Rupert Murdoch, never one to shy away from controversy, has stirred up the Internet in recent weeks with his declaration that he’s planning to move all his online properties behind a subscription paywall, and that he’s considering blocking Google’s access to the sites. Of course, this is unheard of in an era where we’ve constantly had it drilled into our heads that visibility is paramount, that traffic equals revenue, and Google is the lifeblood of any publishing venture. Not surprisingly, when the news broke, the usual new media pundits reacted with outrage, portraying Murdoch as a crazy old dinosaur who just doesn’t get it:
Rupert Murdoch has it backwards. You don’t charge the search engines to send people to articles on your site, you pay them.
This one is impressive as well:
Rupert isn’t a technophobic loon who will send his media empire to the bottom of the ocean while waging war on search engines. Instead, he’s an out-of-touch moustache-twirler who’s set his sights on remaking the web as a toll booth (with him in the collector’s seat)
Once the furor from the “information wants to be free” crowd died down, and once word leaked out that Microsoft was in discussions with Murdoch about making Bing the exclusive search engine allowed to spider his content, he wasn’t looking quite so backwards after all. Other publishers are starting to show interest in the same sorts of deal. Erik Sherman took a look at the numbers and concluded the following:
Too many are sustaining themselves on wishful thinking, not real analysis. . . . It’s a case of where much popular opinion is based on a vague sense of how things “should” work in the new world. But as happened during the tech bubble, the value of new economic and business models may have been over-sold, and the insight of cold fact under-appreciated.
Despite what you’ve been told, traffic does not equal revenue. Sherman notes that for as little as $100 million (pocket change to Microsoft), they could completely subsidize all of the ad revenue Google sends to the top 50 news publishers. As Murdoch himself notes:
The fact is there’s not enough advertising in the world to go around to make all the Web sites profitable. And we’d rather have fewer people coming to our Web site, but paying.
This is really the key here. Having lots and lots of traffic does you no good if you can’t monetize it. It’s just extra bandwidth costs. Having a massive drop in readership can actually help save a publication, and here’s a case where that was exactly what happened:
Web traffic plummeted from about 15,000 views a month to about 8,000. . . . It was a success because the Hobbs News Sun’s website went from losing money—it generated no revenue and occupied employees for hours each day—to making enough money to sustain itself.
The author of the post notes that their strategy only works in particular situations:
To succeed with paywalls, then, publishers need not only an established monopoly on something valuable (local news, scoops, reporting quality) but also a plan to translate that into advertiser interest. Paywalls alone, unless they are ridiculously expensive, just won’t be enough.
The question, then, is whether search engine subsidies would be enough to allow a major publisher to overcome these hurdles. Mark Cuban (sometimes it takes a crazy billionaire to understand another one) notes that newspapers have very little to lose here, and that there’s a strong potential for gain for both Bing and groups like AP and Reuters.
Thinking in terms of scholarly publishing, most journals do indeed have an established monopoly on something valuable, and our paywalls have succeeded (some would argue that this is because they are ridiculously expensive, as so far online advertising is failing to pay the bills). But I’m surprised we haven’t seen more interest in dealmaking like this from the open access (OA) crowd, nor from the creators of community database resources. It seems like there should be some common interests here. OA-supporting researchers and publishers want to find ways to make their publications freely available. Search engines thrive on giving away products for free and using them to sell advertising. Currently, many important community resources are in danger of disappearing due to lack of funds. The author-pays business model has not shown itself to be sustainable for low-volume, high-editorial-oversight publications.
Could an exclusivity deal with a search engine or an advertiser be the missing link here to making these things viable? It’s an interesting possibility. We’ve seen many contenders trying to become the search engine for scientists. Are any of them well-heeled enough to subsidize exclusive content?
There are the obvious worries about independence and conflicts of interest. It’s also unclear if traffic to science journal articles and database entries would generate enough advertising revenue to make a subsidy profitable for a search engine. Even Google seems to have admitted that there are some areas where advertising can’t cover the costs of content acquisition. It seems like blocking access to particular search engines would be anathema to the philosophy behind OA. And, since a journal must attract authors, having limited visibility might make for a tough sell. But it’s important for publishers of all types to think about alternative business models in such revolutionary times.
And as Murdoch’s moves are proving, challenging the common wisdom might not be so crazy after all.