Google vs Rupert Murdoch- who will win?

October 20th, 2009

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We all know that News Corp’s Rupert Murdoch hates Google. Six months ago, he launched an attack on Google,

Rupert Murdoch threw down the gauntlet to Google Thursday, accusing the search giant of poaching content it doesn’t own and urging media outlets to fight back. “Should we be allowing Google to steal all our copyrights?” asked the News Corp. chief at a cable industry confab in Washington, D.C., Thursday. The answer, said Murdoch, should be, ” ‘Thanks, but no thanks.’ “

Google, with its huge armies of software robots and off-line human agents (e.g. the book scanning project, Street View), is like a huge vacuum cleaner that tries to suck in the entire world’s freely available information in order to index, analyse and categorise them.

The end product of their effort is a wealth of meta-information (information about information) and information in which they grant access to the masses through their famous search engine (and other lesser known information services). In this information saturated world, the divide between the haves and have-nots lies in the line between those who are information-rich and those who are information-poor. Google, with their wealth of meta-information, is the gate-keeper for those who wants to cross from being information-poor to information-rich.

Paradoxically (counter-intuitive, we would say), unlike conventional businesses, Google does not charge for access to their meta-information (who pays when doing a Google search?). For example, a large percentage of you reading this blog are brought here free-of-charge by Google’s search engine. Interestingly, you may notice that Google provides all kinds of free services (e.g. Gmail, Google Maps, Google Doc, Picassa, Google Reader, Blogger, YouTube, etc). So, how on earth does Google makes its money if it is giving things aways for free?

To understand this paradox, we have to appreciate the entrenched position taken by two diametrically opposed camps in the digital world. We will requote Graeme Philipson from an article we wrote three years ago (see Analysing Web 2.0 businesses: Shoutwire vs Digg case study),

We are not even a decade into the digital millennium and already the battle lines have been drawn. Two camps have emerged, each with widely divergent views on the nature of information, who owns it and how it should be distributed.

The forces are at this stage evenly matched, and it is not apparent from the day-to-day squabbling which side will emerge victorious. But one side must, because their views are diametrically opposed and can?t coexist in the long term.

On one side are those who believe information is a commodity that can be owned, bought and sold, and its distribution controlled. This naturally leads to a restrictive view of information. This group comprises most of the music, publishing and film industries, and most hardware and software companies.

On the other side are those who believe that information by its nature should be free, and that its distribution should be uncontrolled. This viewpoint naturally leads to an expansive view of information. This group comprises the open software movement, a few far-sighted computer companies (Google is the best example, but also includes heavyweights such as IBM and Sun), and most consumers.

Naturally, businesses that deal with digital information (e.g. data, music, software, movies, etc) will take the view that information is a commodity. Famous companies in this camps include Microsoft, Apple and as expected, Rupert Murdoch’s News Corp.

On the other side, most who belong there (i.e. those who believe in free information) are not profit maximising businesses- they consist mainly of consumers (of course, who do not like free information, music, movies and software?) and non-profit open-source movement. Very few profit maximising businesses belong to this camp- the big names include IBM, Sun and the 600-pound gorilla, Google.

So, at the very heart of Google‘s business model is the idea that information is free and abundant. Think about it: if information becomes a scarce commodity, Google’s business model will collapse- its ubiquitous search engine will die a natural death as it will not be able to index restricted information. Without its search engine, Google’s monopoly will cease and its revenue will dry up. That’s why Rupert Murdoch’s attack on Google is akin to trying to drive a stake at its heart.

Now, let’s take a look at current reality. It’s true that most information is free (at least for the non-specialised ones that the masses are after). This blog that you are reading now is an example of free information. It is also true that there are too much information available than you can consume. For example, there are millions (okay we made that number up, but you get the drift) of investment blogs that can supply everyone with ideas, news and regurgitation of facts and figures and are vying for everyone’s attention.

So, here comes the crucial point to understand: information (collectively) is free and abundant, but consumers’ attention (for each individual information provider) is scarce. Actually, each feed of one another in a positive feedback loop- to attract the attention of consumers, businesses are forced to give more and more information away, which in turn causes information to be more abundant (collectively), which in turn makes consumers’ attention even more scarce (for each individual businesses), which forces businesses to give yet even more information away.

And here is the beauty of Google‘s business model- it sells access to consumers’ attention. For example, at any Google search results, you will find paid advertisements on the top and at the side. By using Google’s search engine, your attention is captured by Google. Then as you click one of the search results, you may stumble into say, this blog site. Here, we have captured your attention that we sell to advertisers, either directly or through Google. So, why is Google giving away so many free services (many of which are integrated with each other), so much so that you can even organise your life around it? The short answer is that it is trying to monopolise more and more of your attention within its domain.

Now, let’s look back at Rupert Murdoch’s plan of bringing paid content into his agenda. Will his plan work? By introducing paid content, News Corp will lose the attention of millions of consumers who are not willing to pay. Not only that, the Google search engine will no longer be able to index and analyse News Corp’s information. That means it will lose even more consumers’ attention through the loss of search engine traffic.

In a world where information is free and abundant and attention is scarce, that attention vacuum vacated by News Corp will be filled quickly by other information providers. In fact, this will be windfall for them and a mortal blow for News Corp. If News Corp attempts to make up its loss of attention by improving the quality of its information tremendously, no one will know about it because Google will likely to retaliate by imposing an information blackout on News Corp.

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  • Pete

    Right on!

    I like Google. They are pretty smart and fairly unobtrusive. But, anyone with a monopoly on information is dangerous. At the moment they are playing nice…but in the future? (Google = Skynet?)

    News Corp on the other hand…are stupid. Rupert has bought himself into an industry that thrives on control – control what is said in the media, if you control the newspapers, etc. Now he is losing control, and profits. If he is not careful he will lose much more than that.

    information (collectively) is free and abundant, but consumers? attention (for each individual information provider) is scarce.

    For some reason this made me think of supply vs demand. It seems very much like a huge oversupply of information vs moderate demand. Perhaps Rupert is trying to shift that balance, by reducing supply.
    Just a thought.

  • Pete

    Right on!

    I like Google. They are pretty smart and fairly unobtrusive. But, anyone with a monopoly on information is dangerous. At the moment they are playing nice…but in the future? (Google = Skynet?)

    News Corp on the other hand…are stupid. Rupert has bought himself into an industry that thrives on control – control what is said in the media, if you control the newspapers, etc. Now he is losing control, and profits. If he is not careful he will lose much more than that.

    information (collectively) is free and abundant, but consumers? attention (for each individual information provider) is scarce.

    For some reason this made me think of supply vs demand. It seems very much like a huge oversupply of information vs moderate demand. Perhaps Rupert is trying to shift that balance, by reducing supply.
    Just a thought.

  • Hi Pete!

    I like Google.

    A recent survey indicated Google is well-liked by consumers. πŸ™‚ Since they’re giving so much free stuffs away, it is easy to like Google.

    They are pretty smart and fairly unobtrusive. But, anyone with a monopoly on information is dangerous. At the moment they are playing nice?but in the future? (Google = Skynet?)

    Power corrupts. Absolute power absolutely corrupts.

    Perhaps Rupert is trying to shift that balance, by reducing supply.

    Certainly. Rupert is trying to rope in other media companies to boycott Google.

  • Hi Pete!

    I like Google.

    A recent survey indicated Google is well-liked by consumers. πŸ™‚ Since they’re giving so much free stuffs away, it is easy to like Google.

    They are pretty smart and fairly unobtrusive. But, anyone with a monopoly on information is dangerous. At the moment they are playing nice?but in the future? (Google = Skynet?)

    Power corrupts. Absolute power absolutely corrupts.

    Perhaps Rupert is trying to shift that balance, by reducing supply.

    Certainly. Rupert is trying to rope in other media companies to boycott Google.

  • Pete

    Hi CIJ,

    Yes, Google is putting itself in an interesting position.

    Microsoft released ‘Bing.com’ to compete with it, but I am not sure how much market share it will achieve.

    As you mention, both views are diametrically opposed – which means they are both ‘extremes’. The issue with extremes is that they are usually flawed models, lacking the diversity they require to survive over the long run.

    The “everything is free” model of Google seems altruistic but could easily allow manipulation/control of information. As it is, Google collects statistics of searches and website usage for advertising and marketing. What happens if that detailed information gets into the wrong hands?

    So far Google has resisted an advertising onslaught on Google and Youtube (even though shareholders and business analysts pressure it to do so). Over time, Google’s CEO’s and board members will retire and new people will provide Google’s direction. A depression in the USA and an anti-Google Chinese market may mean that Google starts to lose money. Ultimately the question may be – will it choose shareholder profits or it’s ideals of free information?

    Conversely, as you say, Rupert is trying to boycott Google. His is another extreme, one in which we would have to pay for information. Imagine the control there? Most people might only be able to afford to pay for one news source instead of many. This would mean that news/media sources would have a lot of control over people – to the extent that people would not know that what they were being told was wrong (that can be claimed even now).

    Perhaps Rupert might think that he can do this due to his experiments charging money for WSJ. Rupert won’t win though. Freelance journalism and blogging would take over in the absence of news companies. New free news/media companies would arise to take the market share of the old news companies that want to charge for information. News/media can always be provided for free if advertising money can be made to cover costs – and there will always be someone ready to take advantage of this.

    Ultimately, the battle is over control of information.
    Should it be controlled by the news/media companies? Google? The Government(s)? (consider our NBN issues and the internet website blacklist and all the ‘control of information’ issues raised with that).

    Unfortunately no-one can be trusted with control of information, because information has value and control of information provides power. If information is hidden from us, how would we know?

    As you say CIJ, power corrupts.

  • Pete

    Hi CIJ,

    Yes, Google is putting itself in an interesting position.

    Microsoft released ‘Bing.com’ to compete with it, but I am not sure how much market share it will achieve.

    As you mention, both views are diametrically opposed – which means they are both ‘extremes’. The issue with extremes is that they are usually flawed models, lacking the diversity they require to survive over the long run.

    The “everything is free” model of Google seems altruistic but could easily allow manipulation/control of information. As it is, Google collects statistics of searches and website usage for advertising and marketing. What happens if that detailed information gets into the wrong hands?

    So far Google has resisted an advertising onslaught on Google and Youtube (even though shareholders and business analysts pressure it to do so). Over time, Google’s CEO’s and board members will retire and new people will provide Google’s direction. A depression in the USA and an anti-Google Chinese market may mean that Google starts to lose money. Ultimately the question may be – will it choose shareholder profits or it’s ideals of free information?

    Conversely, as you say, Rupert is trying to boycott Google. His is another extreme, one in which we would have to pay for information. Imagine the control there? Most people might only be able to afford to pay for one news source instead of many. This would mean that news/media sources would have a lot of control over people – to the extent that people would not know that what they were being told was wrong (that can be claimed even now).

    Perhaps Rupert might think that he can do this due to his experiments charging money for WSJ. Rupert won’t win though. Freelance journalism and blogging would take over in the absence of news companies. New free news/media companies would arise to take the market share of the old news companies that want to charge for information. News/media can always be provided for free if advertising money can be made to cover costs – and there will always be someone ready to take advantage of this.

    Ultimately, the battle is over control of information.
    Should it be controlled by the news/media companies? Google? The Government(s)? (consider our NBN issues and the internet website blacklist and all the ‘control of information’ issues raised with that).

    Unfortunately no-one can be trusted with control of information, because information has value and control of information provides power. If information is hidden from us, how would we know?

    As you say CIJ, power corrupts.

  • Pete

    And here’s an opinion article on the ‘pay for news’ issue:

    http://talkingdigital.wordpress.com/2009/10/20/would-you-pay-for-this-murdoch-hack-redefines-lazy/

  • Pete

    And here’s an opinion article on the ‘pay for news’ issue:

    http://talkingdigital.wordpress.com/2009/10/20/would-you-pay-for-this-murdoch-hack-redefines-lazy/

  • anon (with a decapitlized a)

    Does that mean you’ll be offering your upcoming book for free, in the spirit of Google? Or shall you go the Murdoch route and charge for information? πŸ˜›

  • anon (with a decapitlized a)

    Does that mean you’ll be offering your upcoming book for free, in the spirit of Google? Or shall you go the Murdoch route and charge for information? πŸ˜›

  • Well, surely you would not want a book on investment to be completely free right? Because if it is completely free, no one will be able to gain any investment advantage right? πŸ˜›

    But jokes aside, our upcoming book is free in the sense that Google can index it and show it up in searches.

  • Well, surely you would not want a book on investment to be completely free right? Because if it is completely free, no one will be able to gain any investment advantage right? πŸ˜›

    But jokes aside, our upcoming book is free in the sense that Google can index it and show it up in searches.

  • Anon

    “Does that mean you?ll be offering your upcoming book for free, in the spirit of Google? Or shall you go the Murdoch route and charge for information? :P”

    LOL

    I’ll buy it .. can we get it from any bookstore?

  • Anon

    “Does that mean you?ll be offering your upcoming book for free, in the spirit of Google? Or shall you go the Murdoch route and charge for information? :P”

    LOL

    I’ll buy it .. can we get it from any bookstore?

  • We plan to sell it online. There’s a physical book version from lulu.com as well as a PDF version from e-junkie.com. As a bonus, you can sell the book for us and earn 50% commission for the PDF version. πŸ™‚

    We’re building the web site for that book and hope to launch it soon. If you’re buying the physical book version, please give us feedback on the book because it is the first time we’ve tried lulu.com’s print-on-demand features.

  • We plan to sell it online. There’s a physical book version from lulu.com as well as a PDF version from e-junkie.com. As a bonus, you can sell the book for us and earn 50% commission for the PDF version. πŸ™‚

    We’re building the web site for that book and hope to launch it soon. If you’re buying the physical book version, please give us feedback on the book because it is the first time we’ve tried lulu.com’s print-on-demand features.

  • anon (with a decapitlized a)

    Well, I believe Murdoch’s logic is that people would be willing to pay for “quality information”. A lot of financial publications do charge for access, and even the Singapore Straits Times (which is state-sponsored) has thrived under a subscription model. This does not necessarily mean complete delisting from Google.

    Murdoch isn’t too bad i.m.o. He’s an opinionated individual, sometimes he gets it right sometimes he doesn’t. Powerful no doubt.

    And Google like all companies are concerned about profitability…

    Personally, I’m more concerned about copyright reform.

  • anon (with a decapitlized a)

    Well, I believe Murdoch’s logic is that people would be willing to pay for “quality information”. A lot of financial publications do charge for access, and even the Singapore Straits Times (which is state-sponsored) has thrived under a subscription model. This does not necessarily mean complete delisting from Google.

    Murdoch isn’t too bad i.m.o. He’s an opinionated individual, sometimes he gets it right sometimes he doesn’t. Powerful no doubt.

    And Google like all companies are concerned about profitability…

    Personally, I’m more concerned about copyright reform.

  • Pete

    anon:

    people would be willing to pay for ?quality information?

    Myself included.

    Do I have faith in anyone to provide quality information?

    No. In fact Murdoch’s information is very much biased to his own beliefs.

    I am sick of hearing about moderated comments on news websites too. Just because they are not aligned with a ‘property bubble’, etc.

    Fortunately there are free websites such as this one I feel are far more honest. Yes, everyone has their biases, but some admit to it, whilst others try to hide it.

  • Pete

    anon:

    people would be willing to pay for ?quality information?

    Myself included.

    Do I have faith in anyone to provide quality information?

    No. In fact Murdoch’s information is very much biased to his own beliefs.

    I am sick of hearing about moderated comments on news websites too. Just because they are not aligned with a ‘property bubble’, etc.

    Fortunately there are free websites such as this one I feel are far more honest. Yes, everyone has their biases, but some admit to it, whilst others try to hide it.

  • anon (with a decapitlized a)

    I’m not about to defend Murdoch – but suffice to say freedom of the media = freedom for media barons to project their views. Media competition is healthy, but it doesn’t necessarily lead to improve in information quality – increased circulation is usually achieved by pandering to the audience (e.g. celebrity news, socialism claptrap, poster girls with big boobs, Paul Krugman)

    I too prefer Internet blogs – which summarize the important news into convenient sound-bites, followed by lively discussion. Oh yeah, I follow those which best pander to my prejudices too.

  • anon (with a decapitlized a)

    I’m not about to defend Murdoch – but suffice to say freedom of the media = freedom for media barons to project their views. Media competition is healthy, but it doesn’t necessarily lead to improve in information quality – increased circulation is usually achieved by pandering to the audience (e.g. celebrity news, socialism claptrap, poster girls with big boobs, Paul Krugman)

    I too prefer Internet blogs – which summarize the important news into convenient sound-bites, followed by lively discussion. Oh yeah, I follow those which best pander to my prejudices too.

  • adamant

    Google does not have a monopoly on information.

    Google does have a monopoly on our attention, to use the jargon of the article.

    This is a critical distinction, because attention is given freely by the consumer, but coveted by those seeking to sell things to said consumers.

    Google’s monopoly on our attention is not dangerous. We are not beholden to Google for our information. I can just as easily use Bing/Yahoo, Ask, or a variety of other search tools to find my information. Until Google becomes the only game in town, their monopoly on attention is not unbalancing, because the consumer has alternate options.

    For purposes of consumer protection against monopolies, even if Google became the only game in town, their monopoly would only become a legal concern if they began restricting or charging for information access. Until then, even if they were the only information portal, they are simply providing a public service.

  • adamant

    Google does not have a monopoly on information.

    Google does have a monopoly on our attention, to use the jargon of the article.

    This is a critical distinction, because attention is given freely by the consumer, but coveted by those seeking to sell things to said consumers.

    Google’s monopoly on our attention is not dangerous. We are not beholden to Google for our information. I can just as easily use Bing/Yahoo, Ask, or a variety of other search tools to find my information. Until Google becomes the only game in town, their monopoly on attention is not unbalancing, because the consumer has alternate options.

    For purposes of consumer protection against monopolies, even if Google became the only game in town, their monopoly would only become a legal concern if they began restricting or charging for information access. Until then, even if they were the only information portal, they are simply providing a public service.

  • Hi adamant!

    Google’s monopoly on our attention is not dangerous. We are not beholden to Google for our information. I can just as easily use Bing/Yahoo, Ask, or a variety of other search tools to find my information. Until Google becomes the only game in town, their monopoly on attention is not unbalancing, because the consumer has alternate options.

    The danger is not in consumer choice. Then danger is how much information about you that Google collects when it gains our attention (and having a monopoly of it). Google knows a lot more about you than you realise.

    That’s the danger with Google.

  • Hi adamant!

    Google’s monopoly on our attention is not dangerous. We are not beholden to Google for our information. I can just as easily use Bing/Yahoo, Ask, or a variety of other search tools to find my information. Until Google becomes the only game in town, their monopoly on attention is not unbalancing, because the consumer has alternate options.

    The danger is not in consumer choice. Then danger is how much information about you that Google collects when it gains our attention (and having a monopoly of it). Google knows a lot more about you than you realise.

    That’s the danger with Google.