Tie Up, Tie Down or Just Tired

Michael Hedges November 25, 2009 (follow on Twitter)

A tie up between News Corporation and Microsoft Corporation is in the air. Sure, it’s insane. But credit both Murdoch and Ballmer for previewing the first truly post-modern publisher.

Rupert Murdoch and his whiny kid are spinning in their graves before they’re buried. Perhaps a paleontologist can tell us if ol’ T. Rex and his pups made so much noise before sinking into the swamp. But, you’re known by the company you keep; even in your final days.

Murdoch plays the business game the way he sees it. Leverage is everything for zero-sum counting moguls. His moaning and wailing about a ‘parasite’ Google stealing his precious ‘content’ brought out the best and worst of modern media’s genius class but Google wasn’t phased.

Instead - and oh, so predictably – Microsoft’s Steve Ballmer took the bait. Search engine Bing – looks nice but where does it go? Oh, Bing. I get it – is meant to trash Google or Yahoo or Altavista or Yodel and bump off at least one other search engine for shelf space in the search engine category. What Ballmer needs for Bing is Zing.

Who in their right mind would turn to Rupert Murdoch (or his brats) for Zing? On the newspaper side the precious Murdoch content runs the narrow gamut of right-wing Times Roman font and fish-wrap tabloids to the ‘business of business is business’ fodder for those unable to accept that Enron was a scam. News Corp television channels, notably Fox News in the US, ply the punters with extremes sufficient to keep their hearts pumping between educational visits to Wal-Mart. In fairness, News Corps movie studio cranked out a fair share of good stuff but Peter Chernin, who ran it, was chased off. And, too, the BSkyB sports productions have been terrific. Go figure.

Earlier this year Mr. Murdoch issued an encyclical on freeness. It would, he said, not be. Largely if not entirely targeting the UK newspaper market, he made it clear that he would – very soon – be charging – somehow – for access to his newspapers websites and every other newspaper publisher had better follow suit. Preferably, a few News Corp competitors should venture into the promised land first and start charging internet users to, well, access. None did. So much for Murdoch’s leverage.

The alleged deal between News Corp and Microsoft involves the very thing Murdoch needs to prove how the world hasn’t changed. News Corp will (might, could) provide ‘content’ to Microsoft’s Bing exclusively for a fee. How Microsoft monetizes that investment is not Murdoch’s problem. News Corp becomes (as if it isn’t already) a ‘content’ wholesaler. Microsoft becomes an aggregator of limited but exclusive content.

Think for a second about what it is that Microsoft really does. Differ for a moment listing all those things Steve Ballmer wants to do. After 25 years of Bill Gates calling all the shots, Steve’s ‘to-do’ list is huge. Bill didn’t like the internet until he did.

Microsoft is first and foremost a software company. It has teams of talented people writing programs and applications that allow people who use personal computers to do stuff. (That would include writing this article.) It has teams of people selling that software. It has teams working on games, mobile phone stuff and, now, Bing. It has teams of teams. There are team leaders. It’s a lot like IBM in 1975. Microsoft was once the richest company in the world making that new fangled stuff. Google is now several times bigger.

News Corporation has one team: Clan Murdoch. It, too, has done brilliant stuff. Risk taking has been more important than anything. Those days are over. News Corporation is over. Rupert Murdoch knows this and wants to make sure his extended family doesn’t suffer. He doesn’t care if the rest of us suffer in the meantime.

Content aggregation is a post-modern concept when technical formality (that would be buttons to push) is both push and pull. Media has, historically, been a push process. We decide what to push and users either accept it or not. The internet enabled more to be pushed. If that had been the end of it, nothing would have changed. Search engines like Google use relatively unsophisticated electronic robots to wander through the vast reaches of the internet collecting and indexing everything. Users can, then, pull from the internet whatever it is they want because it is indexed.

Google News aggregates web content, collecting and indexing. Its robots look for words, links, videos, everything. A mathematical algorithm organizes the results for a reasonably effective presentation. Hundreds of millions of web pages are created every day. It’s a tall task. Google’s computers whir away day and night.

Most of the search engines you’ve heard about take instructions from website producers. Some don’t and they can be quite nasty. But the major names in the search engine world play according to the rules. Mr. Murdoch made a bit of noise recently about taking his ‘content’ away from Google. Many people offered to help: it’s two lines of code.

Google makes its money from advertising. This distresses Mr. Murdoch. Not only does Google index News Corporation ‘content’ it gets money for ads on the search index pages. Mr. Murdoch’s has a classic complaint, classic red herring. Ad spending, too, has become post-modern as distribution among media is no longer zero-sum. It’s negative-sum.

Think of Google News as a newsstand. There are lots of headlines and pictures. Sometimes people buy the newspaper or magazine. Sometimes they only buy cigarettes. What ads do you see on the sides of newsstands? Cigarettes. Sometimes people only want headlines but they need nicotine.

If the relationship between Microsoft and News Corporation develops as most media watchers predict, Bing will become another newsstand. It won’t make any money on headlines and pictures but it might get a share of the cigarette business. Don’t expect anything very creative here.

The preeminent post-modern condition is disintermediation. People like the idea of interaction and hate having some one or some thing getting in the way. Media people are understandably distressed by this notion because controlling the transaction has economic value. That would be Mr. Murdoch’s pay wall.

For real people, interacting on their own terms is a powerful drug. Microsoft’s primary nemesis – Apple – proved that (again) with the iPhone. Simplified web applications allowed people to have a ‘web presence’. Facebook – an application – has made a web presence almost a necessity. I am indexed, therefore I am.

The next step is smartphone applications. Already these little plug-ins do all sorts of cool things (for a small fee). This is how Facebook and Twitter will see a revenue stream.

Eventually, there will be a ‘my news’ smartphone app. Unlike the presumed Bing hooked up with News Corps zing people will hook up directly with journalists, writers, photographers and artists based loosely on the Twitter follower. The crowd-sourcing effect would stimulate push and pull both in determining content themes and the financial participation.

Of course, Mr. Murdoch will complain.