Google Outfoxes Murdoch

Rupert Murdoch clearly yearns for the good old days: when Republicans were in the White House, MySpace was the hottest site in the universe, and people paid for media instead of expecting to get it free on the Web.

The shrewd 78-year-old media mogul is doing his best to turn back the clock on all three fronts, but even the world’s biggest megaphone may not help him stand against time, tide, and Google (Nasdaq: GOOG).

Earlier this week, Slate’s Chadwick Matlinreported on the mysterious disappearance of Fox property Arrested Development from the popular online TV portal, Hulu. Matlin speculated that Fox figured since it was selling the cow -- DVD box-sets -- why should it give the milk for free?

Reuters finance blogger Felix Salmon took the theory a step further and suggested that “it’s all part of Rupert Murdoch’s new information-wants-to-be-paid evangelism. He’s looking all over the Internet to see where he’s giving away valuable content, and then bringing down the hammer.”

One does not have to look too far to find evidence of Murdoch’s disdain for the prevailing model of content delivery where value is measured first in attention, then in revenue.

Murdoch’s newest media property, The Wall Street Journal, has long been the Web’s showpiece walled garden, tossing crumbs of content over the fence to hoi-polloi while keeping the choicest items behind the firewall for paid subscribers. The unique nature of the WSJ brand, its specialized content, and its readership makes this model difficult to replicate. Only the similarly positioned British news weekly, The Economist, keeps its walls so high: Its new Web-only deal for $19.95 per month actually exceeds the (already high) cost of a print subscription.

The difficulty of sustaining a paid content model hasn’t discouraged Murdoch, who routinely fumes at Google for plundering his publications and ruining journalism. He was at it again earlier this month at the World Media Summit in China (well known bastion of free press values), where he accused Google and the whole search-industrial complex of being “parasites.”

“It’s time for them to pay!” he reportedly thundered from the podium.

This occasioned Google to once again point out that any content provider can opt out of having its site crawled by the insertion of a single line of code. If Fox or any other news outlet is determined to be invisible -- and thus irrelevant -- on the Web, Google is more than happy to let them.

Cue the sound of crickets chirping in the executive suites of media companies.

What Murdoch would no doubt love more than anything is to displace Google, and there may have even been a moment when he thought he might hold the lever. Back in the summer of 2005, Murdoch’s NewsCorp shelled out $580 million to buy Intermix Media Inc., the parent company of MySpace -- then the hottest social network in the universe. It was not entirely farfetched to believe that, if anything could eventually rival Google’s dominance, the top Web 2.0 brand was not a bad place to start (apparently, Facebook thinks the same thing).

Analysts at the time thought the MySpace deal was a steal. They were right, albeit in the same way that most financial analysts were “right” in the mid-00s. But while Intermix’s owners were crying all the way to the bank, MySpace went into a tailspin that may eventually prove terminal. Huffington Post’s finance blogger, Henry Blodget, who knows a thing or two about overvalued Internet investments, pegs the current value of MySpace as “next to nothing.”

The resourceful Murdoch still has one tool left in his shed, even if it’s not the sharpest: his close relationship with the Republican Party. Recently, the GOP stepped up its opposition to net neutrality, widely seen as a way for content providers to protect their high-bandwidth services (such as Hulu) from discriminatory pricing by carriers.

A delay on the planned October 22 net neutrality vote by the FCC would conveniently have the effect of punishing the “pirates and parasites” that bedevil media monopolists, although it is unclear how exactly it would forward the pay-for-play model.

Is this all coincidence, or is there a larger conspiracy at work? In the words of Fox News: “We report. You decide.”

— Rob Salkowitz is the author of Generation Blend: Managing Across the Technology Age Gap (2008) and co-author of Listening to the Future (2009). His next book is Young World Rising: How Youth, Technology and Entrepreneurship Are Transforming the Global Economy.