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Search Engine Wars: The Murdoch Gambit

Haven't we learned that online wars do not achieve value. Browser wars - mobile fragmentation, and now the Murdoch gambit. We will come out and say this is a bad thing for the internet-sphere.

Rupert Murdoch, News Corporation, has stated that he wants to pull his content off of Google. Naturally, this makes Microsoft's Steve Balmer salivate. An interesting strategy unfolds; if you can't beat Google - bribe the content providers to block their material from Google. Pay Murdoch to shut off the Wall Street Journal content from Google and anyone else. Then of course, Google would counter by having the New York Times remove their content from Bing - and on and on. And who loses - You Do as you content with content fragmentation.

Two articles that state the pro/con case:

Forbes Magazine' Velocity "How Murdock can kill Google"

New York Times Opinionator "Murdochs Google Gambit"

with interesting comments by:

John Battelle, “Just give Google summary text and headlines to index (like the W.S.J. does now). Then do your best to convert would be readers to your paid model. That’s it. What’s the big deal? The rest is bluster."  Yes yes, provide great content found no where else that consumers will want to buy...

Mark Cuban, "I love to tweak all the internet information must be free bigots. They get so damn religious about information on the net that they lose what little objectivity and awareness of the real world they had in the first place."  Sounds like he enjoys stirring the pot..."

Mr.Cuban goes on... "TWITTER AND FACEBOOK are platforms that allow the news sources, like newscorp to post breaking news and gain value from their brand."  We agree, Twitter could be the best source of breaking news and quick ready access to the content...  Leverage these platforms instead of rattling swords at Google.

Jason Calacanis, however, says "Murdoch is savvy." and goes on to imagine Bing advertising that states,

"Want to search the New York Times, Wall Street Journal, USA Today and 3,894 other newspapers and magazine?" "Well, then don't go to Google because they don't have them!"
"Go to Bing, home of quality content you can trust!" We can't imagine a worse case -- trust? More likely it is content that we paid for...  which does not lend credibility to content.

We believe that any means of blocking content from one search engine, in favor of another will ultimately backfire. Google won't die from this gambit and Microsoft won't win. Some savvy entrepreneur will develop a super-search engine that sits above the others helping us - the consumer of information to access content...without having to play favorites. And this gambit will not sell login access either. And if Murdoch thinks this will help save his "pulp" based product... and although we think this is sad...  it won't. Newspaper subscriptions are declining (as are magazines) - so let's find better ways to monetize the content online...  no one really wins a war.

Posted in Industry News, Search Business | Permalink | Comments (0)

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The #Yahoo and #Bing Deal: Yahoo Fails or Does It?

Today Yahoo and Microsoft announced a deal to combine their forces against Google. Yahoo gets to retain 88% of ad revenue ($500 Million in value over 10 years), and access to some of Microsoft's reach. And Yahoo gains$ 250 Million in savingsMicrosoft gets an instant bump in search marketshare - 28% vs 65% for Google. So what did the investment community think of this long time deal. Who came out on top....

Microsoft gained nearly $2.94 Billion on market value - nearly all of it at the direct expense of Yahoo, that lost $2.91 Billion. Ouch. Read TechCrunch's review of this Yahoo to Microsoft valuation shift.

Investors lamented that Microsoft paid Yahoo no money upfront and that it will share only 88 percent of search revenue from Yahoo sites with Yahoo.

"I was surprised at their decision to give the milk for free rather than forcing Microsoft to buy the cow," said Eric Jackson, a former Yahoo investor, who sold off his holdings in September after Yahoo turned down Microsoft's $47.5 billion buyout offer.

"Yahoo should have fought harder for a big upfront," similar to the search proposal Microsoft initially suggested last year after it failed to buy all of Yahoo, Jackson added.  Reuters.

We think CEO Carol Bartz underplayed her hand and was out-matched by Microsoft. However, over time will this deal make sense - time will tell. We think it spells the end of Yahoo and possible Bartz' herself. And what about Google? We always believe that any innovation that Bing/Yahoo come up with - Google has the resources to quickly leap over- and maintain...and potentially grow market share. It is good that there may be competition for Google's search prominence, yet we believe that the combined marketshare for Yahoo and Bing will maintain current levels or drop off...  stay tuned. If anything - the search market just got a little more interesting.  Yahoo - RIP.

Updated: on the second day - yahoo dropped 3.43% -further eroding value.

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