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Firewalls for the opponent

The Murdoch-Google war shows the digital economy probably needs a new set of rules. Read on...

india Updated: Dec 04, 2009 21:51 IST

The Sun King is mad again. And an angry Rupert Murdoch usually has his way with entrenched opposition. The latest object of his ire —Google, whom the media mogul accuses of stealing content — has agreed to limit the number of free clicks inside newspapers’ paywalls. This looks like the opening shots in a battle a badly mauled newspaper industry is engaging with geeks bearing gifts. Typically, newspapers have made money on the news they print and from the act of reaching it to the reader’s doorstep. They, therefore, kept tight control on both their proprietary content and distribution networks. But they lost distribution in the digital world to its gatekeepers, principally search engines like Google, which make money from advertisers for generating 4 billion clicks every month at newspaper sites across the world.

Newspapers have themselves to blame for losing business — advertising and circulation revenues in the US have plummeted from $60 billion in 2006 to $37 billion today. They allowed news trawling software to merrily cart away their content even as they saw the music industry bring file-swapping Napster to heel. Enough, they say now. Two years after taking over the Wall Street Journal, the only mainstream newspaper to charge for its news online since 1996, Mr Murdoch states content is king. And when Google — the most-fancied stock in the world built on the premise that every byte ought to be free — lets a freeloader inside a members-only area, it is an act of piracy on the digital sea. Google, on the other hand, believes distribution is god. It argues that the mess the industry is in is of newspapers’ own making and that it is only helping by bringing them custom online. This cuts little ice with media bosses.

Two issues are at play here. The limited one is of evolving an online distribution model for the newspaper industry, or for that matter, any industry. This would arrive at revenue-sharing arrangements between content creators and the guys that direct consumers to the stuff they seek. The larger question is whether property laws should hold online in broadly the same terms as they do in the real world. Google’s attempts to make the web free are increasingly facing resistance — from music labels to newspapers to publishers. Does the digital economy need an entirely new set of playing rules?