Google (GOOG) Backs Down In Fight With Publishers

Google (NASDAQ:GOOG) will allow online publishers to limit the number of stories that Google News runs from them each day, a victory for some publishers who think that giving away free content is bad for their businesses. Now, they have to decide whether to take the search company up on its offer and lose a great deal of their traffic.

In Google’s statement about the new program to limit access to some sites it said, “One way we overcome this is through a program called First Click Free. Participating publishers allow the crawler to index their subscription content, then allow users who find one of those articles through Google News or Google Search to see the full page without requiring them to register or subscribe. The user’s first click to the content is free, but when a user clicks on additional links on the site, the publisher can show a payment or registration request.”

Rupert Murdoch of News Corp (NYSE:NWS) and other publishers who want to charge for content can now decide if they want to give up Google traffic which they have been able to sell to advertisers or shut off most access to their sites and force consumers to pay for their content.

Murdoch’s gamble may be reasonable particularly in a period when the price that publishers can get for online ads is stagnate because of the large number of competing sites, the rise of blogs as ad vehicles, and the general pressure of a week economy. Murdoch has obviously done some calculation of how many people he can get to pay for WSJ.com if they cannot get access to the content otherwise. His calculations are at best an educated guess because they predict the results of a model which has never been used–one in which Google’s news results are screened to limit access to certain sites.

It now falls to other large publishers like The New York Times (NYSE:NYT) and Washington Post (NYSE:WPO) to decide if they will follow Murdoch’s path. The Australian has wildly profitable TV operations like Fox News and his movie studio. He is not risking much of his company’s sales by experimenting with his newspapers. A number of other publishers are not diversified enough to be that fortunate.

Douglas A. McIntyre