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Microsoft Plan to Poach Google Search Traffic No Sure Win for Newspapers


The unorthodox strategy faces some stumbling blocks.

There's an intriguing idea floating around the media: Microsoft Corp. (MSFT) wants to undercut Google (GOOG) so badly in Internet search that it might pay newspapers to withhold their content from Google.

Just don't count on that turning into a lucrative plan for newspapers.

The unorthodox strategy faces stumbling blocks, starting with this one: Microsoft is unlikely to fund a Google boycott, according to three people familiar with Microsoft's discussions with a variety of publishers. These people spoke on condition of anonymity because the talks are still in early stages.

That contradicts other unnamed people who told the Financial Times and other newspapers that News Corp., (NWS) the owner of the Wall Street Journal, is discussing a plan that would block Google from indexing its content in return for an unspecified payment from Microsoft.

The sources in the conflicting reports agree on one point: Microsoft is in talks with a wide range of media outlets, including The Associated Press, about ways that its search engine, Bing, might be able to showcase stories, photos, and videos in a way that distinguishes it from Google.

The discussions could result in new revenue-sharing agreements or other payments -- but they wouldn't necessarily require News Corp. or other publishers to shun Google.

In theory, getting news organizations to block Google from including links to their content might give Microsoft a slight edge over its nemesis. Bing would have a trove of material that its rival didn't, giving people more reason to search somewhere besides Google. Google handles more than six times as many web searches as Bing, a lead that Google has translated into billions of dollars in annual revenue from ads that the company sells alongside search results.

But even if it were willing to pay for exclusive indexing rights to some newspapers, Microsoft then would have to spend heavily to make sure web surfers knew Bing had stuff that Google didn't -- and even that might not be enough to get people to break their Google habit, said Forrester Research analyst Shar VanBoskirk.

"The reality is that people have been trained to go to Google for information, so if you are not showing up in Google, that hurts," she said.

Newspaper websites need all the traffic they can get, because the revenue they're collecting online is not close to making up for what they're losing in print. Print advertising revenue -- the main source of income for newspapers -- is in a three-year slump and on pace to slip to its lowest level since 1987.

More than 21 percent of the clicks to newspaper websites come from Google, according to the research firm Experian Hitwise. Just 2 percent come from Bing, fewer than the referrals from Facebook, Yahoo (YHOO), and the Drudge Report.

Even publishers who are thinking about limiting Google's access to some newspapers realize it probably would be counterproductive to cut all ties with a search engine that is so pivotal in Internet navigation.
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