Murdoch has been rumbling for a while about his intentions to stop the hemorrhaging of newspapers by charging for online content. He is right to try to win the Paid Content battle. But there is an even bigger battleground.
Today everything in business has a fundamental network orientation. Everything which was linear is now network-oriented, and the winners are those companies who can align the economics for the ecosystem - whether it's a start-up or an established business with vision.
Google's innovation was the business model, not the search engine technology. Alta Vista was the better search engine and Yahoo the more dominant one, but Google integrated the same business model that UK based businesses Espotting had pioneered.
Using this businesses model allowed them to control without looking in control, to establish massive network effects not by organising the world's information as they claim but by organising the economics of the world's information. That's why they are winning this particular business battle.
Nothing in businesses is ultimately free. Where you pay may be hidden, but that just delays the payday
However, they are vulnerable in one very important area -they profess that they are helping consumers. The consumer has been fooled into feeling good that someone else is paying for the utility of their ability to search the web for free.
Nothing in businesses is ultimately free. Where you pay may be hidden, but that just delays the payday. When the consumer wakes up to understand the value of their personal information - which they are currently attributing no value to - things may change.
Consumers are giving away their personal information through the process of browsing and searching the web. However, like every artist or any creator of content there may come a time they will want not only a cut of the value of the transaction but they will shift to any new search engine which gives them their fair share of the value.
All around the world, people's identity online is anonymously being used. Obongo was the first start-up to try to help the consumer, and it was sold to Time Warner in 2000. Jellyfish was acquired by Microsoft and seems to form part of its Bing strategy, but the cashback to consumers are small portions. Phorm, a contextual search engine, didn't succeed.
There are always failures before a breakthrough - an entrepreneur who by design, luck or theft will see the next paradigm. We may laugh to think of Google fearing cannibalisation of its status quo, but they have an achilles heel. If they don't cut the individual into receiving a piece of the value of their personal information, as it is used in search and purchase transactions, someone will, and that new party will rise to dominance.
Every traditional media company out there today could play that role of the friend to the consumer. Few understand what's at stake or how to do that.
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