Leaving aside the question of anti-trust - and whether, given Murdoch's extremely close and effective ties to governments, any regulator would be able to function at all or act fast enough to make any difference - this would seem to presage the death of the Internet and its replacement with what old media and old telecoms wanted all along, a segregated, partitioned network where access always comes at a price.
We had that before. It didn't work. Or, rather, it worked fine for established interests with the money to build their own systems or who, by accident of history, controlled the routes of access, where 'fine' meant maintaining that control and preventing open standards, open access and open innovation.
Let's say that Murdoch carries through with his threat and pulls all his content from Google, and sets up paywalls for all his properties. What will happen under the following scenarios?
1. Nobody follows him 2. Some content providers follow him 3. All content providers follow him
and a wildcard:
4. He allows Bing (for example) to crawl his sites, but excludes Google. Or Apple springs its tablet-based news-stand app store on the world with all major publishers involved: you want news, you go through Apple, Rupert's new best friend.
Here's how I see those panning out:
1. Huge competitive advantage to everyone else in attracting readers. His pitch, that readers who pay are worth far more to advertisers than readers who don't, relies on having readers who pay. The standard conversion rate for freemium services (ie, you get people in with the free stuff and sell them up) is 1 percent. And that's 1 percent of people who haven't got there via Google? Does that make sense?
2. Chaos reigns. Suddenly, the news outlets with no paywalls and plenty Google will find it very advantageous to run with stories that they read behind the paywall, even a day after - unless the paywalled sites decide they do want Google and just publish a day late online. The opportunity here for a new face (again, think Apple) to step in with a free service tuned to the new landscape is high, and dangerous to the incumbents.
3. Google loses all its news. Everyone has to decide what to pay for - you can't afford the Times and the Telegraph, let alone Salon and the NYT and Boing Boing - and you can bet the paywalls are set to get a year's sub out of you. The news and information landscape takes a 25 year trip back in time... where, you may remember, a new technology called the Internet was waiting in the wings. The Internet has not actually gone away.
There would be no better market for a new operation to start from a clean slate - a billion plus people ready and able to consume content that they've come to expect, and peeved that they've lost it.
4. Stand by for the biggest lawsuit you've ever seen. Unless Murdoch, Apple and co get into bed with Comcast, Verizon and other major internet providers around the world to break net neutrality, in which case stand by for the biggest lawsuit you'll ever see.
2010 will be very interesting. Anything Murdoch does is going to be a huge gamble, beyond anything he's done before - and he'll do anything to appear confident that it'll work.