Friday, July 17, 2009

When is the newspaper industry going to stop blaming Google?

Newspapers and newspaper journalists pride themselves on doing their homework before they publish stories. It's one of the ways they and others in the "mainstream media" like to distinguish themselves from "bloggers." That's why I wish accomplished industry leaders like Howard Weaver would spend more time establishing his case in arguing that Google should share its wealth with newspapers and less time complaining about what he thinks it's doing to the industry.

Look, Weaver is right that he's one of the people in the industry who can say he understands competition. He's a winner of a newspaper war. I think I understand competition, too. But in my case, I didn't come out on top in a newspaper war. So perhaps his thoughts should be given greater weight than mine.

But does he do the industry any service when he provides a totally lame economic analysis, if you can even call it that, of the impact of Google on the newspaper industry and then calls for some form of redistribution of income to newspapers from Google? I don't think so.

Here's the core of his argument:

Google, Yahoo, MSN and AOL are making more money from online content than the newspaper industry makes from everything. Many billions of those dollars are tied directly to the distribution of news and news searches, and that’s the money news companies must find a way to get.

Let’s say those online giants – call them GYMA – make $15 billion a year from news and news-related content (searches, archives, etc). I think that’s a conservative guess.

If we could find a way to get just 10 percent of that – $1.5 billion – pumped into American newsrooms, the impact would be direct, immediate and dramatic. The layoffs could stop, and owners would have breathing room to address strategic questions instead of constantly bailing water to keep the boats afloat. Newsrooms could start hiring the kind of people they need to create the journalism of the future.


Would Weaver, if he were back in Anchorage, have allowed a reporter to guesstimate the revenue the online giants make from news? I don't think so. And if he had, would he not also have asked the reporter how much newspapers are making today as a result of the traffic the major search engines send their way? I think he would have. And would he also not have asked whether the cooperative owned by the newspapers known as the Associated Press is charging these online giants adequate rates to provide them content? I think he would have. And might he also have asked whether AP has charged what it should, or could? I think so.

Weaver is a fine journalist. But I don't think his current approach helps. Why doesn't the newspaper industry commission a serious economic analysis of the impact of these online giants on the bottom lines of newspapers?  That would be useful. It would be a good start to prove the negative impact and to quantify it. If it's true, of course.

Instead, there's still way too much whining about how somebody else is smarter than newspaper people and making more money from what they do. 



10 comments:

  1. You've seriously misread my post, John. You didn't get the "core of [my] argument" at all; what you stated above isn't it.

    The core of my argument is that news companies should band together to obtain scale and then compete with Google by offering a new aggregation site powered by journalistic judgment and not algorithms.

    I also said I'm on the board of a company that's in the final stages of showing how to do just that, in a way that will share 50% of revenues with the companies who participate. Shall I announce all the details of how we'll do that, including financial analysis, in a blog post?

    Well, no.

    I'm not calling on Google to share anything. I'm calling on newspapers to compete and take some of that revenue back. The aggregators won't say exactly how much is derived from news, but it's a huge sum. (If it's not, we're all fucked anyhow). How detailed a financial analysis do you need to recognize that?

    News companies don't have to give up anything to compete. Google can keep indexing and presenting its results exactly as it is. We can keep making money off the traffic they send us. God bless them for it.

    But we also need to capture the money *at the front end of the distribution curve.* Google (and the others) collect 100% of their ad revenue based on being the news distributors online.

    We will win NOT by walling off our content, but by presenting it in a way that consumers will prefer. We have to play the same game AND PLAY IT BETTER.

    I think I can make this simple: It's journalists versus algorithms, John. I think journalists will win that fight if we can get them on the same playing field as the aggregators: big scale, world-class tools, tech-savvy partners.

    I defy you to find the whine in this, old friend. It's a manifesto, and a call to arms.

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  2. Thanks for the response, Howard. I agree with you that we won't win by walling off our content. I don't agree that we have to play the same game and play it better. I think we have to play our own game, and that's content. I think algorithms win when it comes to making accessible the information of the world. Where newspapers can win is by organizing their content in such a way that readers find it easy to use and search engines find it the most worthwhile to point to. I wish you luck with your new enterprise. But I don't see how you can feel comfortable with an analysis that you wouldn't have allowed in a news story in the fine newspaper you edited. I would like to rise to a manifesto based on an analysis I can see is grounded in solid research. I don't see that in your post. I hate to say it, but most, perhaps almost all, newspaper sites aren't good enough. They don't provide people with what they want. Others are doing a better job of meeting their needs. That, to me, is the big problem.

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  3. Journalists vs. algorithms misses the point entirely: The quality of news has been degraded by newspaper management's reluctance to pay for quality. When it comes to budgeting, reporters are viewed as widgets. And it shows in the content.

    So here is my lonely plea for more accuracy in news, which is the cornerstone of credibility. Horrendous errors constantly appear in news articles that are never corrected or even challenged.

    Here's an example that's particularly shocking to me as a business reporter, from an AP story about the supposed boom in green jobs.

    The gist is that AP uncritically used a number from a study on green jobs that made no sense. The study from the Pew Charitable Trusts said total job growth in the decade of 1998 - 2007 was just 3.7 percent. However, the Bureau of Labor Statistics says the job growth during that time was 11.1 percent.

    If indeed the BLS number is that off, it would be huge news. It would mean job growth was nearly stagnant during a period comprising two economic booms and one mild recession. But the AP hasn't done that. So either way, the AP's response is nonsensical.

    My belief is that the BLS number is correct, and the AP served as stenographer to a flawed story. Three reporters wrote it, BTW. Why not just run the press release and save all that money?

    So why don't some editors corral Dean Singleton or some other top AP official when they're bragging about the value of their reporting, and ask them about this and other howlers?

    If you as editors don't demand accuracy and accept such blatantly false information, how can you expect to build reader trust?

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  4. >>> But we also need to capture the money *at the front end of the distribution curve.* Google (and the others) collect 100% of their ad revenue based on being the news distributors online. <<<

    I believe the second sentence is just an oversight, since of course google makes ad money also from the other types of content, not just news, which comprise only a fraction of the whole internet. I think Google makes most from the websites with information about products where they can show related ads. But I would be interested to see a study analyzing how much content on the Internet produce MSM and how much of total Google searches goes there. My guess is it would be a few percent...

    The idea to capture money is the front end is good, but how exactly do you provide the value so people will go there? Gooogle provides that value by search technology. I don't think the human aggregation is that valuable in and of itself..i can do that myself using rss feeds with filtering or twitter searches.

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  5. Peter, thank you for your comment. I think one way we might capture the money at the front end of the distribution curve is to become the local equivalent of Wikipedia, the first place people in our communities turn to find out anything about where to shop, where to find services, how to do things, etc. I see too many newspapers still thinking of news as their only franchise. We need to change the definition of news to include connecting people and being a trusted resource for them.

    Mr. Filkes, thank you for your point about accuracy. You're absolutely right that newspapers will never be the trusted resource for news and information if they're not accurate. I do think the Internet, with its instant feedback and the ability of the public and experts to participate in shaping the news, can help news organizations improve the quality of their reporting.

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  6. Thank you, Mr. Temple. I hope that newspapers will put pressure on AP to improve their accuracy. I'd also like AP to live up to its own standards on the use of anonymous sources.

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  8. I am so confused.
    I don't understand how Google makes any money from "news".

    I just searched Google News for "Rihanna".

    The results page had:
    1. 2 AdWords ads on the right that no one would click on.
    2. As the first organic result: a link to the LA Times. Which is where I went.

    How did Google make any money from their news search service to me?
    How can they possibly make any money when I immediately go to the LA Times page?
    How does the LA Times not make money from Google's help to me when I am exposed to adverts on the LA Times website?

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  9. Weaver is just assuming Google makes a lot of money from news. He just casually tosses off a nice-looking number, without the slightest research to back it up. God help the news industry if this is how top executives plan their budgets.

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  10. I think Mr. Fikes is correct. That's why I was encouraging Howard Weaver to be more rigorous in his presentation.

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