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Newspaper publishers have been blaming Google for their revenue decline long before the recession plunged them into chaos. Google scours the web and delivers their hard won news in an instant — for free. But it's not a one sided relationship, and today Google's CEO is fighting back — in Rupert Murdoch's pages.

Murdoch has been loudest amid the din of publishers who are demanding payment for their services. And today in his Wall Street Journal, Eric Schmidt made his pitch for how Google can help newspapers survive the digital shift.

For starters, he wants to clear Google's name:

"Google is a great source of promotion. We send online news publishers a billion clicks a month from Google News and more than three billion extra visits from our other services, such as Web Search and iGoogle. That is 100,000 opportunities a minute to win loyal readers and generate revenue—for free. In terms of copyright, another bone of contention, we only show a headline and a couple of lines from each story. If readers want to read on they have to click through to the newspaper's Web site. (The exception are stories we host through a licensing agreement with news services.) And if they wish, publishers can remove their content from our search index, or from Google News."

Schmidt acknowledges that newspapers are in a bind right now. (The piece is subtitled "Video didn't kill the radio star, and the Internet won't destroy news organizations. It will foster a new, digital business model.") It's the same thing that digital adopters have been saying for years, but publishers watching their business crumble around them are pretty nervous about where they'll fit in this "new business model."

In that direction, Schmidt offers some (Google created) solutions. He thinks the main inhibitor for newspapers in the digital age is the delivery method. Right now, online news is actually more difficult to read than a traditional newspaper. Google is working on solutions. Right now, they have Google Fast Flip. Says Schmidt:

"The theory—which seems to work in practice—is that if we make it easier to read articles, people will read more of them. Our news partners will receive the majority of the revenue generated by the display ads shown beside stories."

But another problem that Schmidt doesn't address is the issue of payment. While online news may be popular, getting people to fork over for it isn't so easy. And he even admits in his piece that Google has trouble profiting from the news:

"A typical news search—for Afghanistan, say—may generate few if any ads. The revenue generated from the ads shown alongside news search queries is a tiny fraction of our search revenue."

That same problem plagues news producers — but for them, they don't have a windfall of product search ads to fall back on. Publishers now need to find a better delivery method for their content — and a better monetization route.

Schmidt's piece may help in the PR battle to clear Google's reputation in the media, but it doesn't contain the answers publishers are looking for. Google may not be the cause of newspapers' problems. But they aren't likely to be the solution either.

Image: WSJ

Meghan Keane

Published 3 December, 2009 by Meghan Keane

Based in New York, Meghan Keane is US Editor of Econsultancy. You can follow her on Twitter: @keanesian.

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Comments (4)

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Mike Stenger

I agree with Eric that Google isn't to blame. Blaming Google for newspapers' decline is like me getting mad at people reading my blog posts after clicking through on Twitter. It's plain dumb!

The key problem here is the whole monetization of content. Google is doing news sites a big favor by sending all this traffic TO THEM. It's the site's decision on what they do with that traffic and how they make money from it.

All in all, it doesn't take a rocket scientist to monetize. Instead of them freaking out and pointing fingers, it's about time they put their head down to figure out this whole thing.

almost 7 years ago

Neil Warren

Neil Warren, Publisher at 2N Media Ltd - ModernSelling.com

And the other big issue is going to be that it is less and less possible for "lazy" advertisers to claim that a massive audience, determined by a few bland demographics, is what they are really after, or ought to pay for.

The truth is that these were only ever probabilities in the first place and, when the digital world delivers the more brutal realities of which precise story was read, rather than overall title bought, you can see a) what percentage of a title's readership would actually have lingered over that story (and your facing ad) in the first place and then b) what percentage of them actually does have an interest in your product or service.

And if we push on further than that, and discover that what customers really want is not a persuasive "push" advertisement trying to convice them to "buy now" a B2C commodity/utility but a more compelling "pull" message that addresses their problems, then advertisers will have to find a way to employ a few more eSales executives and learn all about what their prospects are really interested in, and in which ways they will engage.

almost 7 years ago

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Lindsey Annison

The problem is the monetisation. We are looking, all of us, to find new models for doing business now the Internet is here. And what we call the internet now is going to change even further yet, and making money will become ever harder yet.

I am struggling to combine ideas such as Don Tapscott's about music this week http://www.guardian.co.uk/commentisfree/libertycentral/2009/dec/02/labels-music-industry-filesharing with how news organisations will deal with this. Or small businesses. Or how anyone will deal with 'free content'.

There has to be a paradigm shift. To me, this has to be about collaboration and co-operation.

Newspapers have been dragged from having a monopoly on yesterday's news, to having to use Twitter etc to be seen to have great journalists, with brilliant research and writing skills that can hold good under pressure. ie putting out the best story within the least time to compete with citizen journalists etc. The big media groups are now very much tuned into a new model already - "NOW news".

"Is it trending on Twitter, FB, Digg, Slashdot etc? Why haven't we got a story out there?" must be very much being asked within news organisations right now?

How do they make money from this? Well, let's think big. Why not apply the music model Don proposes to news? I would willing pay £2/month to access every piece of news, everywhere, whenever I want it. As a business, I can write it off anyway. It is up to me what I make of that news and how I recoup my costs.

Before every news corp suddenly starts demanding £2/month from me and not working together, let's look at the reality of all this on a wider scale. In an average day, I may access news, music, video, social networking sites, gaming sites etc. On top of my internet bill, which is hefty here in the UK considering it doesn't actually do what I need it to, I do NOT want to be paying for all these "add-ons."

The networks are making money, and quite substantial amounts of money, from flogging me 'scarcity'. Let's move everything to 'abundance' and keep talking about collaboration.

What if....I can access a fat pipe to the net at a price that keeps the suppliers of that pipe in the money and is affordable to anyone? On top of that, I pay to subscribe to my feeds eg music, news, etc. That subscription gives me access to everything in that category, worldwide, available right now.

I have no need to ever 'thieve' something, be it a game, song or news item, because I have paid to have access. I can choose what I watch, play, listen to, read etc. Each time I click on something of interest, I become part of the billable long tail for that item. And I have paid to do so. A percentage of my sub goes to the author of that content via the publisher.

IF the people making the most noise would just accept that I and many others will be accused of 'stealing' your content if you lock it away from us, and yet we are quite happy to pay a single price to access ALL the content in that subject area. AND that if you all just collaborated so we could access EVERYTHING, you would be making a hundred million times more than you are failing to make right now, because us consumers believe it should be free if you can't work out a sensible payment model......you would be onto something!

It's that age old 1 million times a penny vs 1 sale of a million dollars/pounds etc. It's about hiding your content behind such a complex registration form because you are GREEDY. (Even though I might have been willing to pay the sub, you just lost me.) It's about adopting a mentality that will work with today's consumers. It's about making it abundant, not scarce.

Just a few thoughts...I could go much further!

[Wanted: 1 dev for a very sophisticated billing engine!]

almost 7 years ago

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FriendyAnil

Google chairman and CEO Eric Schmidt has an op-ed in today's Wall Street Journal , which -- in case you've been hibernating under a rock -- is owned by News Corp. head Rupert Murdoch, who professes to hate Google, and has sworn to soon deprive it of the ability to index The Journal 's content. In the column -- which Around The Net was able to access without a Journal subscription -- Schmidt writes, "With dwindling revenue and diminished resources, frustrated newspaper executives are looking for someone to blame. Much of their anger is currently directed at Google, ...Street Fights

over 6 years ago

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