GOOG Rejects Direct Investment In Failing Newspaper Industry

I still don't understand why you continue to insist that Google is a media company... because they sell advertising? By that definition an airport and a MUNI bus are also media companies.

They are two different models, newspapers create content with their "legions of editors, journalists, photographers, etc," and Google searches and aggregates content using "servers and algorithms." Try as they might, servers don't create content.

Sure, the newspaper business is in trouble, no news there. My guess is Craigs List (free classifieds) is as much to blame as Google.

But ultimately, they are different businesses.

Second on the suggestion that Craig List hurt newspapers more than Google. Just check the regular RPM for local auto/job/rental listing on your local newspaper with $0 RPM "charged" by Craglist, and aggregate the yearly run-rate. You will be surprised.

Ron: Google is a media company. It publishes pages of content with advertising around it. That is a media business.

It is certainly not a tech company. The only "tech" you can buy is a GOOG search appliance, which makes up less than 1 per cent of its revenue.

GOOG is a technology enabled media company. It harvests its content via servers and algorithms. It doesn't have to pay people to create content. That is why it has a very profitable and effective business model. Traditional media companies can't compete against such a business model because they have to maintain a large labor force to publish content--GOOG maintains large server farms to publish content. Machines are cheaper than people, Google's operating costs, as a media company, are far less than that for a traditional media company. Yet it takes advantage of the content created by other people's web sites by saying it adds value by indexing and sending traffic to those sites. But that balance of value is shifting. Google's technology is becoming a commodity but content creation is not a commodity. At some point this balance of power will shift.

I am quite sure that Google can save newspapers, if they themselves are prepared to save themselves!

Google has created perhaps the largest metaphorical ocean and Facebook et al have created 'Countries' amidst those seas and as sure as Apple and Microsoft dominate operating systems, this landscape is almost certainly irreversible.

The Newspapers have resisted this by trying to create their own environments instead of negotiating rights of passage for their liners and similarly have devalued their online value by working purely on volume attraction rather than nurturing their audiences and advertisers towards long-term loyalty. A CPM business model for newspapers is as meaningless as a Google without some aggregated value in top search results and concomitant brands.

As I read it Eric is offering that dialogue...in my humble opinion they should take it!

Google's business is very clearly making it very difficult for the newspaper industry to transition to an online business model

Can you support your claim somehow? Do you think newspaper industry would make more money if Google didn't exist? Were online newspapers profitable in pre-google days?

Google has very profitable Adwords/Adsense bussiness, but particularly in newspaper websites, it doesn't work that great...If Google and Adsense didn't exist and newspapers implemented something similar, it still wouldn't enable them to be profitable online, IMHO.

In all honesty, I think the problem is elsewhere - in the quality of the product itself. I am in Europe and here the newspapers are doing quite well. But when I watch USA media, the quality is much lower - not in technical execution, but the independence from political and economical influences just isn't there.

So please stop blame Google and make better newspapers so more people will be willing to read them.

Peter: I'm not blaming Google for making it difficult for newspapers to transition to an online business model I'm simply stating the fact that online advertising prices are set by the prices Google recieves through its auction model. That doesn't provide enough of a revenue stream to support a news organization and all of its costs of doing business. Google doesn't have the same costs of doing business and therefore it can survive very well on its online advertising revenues. It isn't Google's fault that newspapers can't make enough money online, it's simply that ads are cheaper and convert better when they are next to a search box than they are next to a column of journalism. So how do we pay for good journalism if online ads can't do it? Subscriptions?

Wouldn't a newspaper's costs go down DRASTICALLY if they did business online only? They could replace a bunch of the jobs that people are paid to do at a print newspaper. Besides, couldn't newspapers have Adsense on their sites where Google can pay THEM for ads?

Angela from Aberdeen

Backlinks

Most newspapers have an small free online presence anyway. Surely with the technology coming out you could soon have a newspaper delivered to your phone or handheld for people on the go.

A subscription list with targeted advertising could be a model?

Good journalists will always have a role to play in reporting, only the media will change.

Think of the environmental impact if we did not print newspapers.

Good debate!

Alex Jeffreys

I don't understand why people worry about newspapers. I believe that they are expiring for the future realities. We still read them because we used to it but our children find it easier to find everything they want in the Internet.

And all the "legions of editors, journalists, photographers, etc," are still necessary in a new realities but with a functions that are shifted a little...

At the end if the day, if newspapers aren't around to create content offline, there will be a lot less content created online. I can see why Google was considering this and it's a very smart move.

uk book publisher

I agree with Sandra - Google will have to make a purchase sooner or later to ensure they still have content to publish. I'm going to keep a very close eye on this
Risk Management Software

Google won't invest in a newspaper. They don't know how to build that kind of business nor do they know anything about growing that kind of business. Why buy the cow? It makes no sense at all.
Also, Wall Street would punish Google big time. The investment would drive down its stock price because the profit margins are so much lower than in Google's core business.

Google has a total lock on the Internet. I would venture to call it a monopoly almost. Why would they invest in offline news papers when Google them self is making newspapers obsolete.

Angela,

I do agree that newspapers could cut their costs significantly by going online only but Google AdSense on a local newspaper's website would definitely not be enough to keep them afloat. Personally, I haven't read physical newspapers in years since I just get the news online, but I can't imagine a world where actual news "papers" ceased to exist. However, I don't think Google or any other company and certainly not Congress should feel compelled to bail them out since they have an emotional attachment to them. We all see what happened with the GM bailout and how that failed. If a company is failing because they can't sell their products, they should go out of business, simple as that.

Freight factoring company

Check also that local listings on your local newspaper with $0 RPM "charged" by Craglist, and aggregate the yearly run-rate.

Just Think of the environmental impact if we did not print newspapers;)

TMJ

What company is going to share revenu with competitors? What does Google have to gain by getting in the print new business? Technology has shifted the way people get their news. The real downside being it's really difficult to determine what is fact and what is fiction or hyperbole. At the same time it's harder to create an environment where large media conglomerates can control spin. The reality is technology introduces change to all industries.

The horse drawn carriage died as the automobile replaced it. The people will gravitate towards how they want to receive information. It's simple a medium shift. Schmidt is not an idiot, you don't throw good money at bad!

Print as media will never die. It may not survive with competition, especially in areas that are over saturated with two newspapers, but it will not die, ever, in the same way that books will always exist. Readers like something substantial to hold in their hands, that will not fade away with a modem or satellite failure.

This line of questioning is interesting in that is is based on the premise that Google is at fault and should provide a remedy. It doesn't look like Google sees this the same way. I am surprise the "don't be evil" quote was not invoked. ;)

I agree and do see Google as a media company as they are the largest distributers of information in the world. The way people view information is their choice. There are certain businesses that will thrive using an online medium. Real estate happens to be one of them. The playing field has changed dramatically over the last ten years as print media and real estate used to go hand in hand. Not anymore!

>>Besides, couldn't newspapers have Adsense on their sites where Google can pay THEM for ads?

Quite an interesting thought, but I am already p*issed off with the large newspaper ads that take up half the editorial space. Not sure if I would keep my newspaper subscription if they are filled up with Adsense-like garbage! :)

About Me

I am quite sure that Google can save newspapers, if they themselves are prepared to save themselves!

Google has created perhaps the largest metaphorical ocean and Facebook et al have created 'Countries' amidst those seas and as sure as Apple and Microsoft dominate operating systems, this landscape is almost certainly irreversible.

The Newspapers have resisted this by trying to create their own environments instead of negotiating rights of passage for their liners and similarly have devalued their online value by working purely on volume attraction rather than nurturing their audiences and advertisers towards long-term loyalty. A CPM business model for newspapers is as meaningless as a Google without some aggregated value in top search results and concomitant brands.