Silicon Valley Watcher - Former FT journalist Tom Foremski reporting from the intersection of technology and media

Google Apologizes To Euro Publishers And Offers Money And Developer Help

Posted by Tom Foremski - April 28, 2015

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As the European Commission considers punitive measures against the US search giants business practices, Google offers to help eight European publishers develop new digital media products and announced it will fund new media projects from a $165m three-year "Innovation" fund.

Glyn Moody at Ars Technica reports that the offer is an attempt to mend bridges with the European Commission as it considers measures to crack down on Google's business practices.

There was also a public mea culpa from Carlo D'Asaro Biondo, Head of European Strategic Partnerships, speaking in London:

"I firmly believe that Google has always wanted to be a friend and partner to the news industry, but I also accept we've made some mistakes along the way."

"Over the years we have worked on a range of news-related initiatives, but we tended to work in isolation, and the feedback has been that Google can be complicated to work with, and at times unpredictable!"

Moody explains that this is not the first time Google has tried to buy its way out of trouble with European authorities. It set up a $66m fund in France to placate publishers and the government from taking additional legal action. 

Google has chosen to work with eight small but very influential European newspaper publishers such as the Financial Times and The Guardian in the UK, as part of a "charm offensive," says Moody.

 Foremski's Take: Google's public semi-apology is interesting but of not much help to European media companies as they struggle to compete with Google as a media company.

The apology and Google's offer to help fund "innovation" in the media industry demonstrates that Google has no idea how to help solve the media industry's problems or that it's a cynical red herring designed to obfuscate the real issue. What's needed is innovation in the media business model and that is impossible. 

Mashing together media feeds and clever CSS and HTML5 creations in amazingly innovative ways that engage and entertain, can only happen if there's a solid revenue base to support the creators. But the media industry has an endlessly eroding revenue base. 

We have failed to develop a mechanism that can recover the value of good journalism versus bad, which would create a virtuous reinvestment cycle. A click is a click no matter the quality of the content.

Google's algorithm can read but it can't comprehend beyond a very primitive level. It looks at only 200 data points to determine a web site ranking and assess the quality of its content. 

Google could help the European newspaper publishers by explaining to them that it is not a technology company, as it has been happy to portray itself over the past decade, but it is a media company -- a highly tech-enabled  media competitor that has digital media products the newspaper publishers will never ever have and which wouldn't do them any good, because they don't have a fraction of the audience and scale that's needed to survive.

That explanation would help the European publishers realize that they are toast and there's nothing they can do about it. The web is a disruptive media technology and it rewards scale. Biggest trumps bigger which beats big in this new media world. Even "Big Media" is not big enough to compete against Google or Facebook. 

The dirty little secret is that Google and Facebook are terrifically bad at monetizing content and it's precisely this failure that harms other publishers. Facebook's 2014 revenues are about $1 per user per month. Its profits are about 25 cents per user per month. Yet it can make billions of dollars in profits because it can sell ads for less money than traditional media companies can afford. Let's not mention all the personal data that Facebook can offer advertisers. 

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Google cannot change its nature. Google is like the scorpion riding on the back of the frog that's carrying it to the other side of the river. The frog is the media industry whose support was vital in contributing 50% of Google's revenues, reaching a level that enabled it to IPO in 2004.

But the scorpion cannot change its nature and stings the frog. Without a constant supply of new content Google will run into serious trouble because there's less to index, less new content to sell ads around, and without new web pages there's less reason for users to search Google.

The death of the media industry will kill the web. We'll be liberated from our screens,  we'll walk blinking into the daylight, seeing gigantic animal images in the clouds, and wondering at this awesome 400K resolution,  fully immersive experience of being human. I can't wait :)

A scorpion cannot change its nature and the European Commission won't be able change the fundamental nature of Google's business model.  

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The Holmes Report names Tom Foremski one of the top 25 Innovators of 2013.




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