06:52 AM

Foremski's Take: Forbes CEO Says GOOG Does Evil

Jim Spanfeller, president and CEO of Forbes.com, accused Google of violating its "do no evil" policy and of failing to clean up a web "cesspool."

In an article titled What Google Can Do To Make The Web Less Of A 'Cesspool' | paidContent.org Mr Spanfeller wrote:

... in attempting to "do no evil," Google has done exactly that. I say this not just as someone running a content site but also as an end user. If this inequity of support continues along these lines, we will see a continuing destruction of our journalistic enterprises -- enterprises that are one of the core building blocks of our democracy.

Forbes.com estimated that Google makes $60m per year from directing traffic to Forbes.com. About $24m of that is from selling keywords with that include Forbes brand names. Google is making money from "simply being there."

Mr Spanfeller is also the treasurer of the Online Publishers Association and chairman emeritus of the Interactive Advertising Bureau.

He said that Google could take steps to make things better for publishers such as Forbes.com:

- Better showcase professionally created content, as the fine people at the Online Publishers Association have been asking for, for some time now

- Allow marketers to own their brand names in search results without fear of being cannibalized by their competitors in some sort of perhaps unintended brand extortion, and;

- Cease stepping on or over the line of fair use.

He admits that Google is a small part of an overall problem affecting publishers as they transition to online business models. But Google is a factor and it could help with the transition.

. . . if the present path of activity is not amended in time, even Google will lose. With less content online there will less activity online, and with that reduction of overall activity there will be fewer searches.

Foremski's Take:

Mr Spanfeller's views represent those of many in the media industry. Although Google is getting the brunt of the media industry's complaints, it is mostly a figurehead that represents a stark reality: online business models are hugely inefficient in recovering the value of content, and of distinguishing quality content.

Google is good at making money to support its own business model but that's a low cost server-and-software model, it doesn't require legions of content producers such as journalists, photographers, editors, etc.

Google is lauded as technology leader but this masks the fact that it is horrendously bad at monetizing online content. For example, Its text ads require massive amounts of traffic to be effective.

Here's an extreme example:

The UK Guardian recently reported that the co-writer of the Rick Astley song "Never give you up" was expecting a fat royalty check from YouTube for more than 154 million views of the video. Google sent him a check for 11 pounds ($15).

This is a failure by Google to monetize content but its not a failure for Google - it can still earn enough money because its costs of business are so much lower than for a traditional media company.

That's why it can sell advertising at low rates thus undercutting media companies -- it sets the price. No traditional media company can compete against Google on ads.

Google can help the media industry in several ways:

- get better at monetizing content.

- pay for content. It pays the AP for content why not pay for other content too? That would force it into either charging for access or finding better ways of monetizing the content and thus create a virtuous circle that helps fund content producers.

- Reform its keywords sales so that brand owners derive a clear benefit. Driving traffic to a media site is not enough if that traffic can't be monetized.

A key problem is that Google and others, such as Yahoo, etc, don't know how content is created -- they don't have clue about how much work goes into creating content. They look at news as being a commodity and think that it gets created for free.

For example, even with my low overheads, to create original content I have to drive to a meeting, interview people, drive back, write up the article, add images, production work, and publish. It can take the better part of a day to create one article, one original piece of content.

Google's spiders will index it within minutes and although Google might only make a couple of dollars from my content that's good enough for Google. If I were using Google AdSense I might make a couple of dollars from it also, maybe a little more from other ad networks.

But that's not enough to support me and I'm just a guy with a laptop in a bedroom. What about a newspaper with large staffs, office buildings, pension plans, trucks, etc. You can see the scale of this problem.

It's not that there is only a couple of dollars value in mine or other's online content it's that we have a lousy value recovery mechanism.

The value recovery is set and controlled by Google and its ilk. It's good enough to support their businesses but not much more.