23:31 PM

Live from Syndicate: Red sky in the morning - Hearst News puts Google and news aggregators on notice

By Tom Foremski for SiliconValleyWatcher


The "RSS and Advertising" panel at Syndicate was fascinating because this has become such a hot topic issue. Internet guru Dave Winer has recently been advocating ad-free RSS feeds and urging boycotts of publishers that pollute their feeds with ads. Google, Yahoo, Moreover and others are paying no attention - on the contrary, they are rubbing their hands with glee at the fat cash cow they see in mixing ads into RSS feeds.

On Tuesday Google launched its public beta of AdSense for Feeds at the show, saying it would enable content producers to make money and plough that back into generating yet more quality content. Shuman Ghosemajumder, business product manager for AdSense, called this a "virtuous cycle" that would enable the production of larger amounts of high quality content - and lead to a better society.

That's a noble goal, and Google's AdSense network, which publishes content-related text ads on third-party sites, has generated more money for small publishers than anything else. Yet the modest revenues earned by most of the 200,000-plus AdSense network sites are under threat because of RSS, which allows people to read content without going to the originating web site.

For many web sites using RSS, 50 to 70 percent of their readers subscribe to their RSS feeds and rarely see the web site itself. Since Google AdSense only pays if someone clicks on an ad, Google had to figure out a way to mix ads into the RSS feed and collect the clicks and usage patterns.

Others, such as Pheedo, Moreover and Kanoodle have beaten Google to the market, but why rush? Google can own this market because of its scale and reach. Or can it?

On the panel, Lincoln Millstein, SVP and Director of Digital Media at Hearst Newspapers, said his company was looking at mixing text ads within its RSS feeds - "But we don't need Google to do that."

Millstein went further, saying that Hearst has become marginalized by the aggregators and wouldn't let it happen again. "The big money is being made by the aggregators, but who wants to be one of 1,000 publishers? That's just nickels and cents. We want to play the role of the aggregator."

Hearst and other publishers such as IDG (organizer of the conference) are growing increasingly protective of their content, and increasingly hostile to Google or anybody else that is making money from their content and kicking very little, if anything, back to them.

It will be interesting to see if the big publishers are better able to monetize their content, or if the value of digital content is in the aggregation services as Moreover and other aggregators argue.

My take is that content will be king, this time around. And being a content producer/publisher (with an online cost base) is a very good place to be, because the headline links in Google, or in a news aggregator such as Yahoo Finance, have to lead to original content. And original content is hard to produce and cannot be done by machines.