Newspapers Can't Compete with 'Us'

The discussion in the tech/media blogs this weekend is Rupert Murdoch's comment:

“Should we be allowing Google to steal all our copyrights?” asked the News Corp chief at a cable industry confab in Washington, D.C., Thursday. The answer, said Murdoch, should be, ‘Thanks, but no thanks.’ “

Ian Betteridge has a good post on this and says:

Some people will paint this as an old-media dinosaur not understanding new media, but I’m not so sure. If you’ve read Michael Wolff’s biography of Murdoch, you’d realise that he rarely says something like this without thinking it through, and without having an agenda.

I agree with Ian that Rupert is as smart and sophisticated as they come and he has thought this through. But unfortunately for Rupert and News Corp (NWS) and other newspaper owners, you can't take your toys and go home on this one.

News Corp can easily block Google (GOOG) from crawling its pages at the WSJ, NY Post, and elsewhere. They can also sue Google and litigate for a rev share or whatever else it is that Rupert wants from Google.

But here's the thing. Google is distribution. It is the newsstand. If Rupert or any other newspaper owner chooses to take its content out of the Google index, there will be plenty of content left that can take its place.

Look at the top of the page on Google finance right now (click to enlarge):

On Friday, an Asian online games company called Changyou went public here in the US and had a very successful offering. This is interesting to me on many levels as you might imagine. Google shows three stories on the Changyou IPO; the lead story from SeekingAlpha, a story from Forbes, and a story from the FT. Note that there is no story there from the WSJ.

And I could care less. I had the option of all three links and I selected the SeekingAlpha link. SeekingAlpha is a network of stock bloggers. It is slowly but surely building a brand as a trusted source of stock news and opinion.

Google is not News Corp's problem. Their problem is us. We know a lot. But we don't own a printing press. And that's a good thing. Because printing presses are expensive. But we do own a computer and many blogging services are free. The explosion of "user generated content" has created some very compelling news services in all sorts of verticals. Not just tech, but finance, fashion, music, travel, lifestyle, and on and on. And there are a bunch of companies like Seeking Alpha that are aggregating up the best user generated content in verticals and creating awesome news, information, and entertainment services.

Steven Johnson, the popular author and founder of our portfolio company Outside.in put it very well in his keynote at SXSW last month.

What’s happened with technology and politics is happening elsewhere too, just on a different timetable. Sports, business, reviews of movies, books, restaurants – all the staples of the old newspaper format are proliferating online. There are more perspectives; there is more depth and more surface now. And that’s the new growth. It’s only started maturing.

More perspectives is the most important thing of all. News and information content is becoming much richer and better. And that is Rupert's problem at the end of the day. It's not that he can't compete with Google. It's that he can't compete with us.

Disclosure: Author holds positions in GOOG

Comments

[John Eckberg:]

Blogger don't write obits. Newspapers aren't going away anytime soon, particularly in the 5,000 small towns spread out across this land.

Apr 06 06:06 AM

[Hedged In:]

Fred -- great article. You're right that bloggers and other online alternative are the competition to Murdoch, not Google itself. Question: Do you think that bloggers and others (Twitter?) can compete with the newspapers on breaking news, as opposed to analysis of news stories?

John -- Not sure you're right; aren't local newspapers going out of businesses faster than others?

Apr 06 06:16 AM

[Zieb:]

Hedged in, it is my understanding that small town papers are doing better than their bigger counterparts. This is because they can offer something the big papers cannot: targeted marketing and content. My local weekly (which I have delivered to me every week) had a two page spread about the home town hockey team winning the provincial championship. The larger National papers don't even know the name of the team. This provides readers with information they aren't likely to find anything on even online. It also allowed for a full page spread listing all the local businesses that sponsor the team. Wal-Mart wasn't one of them. Meanwhile a local Pizza place was.

When you sell to a very niche market, you offer your customers and your advertisers a fit they can't get anywhere else. It's the reason the local paper has had a steady 10,000 people readership, the same sized office staff, and the same length of paper for 40 years or so.

Check out this report:
www.minnpost.com/stori...

Apr 06 08:24 AM

[Engine Block:]

Newspapers offer economies of scale that most new media outlets are unable to duplicate. E.G. A web site with 500K unique visitors monthly has on average 16K daily visitors yet even modest sized newspapers deliver 100,000 readers daily.

Apr 06 09:09 AM

[NP Refugee:]

Think about this: the newspaper's content, most of which they don't own nor create is available in lots of places. The newspaper is under siege from all sorts of directions. I can get comics from comics.com; I can't get that on the newspaper's web site. I can get stocks from-what-1,000 different places? I can get the syndicated national stories from just about anywhere. Obits are available numerous places. I don't have any problem finding puzzles online from numerous sources. A great number of the published editorials are available on the commentators' web sites. All of that content used to be the NP franchise. So it's not just about Google, it's the cumulative effects of having commoditization of what the newspaper used to monopolize in a local market. Going from monopoly to commodity is a giant killer. I agree that the small town newspapers will be the ones that last. If you consider the papers closing shop thus far, most are in 2-newspaper towns (Seattle, Denver). But the small local papers seem to understand the need to drill down into the communities they serve--because they can, while big metros seem intent on being a national newspaper. Unless the big metros bust up their newsrooms and start small suburban bureaus that can go deep in communities while having a "most important" fill the main section, I'm pretty sure the erosion will not subside.

Think about this too: NPs don't put the local box scores and the other fine print online. To a local market, that's valuable.

I, for one, believe that Murdoch knows exactly what he's doing. If you've been following the latest moves by the NP industry, there's a bit of interesting news where most have signed on to work with a search engine directly. If I were Murdoch, I would start a news search engine and sign on all the NPs as true partners. I would add some things the SEs don't currently do. I would have wild cards in search strings, so if you don't know some characters, you can use *, I would also allow searchers to index the search results according the date the article was published. Then I would cut off the Google and Yahoo! spiders. Goodness knows, promotion wouldn't be a problem.

News flash. Only 20% of most newspapers' visits come through search engines. Most NPs are bookmarked.

It would take a giant to make it happen, no doubt. Goodness knows, the NP companies can't get along to make it happen.

And I could almost argue that the suburbanization has had almost as profound an effect as the Internet on the precipitous drop in circulation. Publishing the latest antics about which councilperson is taking a bribe in a large market? Most people in the suburbs are embarrassed and think it's pathetic, but beyond that, they really don't care. It may as well be 500 miles away.

My prescription for survival is what everyone keeps telling the NPs: start digging deep into the communities and quit trying to cover the world. My fear is that they cannot get out of their own way to do that and the new NP model will be reinvented by those outside of the NP industry today with a fresh perspective and no ties to legacy systems and processes that are outdated.

Apr 06 09:35 AM

[Doug Poretz:]

There is a major problem on the horizon. Along with vthe death of mainstream media (most assuredly happening) we are also seeing the death of journalism and the rise of neo-journalism. The consequences are very significant. Seekling Alpha published my more robust comments for those interested: tinyurl.com/d5m63x

Apr 06 11:48 AM

[balois:]

Zieb wrote
"...small town papers are doing better than their bigger counterparts..."

Can only confirm the excellent health of this mountain village micropaper, offering even a English edition, print and on-line, with sometimes scoop-like gossip of international proportion...! tinyurl.com/cs6dsq

have a good day

Apr 06 01:02 PM

[tessant:]

its a tough situation for the old media dinosaurs...i think there will be a major shift in strategy soon - i see old media buying blogs and soma blog networks...just my opinion, but thats where we are headed...

Apr 06 01:19 PM

[Mission Imp...:]

Can you give me some help, NP Refugee?

Where did you see that "most have signed on to work with a search engine directly"?

I would like to know more about that story. Thanks!

-- NP Survivor

On Apr 06 09:35 AM NP Refugee wrote:

> Think about this: the newspaper's content, most of which they don't
> own nor create is available in lots of places. The newspaper is
> under siege from all sorts of directions. I can get comics from
> comics.com; I can't get that on the newspaper's web site.
> I can get stocks from-what-1,000 different places? I can get the
> syndicated national stories from just about anywhere. Obits are
> available numerous places. I don't have any problem finding puzzles
> online from numerous sources. A great number of the published editorials
> are available on the commentators' web sites. All of that content
> used to be the NP franchise. So it's not just about Google, it's
> the cumulative effects of having commoditization of what the newspaper
> used to monopolize in a local market. Going from monopoly to commodity
> is a giant killer. I agree that the small town newspapers will be
> the ones that last. If you consider the papers closing shop thus
> far, most are in 2-newspaper towns (Seattle, Denver). But the small
> local papers seem to understand the need to drill down into the communities
> they serve--because they can, while big metros seem intent on being
> a national newspaper. Unless the big metros bust up their newsrooms
> and start small suburban bureaus that can go deep in communities
> while having a "most important" fill the main section, I'm pretty
> sure the erosion will not subside.
>
> Think about this too: NPs don't put the local box scores and the
> other fine print online. To a local market, that's valuable.
>
> I, for one, believe that Murdoch knows exactly what he's doing.
> If you've been following the latest moves by the NP industry, there's
> a bit of interesting news where most have signed on to work with
> a search engine directly. If I were Murdoch, I would start a news
> search engine and sign on all the NPs as true partners. I would
> add some things the SEs don't currently do. I would have wild cards
> in search strings, so if you don't know some characters, you can
> use *, I would also allow searchers to index the search results according
> the date the article was published. Then I would cut off the Google
> and Yahoo! spiders. Goodness knows, promotion wouldn't be a problem.
>
>
> News flash. Only 20% of most newspapers' visits come through search
> engines. Most NPs are bookmarked.
>
> It would take a giant to make it happen, no doubt. Goodness knows,
> the NP companies can't get along to make it happen.
>
> And I could almost argue that the suburbanization has had almost
> as profound an effect as the Internet on the precipitous drop in
> circulation. Publishing the latest antics about which councilperson
> is taking a bribe in a large market? Most people in the suburbs
> are embarrassed and think it's pathetic, but beyond that, they really
> don't care. It may as well be 500 miles away.
>
> My prescription for survival is what everyone keeps telling the NPs:
> start digging deep into the communities and quit trying to cover
> the world. My fear is that they cannot get out of their own way
> to do that and the new NP model will be reinvented by those outside
> of the NP industry today with a fresh perspective and no ties to
> legacy systems and processes that are outdated.

Apr 06 02:43 PM

[Lee Eugene ...:]

I agree with most of what is said here. You need to keep in mind that there will be a winner in the end, and Rupert will probably be it. Not because newspapers will live in their current form, but if you take a horrible industry, there will be a survivor. The WSJ, FT, and other specialty papers have a reason to survive.

Apr 06 03:34 PM

[mattjh:]

Journalism is evolving. The NP model is definitely dying and will evolve. We are suffering a drop in the overall quality of the well researched and investigated story and this will continue to worsen. This kind of content will not come from the non-paid or underpaid "neo-journalist" blogger.

I'm continually amazed that so many fail to see the great potential loss of quality content if the NP model is not replace by a viable revenue online model. For now, free is not sustainable.

I like Seeking Alpha, but suspect the blogger burn rate will increasingly be an issue if there is little or no remuneration.

Apr 06 04:55 PM

[Lilguy:]

What Mr. Wilson says about the blogosphere is true. And equally important, the opposite is true of newspapers: They are getting both narrower and shallower as a result of laying off news staff during the economic downturn as ad revenues and sales plummet. Now what passes for news in a paper is often the highly spun press release from a business, a politician, or some other entity or person with a very clear agenda slightly re-written by a news service organization.

It both saddens and frightens me a bit to see newspapers so much on the wane. I believe they can be an excellent complement to the blogosphere in any topic area.

Apr 06 04:59 PM

[Mad Hedge F...:]

It's impossible. I bumped into Jim Lehrer last night, the legendary anchor of “The News Hour With Jim Lehrer” on PBS, as he breezed through the San Francisco Bay Area promoting his 22nd novel, “Oh, Johnny”. The ex-Marine, who’s first big story was covering the Kennedy assassination in Dallas, had some cogent observations on the current demise of the US newspaper industry. Print media have traditionally been the originators of the news, the guys who went to the city council meeting and took copious, accurate, notes. For this, the paper got full page ads from the local car dealers and every other retail business. Now the car dealers are going under. The proliferation of new media, from radio to TV, the Internet, and smart phones means that the monetization of this content has moved downstream to be reaped by others. Talk radio, weekend news programs, comedy shows, even congressional debates, and yes, blogs (guilty), are feeding off of this news fount for free. The originating newspaper maybe gets a penny of each dollar of revenue spawned by their stories. Newspapers now have no choice but to cut costs by firing journalists and moving online. Thomas Jefferson said that “an informed electorate is essential for a democracy”. The big question is, when all the journalists are gone, where will the news come from? I have suspected all along that Truth, Accuracy, and Neutrality will be the big casualties of all of this. They will go the way of the full service gas station, free check in luggage on airlines, and home delivery of newspapers by teenage boys on bicycles.

Apr 06 05:04 PM

[Libertynews...:]

Newspapers need to do three things:

1. Use emerging internet technologies like www.feedjournal.com and twitter and social networks.

2. Focus on local News and investigative reporting

3. Shy away from opinion reporting, Just the facts man, just the facts.

You can check out my custom online newspaper I created with the Feedjournal application at:

www.Libertynewsprint.com

~J

Apr 06 05:49 PM

[Richter Scale:]

The thing to remember about newspapers, is that, obviously, they are NOT connected to the Internet. It's still nice to have a digest of the news & entertainment, in your lap, while you're not connected to a "device". Lots of people might still value that, imho.

Apr 06 11:06 PM

[Zieb:]

NP Refugee said:
I, for one, believe that Murdoch knows exactly what he's doing. If you've been following the latest moves by the NP industry, there's a bit of interesting news where most have signed on to work with a search engine directly. If I were Murdoch, I would start a news search engine and sign on all the NPs as true partners. I would add some things the SEs don't currently do. I would have wild cards in search strings, so if you don't know some characters, you can use *, I would also allow searchers to index the search results according the date the article was published. Then I would cut off the Google and Yahoo! spiders. Goodness knows, promotion wouldn't be a problem.
______________________...

I don't imagine you'd see them work from scratch. I think you may see them work with either MSN or Yahoo to work out a better (for the papers) model. God knows MSN search could use the press, and Yahoo is already really good at monetizing the internet. Both Microsoft and Yahoo would LOVE to have content people had to use them to get at, even if it only moves the needle on their user rate a couple percent. And going this route, consumers can still get at blogs, etc, as MSN and Yahoo are already able to point to all those. And blog writers still need to get their information from somewhere, so they'll have to use those search engines themselves.

I don't see why the NP industry would bother starting from scratch, when I'm pretty sure they could find willing partners in search. And if Yahoo sells its search to MSN, they'd have combined, what, 25% of search to begin with to offer to the grasping NP industry.

Apr 07 02:17 PM

[jfr:]

I work at a newspaper. Newspapers are simply a mode of information distribution (just like the internet). Their weakness is that their distribution system is expensive to maintain, too slow, and limited in scope. The internet is lightning fast, world wide and, oh yeah, and did I mention FREE (at least for the readers... for now)!

Having your site linked to good search engines is paramount. How do you think I found this blog? The internet is the haystack. Your blogs are the needles that the engines help readers find.

Google knows this, and we (and Murdoch) are now haggling over the price of doing business together. The AP, newspapers and other news gathers have the gathering staffs. Google does not (and I expect they don't want to go to the expense of hiring such staffs), but Google has the best device to find the data. The gatherers do not. The vast majority of hits at my paper's site come directly to the story via search engines. We slammed our site's front door shut to readers long ago, by requiring memberships and passwords there. You are seeing the classic supply and demand battle, played out in the new information age. What is the collection and organization of information (and the time and effort of the gatherers) worth in this new world? That is what is being determined!

For years, to be a part of the new internet game, newspapers have been giving their products away over the net for free. Everyone out there is reluctant to start paying for information now, but as newspapers and news gatherers go away, as in the recent newspaper holocaust (and the free sources start to dry up), just perhaps our efforts will become more valuable to everyone!

I found this link valuable (but I don't totally agree with the outcome).

www.albinoblacksheep.c...

Apr 10 10:30 AM

[jfr:]

I agree. Already thousands of journalist have lost their jobs and are retooling careers (in other professions). The limited number of jobs available and lower wages for those jobs will drive future talent away too. It is already happening. Where will the majority of bloggers get their facts to blog about in the future ? Few bloggers research themselves and get their facts from the journalist's stories? Our democracy is dependent on the free-flow of timely, accurate information. What happens when the collection and distribution of that important material slows or even stops?


On Apr 06 11:48 AM Doug Poretz wrote:

> There is a major problem on the horizon. Along with vthe death of
> mainstream media (most assuredly happening) we are also seeing the
> death of journalism and the rise of neo-journalism. The consequences
> are very significant. Seekling Alpha published my more robust comments
> for those interested: tinyurl.com/d5m63x

Apr 10 01:32 PM