The posturing this week over dying newspaper business models has been entertaining. Unfortunately for the papers, it only confirms that most of the industry will be gone a decade from now.
On Tuesday, Google (NASDAQ:GOOG) billionaire† (#40 on the Forbes 400) Eric Schmidt pretended (once again) that the Monster of Mountain View has the newspapers’ interests at heart in a WSJ op-ed modestly titled “How Google Can Help Newspapers.”
A mere 20 years late, Schmidt channelled John Sculley in his utopian vision:
It's the year 2015. The compact device in my hand delivers me the world, one news story at a time. I flip through my favorite papers and magazines, the images as crisp as in print, without a maddening wait for each page to load.
With dwindling revenue and diminished resources, frustrated newspaper executives are looking for someone to blame. Much of their anger is currently directed at Google, whom many executives view as getting all the benefit from the business relationship without giving much in return. The facts, I believe, suggest otherwise.
Google is a great source of promotion. We send online news publishers a billion clicks a month from Google News and more than three billion extra visits from our other services, such as Web Search and iGoogle. That is 100,000 opportunities a minute to win loyal readers and generate revenue—for free.
Wow! Isn’t that generous of Google?
It’s not clear whether Schmidt had planned the op-ed for a long time, or if he was reacting to the report released Monday by a newspaper coalition showing Google makes more money than anyone else off of “unlicensed” use of newspaper content. The study said Google enabled 53% of the monetization of these articles.
The Fair Syndication Consortium summarized its findings:
These results exclude any articles found on Google News.
- During a 30-day period (October 15 – November 15, 2009), 75,195 Web sites reused at least one U.S. newspaper article without a license.
- On these sites, 112,000 near-exact unlicensed copies of articles were found.
- Among the top 1,000 sites reusing the most articles, blogs represent less than 10 percent of the total.
- In addition to the 112,000 full article copies (defined as more than 80 percent of the original article and more than 125 words reused), an additional 163,173 excerpts were found (defined as less than 80 percent of original article and more than 125 words).
Of course, there are some problems with the study, since under fair use provisions of copyright law, a “license” is not required. Fortunately, the Consortium is willing to let this continue “to start.”
This week, Google also announced they would allow less free access to Google-indexed paid content, in an existing program called “First Click Free.” This effort is intended to mollify the few publishers (WSJ, FT) who charge for content.
But in the end, Google’s going to keep its core business model: organizing the world’s information without having to pay for any of it, continuing to siphon off the revenues that once kept newspapers alive. Absent a gun to their head (e.g. in Europe), they’re not going to share any significant amount of the billions they’ve accumulated from that information and the stickiness it creates on their sites.
Fitch is fully expecting that many newspapers are going to try and charge for content next year, only to realize it was a mistake. A handful of properties, notably the Wall Street Journal, the New York Times and smaller local papers will be able to or have pulled off an online pay strategy, according to Fitch, but don’t expect a widespread trend.
Simonton and Rizzo explain that for the rest of the lot, the competition has become too fierce. Furthermore, that competition with free content only will pull in readers, thus gaining share and the attention of advertisers.
In other words, we know how this story will end. The national category killers will be able to charge, while small hyperlocal papers operating on a shoestring will make money either online or in print-only publications.
The end of the 20th century means the end of the traditional big-city newspaper, with the inevitable conversion to online-only meaning layoffs for more than 80% of the news staff. Bloggers will rule the day, supplemented by headlines from local TV stations.
So what we’ll end up with is a world with more convenient, lower quality news — indexed free by Google but little of it gathered by professionals. Today’s teenagers will say “so what?” while old codgers will lament the loss of intelligent discourse.
Personally, I shudder to think what the lack of (relatively unbiased) in-depth news coverage will mean for municipal elections — probably even greater success for machine politics, vote fraud and family dynasties.
† With my frequent posts on Total World Domination, I figure I have already made it on Schmidt’s blacklist.