Publishers seem to be saying, in not-quite-on-key unison: The next Internet decade is going to be different than the last one.
They are all living with the consequences of unintended Googling, as their own sites have become secondary players to the search aggregators, Google (NASDAQ:GOOG), Yahoo (NASDAQ:YHOO), AOL and MSN (NASDAQ:MSFT).
In a week that saw the Tiger Woods Affair look like a Sopranos’ Episode Gone Mild and the Sheila Dixon gift card conviction look like a David Simon outtake, we saw more skirmishes between Rupert Murdoch and Google. Rupert led off the FTC save-journalism workshop with a well-covered anti-Google benediction, and Google followed with a couple of blog posts tweaking its news search protocols. The conversation, as usual wasn’t in the (FTC) room, but conducted on and through the web. That should tell us something.
It’s quite a cat-and-mouse game. The cat is Rupert Murdoch, a lion in the winter of his career. Astoundingly, he’s become the leading spokesman for American journalism. The mouse is the crafty Google, adjusting its algorithms and its tactics, faster than publishers can bemoan, “who moved my cheese!” It's not just the dollars and cents at stake here -- though, of course, that's the fundamental issue. It's the dollars and making sense of what is going on as 2009 closes.
It can seem like a simple toggle. Turn the news free or lock it up. There are, though, many sharp edges here. To that point, let me try Nine Questions about this confusing landscape of threats and promise:
1. If Rupert Murdoch is now the Really Bad Cop, does that leave Tom Curley as just the Bad Cop?
Both have called for a reordering of the news-search landscape, but now AP CEO Tom Curley is starting to appear as the reasonable alternative to The Rupert, who keeps raising the temperature, especially, on Google.
The News Corp (NASDAQ:NWS)/Microsoft dance and Murdoch’s cries of “Pirate!” have won headlines, but AP’s re-negotiation of its licensing deals with the search aggregators have the potential to have more impact. AP's license deal with Google is up at the end of the year. In the throes of unprecedented change itself, AP's re-negotiation tries to put the new Digital Coop at the center. The idea: rich, universally tagged, delivered-on-the-fly indexes of news content add extra value to news content itself. AP hopes its negotiation will both increase its own take from search engine licensing -- and provide a model for individual newspaper companies. How much a “model” would be adopted by an increasingly cantankerous, go-your-own-way industry is highly problematic.
Still, AP, with its own voluminous content and newspaper relationships may be more of a trend-setter than the publisher of two American dailies, News Corp’s Wall Street Journal and the New York Post.
2. If Alicia calls, will you pick up? Sure, in public, Rupert is throwing grenades. His complaints about Amazon (NASDAQ:AMZN) and Google, some valid, others just good theater, draw attention and soften the battleground. Behind the scenes, though, he's moving forward with project “Alicia.” News Corp has apparently allocated several million dollars to starting up the news portal, a Hulu-for-news site. Perhaps a free/paid hybrid portal, perhaps a paid one, the notion is to divert traffic from the search engines to a news company-controlled site. News Corp has pitched the idea of joining in to at least a handful or two of publishers, in both the U.S. and U.K. Critical mass of news – compared to the several thousand news sources indexed by Google – is, of course fundamental to giving any such play a prayer at success. Big question: could Alicia ever gain sufficient breadth to really compete -- and charge? Is Alicia really a bargaining chip with the search engines, or are the search engine wars a chip for Alicia? Or both?
3. Isn't it better to “negotiate” with Microsoft than against yourself? For several years now, publishers have tried to get Google to negotiate better terms, the acceptance of a new content handling protocol (ACAP) and, more recently, the adoption of an Attributor-based anti-piracy system. They haven't gotten far. In essence, newspaper companies have been negotiating against themselves.
Google has repeatedly said: If you don't want us to index your content, just tell us, and we'll be happy to stop. Just use our on/off switch. End of discussion. End of “negotiation.” In fact, its twin moves this week – allowing publishers more flexibility in news search rules and in its Five Clicks Free program – are the latest expressions of that public pose. It knows that the publishers’ current addiction to search traffic makes the on/off choice (even with this week’s nuances) not much of a choice at all. So in part, Murdoch (and more quietly, AP’s) move to bring the anti-Google, Microsoft, to the table creates a sense of real negotiation, competition for perhaps scarce assets.
4. What is Google's (and search engine traffic) worth)? Most news publishers will tell you that about 25-35% of their traffic is driven by Google and that more than 50% of it is driven by search engines generally. They'll also say that about a quarter to a third comes directly to their sites -- and that these are the regular customers they care about. They'll tell you that it is the number of monthly sessions and the number of these page views that these customers generate that should make the most sense in building a real, digital business.
We can look at this view in a couple of ways.
It may be simply old-fashioned, an outgrowth of the old way of looking at media businesses in terms of stable, "owned" readerships. In this view, digital news readers are happy free agents, flitting about the web, picking and choosing what they want, without being tied down. The only thing that counts is a single view -- and what marketers can do with it, getting the reader to take notice of a product, service or brand, or seducing them into an interactive experience. There is lots of technology trying to make that match of reader and product, watching readers' clickstreams and delivering appropriate ads. Consider the marketer's mantra of the day: We buy audiences, not media. Through that lens, publishers may be fighting an old war. The new atomized (content unit by content unit; ad unit by ad unit) world gives considerably less value to the reader's relationship with the publisher's brand.
The alternative view is that news publishers have been hopelessly seduced by first-generation web measures. Those metrics all said: more is more. Those counts first focused on uniques and page views. Then time-on-site followed, but, of course, that's an averaged number, of all uniques. Now Nielsen has introduced average number of sessions per month, but of course, that's an average of sessions for all those uniques as well.
Publishers are telling me they are increasingly focusing on those uniques visiting for two or more sessions within a month, essentially those that are their ongoing customers. These are the people that Journalism Online is targeting as it works with publishers, trying to figure which of these more loyal customers will pay for content. These are the users that sites as small as MinnPost talk about when they sell non-CPM-based sponsorships.
So in this view, it's a matter of establishing a new, fairly loyal digital readership (online + mobile) and then figuring out how best to monetize it widely -- through ad and subscription products.
It's an alluring argument, but it looks like though it may be swimming against the currents of modern marketing. Still, if publishers believe it, it leads them to discount much of that traffic they get from search engines, and that's informing the new round of aggregator angst.
5. So are we into the age of Junk Traffic? In 2009, news publishers figured out that the Internet is indeed infinite. It's not the scarce world of print publishing or broadcasting; it's an expanding universe that by its nature has no bounds. Did anyone ever try to measure human conversation itself -- or more to the point, monetize it? So in this infinity -- treasured by readers and abhorred by people who make their money selling space or time in a finite world -- more is no longer more.
Don't tell me more page views are better, they say. Don't tell me more unique visitors are better. Tell me why 50% or more of my ad inventory goes unsold (and how do I get a decent chunk of that every-page-is-useful paid search business, anyhow?). If, in fact, these visits and odd once-in-a-month, once-in-a-year page views happen on my site, does it really matter? If a one-page reader falls on my site, can my finance department hear even a peep?
At least, that's one evolving viewpoint explaining search engine angina.
It’s based on the growing assumption that some of the search engine traffic isn't, at this point, valuable. It's akin to newspaper publishers cutting "junk circulation" -- outstate circ, free State Fair copies and the like -- similarly disdained by advertisers.
Yes, it’s easy to say news publishers should better convert some of those odd visitors to real customers (and they should), but the sense of Junk Traffic is getting more pervasive.
6. What kind of match would Microsoft and News Corp really make? As Michael Wolff points out, we've been there before, as the two have tried the mating game before. So, post approval of joint Microsoft/Yahoo search business, Microsoft would be the smaller half of the Google/Microsoft duopoly, with about 30% of search. News Corp's got a diverse bag of the New York Post, Fox News and the Wall Street Journal to bring to the game. A deal is the start of some kind, but not a game changer for either.
7. What would a Bing/News Corp deal do to the Journal's freemium model? Freemium has been a core principle of Journalism Online, as it makes its case to publishers. Have your cake -- keep 90% or more of your traffic -- and eat the icing (new online subscription revenue), too. The math for the Journal goes something like this: get about one million customers (and uniques) to pay a subscription price. Capture another 19 million uniques or so via various free web openings, opening and closing gates, moats, and bridges into the paywall and make money off those via advertising.
We don't know how any Microsoft/News Corp deal might affect that balance. Would more Journal content be able for free through Bing?; what might that do to subscription business? Would a Bing deal focus a spotlight on just how much WSJ content you can get to, without a subscription? Alternatively, if WSJ content wouldn't be prominently free on Bing, then what kind of advantage might that really give Bing, left with just New York Post, Fox News and, maybe, Murdoch's international paper content (though he's busy erecting pay walls there, as well.) New wild card: how might Google’s new Five Clicks Free program affect the Journal’s strategy?
8. If Microsoft really wants to amp up its newspaper partnership, how much sense might an investment in or acquisition of Journalism Online make? We'll see some tests in the first or second quarter next year, as JO figures tests markets with publishers. The freemium notion will get a real test -- does it have legs beyond the WSJ and FT models? -- and Microsoft, as it newly befriends publishers as the anti-Google, might be able to use JO's relationships.
9. Can the newspaper industry negotiate in 2009, as if it were 1999? As newspaper publishers debate various schemes, they are valuing their news output as if it were 1999. Back in 1999, they were quite dominant, largely daily print monopolies across the USA. In addition, they produced great quantities of news content ---with at least 12,000 more newsroom staff -- and had little competition in their marketplaces.
Today, the new local/regional startups -- think Politico's DC operation, Texas Tribune, Chicago News Cooperative, Warren Hellman's Bay Area site -- join a rich group of smaller sites from New Haven to the Twin Cities to Dallas to Seattle to San Diego. Public radio's jumping into the game. Local TV broadcasters are trying to find their way. In short, dailies' daily output is no longer as dominating as it was -- and their threats to withhold it may a bluff that Google can call. Curiously, in this call to have news content better compensated by the search engines, daily publishers usually leave out the rest of the developing and developed press. That's a mistake, I think, for them, and their own negotiating clout.