The brouhaha created by Rupert Murdoch‘s gripes about Google has uncorked a simmering set of hopes and dreams from traditionalists. Basically, the hope can be stated as, Can we go back to an age of publisher-centric content distribution?
Google’s CEO, Eric Schmidt, published an editorial in Rupert Murdoch’s Wall Street Journal last week explaining a few things to those dreamers who think the innovation cake can be unbaked:
- News content is only a small fraction of all of Google’s content, and the ad revenue Google generates proximal to news content is relatively tiny (aka, dispensable).
- Google sends billions of users to news sources every month.
- Google doesn’t show complete news content, just headlines and a line or two, except when an agreement allows otherwise.
- Google doesn’t control any publication’s pay gates.
Schmidt ends the editorial by referring to a Buggles‘ 1979 hit:
Video didn’t kill the radio star. It created a whole new additional industry.
Schmidt’s analogy is rhetorically useful, but it doesn’t get to the bottom of the issues facing news providers.
While the wishful thinking of news providers might be fulfilled by withholding the content from the search engines and extracting revenue deals in exchange for crawling and indexing that content, the money will never materialize because access to news isn’t controllable in the modern information age.
The issue facing news providers isn’t that the news sources are being exploited by search engines, it’s that the useful lifespan of proprietary news has decreased from days (pre-newspaper), to hours (newspaper and network news) to minutes (cable news) to seconds (blogs, search, Twitter, Facebook).
Imagine the state of news if the protectionists were to prevail — a story is published in the Wall Street Journal and not indexed in Google; a savvy reader Twitters about it or writes and publishes a quick blog post; the tweet or post are indexed; within seconds, awareness exists outside the news source, and the search engines can effectively index the topic.
It’s the approach of the real-time Web.
The real-time Web may kill the radio star, to continue Schmidt’s analogy.
Another interesting angle is that while Murdoch and others may complain there isn’t enough advertising in the world to support online news, the Schmidt editorial is not behind a pay wall and has four ads against it.
That’s four ads for one story. Imagine the print equivalent — the article would probably be on a broadsheet with other stories, and perhaps one ad facing the page of news. Not a targeted ad, not a clickable ad, (probably) not a color ad, and definitely not a video ad.
Instead, a static, non-interactive, and boring ad.
It seems the problem isn’t about ads per story, or ad effectiveness or capabilities, but price per ad.
Personally, I’m suspecting that a more productive approach for Murdoch and his cohorts might be to jack up online ad prices dramatically and weather the storm until advertisers acknowledge that online ads are more valuable than print ads.
Until that happens, online will be undervalued. And that’s the pricing issue here.
Murdoch and his ilk should advocate for the value of the audience they have, not the content they create, and push the value hard, up to the level of print audience, if not higher.
As we approach 2010, to do otherwise is irrational.