Google has been frequently cited as one of the primary contributors to the decline of the newspaper business. Very recently people have even asked Google if they would be part of the rescue of newspapers. Eric Schmidt, wisely, said no.
Schmidt smartly recognizes that the key problem isn't the access or demand for information, it's the business model itself that is the issue.
Twenty years ago, a newspaper ad was they key way to relate complex information about a new product to a broad audience. No advertising medium could come close. Now a website can relate even extraordinarily complex information in a multi media manner to an engaged and interested audience. It's 10 levels deeper than a single print ad could ever be. The best sites allow conversation and questions to emerge about products.
So newspapers have lost on the depth of product information, needless to say. While google is the key way of steering people to these deep information sites, newspapers themselves could have, and often do function, in this manner as well. The key difference is in the scale that a web portal provides. Scale is part of the new advertising landscape, and it's a loss of newspaper competencies. As a response newspapers tried to go "local" which may be the opposite of the direction they should have gone. A local strategy naturally cedes scale.
A second loss is in efficiency. Printed newspapers deliver a bundled product. Even if I only want business news, I have to buy the whole paper. This is naturally inefficient for the delivery of advertising. However it is this inefficiency that leads to outsized profits, or at least used to. Search engine marketing is relentlessly efficient. It can deliver an advertisement to a person as they are in the final consideration set, and lead directly to a purchase. The model of pay per click is also remarkably efficient in delivering cost effective traffic for any budget.
Note that these two strengths of Google (and other search engines) have little if anything to do with content. While I have heard publishers claim that Google "steals" their content and profits from it, this argument has little grounding in reality. What Google has become is a model of advertising efficiency, and it threatens the most inefficient models. That model just happens to be printed newspapers.
I've made the argument in the past that newspapers should band against Google. Let me articulate that more clearly. Local isn't going to win. The Internet isn't local. It is my opinion that the best strategy is to collaborate and deliver scale. It's not about being hyperlocal, it's about delivering EVERY locality.
Wednesday, January 7, 2009
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1 comments:
hi,
i strongly disagree with your assessment. the newspaper industry underwent a process of industrial consolidation that was supposed to increase profits by leveraging journalistic content, so that the same content could be used in multiple newspapers directed toward different markets; all of these articles being owned and published in different watered down localized publications that are owned by the same conglomeration.
this compromised local news and its ability to generate meaningful reports based upon the knowledge accrued by local reporters who cultivated contacts in provincial governments, who provided critical reporting on the corruption and incompetency of city and county politicians: knowledge that is more relevant and tangible to the consumer.
wall street analysts, of course, were favorable to the corporate plans to consolidate the industry. however, subsequently, the syndicates owning multiple newspaper publications never achieved the profit margins that were originally estimated leading to a scenario where wall street adjusted its ratings, causing stocks to plummet, and the industrial oligarchs to no longer attract additional investments.
Newspapers could have prevented this situation by further localizing their content - what they are good at - rather than merely publishing the same crap emanating from the typical intellectual lightweights associated with the american chattering class, or what we can call the punditry.
Russell Cole
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