Google could come to the rescue, but won’t?

8 min read
By Steve Outing

I was disappointed in Google CEO Eric Schmidt’s keynote speech to the Newspaper Association of America today. (Audio here, courtesy of Bill Densmore. Transcript of Q&A portion of Schmidt’s session, thanks to Poynter.org.) Oh, it was a fine speech and Schmidt educated some of the backward-thinking publishers in the audience, no doubt, about what’s ahead.

But Schmidt has expressed his respect for newspapers and a desire to help them survive. Well, he’s not promoting newsPAPERS surviving, but rather their large newsrooms of reporters capable of well serving society’s need for watchdogs of the powerful. That’s a role that Google does not want to play. He thinks that newspapers should use the Internet to get 10 times their current audience online and with mobile (cutting back on print), and he thinks that advertising will (eventually) be their salvation.

I was hoping for more from Schmidt. With a few instructions to his managers, he could direct billions of dollars to content producers, including news organizations. I don’t get why he doesn’t do it.

Why should Daddy Googlebucks help those newspaper publishers who are too behind the times to understand how to survive in our new world? Well, first, I want Google to support quality news content, which may come from a newspaper company, a news-oriented start-up, or a quality blogger who produces news. So I’m not talking about Google saving just newspapers, but rather about the company financially supporting quality content and journalism.

Right now legacy news executives are panicking, especially newspapers. They’re discussing schemes to put news content behind walls, away from Google’s prying eyes, and despite many rational and convincing arguments as to why that is a DUMB idea except in special cases, the movement appears to be gaining speed. (As to why it’s dumb, I urge you to read this great piece by search guru (and ex-newspaperman) Danny Sullivan, “Google’s Love For Newspapers & How Little They Appreciate It,” and Steve Yelvington’s month-old advice, “Eight barriers to local paid content.”)

If news executives continue down this misguided path, this loss of quality content will not be good for Google (nor the public). Sure, if a bunch of newspapers led by dinosaur executives cut off their noses to spite their faces, new news entities will arise and journalism will live on after a short period of ugly transition where the watchdogs are few and the bad guys in government and business get away with more than usual. It can’t be in Google’s interest to let this happen, and the quality of the web content it thrives on wither, even if only for a year or two.

What can Google do? What order do I wish Schmidt would issue to the Google troops from his lofty office? Here are two possibilities:

1. Turn on ads for Google News, and share some of the pie
Google News already has started putting contextual ads on searches of Google News. (Example.) Why not go further and turn on ads for all of Google News? Click the sports news category and see Google ads in the right column. See them on the Google News homepage.

Of course, if Google did that now, the screams of “Google is making money from my content!” by the media dinosaurs would grow even louder. Some would remove themselves from Google’s reach. But Google could calm down those ancient media beasts by simply starting a program where any publisher that’s tracked by Google News could participate. It would count the number of clicks through to a story that any publisher gets, then at the end of the month distribute a pile of money based on popularity of the various news sources.

The money pool would be filled with the money that Google advertisers paid when users clicked on the ads while using Google News. Google would allot a percentage of the revenue to be split among the publishers.

Why would Google do such a thing? Because going whole-hog on ads on Google News would incense publishers; doing it in a limited way (just search queries, as is the case now) would get less resistance, but Google keeps all the money. I’d think that full-out Google News advertising and Google voluntarily paying out a slice of Google News ad-click revenues to news publishers would mollify the seething and panicking news executives, and probably leave more money in Google’s account. Perhaps some of those dumb proposals to lock down news content would become unnecessary with a healthy revenue stream from Google for quality news publishers. (I emphasize “quality” because this simple scheme would reward the most money to news sites that get the most clickthroughs from Google News.)

I don’t believe that the news industry should demand this. Calling out the lawyers to demand that Google share Google News ad revenues seems like the wrong approach. But Schmidt says he wants to help pay for quality news content and keep reporters working. Google could send waves of money to news producers who continue to give their content away for free online. (Ditto for blogs, if such a program were instituted on Google Blogsearch.)

Based on Schmidt’s words to the NAA today, he thinks that Google can just get more people to click through Google News headlines, in such large numbers that advertising revenue will support news organizations online. I doubt that, and suggest that Schmidt take one step further back and get news publishers money directly from participating in a Google News ad-share program.

How about it, Eric?

2. The perpetual Google pledge drive
This second idea could complement the first. … Not long ago I ran across and wrote about Silicon Valley start-up Kachingle, and I fell in love with the concept. It’s a simple voluntary subscription that you (the online user) pay $5 a month for (or whatever amount you decide), and then that money is divided up each month among websites that you LIKE and that you VISIT. Publishers become Kachingle participants for free and display a medallion, and when Kachinglers who like your site visit, you get some of their money based on how often they visited your site compared to other sites they’ve told Kachingle they like.

It’s a bit NPR-ish in that you voluntarily donate to all the websites and blogs you like; and if you are a cheapskate and want all your content online free, don’t pay but still see everything. Like the scheme above, Kachingle supports quality content sites; popular news sites presumably will get more money from their fans. And money flows automatically, month-after-month, with regular credit card deductions from Kachingle member accounts.

Google could easily support this on Google News, by indicating when its source news sites (and blogs) are Kachingle members, and encouraging GN users to support news and online content by becoming a Kachingle member.

Why would Google to this? Pretty much the answer is the same as for idea No. 1 above. By using the power of Google’s many millions of users to drive voluntary regular contributions to Kachingle, Google would be financially supporting news sites and bloggers who produce quality content. Again, this would be a move to prevent panicky publishers from taking their content away from Google News because they’d have yet another revenue source to support them.

Schmidt told the NAA earlier today:

“If you see a headline what I want you to do is I want you to think, ‘Oh that’s interesting, I want to know more,’ and then based on that I want you to click to the newspaper Web site or to Wikipedia or to wherever. If we can build products — and we have teams at Google working on this — to roughly work like that where there’s a one-liner that’s interesting and you click and go into layer after layer after layer of information — and by the way, not just text but also video and entertainment, and so forth and so on — that’s personalized, we think we can build a business — again, with you guys — with significant advertising resources, where the advertising is targeted to the content. To me that’s the only solution we’ve come up with to this problem.”

Well, that’s going to take a while. Meanwhile, major metro newspapers, some in existence for 150 years, have died, and more will die. The simple ideas above would allow Google to quickly address the media crisis in a meaningful way, AND it would benefit Google.

Mr. Schmidt, I don’t expect you or Google to single-handedly save journalism and the news industry. Yet you have the power to improve the situation significantly. And it’s in your own interest.

What are you waiting for?

21 Responses to "Google could come to the rescue, but won’t?"

  1. David Herrold
    David Herrold 5 years ago .Reply

    Steve, have you read this piece about the AP gearing up for battle? Not sure Google would want to play nice.

  2. Chip Kaye
    Chip Kaye 5 years ago .Reply

    I’d agree with you and guess that it’s more likely than not we will see some version of #1 evolve over the next several years, with aggregators like Google sharing some ad revenue with original content producers. But I’d also guess Eric Schmidt’s follow-up to the question “what are you waiting for” would be the opposite question: “what’s the rush?”. Or maybe more harshly “what’s the point?”. Yes, quality original content is in Google’s best interest, but helping to underwrite original news production is not the same thing as propping up existing news corporations. Existing newspaper businesses are optimized – executive staff included – for a dying production model. Why would Eric Schmidt come to the conclusion that those executives are a good bet for stewarding journalism across the print/digital divide?

  3. Bill Densmore
    Bill Densmore 5 years ago .Reply

    Simple answer to your last question: He can’t. When Google went public, it effectively took a vow to maximize shareholder value. Schmidt can’t easily make a decision to magnanimously support journalism in the public interest. Perhaps the Google Foundation could. The only answer I can see (see conflict disclosure) is for the news industry to building a next-generation search facility — or convincingly threaten to — so that Mr. Schmidt can argue to Wall Street “look, we had to pay more to the news industry to stave off competition.” The disclosure is that I’m working on the Information Valet Project at the D.W. Reynolds Journalism Institute, which could help in this area, perhaps.

  4. Tim Windsor
    Tim Windsor 5 years ago .Reply

    Steve,

    I think #1 and, to a lesser extent, #2 haven’t happened because Google, as a smart negotiator, doesn’t want to establish the ante. No matter what Google offers, newspapers will demand more. Better to hold the idea back until they find it spiked to the door of their castle, scrawled, of course, on a roll-end of newsprint.

  5. [...] Steve Outing makes a more developed argument on what Google should do to help news. Written by Paul Bradshaw – Visit WebsiteSHARETHIS.addEntry({ title: “Google’s Schmidt to [...]

  6. [...] which discouraged readers. On the other hand, Schmidt didn’t really offer anything new, as Steve Outing points out. He did say, that he hoped, as all reasonable people do, that advertising revenue could ultimately [...]

  7. Steve Outing
    Steve Outing 5 years ago .Reply

    Bill D.: I think I made the case already that it IS in Google shareholders’ interest for Schmidt to execute idea #1. Google could turn on the AdWords spigot for Google News any time; so far it’s just allowed a trickle with GN keyword search results. If Google turned on the ad flow to GN full force, that would encourage (misguided, IMHO) traditional publishers to go forward with plans to put much more content behind pay walls. Google News suddenly becomes less valuable of an asset, because it no longer includes a big chunk of the best-quality news content as it does now. That’s a bad decision for shareholders, and my guess is that’s why Google is tip-toeing around with ads on GN.

    Google executes idea #1 on GN. It can be argued to Wall Street that this is necessary in order to pull value out of Google News, so that quality content sources don’t block themselves from it. Google doesn’t have the option of keeping all the money because sources would dry up and degrade the service, so it HAS to come up with a plan to benefit the publishers that it tracks on Google News as well as benefits Google Inc.

    Further, this is not just about newspapers and saving them. The plan I offered (and if Google hasn’t already pondered this I’d be shocked beyond belief, because it’s so simple) provides funding for ALL of the news-related sources the Google News tracks and links to. So don’t look at this as “Google’s way of saving the newspaper industry.” It’s “Google’s way to turn Google News into a major revenue stream, and to raise the boats of ALL providers of news, from the TV networks, to newspapers big and small, to tiny placeblogs, to the individual blogger who’s done a good enough job covering news that Google News has chosen to include him/her.”

  8. Steve Outing
    Steve Outing 5 years ago .Reply

    Tim W.: Why does Google even have to negotiate on this? It can arbitrarily create a revenue-sharing program at whatever number it wants, and that it calculates will benefit itself as well as mollify publishers enough that they decide to keep their news content free access. If it sets the publishers’ share too low, the market will tell them (quality content gets removed from Google News).

    Yesterday Eric Schmidt made the comment, “It’s a cesspool out there.” By not implementing idea #1, it’s promoting the cesspool getting larger as quality news providers follow through on their (suicidal, IMHO) plans to start charging for news content. Again to Bill Densmore’s point, that’s not in the best interest of Google shareholders.

    I don’t think the newspaper industry should make this demand, as I wrote, because this isn’t just about them. Google News needs quality content, and a revenue-share plan that supports all manner of news providers online will keep that coming.

    The only reason we’re talking about newspapers is because they are the ones most in crisis right now. Next it will be TV news. And we’re talking about newspapers because Schmidt addressed the NAA yesterday. But newspapers are just one small part of this. The problem to Google is larger: For Google News to be valuable, it must keep quality news content free on the web.

  9. Steve Outing
    Steve Outing 5 years ago .Reply

    Chip K.: “What’s the rush?” Google News is ripe as a new Google revenue stream. It’s now a mature service. Why not turn on the ad spigot now?

    “What’s the point?” Schmidt himself has bemoaned the state of journalism and the decline of the watchdog press; he’s personally worried about it. The crisis is moving quickly as major news institutions fail, or simply degrade so badly that the public is ill-served by news publishers serving up crap instead of fulfilling their mission to their communities. If Schmidt can make a difference to that problem, AND AT THE SAME TIME benefit Google shareholders, what’s he waiting for?

    “Propping up existing news corporations.” The idea I presented supports ALL news providers, old and new. It well may not be enough to save the legacy news companies that aren’t nimble or smart enough to reinvent themselves for the new world digital order. Google would be propping up all struggling news providers, new and old, in order to maintain quality content is available on Google News, and that it would be a valuable ad vehicle pouring more money into Google’s coffers.

  10. Tim Windsor
    Tim Windsor 5 years ago .Reply

    Steve,

    You ask: Why does Google even have to negotiate on this? It can arbitrarily create a revenue-sharing program at whatever number it wants, and that it calculates will benefit itself as well as mollify publishers enough that they decide to keep their news content free access.

    I’m not a lawyer, but that seems to me to be kind of a unilateral contract: “We sold some ads on pages of links to your content, and we think it’s worth $50 to you. Here you go.”

    If Google decides to compensate publishers — thereby indicating that there is value to what the publishers are providing as link-fodder — but doesn’t allow the owner of that value-generating content to set the price, that strikes me as wrong.

    I’m with you generally. I just think we disagree on the rules of engagement.

  11. Steve Outing
    Steve Outing 5 years ago .Reply

    Tim: The trouble is, why would or should Google negotiate with newspapers on this? It affects all manner of news providers, new and old, large and small. Who’s supposed to represent this diverse group in any “negotiations” with Google?

    “Unilateral contract”? Google is doing nothing wrong; it’s abiding by fair use (and doing publishers a favor by driving lots of web traffic to them). This isn’t about entering into a contract with newspapers or any other news provider in order to move ahead with creating this mutually beneficial program. It’s establishing a program (a la AdSense) that any participating news publisher (any that are tracked by Google News) can participate in if they wish.

  12. Tim Windsor
    Tim Windsor 5 years ago .Reply

    Okay, I get what you’re saying now: The publishing entity has to agree to participate in the revenue split. In that case, yeah, that might work. Newspapers being newspapers, of course, they’ll try to negotiate a special deal anyway.

    As long as they don’t suddenly just get a check in the mail some day for a program they didn’t sign onto.

  13. Steve Outing
    Steve Outing 5 years ago .Reply

    Tim: Yeah, well good luck to them with that negotiation. Newspapers have degraded so much, and their position in the world faltered so, that they’ll have no special negotiating power than anyone else as the world of “news providers” expands.

  14. Ken Doctor
    Ken Doctor 5 years ago .Reply

    Steve: Great post. Let me focus on your point #1, opening up Google News to full-bore advertising. I agree on that basic principle, as long as the ad payout system is fair and fairly transparent. You’re right; the ads so far on Google News are a half-step. The reluctance to further inflame publishers — sometimes inflamed (Monday); sometimes quiescent (Tuesday after Schmidt’s talk) — results in non-solutions. As AP is trying to convince newspaper CEOs, they are becoming suppliers of content and need to think of themselves that way. Once you cross that line of thinking, that of course you want your buyer to monetize the hell out of your content…and pay you appropriately. As to why Google hasn’t moved on it: one of many priority choices. Ken

  15. Chip Kaye
    Chip Kaye 5 years ago .Reply

    Steve,

    “Why not turn on the ad spigot now?”

    I’d say there are two reasons: Google is teetering on a serious public relations problem here. Generating even more revenue around news content – revenue Google doesn’t need – might fan the flames if bickering ensued around how to split that new revenue. Following on from that, if their public image takes more of a beating, they might feel forced to act in ways against their better judgement (see below).

    “Schmidt himself has bemoaned the state of journalism and the decline of the watchdog press; he’s personally worried about it.”

    Yes, the state of journalism, not the state of the enterprises currently stewarding journalism. This is a shakeout – it’s painful, it’s ugly, and it will take some time. And we might see some temporary ebb in important journalistic functions, though I would suggest these functions were already largely offline given the last eight years. Google could add cash to the current scenario – maybe that would defer the pain a bit – but the shakeout still needs to happen. I think Schmidt understands this.

  16. [...] NAA:n (Newspaper Association of America) konfrenssissa, jossa Googlen Eric Schmidt kävi myös puhumassa. Tässä valittuja paloja Pruittin puheesta (via followthemedia.com) – lihavoinnit ovat minun: [...]

  17. Steve Outing
    Steve Outing 5 years ago .Reply

    Chip: But there is need for turning on ad spigot for Google News now. Schmidt could justify extra revenues as needed for company during recession, while a program like I described that shared revenues with *all* news providers who wish to participate would negate the PR problem. Google looks like good guys and news providers get needed additional revenue and are less tempted to take behind-pay-wall approach (which hurts Google News).

    As for shakeout, Google is powerful enough and could affect situation enough that we have either a painful shakeout with a period of weak press and lesser watchdog journalism as old news institutions continue to fail while new ones struggle to find enough revenue to grow, or a smoother one where old media companies hang on longer and make transition to digital *at the same time* as new news entities form and mature with more revenue available to succeed. I agree, shakeout will happen, because some old media companies are incapable of transforming. It’ll happen whether Google helps of not.

    “I think Schmidt understands this.” That sounds like you think he *wants* newspapers to go out of business to speed the transition. I seriously doubt that, and that’s not what he has said publicly. He’s said he’s worried about a deteriorating news media, deteriorating reporting, and lesser watchdog role played by a weakened press.

    If he understands news at all (that’s not clear), he would utilize Google’s power to fund ANY quality news provider, which would include 150-year-old newspapers all way up to 1-month-old digital-only news start-ups. And he’d make that decision based on his self-interest, so that Google News could be turned into a strong revenue source for the company while at the same time serving the public good.

    I’m not asking Schmidt to make a charitable decision to “bail out” old media. I’m asking him to turn on a new revenue spigot (Google News) that’s sitting mostly dormant, when the spigot can only be turned on full by sharing revenue with news providers that are tracked by Google News. Obviously, Schmidt can’t turn on the ad-money spigot without cutting news providers in the deal, because of the “PR problem” you describe and a likely revolt by media companies.

  18. Chip Kaye
    Chip Kaye 5 years ago .Reply

    Steve,

    “‘I think Schmidt understands this.’ That sounds like you think he *wants* newspapers to go out of business to speed the transition.”

    Honestly, I have no clue what Schmidt wants, but I also don’t think it matters – his obligations as CEO aren’t a matter of personal preference. What I said really is what I meant – I’d assume he recognizes this shakeout is both epic and unavoidable, and that any maneuvering by Google would have almost no effect in the best case, while at the same time opening them up to a weak bargaining position, damaging public opinion or both.

    I appreciate your concern about the democratic function of journalism – I share it, truly, that is why I am starting up jseed.org. I just think you are underestimating the scope of what is happening and overestimating any impact Google might have.

  19. [...] Google could come to the rescue, but won’t? in SteveOuting.com, by Steve Outing, April 7, 2009 [...]

  20. [...] Google could come to the rescue, but won’t? April 7, 2009, SteveOuting.com by Steve Outing Visit his blog [...]

  21. [...] então vem o renomado consultor de mídia Steve Outing, com quem costumo concordar, e sugere em seu blog que o Google News passe a exibir mais publicidade (hoje ela é bem tímida), distribuindo uma [...]

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