Google and the future of the news industry

There are no big solutions to save the news industry as we knew it. On the paper, namely. And although Google is the corporation that dominates the on-line-advertising today, this same Google claimes that there is much more on-line-ad money to be picked up by news organization. This are one of the conclusions by James Fallows in The Atlantic magazine from June 2010 in an article How to Save the News.

For me, it was interesting to read about:

  • the differences between Google and news industry,
  • triple whammy claim from the Google’s CEO Eric Schmidt, and
  • bundling case of the Google today and newspaper industry today and in the past.

THE DIFFERENCES BETWEEN GOOGLE AND NEWS INDUSTRY

Google and the future of the news industry - the differences

SCHEME: MARKO SAVIĆ ADAPTED FROM JAMES FALLOWS, HOW TO SAVE THE NEWS, THE ATLANTIC

Google is wildly successful, collectively cocky, engineer-dominated, very internationally staffed West Coast tech start-up. The news industry from the point of view in the USA is: East Coast-centric, liberal arts-heavy, less international in staff and leadership, dominated by organizations founded in the distant past and strikingly downcast and even panicked at the moment. At Google everybody is supposed to believe that that consumers are willing to spend time with printed, on-line and on-air products from the news industry, however much they cots. And people from the news industry doubt heavily if consumers are ever going to be willing to pay for on-line news. Time will show, but changes are on the way, definitely.

THE TRIPLE WHAMMY FROM ERIC SCHMIDT

SCHEME: MARKO SAVIĆ ADAPTED FROM JAMES FALLOWS, HOW TO SAVE THE NEWS, THE ATLANTIC

SCHEME: MARKO SAVIĆ ADAPTED FROM JAMES FALLOWS, HOW TO SAVE THE NEWS, THE ATLANTIC

Jammes Falloows family and Eric Schmidt family happened to be friends. For the purposes of the published article Google’s CEO was also interviewed. Eric Schmidt said in that interview that we are dealing with the triple whammy in the print:

  • loss of classifieds,
  • loss of circulation, and
  • loss of display ads in print, on a per-ad basis.

More on the subject in the Google-eye View of the Newspaper Business.

UNBUNDLING

SCHEME: MARKO SAVIĆ ADAPTED FROM JAMES FALLOWS, HOW TO SAVE THE NEWS, THE ATLANTIC

SCHEME: MARKO SAVIĆ ADAPTED FROM JAMES FALLOWS, HOW TO SAVE THE NEWS, THE ATLANTIC

The newspapers always knew that serious reporting from, let’s say Afganistan can never be profitable. But the automotive sections, real-estate, home-and-garden, travel, and/or technology have always found their advertisers. On the other hand Google is the most powerful unbundling agent of all, since it is leting the users find exactly the article they were looking for. But in my opinion Google also became the bundler of its many services but only one being really profitable: the advertising. We will see how long will Google’s model be sustainable.

The solution for the future of the news industry? New on-line news business model.

THE SOLUTION FOR THE FUTURE OF THE NEWS INDUSTRY? NEW ON-LINE NEWS BUSINESS MODEL.

SCHEME: MARKO SAVIĆ ADAPTED FROM JAMES FALLOWS, HOW TO SAVE THE NEWS, THE ATLANTIC

SCHEME: MARKO SAVIĆ ADAPTED FROM JAMES FALLOWS, HOW TO SAVE THE NEWS, THE ATLANTIC

Three parts of the proposed new on-line news business model:

  • distribution: getting news to more people & more people to news oriented sites,
  • engagement: making the presentation of news more interesting, and
  • monetization: converting these larger audiences and more strongly committed audiences into revenue trough both subscription fees and ads,

calls in each area for Google’s expertise. And the news industry should be able to make the news business profitable by them selves. Google is offering support though. This support is actually part of Google’s corporate culture, namely:

  • Permanent beta & continuous experimentation: learning what does work by seeing all the things that don’t.
  • Small steps to make surprisingly large difference: nothing will work but everything might.

And for the end the most funny part of the article, about the newspapers business model:
“If you were starting from scratch, you could never possibly justify this business model,” Hal Varian said, in a variation on a familiar tech-world riff about the print-journalism business. “Grow trees—then grind them up, and truck big rolls of paper down from Canada? Then run them through enormously expensive machinery, hand-deliver them overnight to thousands of doorsteps, and leave more on news-stands, where the surplus is out of date immediately and must be thrown away? Who would say that made sense?”

Source: Fallows, James: How to Save the News in the Atlantic, june 2010

Marko Savić Linkedin profile

Marko Savić
I’m raising awareness on design thinking and business model innovation. Meet me in person at my next workshop. Don’t forget to follow this blog RSS feed or interact with me on Twitter.

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