Newspapers to be fed by Google – supping with the Devil?

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Content Management

It’s taken more or less as read (pardon the phrase) that traditional print media are on the wane and that even the digital editions of formerly mainstream publications are threatened in the longer run.

Who is at fault for this? That’s a complex question: but a major cause is the availability of free content from Google, through its various tentacles. The sheer power of this big beast is the reason why it has become the subject of a European Commission investigation into alleged anti-competitive trading (in which Google seemingly skewed search results towards services offered through its own operation). Its 90%+ share of searches gives it phenomenal power. The result, after a no doubt lengthy legal tussle, could be a fine as costly as the €1 billion meted out to Intel in 2014 for abusing its microchip near-monopoly.

Commentators have also suggested that Google may be forced to change its European business model, with big ongoing adverse effects to the operation’s profitability.

Old News or New News?

Now you can be cynical, and link this background data with the latest news, or you can cut Google some slack and applaud its innovation, but either way the corporation is making a bold move by announcing a ‘Digital News Initiative’, worth a claimed £107 million over the next three years to the European publishers who will receive this largesse.

The big idea is that Google and the participating newspaper groups will work to create new digital revenue streams by such means as:

  • better use of advertising
  • creating apps
  • offering analytics to advertisers

Four leading newspapers are involved in this launch phase: from the UK, The Guardian and Financial Times; from Spain, El Pais; and from Germany, Die Zeit.

Their journalists and advertising teams will be trained about digital best practice by three Google staffers based in London, Paris and Hamburg, who presumably will know a thing or several about how to maximise online revenues.

In charge of Google’s European strategic relationships is Carlo D’Asaro Biondi, who in announcing this initiative commented that Google wants to be a friend and partner to the news business, but he said “we also accept we’ve made some mistakes along the way”.

New masters

Elsewhere, some apparently surprising acquisitions of long-established publishers are taking place. Both traditional and new-breed investors are participating:

  1. Jeff Bezos, owner of Amazon, now counts the Washington Post as one of his trophies, following a $250m buyout.
  2. An identical amount was ploughed into independent journalism by Pierre Omidyar, of eBay fame.
  3. While veteran Warren Buffett has acquired the Omaha World Herald to add to his stable of more than 60 titles. He is famously contrarian in his policies – but he knows how to maximise profits from mature markets.

Content Marketing

To charge – or not to charge

The big dilemma that these and all papers have had is whether to charge for their online content.

The FT is a special case because it is bought (worldwide) by financial specialists and high net worth individuals who are subscribing to its digital edition to stay up to date in their business life.

For a generalist paper like The Guardian it is much more difficult. It has resisted charging, and its free news has a big circulation: but its digital advertising does not pay its way and the operation is heavily loss making. (The Times by contrast has a much smaller online circulation but makes money from subscribers).

One new source of Guardian revenue is recent years is the £2m p.a. supplied by the Bill and Melinda Gates Foundation to support the publishing of stories about third world sustainability issues. Journalistic independence is apparently assured. A less altruistic motive probably lies behind Apple’s strong advertising support of the Guardian: it has also enjoyed very favourable coverage of its products.

The paper (or whatever you call it, now that digital leads the way), is also attempting to build membership fees, through special club offers in the manner of an upmarket bank account. You have to admire its efforts, even though some may fall on stony ground. It could be that Google in turn has something to learn from its elder brethren.

As the Bible had it. “the wolf will dwell with the lamb” (Isaiah 11:6) and in terms of power, we know which is Google: but maybe by announcing this initiative, seemingly a year in the making, it is recognising that journalists (a breed it has never itself hired) have their value and that there are new ways to fund their continuing existence.

Hannon Digital is well placed to watch and assess how this all plays out, from our base in London. We advise our clients on their digital media strategies as part of our complete package of services.