Sunday, April 19, 2009
Here's why newspapers lost to Google in making the Web proftable; too much greed to invest
Alan D. Mutter, now a Silicon Valley CEO but formerly a big-time newsman in Chicago and San Francisco, has some words for newspaper publishers and editors grumbling about how Google took away so much of their revenue and credibility.
Get over it. You had many chances and blew it.
From my point of view, newspapers in general -- with some notable exceptions -- were never willing to make the big investment in the new technology in the beginning ... and even now. That's because the industry was tied to unrealistic profit rates. And that greed has now killed the industry.
For instance, the web sites for Gannett Co., Inc. and The Tennessean are slow and cumbersome in a time that readers want news fast and easy to find. Gannett has never been willing to make the needed investment, because the profit margins at its newspapers have been so demanding.
Below, Mutter shows the opportunities missed by an industry over the past one and a half decades. Now, it suffers for its greed and finds itself on the verge of extinction in the print form:
:: Several newspapers launched their first websites by the time Larry Page and Sergey Brin met at Stanford University in 1995 and started noodling on a research project called BackRub.
:: Two or three years before the first public peek of the still-nascent Google in 1998, the ill-fated and short-lived New Century Network had a plan to aggregate the content from 140 newspapers in searchable format for the web. The plan, which included the idea of inserting ads in selected markets at the push of a button, died when NCN succumbed to industry infighting.
:: It was not until October, 2000 – a good five years after most newspapers were up and running on the web – that Google figured out how to make money off its spectacularly growing traffic by selling keyword advertising.
As Google and many other savvy online publishers learned how to capitalize on the openness and interactivity of the Internet, newspaper publishers stubbornly spent the last 1½ decades trying to sustain their once-enviable print business model in the face of overwhelming evidence that everything was changing: technology, consumer patterns and advertiser behavior.
For an excellent example of the sort of opportunities missed by the industry, look no further than this tale of how the Boston Globe blew the chance in 1995 to buy a significant share of Monster.Com for a comparatively modest $1 million.
Or, ask yourself why Dow Jones, the publisher of the Wall Street Journal, never started its own online stock site. Instead, Dow Jones waited until 2004 and spent $520 million to buy MarketWatch, faithfully printing stock listings in the newspaper all the while.
Today, print advertising has fallen off a cliff because consumers find it faster, easier, more timely and more fun to get their news online. Advertisers increasingly are gravitating to online media instead of print, because it is cheaper, highly targetable and the results can be readily measured and analyzed.
None of this is Google’s fault. Blaming Google won’t help.