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Don MacAskill recently ranted on how much of a closed community traditional print media companies impose on their users. While I would agree that some if not most large media groups are seriously lacking the insight necessary to monetize today’s generation of consumers, it is a little too early to say that all traditional media is doomed.
Gannett and Tribune recently invested more capital in MetroMix, the Tribune’s original foray into the hyper-local scene. While the site may not have the best functionality or user interaction, it is a good start. You cannot ride the subway in NYC without seeing their ads plastered all over the inside of the trains. The question is not how traditional media companies will succeed or participate in the web 2.0 space, but when. These companies are sitting on a large regional or national footprint and an executive guard that does not understant how publishing content online can bring in revenue.
Web 2.0 Is Not That Obvious To Most
For most of us it sounds very obvious, we see the online space as unlimited “print” real estate….pages upon pages of space to throw edgy content and targetted advertising. So its obvious right? Not as much as you would think. Do any of you remember trying to teach your parents, mostly successful business men and women, how to use a computer? Even to this day they struggle just doing basic things on the internet. They are definitely not part of the Digg Nation.
Imagine how the executives at Print Company Inc feel when they hear Facebook, created and run by a 20 something Harvard drop-out is going to put them out of business very soon. They will come around because they have to. Zell did not buy the Tribune because he believed in a rejuvination of print media, he has an idea (we assume its a dam good one), of how to leverage this vast media empire in today’s world. I would be very shocked if upon hearing about the Digg mis-functionality on the LA Times website Zell brushed it off his shoulders as if it was nothing.
Tech M&A Is Not Always The Best Strategy
Acquisitions are one way to enter this arena, but once a Media News or a McClatchy acquires a hot up-coming web 2.0 property, then what? You have a sexy sirloin and no one to supervise the grill…that is to say, the staff on hand that understands the technology and how to leverage it across the existing properties is not there. Online ad-sales folks are in high demand right now, and for good reason. Someone inside those companies needs to really understand the power of users, their attraction to content and how to charge advertisers for it. Looking back, it would have made more sense for Double Click to have been purchased by one of the old print companies than Google. Imagine the power of having access to that online-ad sales force!? Perhaps there are something Mastercard can’t buy.
Herd Mentality
I think that a sudden panic attack will happen sooner than later. Just looking at how much better the internet has become in the past year in terms of delivering relevant content, we should expect even more ad dollars to shift online than we saw in 2007. It is at the point the point where a web 2.0 love bug bites the print guys, where they start acquiring as much as they can; headcount, aggregators, bloggers, startups, you name it. You are all marked. I mean at this point it’s either them or Google.
I’m beginning to wonder if Google has secretly admitted licensing newspaper (and other types of media) content makes sense.
If technology companies aren’t content owners, they must license content to avoid copyright infringment risk. Duncan Riley from TechCrunch misses the point and talks about the need to “run ads” on Google news. There is certainly fear of further Viacom-esque lawsuits, and those dreaded “content licensing consortiums.” But, it’s about advertising dollars, although not in the way Riley explained.
They key here is that Google needs to be friendly because newspapers have a dominate share of the advertising market.
Google can’t piss off newspaper companies with Google news (or any other type of product) and expect newspapers to come with open arms and accept Google’s ad placement technology. 
I expect Google will admit that content has value (i.e. license content from many different partners) because then it will be easier for them to create advertising partnerships with those content providers.
As I’ve said before, Google is alienating content owners with its views on the value of content. This reuters article contains some very interesting points. The best quote was:
“We’re in a world where we’re a partner with everybody and we’re fighting everybody,” News Corp. Chief Operating Officer Peter Chernin said on the panel.
A relationship with Google is love/hate. Google has now has the critical mass. The traditional media companies sat on the sidelines and watched the internet grow beyond what was expected. But, they do sit on valuable IP that can and will be protected by the courts.
I think the solution is for the technology companies of the world to admit they need to own content. I’m still waiting for the day one of the media companies gets acquired by a technology company.
Looks like NBC just joined ranks with Viacom against YouTube/Google. Who is next? Anyone care to wager? I’d put my money on News Corp.
CNet reports:
“Any ruling on YouTube’s motion will have far-reaching ramifications for the owners of video content,” NBC and Viacom said in their filing. “And especially for content owners such as Viacom and NBCU, whose works have been copied, displayed, and performed and disseminated by YouTube and others without their authorization.”
This case will result in a landmark ruling for industry. Unfortunetly, we are going to wait several years until we hear anything. In the meantime, I wonder if a technology solution will solve the problems asserted by content companies.
I suggest my readers to go read “A Reality Check for Newspapers” by Jason Fry. It discusses the love-hate relationships have with Google. Mainly:
These disputes are about money, of course — the newspaper groups think Google’s making some off their efforts, and they want a piece. But more broadly, Copiepresse objects to the idea that Google and other search engines should set the rules for linking, contending that such standards should be set by copyright laws, not technological standards. That’s a bid to turn back time and declare a do-over on the basics of search engines — a quixotic effort that flies in the face of the reality of how content is consumed today, and one in which Copiepresse has inadvertently lined up against its papers’ own readers.
What do you think of shifting the copyright burden to Google? Sounds very similar to the Viacom case. I have an issue with Jason’s conclusion:
It should be said that at times Google and its champions fall prey to thinking that they know what’s best for everybody else. Beyond the fact that no one likes being told what’s good for them, there’s something undeniably coercive about Google and other Web technologies. But what significant technological shift hasn’t been coercive? At its heart, the Web is driven by users, not publishers. Whatever pain that causes content creators, opposing that fundamental idea became a revanchist fantasy long ago.
Jason, sure, the web is driven by consumer choice, but as I’ve said before, “I want free music, I want free clothes, I want a free Ferrari F430, and I want a free Gulfstream 550. Do I get all these things? NO.“ Consumers want things to be free, but Google is playing with fire with all the content companies. Content is just an easy thing to distribute freely despite it’s production cost. If Google could send you a brand new Ferrari without paying for it, I’m sure you would take it. Newspaper articles aren’t really that different (except the Ferrari is infinitely sexier).
What is the appropriate treatment for newspaper content?
I don’t have an answer, but if people could just steal technology and make their own technology solution would that be any different? Companies need to respect IP in any form.
Google responded to the Viacom Suit today. I have already written about the disregard for copyright and how Google sees no value in content. My wise, attorney father posted a comment regarding the Viacom/YouTube suit. He explains:
The resolution of this suit will likely be a voluntary change in YouTube’s upload practices that will engage it in more vigilant policing of uploaded content. In particular, its policy of awaiting copyright owners’ demands before removing pirated material will predictably evolve into a more proactive undertaking to remove infringing material – at least that which is relatively obvious; TV programming, movie trailers, etc. However, it it is not an exact analogue of the Napster case in which Napster executives opined that its users were “…exchanging pirated music.”! YouTube was well aware of the Napster and Grokster fiascos before it, and apparently has given some thought to the potential for this kind of action – its copyright policy is, at least, well written, and if implemented in a more aggressive fashion would likely insulate it from the kind of direct and indirect liability alledged in the Viacom complaint. Its exposure lies in part in the very technology that enables the uploading, and exchange of video content because it also permits it to police the content more vigorously, and hence it will be forced to do so or suffer the fate of Napster and Grokster before it.
Perhaps Google’s new “policing tools” will solve this problem, but who knows. I haven’t found any intelligent commentary, but Google’s response does warrant a few words. It explains:
By seeking to make carriers and hosting providers liable for Internet communications, Viacom’s complaint threatens the way hundreds of millions of people legitimately exchange information, news, entertainment and political and artistic expression.
The funny thing is technology can be used for illegal AND legal things. Maybe the “entitled generation” doesn’t believe this, but I honestly believe copyrighted works should be protected. The companies that create technologies which enable the easy sharing of content should be responsible for monitoring the use of that technology. Additionally, I firmly believe it is unethical to use technology to facilitate the sharing of copyrighted works to build a “destination site” like YouTube.
ZDNet has a good analysis of the rebuttals. Other bloggers are adding small bits of information.
Read my blog post from March 5th. In it I argue that technology companies will need to own content. Jeff Maurone, sent something to my inbox today. Bloomberg reports:
General Electric Co. shares staged their biggest rally in four months after Citigroup Inc. analysts said the company should spin off NBC Universal, GE Money and the real-estate division.
“GE’s size and complexity is working against investor interest in the stock and has contributed to further valuation erosion,” the analysts wrote.
This is the second time this week analysts have suggested GE take such steps. Nicholas Heymann of Prudential Equity Group Inc. in New York said a company such as Google Inc. may be interested in buying NBC Universal as part of its effort to add to its mix of media offerings including YouTube.
We come from a background of M&A transactions in print media. We understand the value of content.
Technology companies need content in order to deliver their products to an existing user-base. Aggragation and user generated content are crowded markets. Growth will come from partnerships with media companies, not stand alone technologies.
I don’t know if Google is the best buyer for NBC, but it wouldn’t surprise me if this happened.
Thoughts?
The Washington Post reports that the EPIC is opposed to the Google acquisition of DoubleClick. The complaint is here. The Post reports:
The deal would create a firm with access to more information about consumers’ Internet activities than any other company in the world, the Electronic Privacy Information Center said in its complaint.
Google’s quest to organize the world’s information has created the most visited site in the world. Organizing information is a good idea.
Monetizing your use of the world’s information is a bad idea
I always tell people that Google created a great product. Google search is a great product. The problem is that Google serendipitously realized they could monetize their users with targeted advertisements. There is nothing wrong with making money. In fact, I like it when any company makes money. But let’s use our brains. Does irrational exuberance make people ignore simple rights?
Tracking users means more relevant, thus more valuable ads
In order to make more money, advertisers demand more relevant advertising prospects. Cookies, tracking, behavioral targeting, etc, are a way of online life. I don’t think Google/DoubleClick really means much more than before, but be aware that the more Google (or any agency) knows about your habits , the larger value proposition they can make to advertisers. Google is the leader in the online segment and will increasingly be under pressure to not actively analyze user habits.
Put this in perspective
For all the Google-aid drinkers out there, imagine if Microsoft would submit user information to their web servers every time you entered information into your computer. This certainly wouldn’t be allowed. As the computer world moves from desktop to browser, how would Google doing this on their online properties (and those also inhabited by DoubleClick) be any different?
What do you think?
Update: Matt Cutts writes about Google & privacy
Update2: Financial Times writes about Google’s quest to organize your “personal life”
The LA Times reported:
‘If all the newspapers in America did not allow Google to steal their content for nothing, what would Google do?’ [Same Zell] muses.
Not surprisingly, the blogging community went up in arms (1, 2, 3) with a resounding “Google is not stealing content” response. I think the responses represent the attitude problem that permeates the New Media world. I wasn’t at the Zell presentation, but I would wager that Zell is referring to the possibility of content licensing consortiums (CLCs) for the newspaper industry.
Reading through some of these responses, I found another great snippet of ill-informed entitlement:
Google moral of the story? Lawsuits ARE the way to pull Google’s very large financial purse strings!
Google has done a fantastic job building their search and advertising product off of freely supplied index-able web data; but online newspaper/magazine, video & audio content is protected by copyright. If Google settled with the AFP (and AP) aren’t they admitting to stealing content and the need to license that content from these associations? The answer is YES and the key is:
With the other major Internet players like AOL, Yahoo or MSN, [The AFP] have been licensing our content to them for years and years
Additionally, the argument that “Google does not make money off of Google News” is not correct. Sure, Google doesn’t place ads on the Google News page, but it is supplying a free service which creates a portfolio of services that keep users coming back to the Google platform.
Google News Provides a Value-Add for Newspapers, but it Walks a Fine Line
Google’s settlement with the AP and the AFP reveals that it would rather pay for content than face a full lawsuit. Zell is onto the CLC argument and if I were Google, I would fear the power of a $59 billion industry. I agree that Google improves newspaper article search-ability, but it needs to admit content has value so everyone can work together.
It is in Google’s best interest to work with the newspaper industry, because pretty soon a lot of large competitors and content providers will band together to better enforce copyright protection and licensing standards.
Amid the glitz of on-line media pundits who proclaim that their way is the new superhighway and the only route to the promise land, let me inject some practical rules of day to day business, especially on the local level.
Rule One: The small, local business owner is stressed. She has to run her business, serve her customers, make her payroll and hopefully generate a profit.
Rule Two: How much extra time does a local business person have to work on their marketing plan, to go on line and sort through what might or might not work for them? Answer: NOT MUCH!
Rule Three: Local businesses have paid their bills, created growth and profits and reared and educated their children, by relying on local media outlets to deliver their information. They can’t risk jumping ship unless they are certain the other boat will float.
Rule Four: Local businesses want results and service. When it breaks they want it fixed by a person they can talk to, that they can touch. In other words, local businesses need and want local services.
Rule Five: Local advertising, local readership and audience, is traditional media’s to lose. If management realizes that they are going through a transition and provide the needed leadership, they will grow and prosper.
Google understands what they are up against and they know that poor management and lack of leadership from Traditional Media will cause more harm that anything New Media can create.
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