Google Suggests Key to the Fate of Newspapers
One thing that’s definitely not news to anyone is the fact that times have been tough for the struggling newspaper industry. Last year, 160 newspapers in the US and UK went under. The reasons behind this lie mainly with the fact that circulation has fallen drastically, due to the rise of TV and online news sources. However, the online facets of newspapers have become major online destinations and are hosting huge volumes of traffic. As pointed out on the Google Public Policy Blog, “About 40% of internet users say they looked at online news ‘yesterday’.” So why has an industry that makes most of its money from advertising and loses most of its money on production and distribution not been able to succeed in the online world?
In what has become a standoff between Google and newspapers from all over, both camps offer their explanations. The newspapers themselves believe that they are being short changed by Google. Google believes that newspapers offer a lack of user engagement and do not utilize their information or content. The fact is that it is both: Google claims a large chunk of advertising revenues through Adwords and delivers traffic in verticals that are hardest to monetize while newspapers have not shown a great deal of innovation or creativity in harnessing the huge amounts of traffic and specialized content they hold. But the events of the past few weeks have seen the two camps come together in an effort to finally sort this issue out.
In the US, search engines account for 30-40% of traffic to major news sites. Out of how many millions or billions of clicks a month that is, let’s say Google accounts for half. The problem is, while Google takes in vast amounts of money through their Adwords and other advertising, they send loads of traffic to news sites in verticals that are not easily monetized. In other words, Google is capturing purchases and driving traffic to specialized sights for news related search queries in the valuable travel, health, electrical, computers, and entertainment verticals while driving the sports, news, current events, and local related traffic to online news sites. In turn, the traditional cross-subsidisation model of newspapers is broken. “While before, in print, advertisements in special interest sections such as motoring, travel, or home & garden helped finance the general news production, now most of the search clicks are in categories such as sports, news and current events, and local.” It is for this reason that online ad revenue accounts for only 5% of the total for newspapers.
At the recent two-day workshop on the future of journalism held by the Federal Trade Commission, Google defended its innocence in the case of failing newspapers, and offered some interesting insight into some alternative explanations. Hal Varian, Google’s chief economist, held that “The news industry’s financial problems came well before the web came along”. Google argued that the key to newspapers’ survival online is engaging more with readers, rather than seeking to charge them directly. The facts are simple. “The average amount of time looking at online news is about 70 seconds a day, while the average amount of time spent reading the physical newspaper is about 25 minutes a day”. The reason for this is that online readers generally check in during working hours, when they do not have much spare time. Varian added that newspapers must increase the involvement of readers during leisure hours.
The simple fact is, charging users for news content will not be the solution to the problems of news publishers. As it appears that Google will not take part in any kind of revenue share of or change it’s indexing, the ideas of online news sites becoming more engaging and more interactive seems to be the way forward. In order to increase the amount of time each user spends on their site, newspapers need to attract readers during their leisure time. Google has also developed an interesting new feature, Living Stories, that allows users to track developments on various news stories and create a personal hub for various topics. Newspapers such as The Guardian, offer a range of reviews, videos, blogs, and local news. Not only does this improve online news, but it enhances ad targeting and measurement. There is no doubt that the key to newspapers solving this problem lies within the vast amounts of user information they have access to. The only thing to do now is expirement, and harnesses that information. We are entering an age where the increasing digitization of all content will see a further decline in offline news circulation. But devices such as the iPad are providing interesting new ways to consume this content. With toys like this becoming the new gateway to news, publishers must re-create online news as a leisure time activity. Their fate depends on it.
0
Loading ...