Too Late for Newspapers vs. the Google/Facebook Duopoly?

Too Late for Newspapers vs. the Google/Facebook Duopoly?

[Updated 7/11/17]: A 2,000-member newspaper alliance is asking Congress for a pass on antitrust laws so it can engage in a kind of collusion to counter the dominance of the Google News/Facebook platform duopoly.

The newspapers’ ask is thus:

“The objective is to permit publishers to have concrete discussions with the two dominant distributors of online news content, Google and Facebook, on business model solutions to secure the long-term availability of local journalism produced by America’s newsrooms,” according to the the News Media Alliance’s announcement today.
The group represents about 2,000 newspapers in the U.S. and Canada and wants Congress to allow publishers to negotiate collectively with dominant online platforms.

It’s an interesting idea. Google News and Facebook are dominant in news distribution. They make and break a lot of traffic for these content creators. But the tyranny of the clicks that these platforms create and deliver — or don’t — isn’t a recent phenomenon.

My question: Is the move too late for the newspapers?

Fifteen years ago, Craigslist was already hollowing out their core classified business, one by one. That was the beginning of the end for many community newspapers, whose switch to digital publishing as their main focus over print came too late, and was too fragmented to create a concerted industry counterweight to the Googleplex.

Or better yet, where was the association’s investment in a competing platform such as a news hub of their own? Heck, they might have been able to team up with a Microsoft on a digital news hub and create their own reach and aggregation engine to counter Google News, or get ahead of the problem sooner by teaming with tech partners on distribution hubs. After all, MSFT did team up with NBC to create MSNBC back in the day, which was about Content Being King or something like that.

Newspapers and publishers did try this a few years back but their market timing was way off.

David Chavern, president and chief executive of the News Media Alliance, published an op-ed in the Wall Street Journal Monday to amplify the economics and technology driving the issue for the newspapers:

The problem is that today’s internet distribution systems distort the flow of economic value derived from good reporting. Google and Facebook dominate web traffic and online ad income. Together, they account for more than 70% of the $73 billion spent each year on digital advertising, and they eat up most of the growth. Nearly 80% of all online referral traffic comes from Google and Facebook. This is an immensely profitable business. The net income of Google’s parent company, Alphabet, was $19 billion last year. Facebook’s was $10 billion.

The remedy is to address this threat by banding together to create a greater network effect, in essence, and push for “stronger intellectual-property protections, better support for subscription models and a fair share of revenue and data.”

The big problem for the newspaper publishers is that Google and Facebook are having a good run at monetizing the content that the newspapers create when they pipe it into their platforms.

It’s a raw deal for the newspapers, and, more important, the communities they are struggling to serve as the decline of print wends its way through their balance sheets.

This is a sad and scary development for a healthy democratic society that needs local government watchdogs. Many journalists and media people lay the problem at the (clay) feet of too many newspaper publishers who didn’t act soon enough as an industry. A few early adopters here and there just weren’t enough to create the market heft they are trying to create now by banding together against the Google-Facebook-plex.

Chavern continues his points about Google and Facebook: They don’t employ reporters.  “They don’t dig through public records to uncover corruption, send correspondents into war zones, or attend last night’s game to get the highlights. They expect an economically squeezed news industry to do that costly work for them.”

It’s hard not to sympathize. News gathering is one of the most labor-intensive activities left in a world shifting to automation any way it can; news is not immune. Computers and bots now read the news and artificial intelligence can actually write the stories we humans think only our brains can tap out.

But I still think it will be a little longer before we’re all munching on McNews gathered and written by a robot, if only for sheer cultural-human reasons over economic ones. In my view, after we pay a robot for our sandwich and coffee at Starbucks, humans will crave a connection with other humans — which will mean we are even more byline-aware as we dine on a meal prepared and served by a bunch of electrons. No soul in that new machine.

Anyway. Forbes is one of a quite a few publications that waxed skeptical of the Alliance’s chances. For its money, Forbes argues that the newspapers’ own monopoly power in their respective markets brought this on.

One big development for the alliance to follow is whether Google’s $2.7-billion antitrust fine from the European Union could help their cause. Might this influence U.S. regulators to take a look at Google’s practices?

Reuters has reported that Google’s parent company Alphabet has “hired several top law firms in the EU to appeal a landmark $2.7B antitrust shopping results fine and to fight a potential second fine related to the Android operating system.”

The people at Seeking Alpha also note that:

EU authorities might also throw a third fine at Google regarding its Adsense for Search platform.

Intel has appealed a similar fine with a decision expected next year.

We’ll see if the newspapers can come up with a way to counter and get a piece of the GoogBook domination of news distribution — or if another idea will deliver their salvation in the age of social media conversations with content.

 

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