Allow Free Markets to Solve the Newspaper Problem

The controversy between newspapers and Google has been going on for quite a while and recently Rupert Murdoch has threatened to pull the content from his various companies such as Fox News and Wall Street Journal off Google and instead allow Bing to have potentially exclusive access for a fee. In my opinion if enough content leaves Google and goes to Bing it will have an impact on Google’s business model.

Moreover, Google’s ability to index the world’s information for free is coming into question as a result of Murdoch’s ranting. To Google, the idea of having to pay for something they have free access to today is horrifying.

I must admit that when I first heard that Rupert was publicly ranting about the world’s most popular search engine and threatening to delist his content I thought it was a poor business decision. More recently though I started to see the genius of having a consortium of websites working together in unison in a collective bargaining type situation.

Google is obviously concerned and one sign is that they recently announced a change in how they allow news to be viewed – basically limiting access to free views of subscription content to five per day among other changes.

Even more important is today’s letter from Google CEO Eric Schmidt in the Wall Street Journal where he defends his company and moreover talks about a future where Google helps the newspaper business. Ironically the letter starts by referring to a futuristic, high-tech scenario which takes place in 2015 – a time when – at this rate, many newspapers won’t be around.

At TMC, we have a very unique perspective on the changing landscape of media as we have spent a decade investing in technology and systems which allowed us to launch news-generated communities of interest (GOCs or Global Online Communities) which are sponsored monthly by customers. We have over 120 of these currently on TMCnet – they are the tabs at the top and left of the site and the success of these products in-part are responsible for our company continuing to hire and grow in what many call a media depression.

Media has changed. Reading habits have changed and newspapers have adapted. They now report online and have a treasure-trove of useful breaking stories.

What hasn’t changed in media is the product mix.

And the product mix issue is the problem for newspapers because on a per-view basis, advertising online yields much lower prices than ads in printed newspapers.

At most newspapers print advertising revenue is declining rapidly and the web yields only incremental dollars. Yet they all still have tremendous fixed costs involved in printing and distribution. This is the heart of the problem.

If they have any chance at all of surviving they need to invest in building viral, news-generated communities for their customers which allow them to tap into company’s search engine and community building budgets.

This process is very difficult – we have been building communities for over ten years and we have gotten very good at it – but we still have far more to do in perfecting our product suite.

Marketing budgets have shifted dramatically in the last decade but media companies haven’t. How do newspapers help companies tap into the power of social media? Organic search rank? Community building?

The FTC recently held a full-day event where they stated they wanted to help newspapers as they are vital to the country. In fact, there has been talk in government about granting news organizations nonprofit status.

To this I say why would we not let the free markets work as they are? My company TMC has been working for a decade to come up with a new web paradigm in news gathering, sponsorship and dissemination. It would be a terrible mistake to “bail out” newspapers which aren’t able to shift in a world of technology transformation.

Moreover, there is more news being reported than ever before and the conversation on the Internet through blogs and comments and tweets has allowed society as a whole to be more engaged than at any time in history.

Media is evolving and the Internet threat has been on the horizon for more than a decade. Savvy media companies who evolve with it will be around and those which can’t figure out how to transition should be allowed to fail. Perhaps search engines will come to the rescue or a news gathering consortium will form. Either way, there is no lack of companies who are innovating online and looking to expand their news dissemination services.

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