Google V. The French Media: Who Will Surrender?

By Matthew Carpenter-Arevalo

If you’re either a techie or a media junkie you’re likely aware that Google and the French media are currently barreling down the information highway in each other’s direction playing a high stakes game of chicken.

Google, operating on the assumption that the French always surrender (do I need to say which side of the debate I come down on?),  is threatening to remove all French media sites from its search index. The French media companies, for their part, are calling in favors with their legislator friends in order that the government creates a ‘Google Tax’ which would force the company to pay royalties for showing small tidbits of articles as search results.

This argument is not without precedent: indeed, it wasn’t too long ago that Google went toe-to-toe with Rupert Murdoch’s News Empire, a fight that ended in Murdoch disallowing Google from indexing any of his sites’ content and then later reversing that decision.

What’s ultimately visible here is the growing pains brought about by technological disruption: Google in this case is a scapegoat for the traditional media companies struggling to make the transition from a world of scarcity where they stood alone as credible sources of information to a world of abundance where each company is but one of many news sources in an entirely re-designed landscape. It’s worth pausing here to consider the underlying issues on the table, including the depreciating brand values, unsalvageable business models and the risky bet that underlines this very public maneuvering.

Depreciating Brand Values - A few years ago during a meeting with a large and well-known Canadian media company a VP wanted to open the discussion of introducing his company’s app to the Android market place. After I explained the application process he said, “We’d like to have more visibility for our app given our status here in Canada and the amount of business we do with Google.”

What was behind the executive’s viewpoint was the idea that his company should not have to compete with all of the other apps. out there because a.) his company has a high brand value in the offline world and b.) his continued use of Google products should by him some good will.

The problem here is that the online economy doesn’t automatically recognize the incumbency of offline giants: indeed, that’s what makes the internet so revolutionary and disruptive. Second, in this and many other cases I came face to face with media company executives who simply refused to believe that Google’s search algorithms were honestly and truly organic and meritocratic. The word that summarizes the attitude of both the media executive in my story as well as the French Press is entitled. 

Our audience is our audienceThey cry.

They are but momentarily distracted! You must needs send them back to us! 

To which we reply: Dude, they’re just not that into you.

Think of it another way: on the Paris Street Le Monde has privileged real-estate on the corner newsstand. As you approach the newsstand Le Monde catches your eye because a.) the amount of newspapers and magazines any one newsstand can hold is limited and b.) Le Monde has made the capital investment to operate a nation-wide daily and managed to stay successful long enough to be one of the few players left. It’s reputation, in the offline world at least, precedes it.

Contrast to the online world and in Google’s eyes Le Monde is but one of an innumerable and uncountable chattering voices providing information about what’s going on in France. Of course Google’s algorithm does recognize Le Monde’s stature and rewards it accordingly and handsomely by sending millions, if not billions of clicks its way every year. Nevertheless, unlike the newsstand where the probability you buy Le Monde may be 1 in 4, on the internet the chance you may read Le Monde may be 1 in 1000, such are the exponential ratios in the world of abundance.

All of this is to say that when forced to compete in the online world to win the attention of its audience  Le Monde is at a strategic disadvantage in that it has all of the costs of the offline world without most of the advantages that come from being a dominant force on paper.

The loss of brand value in this case is immense unless you can a.) beg, plead, intimidate or strong-arm the traffic directors of the online world to favor your site or b.) close your eyes and deny the existence and legitimacy of the internet. Like Ahmadinejad squinting when he looks at a map of the Middle East to avoid seeing that which he doesn’t recognize, many of the world’s media companies have decided to close their eyes, stick their fingers in their ears and sing “I got my mind set on you” as loud as they can in hopes when they stop the world will return to what it was. Unfortunately for them, it wont.

Out of Date Business Model - The news has never paid for itself; when we have produced news on paper some other business model has always paid for it.

Television and radio, due to their ability to acquire and serve millions of customers at no extra cost, have been able to rely mostly on advertising revenues to stay afloat.

Newspapers, however, have not been so fortunate: first, writing, printing and distributing a newspaper every day requires massive capital expense. Though advertising and subscription sales cover some of the costs classifieds really brought home the bacon.

Then, of course, along came Craig’s List offering the same service only better and for the low low price of three easy payments of free of charge. In fact, Craig’s List, even more than Google, basically pulled the rug from underneath the feet of the news industry. Though their online operations do bring in revenue for traditional media companies (indeed, some have switched to becoming online only publications), the margins for online advertising are a lot less than they are in the offline world, as your audience’s attention is spread out among millions of websites, thus essentially flooding the market with excess supply. Though some media companies know a lot about their audiences the advances in advertising targeting technology makes even that advantage somewhat obsolete.

Entirely unprepared for the pace of change, traditional media companies to this day continue to struggle to figure out what the new business ‘model,’ will be, and implicit in this question is the idea that somewhere out there there is a currently vacated ‘model’ not being used that the industry as a whole can simply adopt.

The problem though is that there isn’t any one model because if there is a way for lots of people to make money then lost of people will be out doing it. There will only be models, each one more different than the last.

For example, one media company I know in Canada leveraged its relationships with advertisers in order to be able to sell on behalf of large U.S. publications that are popular up North. Another company I know got into the classified auto-sales business and is looking to leverage its web traffic to become its audience’s first point of reference when they’re thinking of buying and selling a car. The smart companies are launching new media properties every week, often under different brands, to try to figure out how they can amass even larger audiences across more varied content and thus make themselves more appealing to advertisers. The stupid companies are putting up paywalls and assuming that people will pay them for what they can get for free elsewhere.

Marshall McLuhan noted that one medium never entirely replaces another, and this has been true for everything except maybe the ham radio. T.V. didn’t, in fact, kill the radio-star: it just gave the radio-star a new and different opportunity to experience his/her music (Incidentally Reedit killed the Ham Radio Star and exposed him as a pervert. Ok: I kid). What creative destruction does though is that it tends to wipe out those companies that are either poorly managed or not delivering value. The Economist, for example, will continue to do well because of the high quality of its reporting. Others, however, might not be so lucky.

Similarly, it’s worth pointing out that investigative journalism is not dying, nor is the demand for local journalism: the business model that supported them though is in crisis because people are willing to do for free what others demanded payment for, making for a difficult competitive landscape.

The Risky Bet - So what does any of this have to do with Google? In the eyes of media companies Google is the bully ingeniously disguised as a geek that has planted itself between them and their audiences and is now dispersing their readership all over the internet. For the privilege of sending them users, the French media companies argue, Google should pay.

Google would respond by noting that its only job is to let people know what is already available and rank it accordingly so that the user finds the information that is most useful to them as quickly as possible. Google assumes that if it doesn’t include you in its index you wont get any traffic, since Google is the world’s entryway into the internet. The French Media Companies, on the other hand, assume you would simply go to their site directly instead of re-directing through the search engine. Again: they assume that without Google directing traffic their offline brand value is restored.

This argument, however, simply doesn’t pass Grade 1 Internet Mathematics. For example, in this article I’ve linked to at least 3 different news stories, none of which I would have sought out, found and promoted if Google hadn’t made it easy for me. Similarly, though I write this blog mostly for my friends and family much of my traffic comes from people searching in Google for terms that appear in my blog posts (or people looking for hispanic carpentry).

If the French media companies are successful in having their parliament pass a law instating a ‘Google Tax,’ the result will be that Google will drop French media sites from its index. Google doesn’t want this outcome as its strength as a search engine comes from being an expert on everything, not just some things, and it can only do that if information is free and available. It wont, however, allow for a precedent to be set whereby it has to start paying websites for letting the world know what content they contain, as such as economic relationship would put the company out of business were it to be replicated world wide.

The French media companies are thus making a risky bet that they can inflict enough damage on Google’s ability to serve quality results that individuals interested in French news will have no choice but to skip over Google and go directly to them.

What’s more likely, however, is that French users will continue to go to Google out of habit and they will in turn be re-directed to more unconventional news sites, thus emboldening the non-traditional news companies filling the gap.  They will learn the lesson that Murdoch did which is that the traffic Google sends you is far more valuable than what you save by making your content only accessible through your own website. Though niche content sites such as The Wall Street Journal will be able to charge for premium content, others, such as The New York Times will likely ensure their own irrelevance by essentially turning away customers through a pay wall (I, for one, have almost stopped going to NYT entirely, not out of protest but because I have so many other rich options).

Conclusion: There are so many other topics to be discussed here including government intervention in limiting technologies as well as the long term societal implications for resisting and fighting against the forces of creative destruction.

For the moment however I would end by stating that journalism is an important pillar of democracy as well as a public good. We should seek to preserve and promote it at all costs, but we should not insist on trying to fit the squares of yesterday into the circles of today. There is more than one way to do journalism and there is one way to fund it: as I wrote here, the business models that will sustain the internet over the long term are only beginning to show themselves.  The world of abundance is far more free, democratic and participatory than the world of scarcity that preceded it.  Let’s not attempt to hold it back any longer.

 

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