October 23rd, 2009
WSJ chief criticizes news aggregators - creators carry cost burden
Hat tip to Danny Sullivan for pointing out the above panel at Web 2.0 Summit, which featured Robert Thomson, Wall Street Journal chief, and Marrissa Mayer head of search products at Google, plus Martin Nisenholtz, The New York Times Company, and Eric Hippeau from the Huffington Post, moderated by John Battelle. Title: “Whither Journalism.”
YouTube - Web 2.0 Summit 09: “Discussion: Whither Journalism?”
The reason this discussion is interesting is because Mr Thomson is a close confidant of Rupert Murdoch, the head of News Corp and one of the leaders in trying to create new business models for online journalism. One of those ways is to create a paywall - to charge for content.
This has been criticized by many online pundits who believe content should be free and that Mr Murdoch, and others that want to charge for content won’t succeed.
This is a ridiculous argument because it doesn’t address the issue of how content is created and the costs in creating content. An army of citizen journalists won’t be able to fill the gap caused by fewer professional journalists. We have to figure out a way to pay for professional journalism. The Internet used to be free, people used to say that Internet users wouldn’t put up with advertising. We all know how that turned out.
At the beginning of the discussion Mr Thomson gets to the point right away, when he makes the distinction between content creators and content aggregators and point out that the cost burden is being shouldered by the content creators.
Many people, like Danny Sullivan, like to point out that the Wall Street Journal, and others that complain about Google stealing their content, want the traffic that Google sends their way.
But Mr Thomson challenged Ms Mayer’s view that Google is all about sending traffic to other sites. He said if that is the case, why isn’t the font size larger on the link to the original source? Double figure (font size) would be good, he said to laughter.
Google, and other aggregators, take the headline and first paragraph of a story, the two most important elements of a news story and try to monetize that content.
The value of the traffic Google sends is not that great, believe it or not. As a publisher I get to see my server stats, etc, and so I know first hand the value of traffic from Google, or even Techmeme, is not much.
I can appreciate the frustration that Mr Thomson feels when he sees others trying to profit from the work of his journalists.
Producing original content is very expensive. Trawling web sites and taking the headline and top paragraph of a story is dirt cheap. The difference between costs for content creators and content aggregators is very large indeed.
The Huffington Post gets a ton of content for free. The New York Times has more people moderating its comments than The Huff Post has journalists on its masthead. Yet the Huff Post couldn’t exist without the content creators. Clearly there is a large mismatch here.
The tragedy is that on either side of the equation there isn’t enough money to pay for the content creation.
Even if Google News and The Huff Post and all the other news aggregators gave every dollar and cent they make from other people’s content to the content creators it would be unlikely that it would cover the costs of the news creators.
For example, The New York Times is laying off another 100 newsroom jobs and its most recent financial quarter showed a 29 per cent fall in revenues with print and online ad revenues continuing to plunge.
The tug of war between creators and aggregators is some degree, a red herring. We need to develop a “value recovery mechanism” for online journalism.
This is the most important problem we have related to the Internet, it is much more important than net neutrality. It is the Gordian knot of the Internet - if just one person solves it we all benefit.
Tom Foremski reports on the business and culture of Silicon Valley at the intersection of technology and media. He also writes at Silicon Valley Watcher. See his full profile and disclosure of his industry affiliations.
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