Over lunch I did something old-fashioned—I picked up and read a print copy of the New York Times. I was startled to find, on the front of the business section, a large, colorfully decorated feature headlined “Is Google a Media Company?” The graphic accompanying the story shows a newspaper masthead titled “Google Today,” followed by a list of current and imagined future offerings, from Google Maps and Google Earth to Google Drink and Google Pancake. Citing the new, wikipedia-esque service Knol, and using the example of that service’s wonderful entry on buttermilk pancakes, the Times story argues that Knol’s launch has “rekindled fears among some media companies that Google is increasingly becoming a competitor. They foresee Google’s becoming a powerful rival that not only owns a growing number of content properties, including YouTube, the top online video site, and Blogger, a leading blogging service, but also holds the keys to directing users around the Web.”
I hope the Times’s internal business staff is better grounded than its reporters and editors appear to be—otherwise, the Times is in even deeper trouble than its flagging performance suggests. Google isn’t becoming a media company—it is one now and always has been. From the beginning, it has sold the same thing that the Times and other media outlets do: Audiences. Unlike the traditional media outlets, though, online media firms like Google and Yahoo have decoupled content production from audience sales. Whether selling ads alongside search results, or alongside user-generated content on Knol or YouTube, or displaying ads on a third party blog or even a traditional media web site, Google acts as a broker, selling audiences that others have worked to attract. In so doing, they’ve thrown the competition for ad dollars wide open, allowing any blog to sap revenue (proportionately to audience share) from the big guys. The whole infrastructure is self-service and scales down to be economical for any publisher, no matter how small. It’s a far cry from an advertising marketplace that relies, as the newspaper business traditionally has, on human add sales. In the new environment, it’s a buyer’s market for audiences, and nobody is likely to make the kinds of killings that newspapers once did. As I’ve argued before, the worrying and plausible future for high-cost outlets like the Times is a death of a thousand cuts as revenues get fractured among content sources.
One might argue that sites like Knol or Blogger are a competitive threat to established media outlets because they draw users away from those outlets. But Google’s decision to add these sites hurts its media partners only to the (small) extent that the new sites increase the total amount of competing ad inventory on the web—that is, the supply of people-reading-things to whom advertisements can be displayed. To top it all off, Knol lets authors, including any participating old-media producers, capture revenue from the eyeballs they draw. The revenues in settings like these are slimmer because they are shared with Google, as opposed to being sold directly by NYTimes.com or some other establishment media outlet. But it’s hard to judge whether the Knol reimbursement would be higher or lower than the equivalent payment if an ad were displayed on the established outlet’s site, since Google does not disclose the fraction of ad revenue in shares with publishers in either case. But the addition of one more user-generated content site, whether from Google or anyone else, is at most a footnote to the media industry trend: Google’s revenues come from ads, and that makes it a media company, pure and simple.
Nobody follows, or even pays much attention to, names-as-links. So as a method of advertising, it just doesn’t make sense. The supposed sales pitch that doesn’t even perceptibly mention the product is not a functional sales pitch.
“Google’s revenues come from ads, and that makes it a media company, pure and simple” is an ideologically blind statement. Not everything that sells advertising is a media company, and not all media companies depend on advertising. There is no reason to restrict the definition of the media to profit-seeking corporations that subsist on advertising revenue. Indeed, counterexamples abound: PBS. NPR. CBC. BBC. And so on. Plus a host of cable access, college radio, and web sites (like Wikipedia.)
Before reaching for a new definition of the media, it might serve us well to reach for the dictionary. According to dictionary.com, the media are: “the means of communication, as radio and television, newspapers, and magazines, that reach or influence people widely: The media are covering the speech tonight.” That’s it. No mention of capitalism, no mention of advertising.
Google is the message.
Spudz: “Ken” and “Joey” are the blogspammers I mentioned earlier. The only possible purpose of those posts is to shill the website their names link to.
David Robinson? As in…THE David Robinson? Hmm…26, media/tech-focused, something or other about that college in Jersey, eloquently hard-hitting…yes. Yes, I believe that I’ve stumbled upon THE David Robinson. If so, hullo my dear! If not, my apologies to whoever this is and you’re welcome for the compliments.
Ken, Joey: Why have you only quoted parts of preceding comments, without adding any original response? Slip of the finger, hit send before you added your own opinion? In that case, though, why didn’t either of you retry?
Hey David: looks like you’ve been blog-spammed — twice by the same spammer. Interesting new technique, too.
@Mark–
You write:
“The NYTimes produces its daily paper by:
1. Paying a set of reporters to follow beats and write stories.
2. Accepting the contributions of unpaid writers (op-eds and LTEs) who are looking to simply express an opinion or raise their profile.
3. Selling the audience for those articles to advertisers”
I would insert in that list:
2.5: Filtering (1) and (2) through an editorial and quality control staff to identify “newsworthy” content.
I believe that there will always be a market for quality controlled information. Or to put it another way, in the advertising context, editors will deliver eyeballs.
Google simply does not provide this value added, in its current model.
Google is also a major content creator. Microsoft have worked hard to attempt to duplicate what google does and Microsoft have found themselves unable to keep up. When you look at google maps and google street-view, well before we didn’t have that, and now we do so something has been created.
I fully accept that google is also a big content consumer, but then again most content is not created from scratch (we could argue that ideas essentially never exist in a vacuum). People write books incorporating shadows of real life and shadows of what they have read before. Music is built with bits of chord and rif from earlier music. Art borrows from other art… google is no different (in principle, at least).
I guess I’m saying that trying to draw a clear line between producer, distributer and consumer gets just as messy as any other artificial distinction.
Again, real life is messier than you accept. Getting your site high-up in the google rankings is a reward in itself. In effect, some of the audience bleeds from the contributors to the paying advertisers, but some bleeds across to the contributers too so both depend on the other. Comparing this to an employer / employee relationship really misses the point. Besides this “creative talent” might be listed in many search engines, and might arbitrarily flip to any other page-ad system so this market is quite competitive.
Google is a Media Company. It is a direct competitor the NYT times, NBC, and every other media company in the world for the ONLY part of the business that really matters “selling audiences for advertising.†How they get those audiences is practically irrelevant too, because Madison Avenue simply has an advertising budget and it distributes it where it feels those dollars can be best used (and you can see percentages clearly moving away from broadcast to Internet). So, every dollar that goes to Google is a dollar that doesn’t go to an NBC, CNN, or NYTimes. So, from a business perspective Google is the same market as the NYTimes (as are Billboard, companies, Entertainment book companies, etc…) and it would be wise for the NYTimes to treat it as such.
@Don/SAG/DMC – While interesting, your points on what are or are not “true” media companies may not be relevant to this discussion. Rather than focusing on trying to create some philosophically-driven taxonomy of industries, David’s analysis is spot-on from a business/market perspective.
Google is a Media Company. It is a direct competitor the NYT times, NBC, and every other media company in the world for the ONLY part of the business that really matters “selling audiences for advertising.” How they get those audiences is practically irrelevant too, because Madison Avenue simply has an advertising budget and it distributes it where it feels those dollars can be best used (and you can see percentages clearly moving away from broadcast to Internet). So, every dollar that goes to Google is a dollar that doesn’t go to an NBC, CNN, or NYTimes. So, from a business perspective Google is the same market as the NYTimes (as are Billboard, companies, Entertainment book companies, etc…) and it would be wise for the NYTimes to treat it as such.
Even if you want to focus on creating a less market-based taxonomy for ‘media companies,’ I don’t see how you Google falls outside the Media Company designation (even pre-Knol). Compare Blogger to the New York TImes for example:
The NYTimes produces its daily paper by:
1. Paying a set of reporters to follow beats and write stories.
2. Accepting the contributions of unpaid writers (op-eds and LTEs) who are looking to simply express an opinion or raise their profile.
3. Selling the audience for those articles to advertisers
Blogger works essentially the same way:
1. Some bloggers are paid a percentage of ad revenue they bring in via adwords.
2. some bloggers are just giving away their content to express opinions, etc.
3. Blogger sells the audience for these blogs to its advertisers.
So, just because Blogger changes the way it pays its writers and has gotten many of them to work for free, you’re saying that they are NOT a media company? That seems nonsensical to me.
Google is an powerful competitor to media companies precisely because it pays so little for its audience attracting content. It doesn’t have to deal with unions, or strikes, or health care, or minimum wage. Essentially, its creative talent are ALL independent contractors that are working either for free or for a portion of the advertising revenue they help Google generate. If the NYT could get away with that, they would be in a lot better financial shape.
I’d have to agree with Don Marti and the Self Appointed Genius — what makes you a media company is content that you produce. I go to a NY Times or a CNN with the assumption that someone’s put some effort into fact-checking/editing/quality control. I may use a Wikipedia or a Knol, but it is with lower expectations of quality/correctness, because I don’t expect that anyone at Wikipedia is “in charge”.
Knol certainly brings Google closer to being a media company than not having it, but to the extent that the content is not being chosen or managed by Google proper, I can’t really think of it as a true media company. Pre-Knol, I’d say a calling Google a media company would be like calling those companies that sell Entertainment 2008 coupon books media companies. Yes, they deliver audiences, but the audiences have no particular expectations of getting much information from them. The simple fact of a coupon being in the coupon book tells me very little about the service provided except that it is provided, just as the simple fact of a web page coming up in a Google search tells me very little about it except that it mentions some term I asked about.
Ted, your definition seems a bit over-restrictive–it would suggest that the publishers of freely distributed ad-supported newspapers aren’t media companies.
Rather than debating the meaning of the term “media company,” I’d suggest we think in terms of content producers and content distributors. Google is perhaps the world’s most powerful content distributor. Meanwhile, content producers have become less powerful as their content is increasingly commodified. Arguably Google has been a key factor in causing this commodification.
I think that to be a “media company” you must get at least some notable part of your revenue stream directly from the end-user paying for content. How to encourage the end-user to actually pay for content is another problem, but google have nothing to worry about here.
Don, that’s half true, depending what you mean by media company. Billboard companies are certainly in the media business, but we’d be more inclined to call them advertising companies. Media company, as we’ve come to understand it, refers to producing and distributing content, which Google doesn’t do, even though its clearly in the media business.
How are advertising companies not media companies? Isn’t advertising considered a subset of media?
Being supported by ads doesn’t make you a media company. Billboards are supported by ads (financially, structurally it’s the other way around) but they don’t provide any non-ad content. Opera and Kazaa are examples of ad-supported software products that don’t do media. The classic Google business model is similar: ad-supported tools, not necessarily media.