Hey Newspaper Guys: Google's Not Making Money From News
from the so-wrong,-so-sad dept
Except, uh, someone forgot the part where Google and the others don't actually make much, if any, money in aggregating all of that content. At best, it's a loss leader for most such sites. Chris Tolles, who runs Topix -- which is an aggregator that tried to play that game and realized how little money there was in it, before changing business models, has a fantastic response to Weaver that should be read in its entirety, but here's a brief snippet. It starts off in response to Weaver's claim that Google, Yahoo, Microsoft and AOL make ("conservatively") $15 billion from "news and news-related content":
Once again, as these newspaper guys struggle to recognize what business they're in, they seem to reach out and attack Google, without even recognizing what it is they're attacking. They don't want to take the time to understand their own business (hint: it's never been "selling content"), so perhaps it's not surprising that they don't bother to understand the business of those they compete against either. And, if anything is causing the industry to falter it's that simple fact. If they can't understand the business they're in (or how others are beating them) then they're not going to do a very good job fixing themselves, will they?
Uh. No. That's just wrong.
So, since the grand total is around $36B, Google news is pretty much a non revenue products, and Google was doing just fine with little or no news results in their main index until the last couple of years. Yahoo does put news ina lot of their products, but certainly, nowhere near 50% of their advertising is sold against news, as is the same for AOL and MSN.
(Oh and last time I checked the newspaper industry advertising revenue was $37.85B)
News is a crap search product, and a loss leader, which is a big reason why Google news was in beta for years, and unmonetized, and why many news-centric searches get no ads next to them.
News is an unprofitable search. Since we at Topix are an adsense partner, and I am a downstream beneficiary to what revenues there are here, I know what kind of eCPM news brings and how hard it is to make money on aggregated "news" content.
So if you built a news aggregator, powered by journalists, this would somehow unlock the value and get to $1.5B in annual revenues?
NO. YOU WOULDN"T.
BUT THEY AREN'T, ARE THEY?
Closer to home, I have some experience in running a news site here at Topix, and having talked to Howard while he was at McClatchy (and one of our investors), I am somewhat puzzled since I actually talked him personally about the economics of news search a few years ago.
We've built a site which is,according to comScore, the #2 "newspaper" site online. We actually had a program for a while where' we'd give 50% of all ad revenues back to publishers who wanted to syndicate content to us. Didn't work worth a damn.