Aggregation Is Competition
from the future-of-news dept
I'm currently attending a workshop on "The Future of News" at Princeton's Center for IT Policy. One of the most interesting things about the conference is that it has proven to be a kind of "meeting of the minds" between the "old media" (the Wall Street Journal and the San Diego Union-Tribune are represented) and practitioners of Internet journalism. One of the frequent complaints we've heard from some of the newspaper folks is that they're losing business to aggregators like Google News. On the surface, this doesn't seem to make sense, because as we've pointed out before, aggregators drive traffic to news sites, and it's silly for an ad-driven website to complain about another site sending them traffic.
Yet complain they do. And indeed, the complaint seems so common that there has to be something behind it. It has become clear that incumbent media outlets hate aggregators because aggregators increase competition. Incumbent media outlets -- especially local newspapers -- grew accustomed to a cozy relationship with their readers in which their readers had few alternatives for their daily news. That meant they could maintain high circulation (and advertising rates) without worrying too much about the quality of their product. When newspapers migrated to the web, they expected to maintain this captive audience.
What aggregators do is make it a lot easier for readers to find new news sources. That's good for an up-and-coming site with a lot of great content, because aggregators enlarge the potential audience for the content. But it's not good for a mediocre site with a large readership based largely on inertia. The easier it is for readers to find news sources of news, the faster mediocre news sites will bleed readers. We tend to think of competition in terms of price, but competition is important even when a business is already giving its product away for free. More competition forces sites to create more and better content, have fewer and less intrusive ads, and offer content in formats that are convenient and appealing. The increased competition enabled by aggregators may be bad for some websites, but it's unambiguously good for consumers. Google News isn't a competitor to newspapers. Rather, Google News forces newspapers to compete with each other. And when newspapers compete, readers win.