Ken Auletta - Googled - The End of the World as We Know It

While any of these Band-Aids might help slow the bleeding, two things are essential if print or online newspapers are to have a shot at survival. First, newspapers have to stop acting like victims, bemoaning their fate and clinging to the past. To blame Google is to prescribe a cure for the wrong illness. Second, they have to go on the offense by trying new things, including trying to charge for their content.

I was smacked in the face with this realization when my friend Kenneth Lerer, who started the Huffington Post with Arianna Huffington, mentioned in the summer of 2008 that he had hired a single twentysomething employee to launch its local Chicago online edition. The Web site, like Google, was free and offered links to stories in the Chicago Tribune, Chicago Daily Herald, and other local papers and Web sites. Aside from inviting citizens to blog, this local online “newspaper” was little more than a collection of links to work done by others. Lerer said there was promotional value for content providers like the Tribune. True. He said the more page views their content got the more advertising they’d sell. True. He said that “citizen journalists” often provide valuable information. True. But at a time when most newspapers proclaim local news as their potential salvation, these papers were suicidally supplying the Huffington Post with their own murder weapon. By 2009, the Huffington Post was discussing similar local editions in as many as fifty cities.

What to do? Eric Schmidt once told me that he thought “Apple’s iTunes is a great example of compromise” between old and new media and, of course, users pay for their music there. “Google,” Schmidt continued, “has not found the iTunes” model-yet. And unlike music and other forms of entertainment, few will keep replaying a newspaper story on their iPod. Andrew B. Lippman, the associate director and senior research scientist at the Media Lab at MIT, wonders whether the example of ASCAP, the organization that has channeled copyright payments to musicians since 1914, might be a way “for newspaper companies to share revenues.” Newspapers and Google have to keep looking.

Even if they locate the right model, the technical challenge is daunting. “Can you put it behind a wall and charge for access? Yes,” said Andreessen, who despite his criticism of traditional media still subscribes to the print edition of the New York Times and owns some eight thousand books and six thousand CDs. “Can someone still take that content, copy it and mail it to friends? Sure. Can somebody post it on a Web site in Russia and provide it for free? Sure. Can you get the Russian government to crack down on that? You can try. Can somebody put up every copy of the New York Times ever published on BitTorrent and make it available in a single pirated download? Sure. You can’t stop it. It’s bits. If anybody can see it, then there is going to be a way for everybody to see it.”

Today, more than one billion people go online and view these bits. They are accustomed to reading news for free. To suddenly try to get them to pay for it would be an imposing task. To prevent leakage, presumably newspapers would need to act in concert. To do so would require discussions, and such collusion might invite antitrust lawsuits. On the other hand, when the survival of newspapers has been at stake in the past, government has allowed joint operating agreements (JOAs) so that two papers can pool printing facilities or other resources to save money. As there’s little question that newspapers are endangered, our foremost papers-the Times, Journal, and Washington Post-might get together and agree to erect a firewall around their content. Responding to a March 2009 request from House Speaker Nancy Pelosi, Attorney General Eric Holder said he would consider relaxing antitrust regulations to allow newspapers to share costs and merge. In 2009, three longtime media executives-Steven Brill, the founder of Court TV and The American Lawyer; L. Gordon Crovitz, the former publisher of the Wall Street Journal; and business investor Leo Hindery, Jr.-announced that they had formed a company, Journalism Online LLC, in hopes of creating a single automated payment system so that print publications would be paid when their content was viewed.

The rub, of course, is that even if most newspapers agreed to erect a firewall, some would choose not to, probably including wire services like the AP that are now paid by Google for their news. Maybe the Christian Science Monitor, which now relies mostly on an online edition, or the Seattle Post-Intelligencer, which relies solely on its online edition, will achieve success with these and be unwilling to give them up. There would be leakage, as users shared stories. Or as Jack Shafer of Slate observed, an online publication like the Huffington Post or Gawker could subscribe to newspapers and rewrite their stories, as “Henry R. Luce and Britton Hadden started doing in 1923 as they rewrote newspapers on a weekly basis for Time magazine.” On the upside, perhaps online citizens would be better able to distinguish between good reporting and bad. If the online newspaper offers content not readily available elsewhere, along with interactive and video and other features, perhaps customers will pay for it.

In March of 2008, I asked Larry Page how he would save newspapers, and he grew uncharacteristically passionate. “I don’t know how to do it, or I would,” he said. “Or at least try to help.” He said he was spending time thinking about it. This was no abstract puzzle; he knew the question was linked to Google. “I do think that our mission at Google ends up being pretty close to this. We try to produce the best information we can. The success of a Google search is based on the quality of the information-is there a good article about this?” He went on to say, “I’ve been trying to learn more about journalism and trying to understand the issues better. I do think that there is a problem that if you’re primarily doing it for profit, it’s hard to do a really good job. The kinds of things that generate profits and page views are not necessarily the things that generate value for the world. If you look at really good newspapers, they have dual classes of stock. That’s part of our inspiration for doing that.”

Could he imagine Google in the newspaper or journalism business? “We look for high-leveraged things,” he said. “We’re trying to figure out, how does this one employee affect ten million people? I think most content creation companies involve more work. So we naturally steer away from that.”

The next day I asked Eric Schmidt, why not pay a paper like the Times for its content? “We’ve been able with the New York Times to convince them that they make so much money from the traffic that we send them that they want their content available to Google,” he said. “They have the choice of not doing it.” In fact, the Times does generate some income from Google, but digital income from digital operations accounted for just 12 percent of the company’s $2.9 billion revenues in 2008, more than a third of this from About.com. About half of the About Group’s revenues, according to Arthur Sulzberger, Jr., comes from Google’s AdSense, as does “a significant portion” of its online revenues. Might Google try to buy the New York Times? “The official answer is that we have discussed buying the New York Times over the years-and there are many such interesting companies,” Schmidt answered, candidly “In every case, we ultimately decided we don’t want to cross that line”-to become a content provider and risk favoring Google’s own content. “The reason I say we don’t rule anything out is that our strategy is always evolving. We might come up with a different answer in a year or two.”

A year later, in April of 2009, I asked Schmidt if he had come up with a different answer. “It’s the same answer,” he said, before adding that Google was working on a product that is targeted at individuals, that knows the stories that interest people and what they’ve already read and targets text and video to people based on those interests. “In order to do that model we would have to partner with news sources.” He mentioned newspapers like the Times and Washington Post as potential collaborators. Indeed, after leaving Schmidt’s office I bumped into the Times chairman and publisher, Arthur Sulzberger, Jr., and his senior vice president of digital operations, Martin Nisenholtz, grabbing lunch in the cafeteria of Building 43. They were startled to encounter a journalist, no doubt fearful word would spread that they were meeting that afternoon with Schmidt and the founders to discuss a partnership. How they would monetize such a partnership-share ad revenues, create a micropayment system, pay the papers a license fee for their content? Schmidt said he did not yet know the answer. He did know, however, that the new product would not be “a solution to the problems newspapers have today.” But, he added, “the fact that we don’t see a solution today doesn’t mean that it doesn’t exist. This is about invention. One criticism I would make of many industries is that they’ve lost the ability to reinvent themselves.”