No Leaf Clover: Newspapers Keep Pointing to Google as the Source of Their Problems; They Should Be So Lucky.

When a newspaper goes to bed at night, this is what wakes it up in a cold sweat, its newsprint wrinkling and ink running:

You don't have to have an MBA to realize that the chart is heading in the wrong direction and that it's getting worse by the quarter. Three entire years of accelerating declines in advertising revenue would keep anyone awake at night. You'd much rather have a chart that looks like this:

Which just happens to be Google's revenue over a similar timeframe. Which makes you realize part of why newspaper execs are hot on demonizing Google right now: they're jealous.

But, of course, charts only tell half the story. Here's the other half:

$37.8 billion vs $21.1 billion

Want to take a guess at which one is newspapers' ad revenue from 2008 and which one is Google's?

Believe it or not, the bigger number -- the one a healthy $16.7 billion higher is the newspaper industry's. That's right: Google's bringing in just over half what the newspapers haul in on print advertising alone. Which makes the current publisher anger towards Google more than a little disingenuous. Sure, Google's share is growing and newspapers' is shrinking, blah blah blah. Five years ago, Google's entire revenue was a scant $3 billion. Newspapers' print ad sales for 2004? $48.2 billion. And yet, with significantly smaller revenues, over that five year window, Google launched or acquired (list in vaguely chronological order as detailed here):

• Orkut
• Google Local
• Google SMS
• Desktop Search
• Google Scholar
• Google Book Search
• Google Maps
• Google Code
• Google Analytics
• Blogger Mobile
• iGoogle
• Google Finance
• Google Earth
• Google Talk
• Google Reader
• Google Transit
• Mobile Gmail
• Picasa
• Gmail Chat
• Google Calendar
• Google Trends
• YouTube purchase
• Google Docs
• Google Sites
• Google Street View
• Google Hot Trends
• Google Sky
• Android
• Adsense Mobile
• DoubleClick purchase
• OpenSocial
• Friend Connect
• Google Chrome
• G1 phone launches
• Google Wave

Phew. And, really, that's like a fraction of everything they've done, as it doesn't count a ton of failed launches, updates, language translations, 8,000 widgets, their insane space programs and green initiatives and giving everyone that works for them bicycles and a million T-shirts and and and.

What have newspapers done in that same timeframe? A few hamfisted redesigns? A couple relaunches of websites? A few bad acquisitions? And layoff after layoff after layoff.

Have all those products that Google has launched done well? Not by a longshot (unless you're Brazilian, you've probably never even heard of Orkut, for instance). But for every Google Catalog, there's a Google Docs to fill in the gap. Google innovated (and, yes, bought) its way to relevancy. And it did it with a fraction of the revenues of the newspaper industry.

Yes, I'm comparing a bit of apples and oranges here: newspapers are an entire industry, Google a single company. And yes, I'm not counting investors in the money mix. But still. Still.

Newspaper execs talk with exasperation, as if they've tried everything they can. But they define "everything" so narrowly that it renders the word almost meaningless. In reality, as they watch their massive river of money slowly shrink away, they've tried almost nothing. They had a couple hundred year head start on Google, and yet they collapse in a heap here at the dawn of a new age.

Is there any hope for newspaper companies? I'm not sure. But it'd be nice to see them at least go down fighting. That doesn't mean forcing all their employees to start Twittering, but instead opening their institutions up to ideas -- all of them. Why not give their beleaguered employees Google-style 20% time? Allow them to devote a day a week to building new things. Why not create small teams of reporters and charge them with reinventing their beats by any means necessary? Why not create contests for programmers to build a better ad engine, the way Netflix is doing with recommendations? Why not really try everything?

What do newspapers have to lose?

This was originally posted on the site of the forthcoming Chicago Media Future Conference, which will be awesome and which YOU should go to.

Follow Daniel Sinker on Twitter: www.twitter.com/dansinker

Comments

[FrozenNorthObserver]

The newspapers are right google is the problem. It has allowed them to be fact checked and they have been found wanting and unreliable for truth in journalism. If you are in the business of selling information and that information is more propaganda than anything else you have a unsellable product. They are victims of a self inflicted wound.

[jsgaetano]

Newspapers, like so many US companies, are still running on failed business models based on coservative principles. That's why they fail- they need to support an extremely top-heavy pay scale (trickle down!!!), which bleeds money from every aspect of the business which isn't executive pay.

Time to get back to more realistic, nonparasitic business models, which don't rely on leveraged debt, growth through acquisitions, and constant infusions of cheap loan money. Also, they need to dismantle upper management and astronomical pay scales. There is no reason a CEO needs to make more than 3000 times more than the guy loading the papers onto the trucks.

[paixa3]

Forget business models ! When a news organization becomes a shill for anyone or anything besides TRUTH, they will all lose in the long run.

Good riddance to bad rubbish.

[marketfolly]

lot of talk about the newspaper industry these days, it will be fascinating to see how it ultimately plays out. Obviously not many are counting on it turning rosy. I'd wager they end up going the way of non-profit or integrated into a larger conglomerate that can absorb their losses.

totally unrelated comment: no leaf clover, great metallica song with the San Francisco Orchestra

[BlueCashew]

Newspapers are caught in the perfect-perfect storm, featuring the collapse of the advertising model. Almost any of the automobile sites and certainly EBay do a better job of selling stuff. Combined with the general weakness of the US economy -- affecting recruitment ads, retail ads, etc.

Newspapers have been very slow to catch on to what news aggregators are doing to them. They really thought the internet was some kind of fad. In addition, people under 30 don't read newspapers. They read, they read all the time, but they're not reading newspapers. This is an earthquake to the industry, or should be.

The New York Times picked a heck of a time to have two scandals that went to the heart of journalistic integrity -- the Jason Blair scandal and the Judith Miller scandal. The first scandal told readers that reporters sometimes make it all up and it takes a long time to find that out. The second told readers that management can be so afraid that they don't do their jobs and they're not willing to question government authority, even if it means being part of the machine that leads a country into war.

Management­/ownership of newspapers is phenomenally short sighted in most cases. For years they enjoyed double-digit profit margins while putting next to nothing into training of reporters, ad sales, circulation people. Now it's all cut-cut-cut our way to greatness, which even the most frightened owner knows is not going to work.

[EbenSpinoza]

Not quite the right analysis. You've compared revenue, but forgot the costs. Google was never burdened by the expenses of a unionized workforce, pension obligations, editorial creation, or print distribution. No wonder Eric Schmidt has chosen not to enter this industry -- and why not, when Google can capture its benefits without incurring its costs? When a company has uncapped what appears to be an endless gusher, its easy to be experimental and acquisitive and lauded -- just examine the glowing business articles from 1986 to 1996 about Microsoft (interesting observation: the end of Microsoft's good press didn't start with the DOJ anti-trust case, but when Microsoft announced its Sidewalk project to enter local classified advertising in 1996.)

[Steve Magruder]

I'm afraid that newspapers have the same mentality that today's Republican Party has: "We shouldn't have to change." It's arrogance combined with fear of the unknown. The newspaper is an industry very unaccustomed to innovation, and that can't simply change overnight.

[Waltfl]

I stopped listening to right-wing radio, after Stern got sh*&canned for being obscene (=critical of Busch), and Bubba got taken off air. On the same token I cancelled 2 decade-long newspaper subscriptions, after they had become cheerleaders for Bush's wars, and got busy with kissing the conservative establishment's rears. Instead of condemning Google and the Internet, they need to stop the FOXification of the print media.

[Toby Barlow - Huffpost Blogger]

There are some terrible numbers running around in this article.

Yes, newspapers had more ad revenue than Google. But it's a collective number compared to a singular one. There are LOTS of newspapers. There's only one Google. After you're done slicing up that pie between the Times and the Chronicle and the Pheasant Valley gazette, there's not a whole lot less money left over for newspaper innovatin'.

The fact is, a newspaper is a fantastic omnibus with an incredibly vast variety of ad formats. Everything from luxury ads to funeral announcements to car sales spreads to Sunday coupons. Around those ads the publishers allow editors to insert some content. Readers pick up the paper both (Sunday papers do so well is that people love their coupons, it's free money.)

Now that Google, Craig's List, and Yahoo are making enough of these services available for free to make newspapers moot, it's a hard model to beat. Perhaps someone'll figure out a way to save newspapers. (Maybe it's the non-profit model Geffen promoted for the Times - one that has been successfully followed by publications like Mother Jones.)

It is hard for any business to ride a shift and adapt existing infrastructures to fit radical new formats, just ask Polaroid or the Pony Express. (The only company I know that's done it successfully is Yoyodyne.)

So maybe independent journalism collapses and we're reduced to relying on the internet's unreliable babble internet until something better emerges.

[Charles Milburn]

All well and good, but I'll tell you why I stopped reading newspapers after 40 years. I used to read the Post-Dispatch daily but the quality just got worse and worse. Articles cut off at the end of the column mid paragraph. Typos galore. No obvious proofreading. And the price? What used to cost 50 cents went up to 75 cents and now costs $1.00. All within the space of a year. And the paper shrunk. Tell me, who would purchase something that doubled in price and offered less for your money? No one. For the past 8 or 10 months, I've gotten most of my news online through one site or another. And I don't have to wait until tomorrow morning to get it, either. Speaking as someone who loved the smell of news print and loved to read the paper every day (and who made his living in the printing industry, by the way), why should I buy another newspaper in my life?

[Charles Milburn]

And one more thing, who does investigative reporting any more? All the papers cut back on their staff so no one does scoops anymore.

[larry278]

The problem with print on paper, traditional MSM, newspapers is their tradition. "Tradition" is also a song used in the musical, "Fiddler on the Roof.". Check out the English words of "Tradition", Pooch, your Rupertship, Sam...; the words can be used to sum up the problems of publishing a newspaper in 2009.

[provgrays]

The only way for papers to survive is to structure them for the goal of public service and not profits.

[ufopp]

Cross ownership has killed the newspaper. When print media is used as a means to something else besides conveying news, it's only a matter of time. Same with Google. If they load their pages with ads, flash movies, banners, and pop ups, they'll be history too.

[rtb61]

You should reconsider googles long term future. Google has managed to gain a significant lead in what is still a fairly young industry. The catch is as the industry matures more companies will catch up and start to eat away at googles lead, so inevitably that market segment will break up while it continues to expand. Temporarily that overall expansion in that market segment will hide googles losses in market share to other companies but once the growth slows down google will immediately start to show revenue decreases as it gets targeted by every other company in that same market segment. Some papers will be able to make the transition from print media to internet and eat away at googles market share some will not and simply fail.

[Hastings1066]

If newspapers did what they claimed to do and actually REPORT NEWS instead of OPINION they might actually sell NEWSPAPERS.

[GardenerNorCal]

I second that.

[robin50]

I would like to get a real daily paper on the day it is printed here in rural Indiana. But obviously it seems that can't be done. I subscribed for three months for a local rag and was glad when the subscription ran out. For my money I got very little news and lots of ads, filler and junk. My recycling bin was full within a week. Reading the news on-line with my morning coffee is just not as satisfying as a paper. Working the crossword on line is not the same either. But if that is what has to be done to avoid the junk and trash, that's what I do.

[sixchair]

Stone age strategies, glacial reaction times and a bunker mentality are dooming the industry. I worked there for 20 years and believe me, no place for innovative thought. I now work for a market analysis software firm that offers the industry a unique, brilliant, inexpensive program that can solve zillions of their revenue issues on a new selling model. But you'd be surprised at the number of papers who are hiring "non-innovators" as managers to take their selling efforts "back to basics" - the same old approaches that got them into this ditch in the first place. Guys who sure as heck don't get it the way Google does.

[rabrophy]

Why not an online subscription or pay-per-view system payed thru credit cards or a Pay Pal type system?I subscribe to several magazines That I never get a printed copy of. With the advent of Kindle and other hand held digital reading devices there seems to be less and less need for "hard copy" anything.

Smearing ink on chopped up trees seems SO-O-O Gutenberg