Tuesday, May 11, 2010

Google tries to save the news

James Fallows at The Atlantic has a new article out, "How to Save the News", on what Googlers think about the future of the news industry.

Some key excerpts:
"If you were starting from scratch, you could never possibly justify [the current] business model," [Google Chief Economist] Hal Varian said ... "Grow trees -- then grind them up, and truck big rolls of paper down from Canada? Then run them through enormously expensive machinery, hand-deliver them overnight to thousands of doorsteps, and leave more on newsstands, where the surplus is out of date immediately and must be thrown away? Who would say that made sense?" The old-tech wastefulness of the process is obvious, but Varian added a less familiar point. Burdened as they are with these "legacy" print costs, newspapers typically spend about 15 percent of their revenue on what, to the Internet world, are their only valuable assets: the people who report, analyze, and edit the news.

"Nothing that I see suggests the 'death of newspapers,'" [Google CEO] Eric Schmidt told me. The problem was the high cost and plummeting popularity of their print versions. "Today you have a subscription to a print newspaper," he said. "In the future model, you'll have subscriptions to information sources that will have advertisements embedded in them, like a newspaper. You'll just leave out the print part. I am quite sure that this will happen ... As print circulation falls, the growth of the online audience is dramatic ... Newspapers don't have a demand problem; they have a business-model problem." Many of his company’s efforts are attempts to solve this, so that newspaper companies can survive, as printed circulation withers away.

The three pillars of the new online business model, as I heard them invariably described, are distribution, engagement, and monetization. That is: getting news to more people, and more people to news-oriented sites; making the presentation of news more interesting, varied, and involving; and converting these larger and more strongly committed audiences into revenue, through both subscription fees and ads.

The best monetizing schemes are of course ones that people like -- ads they enjoy seeing, products for which they willingly pay. Online display ads should be better on these counts too, [Google VP Neal] Mohan said. "here are things we can do online that we simply can't do in print," he said. An ad is "intrusive" mainly if it is not related to what you care about at that time ... "The online world will be a lot more attuned to who you are and what you care about" ... Advertising has been around forever, Mohan said, "but until now it has always been a one-way conversation."
The entire article is well worth reading. It gives a great feel for how Googlers are thinking about the future of news (and is mostly in line with my own thoughts).

Please see also my Oct 2009 post, "Google CEO on personalized news".


Anonymous said...

A pretty interesting reading, thank you.
I have tried to start using Google News several times in the past but I did not become user of it.
I prefer NY Times/BBC News/The Times/The Guardian as my primary news/analytics provider. The problem of Google News is too much noise from an obscure sources and inability to select/filter important news from non-important, good journalism from bad journalism, interesting deep analytics from random crap. I bought Kindle recently and started reading newspapers. it is a good experience and I do not need Google.
So I do not see a Google as a threat to a newspaper industry as many journalism/media magnates claim. Google is not a threat. Internet is a threat since people prefer to read news online and if Google would not exist they would use Bing/Yahoo whatever else.
But I do not think that Googleis a threat. It never convinced me to use its tool to read news, the traditional media is still much better.

Anonymous said...

What has happened to Google's attempts to personalize the news? Their '07 paper (Google News Personalization: Scalable Online Collaborative Filtering) describes an inelegant solution to the problem and the current version of personalized Google News seems to be a regression from what was described in that paper. For example, it doesn't take into account my clickstream and the news recommendations seem somewhat generic.

Given your history with p13n, I'm sure you developed some interesting approaches with Findroy and have had discussions with various companies (Google, etc) regarding IP. There must be an interesting story there and I'd love to hear your thoughts around content based recommenders using real time behavioral data.

Greg Linden said...

Hi, Anonymous. Google has a new paper out describing a hybrid recommender (combining content and behavior-based recommendations like Findory did) that beat their old algorithm.

Details at


Some of my thoughts on the advantages of Findory's algorithms and on discussions with companies about Findory can be found in these two posts:


Hope that helps!