Google + publishers: Push me, pull you

Posted by Peter Kirwan on 10 December 2009 at 19:59
Tags: Google, Media, News Corp

Alternatives to Murdoch’s Google strategy are emerging. The New York Times reports that Christoph Keese, head of public affairs and “architect of online strategy” at Springer wants to work with “Internet companies” to build a “one-click marketplace solution” for paid content.

Google or other Internet gateways would display links to newspaper articles, videos and other content from a variety of providers, as search engines do now. But some of the items would include something new: a price tag.

Meh: not terribly exciting at first glance. But this seems slightly more interesting:

Josh Cohen, senior business product manager at Google, said an online marketplace like the one envisioned by Mr. Keese was an “obvious extension” of the company’s previously announced plans to create an Internet store for digital books.

Google Books? Springer books? Google News? Paid content? Are we talking about content hosted and sold by Google on behalf of publishers? Google as a retail channel?

Surely not. But in the end, there’s no clarity: Josh Cohen, the overlord of Google News, brings down the shutters quickly, offering up the usual boilerplate: “It’s safe to say it’s a global discussion going on with a number of publishers. Publishers are still in the exploratory stages of this.”

We don’t know what News Corporation is up to behind the scenes. Yet Springer appears to be both collaborating with Google and kicking its ass.

For one thing, German publishers seem unafraid of playing the anti-competition card (something that News Corporation has chosen not to emphasise in its campaign against Google):

Publishers say pulling their contents out of Google News, or the search engine, is not a fair choice because of the company’s powerful position on the Internet, leaving them with nowhere else to go; in Germany, Google accounts for roughly 80 percent of Internet searches.

In addition, Angela Merkel’s government has promised an extension of copyright law that would prevent search engines from using text snippets in search results without paying royalties. According to the Times, the proposal has “broad support” among German publishers. No wonder.

In the end, we’re looking at the music royalties model. The Times reports that aggregators and search engines “might be required to buy licenses, much as restaurants, nightclubs or hair salons now need licenses to play recorded music”. A new rights body — much like Performing Rights Society — would carve up the euros and dollars.

Unworkable? Who knows? Deliverable? Probably not. Techdirt is deeply sceptical, suggesting that the proposal was “really designed to gain the current ruling party a bit of support from the mainstream press in Germany”.

Which seems to me to be the point. Google excels at flattering politicians. But newspaper publishers excel at frightening them. The latter technique is far superior.

In all of this, the level of emerging collaboration between rival media organisations is intriguing. The Wall Street Journal reports that Springer is going it alone, but the FT suggests that many others are working together:

Some of the nation’s largest print houses - such as Axel Springer, M. DuMont Schauberg, Verlagsgruppe Georg Von Holtzbrinck and WAZ Mediengruppe - are in initial talks about how to sell content on the web.

For English-speakers, there’s the (still somewhat mysterious) JV involving Conde Nast, Hearst, News Corp, Time Inc and Meredith.

Interesting times. Is the lay of the land shifting beneath Google’s feet? On certain days, it almost feels that way. . .

News Corp vs. Google: Another day, another bombshell

Posted by Peter Kirwan on 3 December 2009 at 12:43
Tags: Google, Media, News Corp

News Corporation’s offensive against Google keeps growing in scale and intensity. Already, the aggro feels much more significant than anything Murdoch has doled out to the BBC in the past.

This week, the sabre-rattling reached new heights, with Murdoch himself, Les Hinton and Robert Thomson all participating in assaults.

So far, News Corporation executives have delivered coruscating anti-Google diatribes in the UK, the US, China, India and Australia. This is a global effort.

In an accompanying post, I try to work out some of implications. For now, here’s a quick summary of how News Corporation’s campaign has developed:

1 December: Rupert Murdoch in Washington D.C.:

“There are those who think they have a right to take our news content and use it for their own purposes without contributing a penny to its production.” More here.

1 December: Les Hinton in Hyderabad:

“We are allowing our journalism – billions of dollars worth of it every year – to leak onto the internet. We are surrendering our hard-earned rights to the search engines and aggregators, and the out and out thieves of the digital age.” More here.

1 December: Robert Thomson in Washington D.C.:

According to Paid Content, Thomson describes Eric Schmidt, the chief executive of Google as the man who put the “dis” into “disintermediation”. (The problem, it seems, is Schmidt’s alleged criticism of media executives.) More here.

18 November: James Harding, editor of the Times, in London:

“We are going to confront those people who we think represent a serious threat to the future of independent journalism. This means having a conversation with the likes of Google, which extracts far more value from content sites than they give in return.” More here.

9 November: Rupert Murdoch, interviewed by Sky News Australia:

“The people who just simply pick up everything and run with it - steal our stories … without payment.” More here.

1 November: Robert Thomson in San Francisco:

“Marissa unintentionally encourages promiscuity. . . The whole Google model is based on digital disloyalty. It’s about disloyalty to creators.” More here.

12th October: Rupert Murdoch in Beijing:

“The Philistine phase of the digital age is almost over. The aggregators and the plagiarists will soon have to pay a price for the co-opting of our content.” More here.

24 June 2009: Les Hinton in New York

“There is a charitable view of the history of Google. [It] didn’t actually begin life in a cave as a digital vampire per se. The charitable view of Google is that the news business itself fed Google’s taste for this kind of blood.” More here.

6 April 2009: Robert Thomson, interviewed by The Australian

“Google argues they drive traffic to sites, but the whole Google sensibility is inimical to traditional brand loyalty.

“Google encourages promiscuity - and shamelessly so - and therefore a significant proportion of their users don’t necessarily associate that content with the creator.

“There is no doubt that certain websites are best described as parasites or tech tapeworms in the intestines of the internet.” More here.

12 February 2009: Robert Thomson in New York:

“Google — I mean, the harsh way of just defining it, Google devalues everything it touches. Google is great for Google, but it’s terrible for content providers, because it divides that content quantitatively rather than qualitatively.” More here.

Where is all of this leading? What does News Corporation want? How can Google stop the pain? In an accompanying post, I try to tease out the implications.

Ad revenue confusion: Where does slowdown end and recovery begin?

Posted by Peter Kirwan on 4 November 2009 at 17:49
Tags: Daily Mail & General Trust, Google, ITV, Independent News & Media

Confusion stalks the land. Is flat the new up? Or is down the new flat?

Typically, recovery means revenue growth. But after two years of declining ad spend, sentiment encourages inflated claims. Disappointments seem exaggerated in their effect. Some persist in talking up a recovery. We all want the pain to end.

At the Guardian a few weeks ago, Roy Greenslade asked whether newspaper publishers might be on the “verge of a remarkable recovery”. The evidence for “renewed optimism”, Greenslade told us, lay in share prices that have “come off the floor”.

This morning, by contrast, Greenslade has noticed a Wall Street Journal piece which argues (in his words) that “there is no real recovery in advertising income”.

Greenslade goes on to paraphrase the allegation that publishers have hyped “slight moderations in the rate of decline of their year-on-year ad revenues”.

There has been some hype. But in general, this is something that chief executives and finance directors tend to avoid. Irresponsible cheer-leading is career-limiting.

Financial PRs are often less squeamish. In the face of pressure to maintain share prices, they’re paid for their promotional skills.

Of course, what matters to journalists is a new direction for the narrative. At the moment, we’re all straining at the leash to declare the end of recession.

This is visible, most of all, in the headlines that fill up Blackberry screens. One among many tells a story: “Daily Mail looks to happy New Year as advertising slide slows” (The Times, 30 September).

Dan Sabbagh’s accompanying copy spells out the facts on which this bright headline relies: a 21% decline revenue at the Mail and Metro during July and August, followed by a 10%-12% decline in September.

This big contrast between flaky summer months and back-to-school September might not tell us much. Notably, Sabbagh’s story quotes Peter Williams, DMGT’s finance director, refusing to “call the bottom, in case it turns out we are on a ledge”.

The reaction to Independent News & Media’s trading update on 29^th October was similarly interesting.

INM’s trading update was ugly. Ad revenues fell by 19% YOY during the nine months to October. Operating profits nearly halved. Worst of all, from the City’s perspective, INM cut its forecast profits for the full year, which ends in December.

Yet some of the coverage — at Dow Jones, Reuters and the Irish Times — underlined the idea that ad revenues are stabilizing.

Arguably, it was the third par of INM’s trading statement that influenced these stories and headlines:

This marginally improved year-to-date revenue performance compared to the trend for the 1st half of 2009 demonstrates a stabilising advertising revenue trend, with each region experiencing similar advertising trends to H1 2009.

The “marginal improvement” mentioned here was very marginal indeed: a 19.6% decline in ad revenues during 1H, versus a 19% between July and October. Tucked away in the 20^th par of the earnings release, meanwhile, was this warning:

Based on still limited visibility, the advertising trends experienced in September and October remain challenging and are expected to continue for the remainder of 2009.

In other words: things might continue to improve very slowly, but don’t bet on it.

Stephen Miron, the chairman of Global Radio, probably thinks similarly about the prospects for his business. Last month, Miron told the Times: “Single-digit declines are the new up now — so used are media businesses to the problems of the year so far.”

It was a back-handed comment. Yet already, the game has moved on. Since Roy Greenslade raised the prospect of a rip-roaring recovery three weeks ago, the shares of DMGT, Johnston Press and Trinity Mirror have all turned downward. The markets have hit the pause button: the six month-long run-up in share prices is over for now.

This suggests that Big Media needs to generate real revenue growth, and quickly. Yet the GDP numbers for Q3 — down by 0.4% — say that this isn’t possible, not yet. Retailers, the biggest advertisers of all, are experiencing similar difficulty. Marks & Spencer may have beaten the market’s profit expectations today, but only because of canny cost management. Like-for-like non-food sales are still declining.

After Christmas, we’ll find out more about how consumers are feeling. Perhaps VAT cuts and the car scrappage scheme have simply brought forward household expenditure that would otherwise have occurred in 2010. Richard McGuire, fixed income strategist at RBC Capital Markets, is among those who think this is the case.

Last week, Sir Martin Sorrell unveiled disappointing results at WPP. He had this to say to those who (for understandable reasons) persist in talking up the market.

“I don’t want to get into that mentality where you accept that declines in negatives is good. We don’t accept that. I’m surprised at people who see sequential declines in negatives [of revenue loss] and say the downturn is over. . . We will only declare final victory when we see positive growth year on year. You can’t declare victory on improving negatives.”

The message was a stern one. As usual, though, Sorrell was on the money. We’re not out of the woods yet.

Google to US newspapers: We could acquire you, but what’s the point?

Posted by Peter Kirwan on 17 February 2009 at 16:17
Tags: Google, Media

A couple of weeks ago, Fortune carried a surreal conversation between editor-at-large Adam Lashinsky and Eric Schmidt, chief executive of Google.

The subject was the future of the newspaper industry.

Schmidt started out –- as he has done a few times in the past — by suggesting that there’s plenty of demand for news. (“People love the news.”) But there are terrible difficulties, too: “a problem with advertising, classifieds and the cost itself of a newspaper: physical printing, delivery and so on.”

As a result, he says, the business model “gets squeezed”.

This much we know. But Lashinsky’s follow-up question is a corker. No doubt with Timothy Geitner in mind, he asks Schmidt this:

How about just buying them?

Without apparently batting an eyelid, Schmidt replies that Google has the cash to do so. But, he adds:

I don’t think our purchasing a newspaper would solve the business problems. It would help solidify the ownership structure, but it doesn’t solve the underlying problem in the business. Until we can answer that question we’re in this uncomfortable conversation.

I think the solution is tighter integration. In other words, we can do this without making an acquisition. The term I’ve been using is ‘merge without merging.’ The Web allows you to do that, where you can get the Web systems of both organizations fairly well integrated, and you don’t have to do it on exclusive basis.

“Merging without merging”? What precisely does Schmidt mean by this? Quite aside from the idea of outsourcing all sales activity to Google, it’s not clear than he knows entirely, because before long, he’s telling Lashinsky this:

The fundamental question you’re asking is why does Google not write large checks to newspapers? We’re careful at Google with our money. We write large checks when we have a great strategy. And we don’t yet have that strategy.

Insiders will smile wryly at the mention of Google’s new-found financial prudence. All the same, it’s interesting to dwell on the possibilities. If Eric Schmidt doesn’t yet possess a workable plan, he may do so at some point in the future.

Descending rapidly from the this 20,000 ft perspective. . . it’s also clear that Schmidt’s colleague Tim Armstrong is getting stuck into the news industry’s crisis at ground level.

Armstrong, who runs Google’s global sales operation, has been revealed as an investor in Patch, a New York-based start-up that aims to spawn a new generation of local news sites across America. Or as Patch’s site puts it:

We’re a community-specific news and information platform dedicated to providing comprehensive and trusted local coverage for individual towns and communities.

Patch launched itself upon the world last week.  At the moment, it runs sites for just three of those “individual towns and communities”: Millburn, Maplewood and South Orange, all of which are in New Jersey.

Valleywag has a typically sour take on Armstrong’s venture. The site suggests that local journalism is a “starter job that desperate grads take straight out of J-school”.

The site adds: “The difference, in this Google-funded scenario, is that there won’t be anywhere else to go from there.”

Well, we’ll see. I’m inclined to give a bit more credence to Armstrong and his effort. Credit to him, at the very least, for putting his money where Eric Schmidt’s mouth is.

As Johsua Mack points out, Patch looks a little bit like backfence.

Uh-huh: and here’s Jeff Jarvis popping up on the Patch Editorial Advisory Board.

Which leads us to an apposite question: what would Google do?

The discreet charm of non-executive directors: Sharp hires at The Guardian and The Telegraph

Posted by Peter Kirwan on 15 October 2008 at 00:59
Tags: Associated Newspapers, Daily Mail & General Trust, Google, Guardian Media Group, Independent News & Media, News Corp, News International, Trinity Mirror, United Business Media, emap

What do non-executives get paid for?

Actually, the money isn’t great (at least not by the standards of Masters Of Universe).

The official version is that non-executives act as neutral voices, mediating between management teams and shareholders. Occasionally, they are called upon to mediate between chairman and chief executives, too.

If that sounds a bit like working as a counselor at Relate, the marriage guidance service, think again. Non-executives also have some serious (fiduciary, in the jargon) responsibilities. In extremis, neglecting these responsibilties can get them prosecuted.

As I say, that’s the official version. In many ways, the unofficial version is much more interesting — particularly at non-quoted companies, where there’s less pressure to appoint directors who are deeply acceptable as guardians of the City’s interests.

Away from the public markets, copper-bottomed presentability in the City doesn’t matter so much as a gilt-edged contact book.

Nothing wrong with that at all. It’s the stuff from which deals are made. In particular, today brought two stunning examples of the genre.

First up, Telegraph Media Group appointed Lauren Twohill, Google’s European marketing boss, as non-executive director.

Twohill has worked at Google for the past six years — long enough to assimilate the DNA of a company that lies at the heart of the web economy.

Meanwhile, over at the Guardian Media Group, in the wake of Paul Myners’ departure, the company has appointed venture capitalist Judy Gibbons as a non-executive director.

Like Twohill, Gibbons is unusual — in the sense that she’s a female Brit with extensive high-level experience of Silicon Valley.

But Gibbons’ track record in the tech industry — all 25 years of it — is deeper and wider. After stints at Hewlett-Packard and Apple, she switched allegiance to Microsoft, playing a big role in the development of MSN.

Next, Gibbons ascended to tech exec heaven — that’s to say, she became a partner at one of Silicon Valley’s largest and most respected venture capital firms, Accel Partners. (Its portfolio of investments include Facebook and a bunch of established and well-respected deep-tech companies.)

No doubt Gibbons will play a big role in advising Carolyn McCall on how to invest the tens of millions that GMG has banked from the part-sale of Auto Trader. (There’s a rather large “investment fund” waiting to be spent — although some of it may already have been blown on the £30m acquisition of Paid Content).

We know less about Telegraph Media Group’s investment plans. Have the Barclays ponied up cash for a 2.0 spending spree? Given the desperation of so many start-ups, they could do a lot worse. No doubt Ms Twohill will help the Barclays to spend what’s available.

If anything, the corollary these appointments is even more intriguing.

At Wapping, can we expect James Murdoch to tear down the walls that traditionally separate News Corp’s operating units — and bring in some digital expertise from his dad’s empire? You’d hope so. But there’s little sign of it.

If anything, the recent promotion of two insiders to take over Anne Spackman’s role as editor of Times Online points to a continuing preference for autarky.

What about Daily Mail & General Trust? This is a company that has excelled in snapping up high-margin B2B and database publishers. But its top table visibly lacks a digital star. (Charles Dunstone of Carphone Warehouse is a retailer at heart, and a superb one. But he doesn’t quite make the cut in tech terms IMHO.)

Endearingly, five of DMGT’s non-execs appear to be over 70 years of age.

At Independent News & Media, there’s no News Corp-style pool of talent to call upon. Here, the roster of non-execs resembles a procession of stuffed shirts, old mates with Irish surnames and the odd bloke who has some expertise in international relations. Plus Baroness Jay.

As at DMGT, this is a boardroom policy minted in the 1980s. The appointment of Twohill and Gibbons elsewhere will steadily increase the pressure on the O’Reillys — and the Rothermeres — to confront the recent arrival of the 21^st century.

And what of Trinity Mirror? Sly Bailey has made some interesting-looking digital acquisitions. But have you looked at Trinity’s line-up non-execs lately? To say the least, it lacks digital oomph.

There’s Gary Hoffman (a vice-chairman at Barclays, who seems well-versed in the credit card business); Laura Wade-Gery (an ex-management consultant and investment banker who runs Tesco.com); Kathleen O’Donovan (former beancounter-in-chief at industrial widget company Invensys); and Jane Lighting (former CEO of Five).

DMGT, IN&M and Trinity Mirror need to get their backsides in gear. Their non-quoted competitors have just raised the ante. Significantly.

Google stoops to conquer: Schmidt frets about decline of US investigative journalism

Posted by Peter Kirwan on 27 August 2008 at 12:15
Tags: Google

Last year, Sly Bailey cheekily appended a quote from Larry Page, co-founder of Google, to a presentation she gave to analysts and investors.

Page’s quote ran: “Newspapers have a good future. A laptop runs out of battery and you can’t tuck it under your arm.”

Nice, upbeat, stuff. During the past year, however, the prognosis from The Googleplex seems to have darkened a bit.

During June, Eric Schmidt, Google’s chief executive, was to be found telling conference audiences that there was a “a huge moral imperative” to help the US newspaper industry with a “shared problem” that he described like this:

“Newspaper demand has never been higher. The problem is revenues have never been lower. So people are reading the newspaper they’re just not reading it in a way where the newspapers can make money on it.”

But only a month later, at a conference held by AdAge in the US in late July, Schmidt has started to sound doubtful about the possibility of helping the news business.

At this conference, Schmidt started by criticizing the “conventional wisdom”:

“More people are online than ever, the existing ‘older businesses’ will in fact discover how to monetize in the new formats, that new information will become possible, and we’ll all get through this.”

Schmidt wasn’t buying it. He told the audience: “I’m sorry to be such a downer, and I’m very worried about it, so I’d rather just confess. . . The evidence does not suggest it’s true.”

Schmidt went on to describe the prognosis for US newspapers as “particularly bleak”:

“It’s a tragedy for America because the newspaper industry — in particular investigative reporting — is so fundamental to how our democracy works.”

“The classic example is how many people are covering the war in Iraq to find out what’s really going on — after we as a country spent a trillion dollars on it? Seems like we should spend a little more to cover it.”

Indeed. These latest (apparently unscripted) comments mean that Schmidt has been caught ruminating publicly upon the problems of the US newspaper industry three times in as many months.

Call me fanciful, but this does make me wonder what’s being discussed away from the podium. If Schmidt’s comments indicate the existence of smoke, where’s the fire?

PS: For those of you with a strong constitution, Valleywag, Silicon Valley’s in-house gossip site, has an little survey entitled “Five ways the newspapers botched the web”.

It’s a bestiary of messed-up Stateside efforts at online diversification that runs from Knight Ridder’s 1983-vintage effort Viewtron (”We’re dancing naked on the stage of history”) to New Century Network, launched in 1995 (”The graddaddy of fuckups”)

It’s gory in extremis. Coincidentally, the dismissive tone nicely captures the attitude among many in Silicon Valley toward the US newspaper industry.

It’s a fact that large swathes of the US software industry regards the news business as the latter-day equivalent of the midwestern steel-making plants that shut their doors during the Reagan era.

This may put Schmidt’s touchy-feely obsession with newspapers into context. The cynical interpretation is that Google’s chief executive shares the views of his peers, but needs to massage perceptions of his company in the run-up to US government anti-trust intervention.

Clearly, The Googleplex would also like the US media to take an enlightened view of its emerging monopoly status. This is something that certainly didn’t occur in the case of Google’s rival Microsoft, which endured a decade of negative media coverage after the Department of Justice instituted anti-trust proceedings in 1998.

If US newspapers resemble the Irrawaddy delta, is Google’s Eric Schmidt planning an airlift?

Posted by Peter Kirwan on 13 June 2008 at 00:30
Tags: Gannett, Google, Guardian Media Group, News Corp, Yahoo

Eric Schmidt, the chief executive of Google, is not what you’d call a loose cannon.

This is a man who, in previous incarnations, became an arch-enemy of Microsoft’s expanding monopoly during the 1990s. Now, at the top of a company surrounded by anti-monopoly moaning, this poacher has become a extremely adroit gamekeeper.

So it’s been fascinating to watch Schmidt talking with apparent compassion about the plight of US newspapers twice this week — once in Washington DC and once in San Francisco.

In Washington DC, he said:

“We all care a lot about this. Newspaper demand has never been higher. The problem is revenues have never been lower. So people are reading the newspaper they’re just not reading it in a way where the newspapers can make money on it. This is a shared problem. We have to solve it. There’s no obviously good solution right now.”

In San Francisco, he said:

“It’s a huge moral imperative to help here.”

To the best of my knowledge, this is the first time that Schmidt has talked in public about Big Media’s plight in the same way that the boss of Oxfam might talk about the need to get aid into the Irrawaddy delta.

Perhaps Schmidt had read the news earlier this week about Gannett’s £3bn write-down — and found his heart melting with pity for the content companies that supply Google with so much valuable raw material.

Perhaps. But it seems equally likely to me that Schmidt’s plaintive outburst was prompted by reading advance copies of the European Commission’s 100-page report on Google’s acquisition of Doubleclick. (The full monty was published yesterday. You can download it in PDF format here.)

The Google-Doubleclick combination is highly controversial. By some accounts, Google already controls around 70% of the paid search ad market, which in turn comprises slightly less than half of all online advertising. By acquiring Doubleclick, which has a big market share in online display, the company could extend its dominance from search to the serving of what we might still call banners and buttons.

In the event, the Commission approved Google’s acquisition three months ago. But the retrospectively published report will have made grim reading for Schmidt.

Among other things, the report says this:

“Many advertisers depend on Google’s search ad services and. . . the revenues derived from Google’s search ad intermediation make it an almost irreplaceable source of income for many publishers.”

The report also suggests that Google’s rivals “do not seem to be a real alternative”. That’s because — in the Commission’s eyes — Google possesses a “sufficient degree of market power to be able to foreclose rivals in the ad serving market”.

Irreplaceable source of income? Power to foreclose rivals? No real alternative? This is monopoly talk.

Just in case you were in any doubt about that, a Brussels-based lawyer called David Wood has been giving Business Week the benefit of his views on the document.

Wood believes that the European Commission has put Google “on effective notice that its behavior will now be measured as that of a dominant undertaking”. He adds:

“This has always not been about whether the transaction would be cleared but what would happen afterwards. The next phase is looking at the behavior of these companies [Google and Doublclick]; let’s see if their behavior is allowed by competition law standards.”

In passing, it’s worth noting that Wood works for a lobbying outfit called The Initiative for a Competitive Online Marketplace, or ICOMP for short.

ICOMP is an anti-Google lobbying front funded by Microsoft and run on a day-to-day basis by Burson-Marsteller, the PR agency.

Don’t let that make you too skeptical about Wood’s comments.

Instead, ask what exactly was going through Eric Schmidt’s mind when he decided to make nice with the ailing US newspaper industry this week.

As Eric Schmidt knows well, ICOMP represents Microsoft’s effort to use against Google exactly the same lobbying tools that he and his allies used against Microsoft in the 1990s.

With the insight of a poacher turned gamekeeper, Google’s boss knows precisely where this particular road leads. In Microsoft’s case, it led to the company being tied down by anti-trust actions that started in 1998 and continue to this day.

Not coincidentally, Google’s monopoly has been the subject of comments by interested onlookers such as Rupert Murdoch, Sly Bailey and Paul Myners in recent weeks.

For the moment, however, ICOMP’s list of supporters mostly remains a rag-bag of obscure European names, including hotel groups in Spain and ad agencies in Austria.

This is not yet the kind of broad front that creates big waves in Brussels. In the name of shareholder value, Google would to keep it that way — for as long as possible.

Better than anything else, this explains the paroxsym of pro-newspaper sentiment that seized Mr Schmidt this week.

Google monopoly: Techcrunch founder backs Microsoft as saviour

Posted by Peter Kirwan on 28 May 2008 at 17:42
Tags: Google, Media

If we’re seeing the beginnings of a proper debate about Google’s dominance (monopoly?) in the UK, something similar seems to be happening in the US.

There, Michael Arrington, the Web 2.0 guru who runs TechCrunch, spent part of his Sunday penning a lengthy article entitled “The Importance Of A Competitive Search Market”.

In some respects, Arrington is arguing ahead of the pack. He claims, for example, that Google’s dominance of search means that “little effort is put into innovation”. Specifically, he offers up one example of what he believes is going wrong:

For example, the CPC (cost per click) model is flawed, but in Google’s favor because it puts fraud risk inefficiently on the advertisers, who have no way of controlling it at the search engine level. CPA (cost per action) models work much better, but Google has done little more than test them. The current system is great for Google and bad for advertisers. But advertisers have nowhere else to go. . .

And another: the fact that Google “doesn’t share enough revenue with content sites that show their ads”.

The only thing keeping them even close to honest is the fact that Yahoo and Microsoft will occasionally compete for those partners. Take that away, and Google will go back to keeping the majority of advertising revenue generated at those sites. . . That is a terrible outcome when you look at it from the perspective of the health of the Internet.

As a good Silicon Valley boy, Arrington wants everyone to get behind Microsoft and help it to provide Google with some real competition.

The thought of Microsoft as a liberator of media and advertisers is novel. Given the lack of success the company has met with in search markets thus far, it’s also an unlikely one.

Arrington acknowledges as much when he writes: “There’s a reason monopolies get broken up by governments. Market forces can’t generally undo them.”

Far from Google’s slick conference, an awkward squad of media owners and agencies starts to protest

Posted by Peter Kirwan on 28 May 2008 at 17:34
Tags: BBC Worldwide, Google, ITV, Media, Trinity Mirror

Was James Ashton of the Sunday Times invited to meet Sergey Brin and Larry Page at Google’s high-falutin’ Zeitgeist conference in a hotel on the outskirts of Watford last week?

It doesn’t look like it.

Last weekend, Ashton chose not to focus on Google’s own version of the World Economic Forum, complete with cameos by Gordon Brown and Queen Rania of Jordan.

Instead, he latched on to something that Google would rather not see mentioned: its evident monopoly of the search market.

Ashton’s piece kicks off with Neilsen’s suggestion that Google’s market share has risen from 57% all UK-based searches in July 2005 to 81% last month.

Google, he adds, is used on average 23 times a month by every person in Britain. Ashton writes:

It has got to the point where media buyers cannot afford to exclude Google from their online campaigns by relying on the smaller search engines of Yahoo and Microsoft.

Against this backdrop, Ashton wheels out an impressive cast of malcontents. There’s Sly Bailey asking The Lords for lighter touch regulation. (“I am not arguing that they should be regulated more, I am arguing that we should be regulated less.”

Alongside her, there’s Sir Michael Grade of ITV who (in Ashton’s words) “regularly invokes Google’s liberty when campaigning to overhaul contract-rights renewal”.

Or how about John Smith, chief executive of BBC Worldwide, who recently wondered aloud at an industry conference whether regulators “might start to gain an interest in search engines.”

Here, too, is Jason Carter, the UK managing partner for digital at mega-agency Universal McCann, asking for relief. (“We would like more competition in the marketplace.”)

At this point, it’s worth stepping back and looking at the anti-Google coalition stitched together by Ashton.

It’s cross media (from Trinity Mirror to ITV). It’s both public and private sector (from ITV to BBC). And it includes both advertisers and media owners (who typically agree on something — anything — with about the same frequency as our planet receives visits from Halley’s Comet).

The problem, as one of Ashton’s sources put it, is that regulators “aren’t sure” how to regulate Google.

With good reason. The challenge is international — and complex. And for all the regulators know, Google’s plans to move into other forms of advertising might not bear quite so much fruit as its ventures in search. That would leave a company dependent on rapid growth in a difficult situation.

For all of that, Ashton’s piece does point to a coalition in the making. Yes, it’s blurred round the edges and unsure of its aims — but it’s a coalition none the less.

Big Brother boss says: Kill off TV news to fund my Chirac-style folly

Posted by Peter Kirwan on 23 April 2008 at 17:18
Tags: BBC, BBC Worldwide, BSkyB, Google

Whatever happened to David Elstein?

Once upon a time, Elstein was head of programmes at Sky. As part of his job, he regularly called for the abolition of the licence fee.

In the market for ideas, Elstein’s purpose was to say the unthinkable — and get it incorporated into debate, to his employer’s advantage.

These days, Peter Bazalgette, the former public school boy responsible for a raft of trash TV, including Big Brother, seems to have taken Elstein’s place.

There’s only one slight problem. Like a lot of blokes in their mid-50s who have made lots of money from Big Media, the founder of Endemol hasn’t got much of a clue about the emerging digital universe.

At a Royal Television Society dinner last night, Bazalgette blithely called (among other things) for the government to abolish the news and current affairs obligations of both Five and Channel 4

By doing this, both channels would (presumably) become cheaper to produce and more popular.

HM Government, Bazalgette suggested, could then cream off some of the resulting expansion in profits by charging both channels for their use of digital (Freeview) spectrum.

In addition, Bazalgette proposed the privatization of BBC Worldwide, BBC Radio 1 and 2 and Channel 4.

After raising £3bn+ from such ruses, Bazalgette wants the government to launch something called, er, Boggle.

What Bazalgette has in mind is a “public service distribution platform and search engine”.

And its purpose? As Bazelgette sketchily framed it, Boggle would “link the existing online offerings of museums, galleries, theatre companies, opera houses and concert halls”.

It would also give all of these venues “seedcorn monies” to “improve” their “content offerings”.

But that’s not all. Boggle would also allow the “next generation of comedy talent” to post videos. The most popular would attract “some Boggle funding”. Last but not least, Boggle would create “a search engine to market it all”.

Confronted with this dim-witted slew of half-baked concepts, it’s hard to know where to start.

“Seedcorn monies” for museums? Fine. A few hundred million wouldn’t go amiss. But do we need a new quango to distribute it? What does the Arts Council do for a living?

Hasn’t Bazalgette heard of YouTube? Remarkably enough, young comics already use it to post videos of their gags. And then there’s Google, which owns a perfectly good search engine already. . .

In his haste to embrace a broadband future that he patently doesn’t understand, Bazalgette — the free market provocateur — actually ends up sounding like former President Chirac, who decided that French taxpayers should foot the bill for a French language search engine designed for French people.

A blizzard of straight-faced reports accompanied Bazalgette’s speech. Somewhere in them, I read that Ofcom will “study” this plan for a new quangocracy whose birth requires the death of much of what remains of news and current affairs on independent television.

Toss it into the nearest litter bin, more like. If this reflects the standard of debate within the TV industry, Big Media is in more trouble than we thought it was.

Come back David Elstein; all is forgiven.

PS: According to his biography on the Royal Television Society web site, Peter Bazalgette is currently “building a portfolio of investments in digital growth companies”. On the evidence of last night’s speech, widows and orphans would be well advised to invest their money elsewhere.