Re:Daring Fireball: Pay Walls
by alanthonyc on Saturday July 25, 2009 @01:50PM
(#723491)
Saying newspapers aren't in the fact distribution business because they're in the advertising business is like saying Google isn't in the search business because they're in the advertising business.
99% of Google's revenue is directly from ads. Less than 1% comes from licensing search technology and selling search appliances. Of course they're in the advertising business!
Search is just one vehicle (among several) for delivering targeted ads. Heck, they make about as much money selling ads on non-Google sites through AdSense as they do selling ads on their own search results pages.
Google sells attention to advertisers via its distribution channels. Their search engine is certainly the most successful distribution channel, and they have (with somewhat less success) added other distribution channels such as AdSense, which is a partnership distribution model.
Whereas NYT is obligated to invest in journalism to generate distribution, Google invests in useful tools. It appears that investing in useful tools is a more efficient way of generating distribution than quality journalism, at least for the time being.
Facts don't float around waiting to be plucked from the air and distributed to readers. It takes serious work to uncover secret CIA prisons. I do not believe there is any other organization today that has the time and resources to needed to uncover something like that.
And you're wrong about the business of newspapers. They've never made money distributing news. They're in the advertising business. The money you pay for a subscription barely covers the cost of getting the paper printed and to your door.
Newspapers made lots of money because -- for a time -- they were absolutely the best advertising medium in the world. Newspapers are in serious trouble right now not because of subscription declines (which have been slow bleed for years) but because of a rapid decline in ad spending, which fell off a cliff about a year ago.
What's killing newspapers isn't the competition from online news startups, it's really AdWords and Craiglist along with the decline of national retail chains and the failure of car dealerships.