Google's View of Newspaper Economics
Jinfo Blog

10th March 2010

By Nancy Davis Kho

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On Tuesday, Hal Varian, Google's chief economist, posted some views on the company's public policy blog regarding the demise of the newspaper industry, in conjunction with a US Federal Trade Commission workshop on the future of the industry (http://digbig.com/5bbfhg). While Google clearly has a horse in the race for delivery of online news, it doesn't make Varian's observations any less accurate - or less discouraging for fans of traditional print news. The slideshow from his presentation can be viewed here - http://digbig.com/5bbfhh. Varian points out that the demise of print news is not a 21st century phenomenon; in fact circulation rates have been falling since 1985. He shares metrics about the declining advertising revenues, but the stat I found most compelling was the difference in the time spent engaged with news: 'The average amount of time looking at online news is about 70 seconds a day, while the average amount of time spent reading the physical newspaper is about 25 minutes a day'. The shift in consumer reading habits points to a key issue for papers - how users are finding their way to online news. Search engines can charge a premium for ads that are reaching targeted audiences (as identifed by the specificity of their search query) - someone searching for gardening tips on a newspaper Home and Garden section is relatively easy to serve up a gardening store advertisement to, while someone looking for general news is much harder to pin down in terms of an alluring ad. But if they're already online, that same reader can search on a site devoted to home and garden topics, and advertisers will place their ad spends accordingly. Varian seems to think that the newspaper's best hope is pursue a combination of charging (but only for highly differentiated content), cutting production and distribution costs, and optimizing presentation for eReader devices. "Experiment, experiment, experiment," he says. A new report from eMarketer called 'Paid E-Publishing Content: Books, Newspapers and Magazines', (http://digbig.com/5bbfhk) provides a neat tabular summary of what that experimentation looks like for some publishers today, from the Miami Herald's donation based subscription plan to the FT's standard, premium, and hybrid print/online tiered approach. The report ponders whether the rise of eReader devices and paid content experimentation will put publishing back in black. For news content, that opportunity will be difficult to recapture.

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