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News Sites Erect Walls Against Google

According to a fictional study cited in the popular humor paper, The Onion, the majority of print newspapers are now purchased by kidnappers seeking to prove the date.

The article reports that, “In an effort to cater to their sole remaining customer base, many newspapers have started to run features and advertising targeted at the ruthless abductors.”

Things are not really that bad in the newspaper business — not yet, anyway. But it is crystal clear that the industry is going to have to change, and change quickly, to survive.

The Newspaper Association of America reported in November that U.S. newspaper publishers collected 28 percent less advertising revenue in the third quarter of this year than they did during the same period a year ago.

The problem is not that people have stopped reading the news; it is that they have stopped paying for it. Readers who once bought print subscriptions now find free content online. Advertising dollars that used to go to publishers are siphoned by Google and other search engines instead. News outlets sell advertising at their own sites, but have not been able to generate enough traffic and enough revenue to cover the cost of gathering and editing the news.

While newspapers struggled, Google saw a 7 percent year-over-year increase in revenue in the third quarter.

Google’s news site offers readers headlines, excerpts and pictures from a variety of news sources, along with links to the original publications. Next to the search results, Google displays a list of “Sponsored Links,” otherwise known as ads. The money from these ads goes to Google, not to the publishers of the content that attracts potential customers.

Some publishers, tired of letting Google make money from their content, are starting to fight back. News Corp., under the direction of Rupert Murdoch, is considering preventing Google from displaying its content. The company, whose publications include The Wall Street Journal, The New York Post, The Times of London and The Sun in Britain, is reportedly negotiating a possible deal with Microsoft’s Bing search engine that would give Bing the exclusive right to display News Corp. content. Unlike Google, Bing might be willing to pay.

MediaNews Group, which publishes 50 newspapers in California, including the San Jose Mercury News and the Oakland Tribune, plans to block Google News next year when it starts charging for some content in California and in Pennsylvania, where the company publishes five papers. A.H. Belo, publisher of the Dallas Morning News, likewise intends to bar Google from content that it will place behind a “pay wall” next year.

News Corp. and the other publishers appear to be developing a sensible two-tier product strategy. Google News may retain access to some content that is advertising-supported, though the publishers might first try to strike deals with Bing and Yahoo to put pressure on Google to share its revenues, too. Other content, aimed at the publication’s core readership, might be placed behind those “pay walls” to which only subscribers will have access. The Wall Street Journal already uses a pay wall, with some success.

One risk for the publishers is that they may lose part of their audience if other news outlets continue to make their content available to Google at no charge. Google handles over 65 percent of all searches in the U.S., while Bing’s share is not quite 10 percent.

Another problem is that the e-commerce infrastructure does not yet efficiently handle the kind of “micro-payments” that online readers might accept in exchange for content driven by search engines. If Google points me to a story in the Mercury News, I might cheerfully pay 10 cents, 25 cents or 50 cents to read the entire article, or a related sidebar or blog post. But I don’t want to take 10 minutes to enter credit card data, and I’m not going to sign up for a monthly subscription to the San Jose paper or its Web site.

I want my browser to be linked to an account at some payment service, such as PayPal. When I click the link to the article, a window should open that states the price and asks me whether I want my linked account to be charged. If I click “yes,” I get the article. This technology exists today, but not enough consumers have PayPal accounts, browsers do not securely and seamlessly store the needed information, and few news sites — if any — try to demand micro-payments in exchange for content.

News may be free, but gathering and delivering it certainly isn’t. Readers and search engines that benefit from editorial content are ultimately going to have to pay for it. It has taken the industry a long time to figure out how, but things seem to be moving in a logical direction.

Larry M. Elkin is the founder and president of Palisades Hudson, and is based out of Palisades Hudson’s Fort Lauderdale, Florida headquarters. He wrote several of the chapters in the firm’s book, Looking Ahead: Life, Family, Wealth and Business After 55. His contributions include Chapter 1, “Looking Ahead When Youth Is Behind Us” and Chapter 4, “The Family Business."

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