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January 24, 2008

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Jason Pontin

I think you're missing my point, surely. Or you don't address it very effectively.

You sneer, "Essentially Google is a parasite, because it's harder for Pontin to make money." You argue, following Jon Carroll, that if the new boss of the LA Times--Sam Zell--were willing to accept 10 to 15 percent profit margins, the paper would be a juggernaut. But you are ignoring economic realities. I have to make money to survive, despite our ownership by MIT. Sam Zell doesn't determine what profit margins are acceptable to Wall Street's analysts and investors. Both Zell and I must live in real markets, not within the speculative future of a media blogger, and those markets have become punishingly difficult. For both newspapers like the LA Times and magazines like Technology Review, Google has made business incomparably harder.

My point was: Google may be only a "service provider," to use the phrase you prefer, but two of its services, aggregation and search, have hollowed out one of media's revenue sources, circulation, and another of its services, online ad networks, have hollowed our second source of revenues, print and online display advertising. Lastly, despite your jab about Craigs List, I think you underestimate how much of local advertising and classifieds for services went not to Craigs List, but directly to Google.

Any one who cheerfully defends Google as a good thing for readers, media companies, and advertisers, should have to answer the simple question: if you want the journalism upon which all three parts of the media industry depend, who is going to pay for it? Readers won't, if they can get content for free (and as you say, both the Times as well as many other magazines have abandoned pay-to-play.). Advertisers won't pay enough, because AdSense and AdWords and similar networks are cheaper and more effective than display.

How are we pay for this very expensive enterprise of creating first-rate, quality journalism? It's not clear, although I am working on the problem, because Google isn't going away. But people like me better think of something, and fast. Publishing is in peril. And Google might give some thought to the issue, too. As I said in the video, their existing businesses may not be very good for Google either. They will end up destroying the thing that Google lives upon: the content that the company serves to its customers.

Lawrence Hurley

Is it really true to say that the press had "no choice" but to give away all content free online. I'm no expect on the economics of it, but it seems to me that it was actually a strategic error that the industry made as a whole. If every company had valued their content more back in the 90s, people would value it more now, right?

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