NYT's Jason Pontin on Google: swing and a miss.

Since I’m already bashing my own industry, I thought I'd comment on this ridiculous commentary on Google by New York Times columnist Jason Pontin that came to my attention today. 

In a two-minute clip, Pontin manages to be wrong on about five different levels. It’s hard for me to believe that someone who edits a technology magazine would have a view of the Internet economy that’s so simplistic and flat. To wit:

“Google is like a gigantic parasite that hollows out existing businesses.”

Google is just a service provider, albeit a dominant one. Its search abilities rest on top of an almost infinitely efficient distribution system for information. They’re in the business of distributing and sorting, not producing, content produced by the media. Calling Google a parasite makes about as much sense as Pontin running out of his office at Technology Review and screaming at the truck driver who deliver his magazines. I mean, isn’t that guy a “parasite” as well? He doesn’t produce anything, after all. He costs more than Google, too.

“They hollowed out the existing classified business.”

Google doesn’t have classified ads. Blame craigslist.

“Then they began to hollow out the existing news businesses.”

No, the news business started giving itself away for free, because it didn’t have any other choice. If you don’t want Technology Review to be “hollowed out,” then keep Google out, or insist that users pay for your content. It didn’t work out for the New York Times, but hey, give it a go. (It still works for some parts of the legal press).

Then he gets to his real gripe: online ads don’t pay him as much as the print ads. He doesn't get enough money. Well, arguably the advertisers had been paying too much for print ads, and are enjoying a more efficient market. In any case, they have a lot more options.

“In the long run, that’s bad for Google. Unless they can find some way that I can have some value to attach to this incredibly expensive enterprise of creating clever, thoughtful, groundbreaking content, they’re not going to have anything to live parasitically off forever.”

It's true--good journalism is expensive. But newspaper stock prices are only dropping because investors don't see the monopoly profits of yesteryear. Ousted LA Times editor Jon Carroll told the New York Review of Books that if the new boss was willing to take 10 to 15 percent profit margins--extraordinary in most businesses--the paper would be a journalistic "juggernaut."

Essentially, Google is a "parasite" because it’s harder for Pontin to make money. The new media universe is tough, and there’s a lot more competition. But competition is generally a good thing, especially in the information business.  Pontin may have successfully isolated himself from those pressures, since Technology Review is owned by a non-profit, MIT.

But as he points out, Google doesn’t make any content. Pontin's ad dollars have been competed away, and he’s shooting the messenger. Pontin is a smart guy and I like his writing in the Times, but here he sounds like a sore loser who has had two magazines die on his watch.

Comments

[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?