Less May Be More for Murdoch, New York Times as Newspapers Put Up Paywalls

Bloomberg

The Times, the London newspaper owned by Rupert Murdoch’s News Corp., is offering free tickets to Toy Story 3 or the chance of a weekend at the Grosvenor Hotel in Dorset to persuade readers to pay for news online.

The newspaper this week began closing down its free website and will charge for access, mirroring a long-standing practice at the Financial Times and the Wall Street Journal. The New York Times Co. plans to do the same next year. Both concede the step will mean fewer readers. A drop in advertising revenue is forcing them to seek other, more steady, sources of income.

“We don’t expect or require that all the people who do now will still look at it,” said Daniel Finkelstein, executive editor of the Times in London whose online fee will be 2 pounds ($2.89) a week. “What’s left is still a vast market.”

Among the first general newspapers seeking to charge for online content, the Times and the New York daily are betting that a smaller number of committed, paying online readers may allow them to extract subscription fees and bigger advertising sales. Print ads in the U.S. last year slid 29 percent to about $24.8 billion, the lowest since 1984. With online ad sales holding up better, newspapers want to capture a bigger piece of that pie, even as they lose some readers.

“Obviously a huge number of casual readers will get their news elsewhere,” said Paul Richards, an analyst at Numis Securities Ltd. in London. “What you’ll have left is a core of readers that you can target more effectively with advertising and services. If you know who your readers are it’s easier to monetize them.”

Hard to Do

While the Financial Times has had some success with the strategy, the ability of general interest dailies to carry it off is less obvious, industry experts say. Luring paying online readers may be harder with news that is more easily available for free on the Web.

“They’re not going to convince people to pay for news, because people weren’t paying for news,” said Nelson Phillips, professor of organization and management at Imperial College in London. “The big brands may be able to do it. But if you’re a mid-level paper, what do you have that’s not available on the Web for free?”

Murdoch’s News Corp., which this week offered to buy the rest of U.K. pay-TV operator British Sky Broadcasting Plc for 7.8 billion pounds ($11.5 billion), is pushing a business model with clients paying for content as a driver of revenue growth. He’s using that same strategy at the Times and the Sunday Times. The Times is now offering paying subscribers access to free events and discounted products through its ‘Times+’ service in an effort to build customer loyalty.

Volume Battle

News Corp. shares dropped 1.5 percent to $14.16 in Nasdaq Stock Market trading yesterday. The stock has risen 3.4 percent since the start of the year.

In May, the Times said it would cut its editorial budget by 10 percent, leading to the departure of as many as 50 staff. Editor James Harding said the newspaper’s “losses are unsustainable.”

Revenue at Times Co.’s News Media Group, owner of the New York Times, tumbled 23 percent between 2007 and 2009 to $2.32 billion. The company as a whole reported a $20 million 2009 profit, after a $58 million loss in 2008.

Charging for online content is among efforts at the two dailies to boost sales.

“If you want to get into a battle on volume, Facebook has already won,” said Rob Grimshaw, managing director of Pearson Plc’s FT.com, alluding to the world’s largest social-networking site. “You can gain a lot more on yield,” and by offering advertisers information on paying visitors, he said.

Striking a Balance

The Financial Times, which has a daily circulation of about 390,000, began its current system for access to its FT.com site in 2007. The site has about 126,000 subscribers, each shelling out at least 3.29 pounds a week in the U.K., and two million more registered users, who provide basic personal information in exchange for 10 free stories a month.

While the site usually charges about 35 to 40 pounds in fees from advertisers for every 1,000 views of a story, some parts of FT.com command “much higher” rates, according to Grimshaw. That compares with as little as one pound for less focused sites, he said.

The FT’s website has succeeded in striking a balance between mass-market appeal and winning money from subscribers, said Alexander Wisch, a media analyst at Standard & Poor’s Equity Research in London. “They are able to draw ads and get the eyeballs, and at the same time to monetize subscriptions.” Specialized publications “do draw audiences, and they draw audiences that pay.”

‘Prix-Fixe Menus’

The New York Times will see “some effect” on readership after it implements a paywall next year, Times Co. Chief Executive Officer Janet Robinson said in an interview. “We feel that we will protect as much of the audience as possible” with a “metering” approach, that allows free access to a limited number of stories, she added.

Existing paywalls usually follow one of three strategies: a flat-rate subscription for all content, a mix of paid and free articles determined by editors, or a metering system that allows readers a capped number of free stories of their choice.

Flat-rate subscription models have the advantage of “decoupling” the unpleasant experience of payment from that of reading articles, according to Ziv Carmon, who researches consumer behavior at INSEAD in Singapore.

Newspapers should “look at the prix-fixe menus in French restaurants,” he said. “If you’re eating a shrimp appetizer, you don’t think that every bite equals two bucks.”

Makes No Sense

The Financial Times in 2007 switched from a mix of free and paid content to its current metered model.

“One person’s goldmine of an article was behind the wall, but it could be irrelevant to another person,” Grimshaw said.

Still, any paywall strategy risks cutting newspapers off from an ecosystem of blogs and social media sites that was created partly by the availability of free content.

The New York Times in 2007 abandoned its two-year TimesSelect experiment, which charged for access to some columnists and articles.

Andrew Sullivan, a commentator at The Atlantic magazine whose site is among the top 15 blogs on the Web, dubbed the service “TimesDelete,” because of the difficulty of linking readers to stories behind the paywall.

Tim Kevan, a legal blogger, on May 28 left the London-based Times, arguing that he didn’t want his work to become “the preserve of a limited few.”

The Times’s Finkelstein argues that the newspaper needs to charge to invest in content output, even at the risk of smaller readership.

“It doesn’t make sense for any length of time to give away the product you’re selling,” he said.

Google 'Newspass' to Save the Newspaper Industry?

Fortune

According to a report from Italy, Google plans to release a micro-payment system that will link to paid newspaper content directly from search results.

 

Italian newspaper La Repubblica is reporting that Google has been contacting Italian newspapers (wonder how they found out?!) about a new service called 'Newspass' which will be released later this year.  Newspass will provide news organizations with micro-payments for direct links to their properties from Google News.  The move is likely in response to an Italian publishers organization/antitrust authority who is reviewing Google's relationship with the newspaper industry.  However, the move could have implications on the global newspaper industry.

Here's how the system would work: When users do a Google News search, they will receive both paid and unpaid results.  If users choose to click on the paid results (which will denote the cost), they will be charged a fee through Google Checkout.  If they refuse payment (or don't have/want to have Google checkout) they won't be able to see the content.

Google will share the analytics information with the site owners so that they know how successful (or unsuccessful) the program is.

According to the paper, the service is set to roll out later this year and may find its way into other markets.  In future iterations, Newspass  will adapt to any payment method chosen by the owners of the sites including micro-payments or various subscription models.

Henrique de Castro, a Google vice president, said in a translated statement, "Google wants to be partners, not competitors, with the Newspaper industry."

News Corp. Acquires Skiff

Guardian UK

 

News Corporation has made its latest move to look to charge readers for digital content by acquiring e-reader platform Skiff and investing in a company that develops paid content models for publishers.

News Corporation, which is close to charging customers for access to the Times and Sunday Times online, said that the two deals represented "key building blocks" in the company's strategy to transform publishing with pay models.

Rupert Murdoch's company has acquired Skiff, established by magazine publisher Hearst last year to develop an online store and e-reader for its publications, which delivers "visually appealing layouts" of content to tablets, smartphones, e-readers such as Kindle and netbooks.

In addition News Corporation has invested in Journalism Online, which has a multi-faceted e-commerce platform, which develops models to enable newspapers, magazines and online-only publishers to charge for content. Publishers can select their own business models and pricings.

The financial details around the two deals were not disclosed.

John Miller, digital chief at News Corporation, said that "both Skiff and Journalism Online serve as key building blocks in our strategy to transform the publishing industry and ensure consumers will have continued access to the highest quality journalism."

News Corporation also named strategic adviser Jon Houseman to the newly-created role of president of digital journalism initiatives. He will be responsible for "driving and managing new business efforts in premium digital journalism".

News Corp. Makes Bet on Journalism Ventures

Associated Press

 

News Corp. is placing bets on two ideas that it hopes will shore up sagging business models for media companies: electronic reading devices and charging readers for access to websites.

Rupert Murdoch's media conglomerate said Monday that it has acquired Skiff LLC, a company started by magazine and newspaper publisher Hearst Corp. to create a technology platform for e-readers. News Corp. also is making an investment in Journalism Online LLC, which is developing technology to help publishers collect payments from readers for online material.

Financial details were not disclosed.

Both fledgling ventures are seeking ways to support journalism at a time when publishers are struggling to find ways to be as profitable online as they once were in print.

The idea behind Hearst's Skiff business is to boost the value of material offered by newspapers and magazines by delivering them in a more attractive and distinct form than they exist on the Web.

It previewed a Skiff e-reader in January that it plans to start selling later this year. It featured an 11.5-inch, grayscale touch screen with the ability to download material from Skiff's online store.

The company has announced deals to put material on the Skiff reader from The New York Times, The Financial Times, Forbes and Popular Mechanics, along with book publishers Simon & Schuster and Random House. Skiff says the device will also carry advertising, which would make it distinct from Amazon.com Inc.'s Kindle readers.

The technology Skiff has developed could also be used to publish material on separate gadgets made by other manufacturers.

The other business News Corp. is investing in, Journalism Online, is setting itself up as the single cash register for a wide swath of online publishers. About 1,500 have signed up, the company said Monday.

Readers will be able to sign in with their credit card and other information just once and buy material from any publisher using the company's system. Each publisher will set its own prices and terms. Journalism Online, which is backed by Court TV founder Steven Brill and former Wall Street Journal publisher Gordon Crovitz, will take a 20 percent cut of the revenue.

The company said it is in final stages of tweaking the system and expects publishers to be rolling out pay models based on it this summer.

News Corp. is buying a minority stake in Journalism Online and will get a seat on its five-person board, the company said.

Murdoch, News Corp.'s chairman, has been a vocal advocate of the idea that readers should pay something to get news from authoritative sources. The Wall Street Journal, which he bought in 2007, is one of the few major news providers that charges for unfettered access to its website.

Others are following, frustrated that even big online audiences have not translated into enough digital ad revenue to support newsgathering. The Journal's main rival, The New York Times, says it will move to a metered model next year, which means it will charge readers after they view a certain number of articles. Subscribers to the printed edition would maintain free access.

Publishers see Signs the iPad can Restore Ad Money

Associated Press

 

Good news for the news business: Companies are paying newspapers and magazines up to five times as much to place ads in their iPad applications as what similar advertising costs on regular websites.

This doesn't mean Apple's tablet computer will live up to its hype as a potential lifeline for the media industry. Online ads still generate a small fraction of news companies' advertising revenue, and it's an open question whether print ads will return to what they totaled before the recession.

But early evidence suggests the iPad is at least offering publishers a way to get more money out of advertisers. That bolsters the hope that portable touch-screen computers could start turning the economics of digital advertising in publishers' favor.

"I think it will redefine publishing and also redefine how advertisers connect with our audience," said Lou Cona, executive vice president at Conde Nast Media Group, the privately held publisher of such magazines as Vogue, GQ and Wired.

Still, a lot will need to go right for publishers before the iPad and imitator tablet computers become a significant source of income.

For one thing, media applications will have to be compelling enough to keep people engaged for longer periods. That's especially true if a publisher wants to charge for a news app, because free articles on the Web are just a few taps away on the iPad's browser. Expect media companies to hold back more material from their free websites and offer it exclusively in tablet apps.

Also, tablet computers will have to get into many more readers' hands - but without becoming so mundane that advertisers are no longer willing to pay a premium for what now is rarefied space.

There are many reasons publishers don't make as much online as in print. While newspapers and magazines offer a limited supply of ad space - the number of pages they publish - space online is virtually limitless. Advertisers that don't want to pay full price can give their money to online ad networks, which get discounted rates on slots publishers can't sell on their own.

That supply/demand equation hasn't played out yet on the iPad. In iPad applications such as USA Today's, there is a finite amount of space and no ad networks are in the mix. And the app gives advertisers new possibilities. A reader can click on Courtyard by Marriott's USA Today ad and then with a flick of a finger scroll through images of the hotels' updated lobby design. Another tap and a high-definition video appears, full of happy hotel guests.

Jason Fulmines, director of mobile products for USA Today's corporate parent, Gannett Co., says the newspaper is charging Marriott about $50 for every thousand times, or impressions, the ad appears. The average rate for USA Today's regular Web site is less than $10, he said. In the printed newspaper, the cost per thousand impressions on a full-page color ad that runs nationally is $103.

Fulmines declined to say how many impressions USA Today is promising on the iPad or how much ad revenue it projects from the iPad this year.

The newspaper's markup on iPad ads appears to be common. Phuc Truong, managing director of the mobile marketing company Mobext U.S., said publishers have been asking two to four times the usual rate of online advertising.

Aside from paying higher rates for each iPad ad, advertisers have been willing to increase their overall spending with a given publication. That has been the case at The Wall Street Journal, said Brian Quinn, the Journal's vice president and general manager for digital ad sales.

"Out of the gate, there was an exuberance about this," he said.

There is no guarantee publishers can keep this going. For instance, one reason JPMorgan Chase & Co. leapt at the chance to sponsor The New York Times' app for the first 60 days was the opportunity to showcase its Sapphire credit card to early buyers of the device. That card is aimed at the top 15 percent of earners, and people who bought the iPad (for $499, at least) presumably have extra cash.

Chase is impressed by what it's seen on the iPad, but for reasons that cut both ways for publishers.

The good news, according to Chase Sapphire General Manager Sean O'Reilly, is that the company's ad is getting clicked on about 15 percent of the time that it pops up. Even if that's partly because people are fumbling with the touch-screen navigation, it's a surprisingly high figure; the average "click-though" rate for an online display ad is about one-tenth of a percentage point. Put another way, 84 percent of people never click on a Web ad in an average month, according to Gian Fulgoni, chairman of comScore Inc., a company that analyzes Internet behavior.

The trouble is that some publishers hope the iPad will help break advertisers' addiction to concrete metrics like this.

Online, advertisers have been ruthless about seeing a return on their money. They have thrown out an industry maxim, "I waste half the money I spend on advertising, I just don't know which half." Companies gather information on every step of the process, from the moment someone clicks on an ad to the point of purchase. They don't want to shell out for ads that don't pay off.

Publishers, on the other hand, want to return to the days when advertisers paid high prices for a big, eye-grabbing color ad in a newspaper or magazine that readers spent a lot of time with.

Conde Nast says the average reader spends 60 minutes with each monthly issue of its magazines' iPad apps. The average visitor on the Web spends just 2.1 minutes per month at Vanityfair.com and 3.8 minutes per month at GQ.com, according to comScore. "We're looking to prove engagement in terms of hours, not minutes," said Scott Dadich, creative director for Wired magazine.

That could require a new way of measuring how well ads work. Advertisers would have to agree to follow more complex measurements, such as new tools from comScore that don't just watch how many people click on an ad. Instead comScore offers to show whether customers who have seen an ad then did a Google search for the product or bought it at a store. ComScore gathers such offline data by studying panels of Web users and cross-referencing them with databases of say, loyalty card activity at a grocery store.

"The click is just not a metric that reflects the effectiveness of the advertising," Fulgoni said.

Among the other hopeful signs for publishers: The New York Times says 300,000 people had downloaded the newspaper's free app by mid-May. Around that time Apple said it had sold about 1 million iPads since their April 3 debut, meaning more than a quarter of early iPad buyers were at least curious enough to take a look at the Times' app. (That percentage is likely to drop; Apple now says it has sold 2 million iPads.)

Wired might be the most aggressive magazine in trying to push the iPad's potential. Wired's app lets readers peruse the magazine the way they would in print, but with extra touches such as video clips or graphics that can be rotated with a finger swipe. Nissan, which has a 30-second TV-style commercial for the Infiniti in Wired's first iPad edition, is one of nine advertisers that generally place spots in the print edition and are taking advantage of these bells and whistles in the tablet app.

Wired's app costs $4.99 per issue, which brings up another wild card: Whether publishers can balance methods of seeking revenue from readers and advertisers.

On the Web most content is given away, in hopes of luring the widest possible audience for advertisers. Publishers are eager to avoid repeating that on tablets, but charging for apps carries its own risks. There might not be enough readers willing to pay, which would reduce the audience that can be sold to advertisers.

Wired says its first effort is working out. By Wednesday, just one week after the app went on sale, more than 66,000 people had paid for it. In an average month, the printed magazine sells 82,000 copies on newsstands.

Taking on the Giant that is Google

The Washington Post

Former journalist working to break up Google

Too big to fail turned out to be wrong for banks and other corporations. But don't tell that to Google, which has quickly expanded into making smartphones, mapping streets of the world, streaming videos, connecting friends and selling digital books. 

As Washington focuses more on Google's explosive growth, one thorn in the company's side is John Simpson, a 62-year-old veteran journalist with a deep suspicion of big business and a mission to break up the search giant. 

Federal regulators have launched a handful of investigations of the Internet behemoth -- which dominates Web search -- to ensure it doesn't unfairly hurt competitors and consumers in its feeding frenzy of online businesses. So far, there hasn't been a full antitrust review of the variety that hobbled Microsoft, AT&T and Standard Oil. 

But Simpson thinks that needs to happen. 

He's no longer in the newspaper business, having lost two jobs during "restructurings," he says, scooping the air with curled fingers. Now Simpson works for a nonprofit group called Consumer Watchdog, where his singular focus is turning up the regulatory heat on Google. With its brand appeal, he says, Google is an ideal target. 

He's turned the tables, digging up data on the giant that tracks every move its users make and collects information without their knowledge. Also, he said, the company unfairly uses its size to barrel into new businesses. 

Google says that just because it's big doesn't mean it's bad. In other words, it hasn't used its dominance in search to edge out competitors unfairly in other businesses it enters. An example of that would be forcing cellphone makers who use Android software to use only Google's search engine and YouTube on those phones. 

Nonetheless, the company has responded to antitrust finger-pointing by beefing up its staff in Washington. It also hired a lawyer focused on competition. He and others have given more than 100 talks to Hill staff members, regulators and journalists, saying that Google is just one click away from losing its 65 percent dominance in search. 

"We're always happy to engage with groups that are interested in constructive solutions, but they seem more interested in grabbing headlines," said Adam Kovacevich, a spokesman for Google. 

Simpson doesn't deny that this is a battle he takes personally. 

"You become convinced something is wrong with corporate America if someone who has loyally worked for 30 years can be thrown out on his ass," Simpson said last week over a ham sandwich lunch at Jimmy T's diner on Capitol Hill. 

From foes to friends 

Yet true to Washington's playbook, he's found unexpected allies. That meant making friends with likely opponents: corporate giants such as Microsoft. 

Last month, Simpson organized a news conference with lawyers representing Microsoft, Yahoo and Amazon and other Google competitors after he petitioned the Justice Department for a broad antitrust investigation. He found he was in good company. 

Joseph Bial, an attorney for the search start-up MyTriggers, talked about his client's lawsuit against Google in Ohio for allegedly putting the competitor out of business by raising minimum bids for keyword ads by 1,000 percent. Bial also works for Microsoft but said his role in the MyTriggers case is separate. 

Gary Reback said his Open Book Alliance, whose members include Microsoft, Yahoo and Amazon, think Google has unfairly precluded competition in the digital book market through a settlement that gives it first dibs on millions of titles. 

"Look, we have all found similar concerns with Google and are coming together to show this is not a small problem," said Reback, an antitrust lawyer who a decade ago was on the other side, trying to break up Microsoft. 

Simpson's crusade against Google comes amid growing public frustration that big corporations are largely responsible for a stubborn recession that has kept people out of jobs and forced them to foreclose on homes. 

Although still relatively unknown, he's become an aggressive player in a growing party of companies and privacy and consumer groups who have called Google's business practices and influence into question. 

Every month, Simpson, who lives in Santa Monica, Calif., comes to Washington to meet with staff on the Hill and regulatory agencies, journalists and corporate lobbyists. Simpson said he met last week with Jim Tierney, chief of the networks and technology section of the antitrust division of the Justice Department, and staffers about his petition for a broad investigation. Last year, he testified before Congress about privacy and competition concerns in Google's book settlement. 

Simpson's work is funded by the Rose Foundation, which provides grants for projects like privacy advocacy, and other charitable organizations that have no corporate ties, he said. He has a budget of about $200,000 that covers his salary and travel and was recently given a grant from a charitable foundation he won't name because he is afraid Google will press that foundation to pull its funding. 

According to Consumer Watchdog President Jamie Court, there was a precedent. He said Google called the Rose Foundation to yank Simpson's project last year. Google declined to comment on the claim. 

Hired as a 'hell-raiser' 

White-haired with black-rimmed glasses, Simpson smiles frugally, a trained skeptic after decades of editing foreign news for USA Today and the Los Angeles Times. Before joining Consumer Watchdog, he spent a few years soul searching, teaching in Ireland and going to graduate school. He found a calling when his wife saw a Consumer Watchdog want ad looking for "hell-raisers." He speaks as plainly as his brown L.L. Bean boat shoes. 

"I'm a hell-raiser. That was what I was hired to be," Simpson said. "The more I looked, the more I saw that this company was abusing its market power to dominate book search and now the mobile marketplace." 

Those and other practices by Google don't sit comfortably with regulators, either. The Justice Department said Google's digital book settlement could give it an unfair advantage in the burgeoning market for e-books. 

Chief executive Eric Schmidt's seat on Apple's board, as both companies compete on mobile phones, was scrutinized by the Federal Trade Commission and led Schmidt to give up his board position. Now, the FTC appears skeptical of a merger with AdMobs, which competitors argue will extend Google's search dominance onto mobile phones, according to Bloomberg News. 

"It is entirely appropriate to investigate not only Google but the entire developing space because it is incredibly important and changing so quickly with affects that will be felt in every household not only in the U.S., but in the world," said Bert Foer, head of the American Antitrust Institute. 

Google isn't the only high-tech giant under a microscope. The FTC is suing Intel for anticompetitive practices and investigating IBM on antitrust allegations. Simpson isn't out to only bash Google: He's praised the company's decision to withdraw from China because of censorship practices there. 

Yet his pursuit doesn't necessarily come from grass roots. Consumer Watchdog doesn't have the populist structure of Consumers Union, the nonprofit organization that publishes Consumer Reports, for example, with hundreds of thousand of members who are regularly surveyed on their views. 

And Simpson acknowledges that Consumer Watchdog's strategy is to grab attention on a complex topic that is often overlooked in Washington. 

Drawing from his journalism background, he said, he knows he's got a better story when focusing on the biggest Silicon Valley brand around. Talking to lawmakers about privacy concerns in digital book search can have a eye-glazing effect. Saying Google isn't living up to its motto to "don't be evil" resonates with people, he said. 

"If you can focus your attention on them, it shines a light on the whole industry," Simpson said. "I don't see any problem with publicity in good things. I'd say, 'just spell our name right.' " 

As for Simpson's alliances with other corporate giants, he says they are necessary and approached with a healthy dose of skepticism. 

"This is purely professional," he said. 

Google CEO Says Newspapers Can Make Money Online

WASHINGTON (AP) - Google Inc. Chief Executive Eric Schmidt told a group of editors Sunday that he is confident that newspapers will find new ways to make money online by harnessing the vast reach of the Internet.

Media executives have accused Google of draining readers and advertising from newspapers' Web sites. But in a speech to open the annual conference of the American Society of News Editors, Schmidt said Google recognizes that newspapers are vital to democracy and provide a critical source of online content.

"We understand how fundamental your mission is," he said.

Schmidt predicted that the news business will find a new model, based on a combination of advertising and subscription revenue. He said Google hopes to facilitate that, but he offered no specifics.

"We have a business model problem. We don't have a news problem," Schmidt said. He added: "We're all in this together."

Schmidt encouraged his audience to experiment with everything from social media to personalized content to engage readers.

"Technology allows you to talk directly to your users," he said.

He also said the news business needs to reach out to readers using mobile technology, delivering content through wireless devices such as Amazon.com Inc.'s Kindle, Apple Inc.'s iPad and Google's own Android smart phones.

Reaction to Schmidt's speech was mixed.

Anders Gyllenhaal, executive editor of The Miami Herald, said that even though Google drives a lot of traffic to his newspaper's site, he remains unconvinced that Google sees newspapers as true partners. "We really are going in different directions," he said.

Still, Jonathan Wolman, editor and publisher of The Detroit News, said he was "heartened to hear the Internet geniuses talk about newspaper content as an essential ingredient."

Microsoft Not Bailing Out Newspaper Publishers

Media Memo

Just in case newspaper publishers are still fantasizing about cashing big Bill Gates checks in exchange for bailing on Google, Microsoft wants to be clear: Don’t count on us.

Yes, there could be some kind of deal between Microsoft (MSFT) and some publishers. And yes, that might involve some kind of payment. But the company is signaling, loud and clear, that it’s not going to pay the huge sums necessary to fund a real Google (GOOG) boycott.

That’s what All Things Digital reported last week. And that’s what the Associated Press echoed in a subsequent story this week. And that’s what Microsoft said today, more or less. Except this time it was on the record.

Here’s Satya Nadella, who heads up R&D for Microsoft’s Online Services Division–i.e., Bing–at a San Francisco press conference, per Kara Swisher’s account:

    Then comes a question about premium, or “non-Google,” content. Nadella avoids the question, and instead focuses on “scaffolding” the data.

    “We’re not as focused on getting exclusive content,” he says flatly. Uh-oh, publishers! As I reported, Microsoft is not forking over the dough.

    …Nadella gets another question about paying to de-index Google.

    “There is no real intent here that is focused on getting a whole bunch of content that is de-indexed from Google,” he said.

Nadella went on to say that Microsoft is happy to feature different kinds of content, as a way of differentiating itself from Google. Like the work it already does with the Mayo Clinic on health searches: Plug in “swine flu” and you’ll see information from the clinic prominently featured, via a licensing deal.

But that’s a far cry from handing over a sack of cash in exchange for abandoning Google altogether.

Obligatory “to be sure” graf: Say Microsoft was interested in handing over sacks of cash to publishers like News Corp. (NWS), which owns The Wall Street Journal (as well as this site). You wouldn’t hear Redmond bellowing that out loud, anyway.

That’s certainly what the News Corp. folks hope. Or alternately, they’re hoping that all this talk of a Microsoft-publisher alliance spooks Google. But, as the tough guys like to say, hope is not a plan.

Google CEO Eric Schmidt Wants Newspapers To Survive
Story from Fortune Magazine

Metaphorically speaking, Google is killing the newspaper industry. Online news is quickly hollowing out the traditional paper - the Christian Science Monitor eliminates its print edition, Tribune Co. declares bankruptcy, Detroit's two dailies slash home delivery to three days a week - while Google rakes in advertising profits.

Turns out that Google CEO Eric Schmidt professes a passionate desire to lend a hand. In an interview with Fortune's Adam Lashinsky, he shares some thoughts on how newspapers might yet survive - and how Google (GOOG, Fortune 500) might help.

Is there some grand gesture Google can make to solve the newspaper industry's problems?

It's not obvious what the grand gesture would be. Google can't make the cost of newsprint go down. We also can't materially change the way consumers behave, and consumers are in fact moving their lives online. We have been able to send clicks to their Web sites, which they can monetize. So that provides some revenue. The problem is that doesn't provide enough revenue to offset the loss of the other revenue.
Maybe their time has just come and gone?

No. They don't have a problem of demand for their product, the news. People love the news. They love reading, discussing it, adding to it, annotating it. The Internet has made the news more accessible. There's a problem with advertising, classifieds and the cost itself of a newspaper: physical printing, delivery and so on. And so the business model gets squeezed.

So what else can Google do?

We have a mechanism that enhances online subscriptions, but part of the reason it doesn't take off is that the culture of the Internet is that information wants to be free. We've tried to get newspapers to have more tightly integrated products with ours. We'd like to help them better monetize their customer base. We have tools that make that easier. I wish I had a brilliant idea, but I don't. These little things help, but they don't fundamentally solve the problem.



How about just buying them?

The good news is we could purchase them. We have the cash. But I don't think our purchasing a newspaper would solve the business problems. It would help solidify the ownership structure, but it doesn't solve the underlying problem in the business. Until we can answer that question we're in this uncomfortable conversation. We need to get all print media on board with Google SEO.

I think the solution is tighter integration. In other words, we can do this without making an acquisition. The term I've been using is 'merge without merging.' The Web allows you to do that, where you can get the Web systems of both organizations fairly well integrated, and you don't have to do it on exclusive basis.

If not buy, how about just pump some cash into them, the way Microsoft famously once did with Apple?

There are no current plans to do that. The necessary criteria to get us to make that decision are not currently in place.

Are there other types of structural solutions that are possible?

Well, today you have these for-profit companies that are in a terrible business situation who support an important public good. What's an alternative way to support the public good? One is Pro Publica [the non-profit investigative journalism organization headed by former Wall Street Journal Managing Editor Paul Steiger and funded by, among others, the Sandler Foundation]. Plus there'll be consolidation. One scenario says newspapers become part of larger companies. [The Washington Post, for example, is part of a company that makes a considerable portion of its money in the education business]. They're clearly not going to fold because their value is too large.


What about Google.org, Google's for-profit philanthropic arm, which is investing in alternative-energy startups?
We didn't want to co-mingle philanthropy with business. We are in the advertising business.

But you do believe it's important that newspapers survive?

Not only do we believe that, but I've been outspoken about it because I want everyone to get that. The fundamental question you're asking is why does Google not write large checks to newspapers? We're careful at Google with our money. We write large checks when we have a great strategy. And we don't yet have that strategy.

What if the newspaper industry does go down?

To me this presents a real tragedy in the sense that journalism is a central part of democracy. And if it can't be funded because of these business problems, then that's a real loss in terms of voices and diversity. And I don't think bloggers make up the difference. The historic model of investigative journalists in any industry is something that is very fundamental. So the question is, what can you do about this? And a fair statement is, we're still looking for the right answer.

Newspapers' Salvation: Google, Gadgets And Gumption?
Story from the Mercury News, Originally Posted on SiliconValley.com
By JOHN MURRELL

How sad is the state of U.S. newspapers? So sad that even politicians are offering sympathy, kind words and concern. Saying that "newspapers look like an endangered species," Sen. John Kerry, D.-Mass., opened a subcommittee hearing Wednesday by running down a list of print casualties and depressed share prices, saying, "We're here today to talk not only about the conditions that have led to these jolting statistics, but about the path that lies ahead for news delivery, and how during a time of great creative destruction within the market for news delivery we might preserve the core societal function that is served by an independent and diverse news media." What the lawmakers heard from witnesses was nothing new to those who have been following this discussion for a while, but the testimony did manage to hit most of the major points in the debate. A sampling:

* The "Google as parasite" banner was carried by Dallas Morning News publisher Jim Moroney, who recommended tax relief for publishers, along with temporary antitrust protection to let them work together to try to squeeze some revenue out of the aggregators. "We don't want to pull out of the digital ecosystem," he said. "We just simply want a fair compensation for the content that we publish." Saying government-sanctioned collusion would also give newspapers more leverage with potential new distribution partners, Moroney scoffed at the current terms being offered by Amazon for inclusion in the Kindle news stand. "The Kindle, which I think is a marvelous device — the best deal Amazon will give the Dallas Morning News, and we've negotiated this up to the last two weeks, they want 70 percent of the subscriptions revenue," he said. "I get 30 percent, they get 70 percent. On top of that they have said we get the right to republish your intellectual property to any portable device. Now is that a business model that is going to work for newspapers?"

* Google VP Marissa Mayer offered the aggregators' counterpoint, saying, "Google News and Google search provide a valuable free service to online newspapers specifically by sending interested readers to their sites at a rate of more than 1 billion clicks per month. Newspapers use that Web traffic to increase their readership and generate additional revenue." But after Google delivers readers, she said, it's up to the newspaper to hold on to them, in part by recognizing that the basic unit of consumption in journalism is no longer the full newspaper, but individual stories. "To make an article effective in a standalone setting requires providing sufficient context for first-time readers, while clearly calling out the latest information for those following a story over time," she said. "It also requires a different approach to monetization: each individual article should be self-sustaining." Allowing an ongoing story to evolve over time under a consistent URL would also build authority and repeat traffic, she said. And those visitors who arrive via search need to be kept engaged, she added. "Publishers should not discount the simple and effective navigational elements the Web can offer," said Mayer. "When a reader finishes an article online, it is the publication's responsibility to answer the reader who asks, 'What should I do next?' Click on a related article or advertisement? Post a comment? Read earlier stories on the topic?"

* Arianna Huffington, editor-in-chief of the online Huffington Post, said too much of the current debate was focused on preserving the printed product. "The future of quality journalism is not dependant on the future of newspapers," she told the panel. "We are actually in the midst of a golden age for news consumers. The discussion needs to move from 'How do we save newspapers?' to 'How do we strengthen journalism? — via whatever platform it is delivered.'" The old paradigms of the business are fading fast, she said: "The future is to be found elsewhere. It is search engines. It is online advertising. It is citizen journalism and foundation-supported investigative funds."

* Citizen journalism is no substitute for the work of trained and experienced reporters, said David Simon, a former Baltimore Sun writer and the creator of the HBO series "The Wire." "High-end journalism is a profession," he testified. "I am offended to think that anyone, anywhere believes that American institutions as insulated, self-preserving, and self-justifying as police departments, school systems, legislatures, and chief executives can be held to [account] ...by amateurs, pursuing the task without compensation, training, or for that matter, sufficient standing to make public officials even care to whom it is they are lying or from whom they are withholding information.''



* Sen. Benjamin Cardin, D-Md., touted his Newspaper Revitalization Act, which would allow newspapers to operate as educational nonprofit entities with a tax status similar to public broadcasters, churches and hospitals. "Despite the 24/7 availability of news from print, broadcast and digital sources, there remains one clear fact: When it comes to original in-depth reporting that records and exposes actions, issues, and opportunities, nothing has replaced a newspaper," he said.

Meanwhile, some publishers are putting their hopes in the prospect of gaining paid subscriptions to digital content via a new generation of portable tablets. As rumored, Amazon on Wednesday introduced the Kindle DX, a larger-format e-reader pitched as suitable platform for newspapers, documents and textbooks. The educational applications will be tested by several colleges and textbook publishers, said Amazon, while three newspapers — the New York Times, the Boston Globe and the Washington Post — will participate in a pilot program under which they will subsidize part of the $489 price of the Kindle DX for readers who commit to a long-term subscription, but only if they live outside the printed paper's circulation area. And News Corp. mogul Rupert Murdoch reportedly has a global team of executives working on a plan for a Kindle-like piece of hardware that would give his papers a vehicle for charging readers for content.