Over the past several months, we’ve seen billionaire tech-company founders invest substantial sums of money in journalism: first Amazon CEO Jeff Bezos acquired the Washington Post for $250 million, then eBay founder Pierre Omidyar promised to spend a similar amount on a brand-new media entity called First Look Media. According to a couple of the business writers at Breaking Views, however, the ones who should really be investing in journalism are Google co-founders Larry Page and Sergey Brin.
Why? Because the Google guys have apparently sucked the lifeblood out of the media business by siphoning off billions in advertising revenue over the past decade or so. As the authors of the post put it:
“Few have made their money at the expense of the old-school pillars of the fourth estate quite as obviously as the Google guys… if any tech moguls have reason to feel they owe it to the now cash-strapped world of journalism to give something back, it’s Messrs Page, Brin and Schmidt.”
Google didn’t invent the internet
The idea that Google and/or other online services such as Craigslist are to blame for the decline of the traditional media industry is a theme that pops up repeatedly in journalistic circles. The online classified site that Craig Newmark started in his San Francisco apartment (and originally pitched to at least one newspaper, as I recall, only to be rejected) is often blamed for removing billions of dollars in classified advertising from the newspaper business, demolishing one of its key revenue pillars.
In a similar way, Google critics note how much advertising money has disappeared from the newspaper business over the past decade or so — more than $40 billion, or about 60 percent of the ad revenue the industry generated at its peak in 2000, according to figures from the Newspaper Association of America — and they draw a direct line connecting that with the in advertising revenue that Google brings in every year from AdWords. As Rob Cox and Richard Beales put it in their BreakingViews post:
“It’s uncanny, therefore, that of the $60 billion plus of potential annual ad sales that print publications seem to have lost, Google had grabbed about $44 billion by 2012, from virtually nothing in 2000. That two-thirds of slice of the spoils is about equal to the company’s market share of the online search business.”
It’s important to note that the $60 billion in “potential” sales the authors refer to is an estimate of how much the traditional print-advertising business might have been worth by now, if the growth rate that the industry saw during the late 1990s had continued through the past decade. In other words, it’s a fictional number — much like the potential future sales revenue that the record industry claims to have lost due to music downloading and file-sharing.
Should Ford have invested in buggy whips?
There’s no question that the massive growth of online advertising has had considerable impact on the traditional print media industry. To the extent that brands have chosen to spend pennies on AdWords and other programmatic tools and services, instead of thousands of dollars on display advertising in newspapers, there has clearly been a shift of spending from one place to another.
In a similar way, many people who might normally have paid money to place a classified ad in a newspaper have chosen instead to post one for free on Craigslist. Is that Craig Newmark’s fault? Hardly. He stumbled on an opportunity — one that was also open to newspapers and other media outlets — and he pursued it. Blaming him (or Google) for their decline is like blaming Henry Ford for the decline of the buggy-whip manufacturing industry, or blaming the manufacturers of a submarine because your boat sank beneath the waves.
Google has prospered because it was an early adopter of a new form of algorithm-driven advertising, one that served the needs of many advertisers as well or better than much more expensive forms of marketing. It may be the most prominent example of that phenomenon, but it is hardly the only one — and to hold Page and Brin to account for this is the same as wishing that the internet could somehow be uninvented.
Would it be nice if Larry or Sergey decided to invest some of their billions in journalism, the way Bezos and Omidyar have? Sure — just as it would if anyone decided to do so, regardless of how they made their fortunes. And perhaps they could bring some of their web smarts to the media business, the way some (including me) would like Jeff Bezos to do. But to say they owe it us or to society to do so is just wrong-headed.