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April 11, 2009, 4:43 p.m.

Why Nick Carr is wrong on Google as a middleman for news

After seeing recommendations on Twitter from Clay Shirky and others, I was expecting a tour de force from author and former Harvard Business Review editor Nick Carr, but I confess that I found his post on Google as middleman — and its effect on newspapers — disappointing. Not just because the middleman comparison is one that has been made repeatedly over the past couple of years, and therefore doesn’t really add much to the conversation, but also because I think he is wrong. Or rather, I think that his description has some merit, but the lessons he draws are flawed, and ultimately unhelpful for newspapers (I would have put some of these thoughts into a comment, but Nick says he has disabled comments on his blog because they are too distracting).

Is Google a “middleman made of software,” as Nick describes it? In many ways, yes. And as he points out, entities that act as middlemen in a market typically act in their own interest. But what about his third point, in which he says:

The broader the span of the middleman’s control over the exchanges that take place in a market, the greater the middleman’s power and the lesser the power of the suppliers.

I think there’s a fundamental misunderstanding here. The broader the control that Google has over the exchanges that take place in a market, the greater its power — but that power doesn’t lessen the power of Google’s suppliers. If anything, in fact, it amplifies it. Does Google indexing my website, and providing a link to it when someone searches for my name, lessen the power that I have over my content? If you think of power as control over who sees the content and where, then yes. But in reality, it provides me with far more reach than I could otherwise achieve on my own, by exposing that content to people.

Does this perception of Google as middleman, stealing traffic and eyeballs from newspapers, really hold water? I don’t think so — and Nick doesn’t provide any real evidence to the contrary. After all, if you search for news about something, Google doesn’t show you anything but a bunch of headlines and excerpts from stories at newspaper websites. How can that simple act be seen as demolishing the business model of newspapers? As far as I’m concerned, if your headline and lede paragraph are the sum total of the value you are providing for readers, then you deserve to lose your business to Google.

So what is Nick’s prescription for success? He says the industry needs to reduce supply, both by getting rid of newspapers and by imposing (or trying to impose) controls on syndication of news articles around the Web:

Once the news business reduces supply, it can begin to consolidate traffic, which in turn consolidates ad revenues and, not least, opens opportunities to charge subscription fees of one sort or another… With less supply, the supplier gains market power at the expense of the middleman.

In other words, the very thing that Associated Press appears to be trying to do by cracking down on unlicensed syndication and by trying to renegotiate their deal with Google somehow (for a good summary of what they’re doing, see the AP’s somewhat self-serving FAQ, as well as Peter Kafka’s piece at MediaMemo). This seems to me like a dead end, both for the AP and for newspapers as a whole. Trying to artificially re-create the kind of scarcity that papers used to enjoy — something that was a function of the control they had over a distribution mechanism, more than anything else — is a mug’s game.

Newspapers should spend less time trying to disempower the middleman known as Google, and more time trying to think of ways to add value to what they do, and building relationships around their content that Google can’t possibly compete with. In reality, Google is the single biggest source of marketing for their content — a service it provides for nothing. The biggest problem with Carr’s post is that it is only going to encourage the “fight Google” mentality that has caused so much distraction in the industry already.

POSTED     April 11, 2009, 4:43 p.m.
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