Google Takes a Lesson from Spider Man

As all fans of Spider-Man know, “With great power comes great responsibility.” In the midst of
headlines over Google’s battle with the Belgian court, the Publisher Relations folks at Google have come out with an official policy statement on how Google will exercise its great power over web content. As John Battelle commented, this was a very important statement by the most influential player in media today. He suggests that Google is trying to establish a framework for negotiating new business relationships with publishers, by clearly marking a line between the publisher’s assets and the search engine’s. Clearly, both Google and the publisher have much to gain from the pooling of these assets. However, the open question (and what should be the focus of negotiation) is how to share in the value created when Google indexes articles and surfaces headlines and snippets in search results. What rankles the European publishers especially is Google’s assumption of Fair Use rights before ever engaging in that negotiation. No doubt this is especially irritating to the Europeans, because this interpretation is based on US copyright law and practice, which is generally more liberal than international standards. Given the general antipathy within the European community toward other recent unilateral initiatives by Americans, it’s not hard to see why this might make European publishers uneasy.

In the context of everything else going on in the world these days, Google’s preemptory assumption of Fair Use rights risks the company being seen as just another example of American cowboy attitudes toward the rest of the world. However, by laying out a clear statement of policy on this issue, they are providing some much-needed transparency, and a potentially more friendly basis for business negotiations with publishers. Perhaps in so doing they will avoid the kind of mistakes recently made by another powerful American who ignored the lesson of Spider-Man.

Lessons from the Success of Times Select

One year after the release of its subscription-based service, Times Select, the New York Times Co. reported continued strong results for its online strategies. As print advertising revenues continued to fall (4.2% year over year for the group as a whole)) online revenues, with the help of higher ad rates at About.com, rose by 27%. Times Select subscriptions were at 513,000 by the end of June, and generated over $6 million in revenue in its first 12 months. By comparison, Dow Jones reported 768,000 paid subscribers for the nearly 10-year old WSJ.com. For the top news brands, at least, the strategy of integrating some paid subscription content into the overall marketing mix seems to be working. Smaller news and industry trade publishers are following the numbers closely to see what might be learned and applied to their own content. Here are a few obvious take-aways:

1. Leverage your print subscriber base. Subscribers to the print NYT received free access to Times Select, and this group makes up about 2/3 of all Times select subscribers.
2. Combine free ad-supported content with subscriber-only content. There was a speculation when Times select was introduced that pulling any content behind a subscriber “wall” would alienate the world of web users, but this has not been the case.
3. Know what content your users are willing to pay for. It seems simple, but being able to segment content between what should be free and what should be paid is something the traditional premium aggregators have never been able to do. It costs the same per article, for instance, to buy a PR Newswire article from Factiva as a Wall Street Journal Article.
4. Make sure that Google indexes your premium pages. This is a no-brainer today, since anyone (not just the New York Times) can submit content to Google for indexing, even if that users who click on the links are required to pay for the content. NYT.com was one the first services to take advantage of this.
5. Get the pricing right. Of the online-only users, about 20,000 initial subscribers signed up at the pre-launch annual rate of $39.95, and the remaining 140,000 (not counting about 10,000 academic users who received additional discounts) felt it was worth up to $49.95 per year to have access to Paul Krugman, Maureen Dowd, and David Brooks.

So, to all publishers who are looking for ways to make up for those dwindling print ad revenues and declining royalties from the traditional aggregators, it’s time to develop new ways to monetize the online market. Services like indeXet are making this easier than ever.

Licensing emerging from the backwater?

Browsing blog post titles recently, the phrase “Ajax is not a business plan” caught my eye. Since I was looking for something else at the time, I did not capture the link, and I’ve been unable to find it again. However, it has continued to reverberate, because it reminds me of the danger of building businesses around content technology without addressing the serious issues of content rights. Web scraping, text mining, peer-to-peer sharing, and other types of technologies that effectively repurpose content offer tantalizing opportunities, but unless the rights of content owners are taken into account, entrepreneurs and venture capitalists building businesses around these technologies are walking a risky path. Yesterday’s headlines about Napster’s decline in fortunes is a cautionary tale about how companies need to secure licensing rights before “betting the farm” on technologies that require other peoples’ content in order to work.

As a content licensing specialist, I have often had sales people show me competitor products that were built to systematically violate copyright, like ad hoc emailing or syndicating of articles or reports, and inevitably they ask, “If they are doing it, why can’t we?” The answer, which always disappoints the person looking for a quick “OK” is that it CAN be done, as long as the proprietary rights of the content owner are not violated. This requires licensing for the specific use to be made of the content. Why were iTunes and Rhapsody phenomenally successful while Napster ended up with lawsuits, bankruptcy, and shareholder losses? Because these successful technology companies made licensing a cornerstone of their business strategy! They put effort and investment in this key area, negotiated deals that provided win/win’s for both sides, and in so doing they created enormous value for themselves and for their content partners. “Rights & Permissions” may seem like an obscure field to most people; I’m used to the blank stares when I try to explain what I do for a living. However, maybe such clear cases where the right licensing strategy has meant the difference between success and disaster will help persuade the boards and executive managers of high-tech companies that there is real value in licensing.

A Few Thoughts from the ASIDIC Fall Meeting

The Association of information and Dissemination Centers (ASIDIC) held its semiannual gathering this week in Newport Beach. This group of information industry professionals has been meeting for nearly 40 years, beginning with the days when electronic information lived on magnetic tape and was only accessible through mainframe computers. The career histories of many attendees could be case studies documenting the disruptive effects of new technologies – the emergence and disappearance of companies, the transformation of institutions and their people. Unlike many technology conferences (Web 2.0 comes to mind) there is plenty of vocal skepticism and an underlying drive to tie new applications to basic business value and things that scientists, librarians, and publishers have been trying to do all along; e.g. Is social tagging really a step forward in helping users get to the information they need? Is search engine optimization undermining our ability to get to the most valuable information? Will vertical search and vertical content aggregation keep the publishing business from going horizontal?

As might be expected, the “elephant in the room” was Google, since no discussion of the financial viability of any strategy could ignore the effect of the ubiquitous search box. The discussion among content and technology vendors has certainly evolved in the last few years - from asking how they can compete with Google to strategizing about how to maximize dollars derived from Google search and ads. Some companies are much further down this road of embracing Google than others. Paul Gerbino of Thomas Publishing had some very convincing numbers showing how Thomas was enabled earlier this year to completely do away with their venerable print catalogue in favor of their ad-supported online service. (Of course, unlike most publishers, with the exception of the PR wire services, Thomas receives money from businesses just to be included in their database.) Aggregation companies are having a much tougher time figuring out how to “play nice” with Google. A number of companies have gone “vertical” in order to try and exploit niches in the market that are underserved by Google, and syndicator/aggregator Yellowbrix has repositioned itself as a contextual analysis application, in order to find a deeper market for selling advertising. Rick Burke of Statewide California Electronic Library Consortium (SCELC) talked about how frustrating it is becoming for academic libraries to support standards of validity and authority in scholarly research when a generation of students is convinced that a Google search is all they need to do.

The “social web” got some attention, with a tantalizing preview of the soon-to-be released blog monitoring and analysis service from a new company, BuzzLogic, co founded by serial entrepreneur and author Mitch Ratcliffe. Sounds like BuzzLogic will soon be elbowing its way into the market next to Biz360, Umbria, Nielsen BuzzMetrics, and others. Another interesting play on the social web is a new search engine, Trexy, which offers searchers a way to share search paths among different users.

The ASIDIC group is a lively and stimulating forum, and I would highly recommend attending a future meeting to anyone interested in diving into the turbulent seas where content and technology meet.

Google Offers Historical News Archives

The San Francisco Chronicle reported today that Google has added a historical news archive search capability, permitting visibility into premium services such as the Washington Post Archives, NewsBank Newspaper Archive, New York Times Archives, and Factiva. This has been a long-awaited development, ever since Yahoo! did similar deals with premium archive services last year. For information industry veterans, these arrangements represent the next step in convergence of the free web and premium databases, bringing virtually all online news content together through a single search box. Combined with the ability to pay for all articles through the new Google Checkout, this will probably be the best way of answering the old question of whether or not individual consumers are willing to pay for articles. Assuming users are willing to trust Google with their credit card information, they are making it about as convenient as possible to find and buy articles online.

Pricing is another issue, however. Considering that one can buy songs or TV shows on iTunes and other services for less than a dollar, and movies for less than $2.00, the average price of $2.95 per article is probably out of whack with what the public is willing to pay. Nevertheless, in the slow-moving publishing world this latest development should be considered a big step. Congratulations to Google on putting resources into negotiating the agreements that made this possible. If they want these deals to really be productive and long-lasting, however, the next step will be for Google’s publisher relations folks to gain the rights to set pricing. They should be able to do this, since once the premium services realize that searchers are no longer a captive audience, they just might see the light and realize they need to allow the market to set pricing, just like it does for any other industry.