Google and the wires torpedo newspapers
A fascinating announcement from Google about an arrangement with four of the world's major wire services that will see their content featured more prominently on Google News. As far as I can tell, this deal has one major loser: namely …
Context & Ripple Effects
This lands after months of open friction between Google and the newspaper industry: in May 2007 publishers were publicly demanding a share of Google News' ad revenue (Newspapers want Google News' quarter), and Google had already begun cutting direct deals with individual news websites (deals with news websites) rather than paying the industry collectively. The answer to those demands, it turns out, was not money for papers but closer ties to their suppliers.
On August 31 Search Engine Land reported Google News would start hosting wire stories directly, and the Guardian confirmed on September 1 that four major international agencies had signed on (agencies' copy on Google News). The pickup was broad — Reuters, the Guardian, BuzzMachine and Publishing 2.0 all carried versions within a day — and the sharpest reading came from mathewingram.com: the arrangement's one major loser is the newspapers themselves, whose pages are now redundant next to the same copy hosted at the source.
First-order effects
- Newspapers lose the search-traffic value of carrying wire copy: when Google News hosts the agency version prominently, syndicated stories on paper sites become duplicate content competing against the original.
- The four wire services gain direct, prominent distribution through Google News, letting them reach readers without routing every story through a newspaper client.
Second-order effects
- Publishers' leverage in the revenue-share fight they opened in May 2007 weakens: if agencies will license directly to the platform, newspapers become one buyer among many rather than the gatekeepers of wire content.
- Wire services face a strategic fork — protecting newspaper clients who pay syndication fees versus monetizing aggregator distribution — and any drift toward the latter reprices the traditional agency-newspaper relationship.
Third-order effects
- If originators keep licensing straight to platforms, value in the news supply chain migrates from the papers that package stories to whoever controls distribution and search placement — an inversion of the twentieth-century structure where wires needed newspapers more than newspapers needed wires.
- The episode hardens the industry's core dispute over whether aggregation is promotion or substitution, setting up the payment-for-content question that keeps resurfacing between Google and publishers.
The trend: News distribution is consolidating around platforms that host content at the source, shifting power from newspaper intermediaries to wire services and the aggregators that carry them.