Google's cynical offer to 'help' European publishers

Google announced a three-year $165 million"Innovation Fund" for European media ventures and it will help some small but influential newspapers develop new digital products.

Liam Tung has the details: Google admits it made mistakes over news as it cosies up to Europe's publishers | ZDNet

Announcing the program in London today, Carlo D'Asaro Biondo, Google's president of strategic partnerships in Europe, said the company has always wanted to be a "friend" of the news industry. While conceding it has "made some mistakes along the way", the company's relationship with the industry has been "misunderstood."

Foremski's Take: Biondo is right about Google being "misunderstood" by the news industry, which thinks Google is a tech company.

Google should explain to the media industry that it is not a tech company, as it's been happy to portray itself for more than a decade, but it is in fact a media company. It publishes pages of content with advertising around it.

It's a technology-enabled media company but it is not a tech company.

The media publishers will then understand that their failure to thrive is because they are up against a super-efficient competitor with which they cannot compete. Google, and other technology-enabled media companies such a Facebook, Twitter, Yahoo, have a size and business model they cannot hope to match.

The economics of the Internet reward businesses that can scale to large sizes. Biggest trumps bigger, which beats big. Even the vilified "Big Media" cannot compete against these competitors. They can sell advertising at a fraction of their costs while at the same time offering advertisers oceans of consumer data.

Facebook is a good example of these media industry economics made possible by the Internet and rewarded by scale.

If you look at Facebook's 2014 revenues it reported about $1 in revenues per user per month and profits of about $3 per user per year. It's terrible at monetizing all the free user-generated content

Google is the same, it is terrifically bad at monetizing content but that doesn't matter because scale is richly rewarded by the economics of the Internet. A onionskin sliver of profit on advertising adds up to a mountain of cash when hundreds of billions of commercial messages are sold every year.

Cynical offer...

Google's offer to fund "innovation" in media and help develop new digital media products is a cynical offer. It implies that the media industry's troubles are due to a lack of innovation in creating new digital products. Yet the failure is in developing innovative media business models.

Until that issue is addressed and answered in such a way that we can have a thriving, independent news industry that sustains itself based on the quality of its work then any other type of proposal to regenerate the media industry is useless. But Google knows that.

Scorpion nature and trust...

An old fable tells the story of a frog agreeing to carry a scorpion across a river trusting the insect's story that he won't sting him because both would drown. Neither makes it to the opposite bank because the scorpion cannot change its nature and stings the frog.

The European Union cannot change Google's nature because it is directly tied to the nature of what makes the Internet such a powerful business platform.

Google can't help killing newspapers and other media industry competitors. Its business model is such that all the value is in the index. The intrinsic value of content is continually devalued by Google in order to protect the higher value of the index. And as the value of each Google click continues to fall so does the value of the content. All media companies, traditional and digital-born, will continue to be disrupted and will continue to go out of business [GigaOm].

Yet without the media industry creating masses of new web pages there's not much new to see on the Internet, there's fewer reasons to surf the web. There's less to index and there's fewer ads for Google to sell.

Gigantic animal images...

The death of the media industry will be a liberation of sorts. We'll walk away from our screens and stand blinking in the sharp daylight, marveling at the gigantic animal images in the billowy clouds, and enjoying the high-def, fully immersive experience of the real world and this curious experience of being.