Journalism June 2010

How to Save the News

Plummeting newspaper circulation, disappearing classified ads, “unbundling” of content—the list of what’s killing journalism is long. But high on that list, many would say, is Google, the biggest unbundler of them all. Now, having helped break the news business, the company wants to fix it—for commercial as well as civic reasons: if news organizations stop producing great journalism, says one Google executive, the search engine will no longer have interesting content to link to. So some of the smartest minds at the company are thinking about this, and working with publishers, and peering ahead to see what the future of journalism looks like. Guess what? It’s bright.
Krishna Bharat

Here’s an important illustration of the difference: people inside the press still wage bitter, first-principles debates about whether, in theory, customers will ever be willing to pay for online news, and therefore whether “paywalls” for online news can ever succeed. But at Google, I could hardly interest anyone in the question. The reaction was: Of course people will end up paying in some form—why even talk about it? The important questions involved the details of how they would pay, and for what kind of news. “We have no horse in that race or particular model in mind,” Krishna Bharat, one of the executives most deeply involved in Google’s journalistic efforts, told me, in a typical comment. His team was already working with some newspapers planning to put their content behind paywalls, others planning to remain free and hoping to become more popular with readers annoyed when paywalls crop up elsewhere, and still others planning a range of free and paid offerings. For Bharat and his colleagues, free-versus-paid is an empirical rather than theological matter. They’ll see what works.

The deeper differences involve Google’s assumptions about what the news business will have to do to “engage” readers again—that is, make them willing to spend time with its printed, online, or on-air products, however much they cost. One Google employee who asked not to be named mentioned another report on journalism’s future and pointed out a section called “Focus on the User.” “They just mean, ‘Get money out of the user,’” he said. “Nowhere do they talk about how to create something people actually want to read and engage with and use.” On the topic of engaging modern users, Google feels very confident right now, and the news business feels very nervous. Apart from anything else, that certainty gap makes Google important to the future of the news.

Before describing how Google came to this point, what its engineers are trying to do, and where it all might lead, a full-disclosure note. Eric Schmidt of Google is an important figure in this saga. By chance, and because he and his wife were Atlantic readers, Schmidt and his family had become friends of my family long before he joined Google as CEO in 2001, and we have stayed in touch. For this story, I did not talk with him except in one official on-the-record interview in late March, after I had finished my other reporting at Google HQ.

Let’s start with the diagnosis: If you are looking at the troubled ecology of news from Google’s point of view, how do you define the problem to be solved? You would accept from the outset that something “historic,” “epochal,” “devastating,” “unprecedented,” “irresistible,” and so on was happening to the news business—all terms I heard used in interviews to describe the challenges facing newspapers in particular and the journalism business more broadly.

“There really is no single cause,” I was told by Josh Cohen, a former Web-news manager for Reuters who now directs Google’s dealings with publishers and broadcasters, at his office in New York. “Rather, you could pick any single cause, and that on its own would be enough to explain the problems—except it’s not on its own.” The most obvious cause is that classified advertising, traditionally 30 to 40 percent of a newspaper’s total revenue, is disappearing in a rush to online sites. “There are a lot of people in the business who think that in the not-too-distant future, the classified share of a paper’s revenue will go to zero,” Cohen said. “Stop right there. In any business, if you lose a third of your revenue, you’re going to be in serious trouble.”

You can’t stop right there, Cohen said, and he went through the list of the other, related trends weighing on newspapers in particular, each pointing downward and each making the others worse. First, the relentless decline of circulation—“fewer people using your product,” as he put it. Then, the consequent defection of advertisers from the lucrative “display” category—the big ads for cars, banks, airlines—as well as from classifieds. The typical newspaper costs much more to print and deliver than a subscriber pays. Its business rationale is as an advertising-delivery vehicle, with 80 percent of the typical paper’s total revenue coming from ads. That’s what’s going away. In hopes of preserving that advertising model, newspapers have decided to defend their hold on the public’s attention by giving away, online, the very information they were trying to sell in print. However that decision looks in the long run, for now it has created a rising generation of “customers” who are out of the habit of reading on paper and are conditioned to think that information should be free.

“It’s the triple whammy,” Eric Schmidt said when I interviewed him. “Loss of classifieds, loss of circulation, loss of the value of display ads in print, on a per-ad basis. Online advertising is growing but has not caught up.”

So far, this may sound familiar. To me, the interesting aspects of the Google diagnosis, which of course sets the stage for the proposed cure, were these:

First, it was strikingly not moralistic or mocking. This was a change, not simply from what I’d grown used to hearing at tech conferences over the past decade—the phrase “dead-tree edition” captures the tone—but also from the way Americans usually talk about distressed industries. Think of the connotations of “Big Auto” or “Rust Belt.” Whatever the people at Google might privately think, that is not how they talked about the news business. What was happening to the press, they said, was happening because of huge, historic technological forces rather than because of short-sightedness or backward thinking by publishers, editors, and owners. “This is a fundamental disruption of an industry,” Nikesh Arora, who joined Google six years ago and is now president of its global sales operations, told me, before detailing the top-to-bottom pressure on every part of the modern journalistic business model.

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James Fallows is an Atlantic national correspondent; his blog is at More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

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