Time for news to play offense: how David can attack Goliath (and win)

If you don’t think paid content can ever pay the freight for professional journalism – and I don’t – then what hope is there for news companies?

Well, the good news is that there’s plenty of money being made on content online. On the other hand, the news companies have to be willing to fight for it.

Google, Yahoo, MSN and AOL are making more money from online content than the newspaper industry makes from everything. Many billions of those dollars are tied directly to the distribution of news and news searches, and that’s the money news companies must find a way to get.

Let’s say those online giants – call them GYMA – make $15 billion a year from news and news-related content (searches, archives, etc). I think that’s a conservative guess.

If we could find a way to get just 10 percent of that – $1.5 billion – pumped into American newsrooms, the impact would be direct, immediate and dramatic. The layoffs could stop, and owners would have breathing room to address strategic questions instead of constantly bailing water to keep the boats afloat. Newsrooms could start hiring the kind of people they need to create the journalism of the future.

Too often, executives and editors I talk with at news companies act like that’s impossible. You can’t compete with Google, they say, grasping instead for legislation or regulation to let them keep their content behind pay walls, away from GYMA altogether. They somehow think their content is valuable enough to charge readers for, but not valuable enough to compete in a marketplace that’s already proven extremely lucrative and attractive to consumers.

Say that again: valuable enough to sell to people who haven’t been willing to buy it so far, but not valuable enough to compete with GYMA? Not good enough to capture 10% of their ad revenue?

That’s a losing strategy. And it’s wrong.

I’m a real dinosaur in the news business in one respect, at least: I spent the first 20 years of my career in life-or-death competition for readers and revenues. The good guys won (that was us) and I’ve never flinched from a competitive fight since.

Not many news executives and editors nowadays were lucky enough to have that seasoning. The newspaper industry as a whole was monopolistic in many important ways over the last 40 or 50 years. Truth is, it was easy to make money for most of them.

I’ve often heard McClatchy’s Gary Pruitt say the news business in that era proved the wisdom of Warren Buffet’s admonition to “always invest in a company that can be run by a complete idiot – because sooner or later, it will be.” When the Anniston Star’s owner (Brandy Ayers) announced in 2003 that he was creating a foundation to keep the paper he inherited independent and reinvest profits in community and academic affairs, he told ASNE he had been raised in a great newspaper tradition with “the twin blessings of monopoly and nepotism.”

News companies no longer have either: few are nepotistic these days, and the notion of monopoly is a distant, dimming memory.

To win and survive in the future, they need to look back instead to a tradition that used to define the industry: competitive fire.

An old politician in Juneau once reminded me that “you can’t beat something with nothing.” Newspapers won’t beat Google or other aggregators by building pay walls and leaving the field of battle. To win, they need to provide something better than GYMA. That’s where the money is – that $15 billion isn’t theoretical – and besides, open competition is the only way to keep serving a mass audience, which is their mission.

The good news is that they already have a product that can beat even Google in the news business: curated, edited, verified, sorted news – not just an exhaustive list of stories, but the news that matters most. What they don’t have is any way to play on the same field as Google. They lack the scale and internet savvy to put that product in front of consumers who want it and for whom advertisers will pay. Google has proven that works; what news companies have to do is take some of that money away.

Google’s algorithims are a wonder of the world, by far the best at sorting and retrieving static information of all kinds. What they don’t do very well is sort through information on the basis of trustworthiness: which is best, most reliable, most accurate? “We have not come up with a way to algorithmically handle that in a coherent way,” Google CEO Eric Schmidt told the NAA last April.

Well, journalists can and do handle that in a coherent way, every minute of every day.

The problem for news companies is that Google spans the globe, and they individually can’t. Only by banding together to offer the collective judgment of thousands of journalists about hundreds of relevant stories and presenting that in web-savvy ways can they reach the scale necessary to win a share of the billions already flowing to Google, Yahoo, AOL and MSN.

Disclosure: I am on the board of a company (Publish2) that is finalizing plans we think could do just that – and something Google never will: share 50% of the revenue with those who create the stories. Others are also looking at or thinking about ways to address the need for joint, competitive action. For any to succeed, the news companies will have to stop building walls and find the nerve to play offense again. They will have to work together and win by offering a better product. They will have to do it soon.

The Anchorage Daily News was just beginning to win its 40-year battle with the Anchorage Times when that once-dominant paper was sold to a rough-and-tumble oil millionaire with deep pockets and a reputation for ruthless competition. It seemed like everybody I talked to after that said something like, “You must be scared now that you have to compete with Bill Allen.”

Honestly, I wasn’t. “If I wanted to compete in the oilfield services business, I’d be terrified,” I told them. “But in the news business, Bill Allen ought to be terrified of us.”

After spending two years and a reported $40 million learning that, he folded the Anchorage Times.

I’d be terrified to think about competing with Google on anything involving algorithms. But when it comes to news judgment, they ought to be terrified of us.