In a period of epic economic crisis, Google, Apple, and Amazon still are doing fine selling advertisements and/or media online. Their dominance over how we get entertainment and information of all kinds is increasingly clear, and the suppliers of that content have to reckon with the fact that the mighty tend to use their power to extract ever more in revenue and influence.
If the past is a guide, there will come a time when these behemoths essentially are monopolies, and society will rise up in protest, to the relief and, usually, the benefit of everyone except them. Consider AT&T—not today’s reconstituted company, but the old “Ma Bell,” which controlled America’s telephone system until 1982, when a federal judge in Washington ordered it broken up into what became known as Baby Bells, releasing a surge of energy and competition, the impact of which, for better or worse, we are living with now. And there is Microsoft, which was synonymous with operating software and was so tough on rivals that eventually it was forced, again by the courts but also by public opinion, to change its business strategy, opening the way (among other factors) for the rise of Google, Apple, and Amazon.
There are a lot of ideas circulating for saving the news business…but getting Google (and its smaller competitors) to share revenue with creators of content would be a money stream that essentially does not now exist.
Google does have competitors, such as Yahoo and MSN, but its reach is pervasive, and the others seem destined for irrelevance, recalling the battle between Microsoft and Netscape in the 1990s. Remember Netscape?
Google’s position is so strong that, even when it enables a breakthrough in the rapidly evolving means of distributing information, there is a perceived downside. Take the settlement Google reached last fall with book publishers and authors that established a royalty model for the use of books in copyright, granting Google the right to scan millions of books for access online. My view is that the principle of payment for the distribution of book content is hugely important and should be extended, posthaste, to cover material from newspapers and magazines (about which more in a moment). But the danger of the settlement, as brilliantly argued by Robert Darnton, the librarian of Harvard University, in the current New York Review of Books, is that Google will now become the repository of all those books online that will, inevitably, lead the company to the arrogance that comes with supremacy.
The public image of Google is still mainly positive, because users of its many services get them for “free,” although users do pay substantial fees to the Internet providers and telecoms that deliver them to us. But don’t be fooled. Anyone seeking to make a business deal with Google—including the book industry—learns that the company drives a very hard bargain, has very deep pockets, and is relentlessly profit-driven, as befits its status in the marketplace. Darnton forecasts, and other experts I have spoken to agree, that whatever Google’s stance today, the record of monopolies is that they eventually take advantage of their power as masters of the universe, until that becomes intolerable and they are challenged, one way or another.
Which brings me to the core of this piece ( argued before in “Platform: Make Google Pay,” 11/03/08). With the print newspaper and magazine business model irreversibly in decline, these enterprises have to start demanding payment for use of their material, or they will disappear. And no one delivers more of that content online than Google does, through its search functions supported by advertising, the revenue from which goes to its bottom line. The notion that “information wants to be free” is absurd when the delivery mechanism is making a fortune and the creators are getting what amounts to zilch.
There are a lot of ideas circulating for saving the news business—such as adopting a nonprofit model that would turn newspapers into public-service institutions like public radio or universities, or soliciting an antitrust waiver that would allow news-based companies to act in concert and charge consumers online—but getting Google (and its smaller competitors) to share revenue with creators of content would be a money stream that essentially does not now exist. This is obviously not a solution to the whole problem, but every penny counts, and there are a lot of them out there that are not being shared. Recently Google shut down its small project to help newspapers sell ads online, saying that it wasn’t working. But company spokesmen, especially CEO Eric Schmidt, have repeatedly said they would like to help newspapers, if only they could figure out how. Well, how about sitting down with representatives of the floundering news gatherers and devising a system that would pay royalties for click-throughs supported by advertising?
History shows that monopolies, like empires, eventually get into trouble. Google has insisted from the outset that it is a different kind of company, and its record of innovation has been extraordinary. Delivering the news is a great service that Google does exceptionally well. Now they should devise ways to pay for it.
Peter Osnos is a senior fellow for media at The Century Foundation. He is the founder and editor-at-large of PublicAffairs Books., vice chairman of the Columbia Journalism Review, a former publisher at Random House Inc. and a former correspondent and editor at The Washington Post.