Google News: How Can It Make Money?

Google News has been sitting in “Beta” for the past three years. Why? Probably because the company hasn’t yet figured out how to monetize the service. Can it ever make money? And if it’s not making money, why does it have competition?

When Google News launched three years ago, the folks at MSNBC, the Yahoo!, and other Internet newsrooms must have been pretty scared. After all, while they spent millions of dollars sending operatives around the world to get exclusives and breaking stories, Google sent out its army of spiders to those sites and created what can be considered the world’s largest news agency, with over 7,000 news sources delivering results, while at the same time not having even one reporter in-house. In this case, Google took advantage of a basic Internet paradigm: it doesn’t matter who first broke a story, if enough people are talking about it, then the biggest news sources will always get the credit.

All news from all over the world, all the time. Not a bad way to promote a site, wouldn’t you say?

The problem that Google News has been having, however, hasn’t been with whether they get enough readers, or whether someone’s beat them to the punch with the latest news. With Google’s exposure, the readership was sure to come, and on the Internet, it’s not who broke the story that matters, but rather how many people will talk about it – and point their links to your site – that really counts. As it stands now, Google news relies on the republication of copyrighted, time sensitive material in order to bring traffic to their site. And that’s just the problem.

Although Google News has been a blessing to anyone looking for not just Internet pages, but actual news stories on a certain subject, the company still hasn’t figured out how to make money with the service. So what’s a company to do? Google News might be the most visited news service in the world, but if they can’t make any money off of it, they simply have a tight grip on an empty sack.

If you’re a business, you expect to have competitors. Unless you’re a sanctioned monopoly like Major League Baseball, or you’re in a business where there really doesn’t need to be a business, competition will always be a part of the game. But who competes with Google News? Given its inability to make money, who would want to?

For starters, how about Microsoft? The software giant has set its eyes on Google as the biggest threat to its Internet empire, and they’re not sitting still on it. With the latest improvements to MSN Search, Microsoft might well be on the way to rivaling Google as Internet search king, toolbars and all. With their latest Newsbot, Microsoft hopes to take some of the spotlight away from Google, and given the recent improvements in the technology (PDF), they might just be able to dethrone Google as the king of news search.

But Microsoft faces the same problems Google does, and that is that it can’t make money from its Newsbot. Still, when you’re holding an empty sack, chances are someone else will also want it, even if it is just to have it.

Microsoft aside, the closest thing to competition Google has is the very news services Google aggregates from. News hubs like the Yahoo! and MSNBC, which spend millions on original and licensed news content. The problem for readers is that, those news services don’t provide the search functionality found in Google News, and generally limit any news searches to content on their sites, and perhaps those of their partners, leaving users to search other news services manually in order to locate information. In addition, by leading searchers to their articles, the services being aggregated actually gain traffic from Google, which leads website owners to ask what the chances of optimizing their sites for Google News are.

Common sense would seem to indicate that Google news would benefit both people searching for news and the news services which make their way to the front page of Google News. Although the site receives over 6 million visitors a month, that’s not always the case.

As it turns out, larger news hubs may be losing pageviews to smaller news sites who come up before the larger site in a search. News hubs like CNN and MSNBC, who rely heavily on advertising revenue, including – ironically enough – Google’s AdWords, are losing individual page hits. That’s because readers who come from Google News are “one hit wonders,” readers who show up for only one page and are off your site as soon as they’re done reading what they’re looking for. They’re more likely to hit the Back button than they are to continue searching on whatever site they’ve just landed on, especially if they’re looking for information on a particular subject. At the very least, even if readers do stay on the site, these sites have just lost one page visit, due to the readers’ bypassing of the first page.

The benefactors here are smaller sites who can’t compete with the exposure given to the major hubs. These sites are more likely to be discovered by someone doing a search through Google News than pretty much any other way. For example, how many sites with weather information were found by Americans in the southeast during the string of hurricanes that ravaged the region in August and September of 2004? Both the NHC and The Weather Channel got their share of hits, but how about The Jamaica Observer, or the Palm Beach Post, who not only reported on the hurricanes, but also on people’s dietary habits during the ordeal (Hurricane Frances made me fat)? I’m sure many of these smaller sites have seen a definite increase in hits since they were first included in Google News. And the average reader has found his share of new sites using the service.

But is it all about sharing the knowledge? Unfortunately, that kind of feel-good belief was destroyed when Google sent a cease-and-desist letter to Julian Bond this past April for creating customized RSS feeds from Google News. The letter mentioned that the Google News does not allow “webmasters to display Google News headlines on their sites.” Look who’s calling the kettle black!

There are a couple of ways that Google News can consider in making money, but none of them come without some risk.

The first, and most obvious, is to sell ads. The problem? At that point, the company is making money from someone else’s unlicensed, copyrighted work. They’d be taken to court, of course. In fact, Google’s already been taken to court in Germany for their use of copyrighted stories and images on their site.

But is this a double standard? Sites like Internet.com‘s LinuxToday.com has been doing this for years, their page littered on a regular basis with both unlicensed, copyrighted material from numerous technical news sources, as well as ads. Whereas in the case of Google News clicking on the story will take readers to the actual location of the story, clicking on an article in LinuxToday takes readers to both more copyrighted material (usually two paragraphs), plus a discussion about the story on their site, and finally a link to the entire article on the site. This, of course, while banners are flashing left, right, and center. If Internet.com isn’t violating fair use, why would Google be?

Here’s the other twist. The Google search engine already makes money from copyrighted material. Whenever a search is run through the search engine, thousands of results come up, all of which link to pages with copyrighted material not belonging to Google. In addition, there are ads at the top and sides of the page, usually relating to what’s being advertised. In this case, Google considered to be making money from the actual search and search terms, and not from the copyrighted material. So what’s the difference?

The difference is in both the images used and the front page of the site. Nowhere in the course of Google Search do entire paragraphs of text get quotes. Neither do they get images. Yet, in Google news, the first thing visitors are greeted with are coherent paragraphs of information and images, laid out in a fashion similar to the front page of most major news sites. Both the paragraphs of text and the images are copyrighted information not belonging to Google. What if Google gave up the fancy front page and pictures, and made its news search identical to its content search? The company could then argue that its search and the presentation thereof are both in line with fair use. Sure, it wouldn’t be as pretty as the sites of news outlets.

Another way Google could walk the tight rope into profitability is by doing something they’ve refused to do with their search engine: pay for results. News services like the rather Google-prominent Xinhua News Service (http://www.xinhua.cn), the official news service for the government of the People’s Republic of China, and smaller news services could pay the search engine to ensure higher rankings for their articles. After all, who ever goes past the first page of news on the site? Sites looking for exposure would then have a leg up on larger sites that would refuse to pay for the service, gaining readership and increasing profits from ads on their sites.

The problem here then becomes the integrity of the search. How accurate and relevant, is it, really? And would taking payment for putting certain news before others violate any unwritten journalistic code of ethics? Is Google even responsible for adhering to that code? If they’re reporting news, then yes, within limitations. Some argue that the company’s treatment of the government sponsored and controlled Xinhua as a legitimate news service is in itself a violation of any unwritten rules regarding ethics or accuracy in journalism.

In addition, this move might make the company seem less Internet community friendly and more like a bully who thinks that just because it’s got a name and influence that it’s “above the law”, so to speak. Sure, they can try to use their weight alone and bully people into paying them, but that would rely heavily on perception: how important are they, really? With competition coming from MSN’s Newsbot, any strong-arming in this direction would automatically mean a major boost for Google’s main competitor. 

In the end, does Google News need to make money? I know, heresy for me to say that a company would actually provide a valuable service and not try to capitalize on it. But the truth is that it already has. By mere virtue of its existence and popularity, the service is providing the company with the type of marketing business owners most crave: word of mouth advertising, something the company has excelled in lately. (Remember Gmail?) And by increasing the company’s image as a friend of the Internet community, that service helps boost loyalty toward the companies other products.

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