An interesting observation was made recently by a colleague of mine, Vincent Dekker, a leading Dutch ICT journalist at the Trouw newspaper.
He was writing about advertising revenues, and, while he used the Netherlands as an example, his point has global relevance.
The enormous success of Google and other international (American) Internet services is creating a big problem for newspapers, since advertising is a key source of revenue for these organisations.
While Google only gets a percentage of the revenue on its ads on, for example, the home pages of newspapers, it gets most of its advertising revenue from ads next to its search results, for which it receives all of the revenue.
In the first half of 2010 (the most recent figures available – data from Nielsen) 54% of all web ad revenue in the Netherlands went to Search in the Netherlands Search=Google (some 94 % of searches)
Google is now also targeting Display (with 13% of market share already in the USA). Facebook is also targeting Display, and it is just beginning to capture market share in the Netherlands.
All Dutch news sites and Facebook’s competitor Hyves together had 205 million Euros in display revenue in 2009. That is half of what Google made, and it will become less as soon as Google and Facebook get going in the Dutch Display market.
The biggest Dutch news site, Nu.nl, claims it makes a profit but Vincent indicates that this is not going to last. Soon All Dutch news sites will lose money, no matter how big they are.
These developments could become a threat to the plurality of the media and that’s not something a democratic world should look forward to.
Here is the original article (in Dutch): http://www.trouw.nl/tr/nl/4324/Nieuws/article/detail/1838132/2011/02/09/Zoekmachine-is-geldmachine.dhtml
Of course, having said all of this the discussion comes back to the future of the traditional newspaper.
Today’s media originated back in the 17th century, a totally different era. Are new forms now going to replace that traditional format, and can plurality of the media be maintained through these new formats? There is obviously no clear answer to this yet, but protecting the old media through artificial regulation might not be the right way forward either. At the same time the current alternatives with blogs and social network sites doesn’t yet provide the media plurality that is needed for a well informed democratic society..
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