Google ads and “the long tail”

Does Lou Ureneck really think the little guys whose ads have popped up on his Web site about fishing in Greece would otherwise be taking out ads in newspapers? The Boston University journalism department chair writes about this in an op-ed piece for the Boston Globe:

[T]hose little Google ads that are popping on my website are chipping — more like hacking — away at newspapers by cutting into their revenue streams. A newspaper spends an enormous amount of money on its newsroom and production plants to bring me my morning paper. It needs that revenue to operate.

Google, on the other hand, spends not a dime on the collection of news. Its business, in part, is based on aggregating the work of others — or getting a cut from the advertising that appears on the websites of others. It’s a brilliant business model. No wonder it has a market capitalization of $160 billion.

In a sense, I am contributing to problems of newspapers by jumping into Web publishing and accepting advertising. Is this fair? Well, fair or not, it clearly is inevitable.

In fact, Ureneck’s site, and the advertising that appears on it, are examples of “the long tail,” an economics concept popularized in an article and book by Wired editor Chris Anderson. The long tail refers to tiny transactions that are too inefficient for anyone to bother with in a mass-market environment, but that become worthwhile as the cost of making those transactions goes down. The idea is that the Internet has reduced that cost nearly to zero.

An example of this is the limited number of books and CDs even a large retailer like Borders or Barnes & Noble can carry, versus the much larger selection offered by a virtual retailer like Amazon.com. But even Amazon is a mass marketer compared to hundreds and thousands of smaller sites. As the long tail lengthens, the size of the mass market might shrink (which is Ureneck’s concern.) But it’s not going to go away by any means.

As for Google and the news business, well, that’s been the subject of uneasy conversations for some time now. Late this past spring, Washington Post journalist-turned-UC Berkeley professor Neil Henry got his cookies toasted for seeming not to understand that Google News actually drives users to news organizations’ Web sites (and their advertising) — thus making, not costing, them money.

Ureneck asserts that Google “spends not a dime on the collection of news.” True, but as of last week, the company now intends to spend many dimes so that others can collect news: It’s subscribing to the Associated Press and other news services, and is featuring their full content on its Google News site. (Yahoo! News has been doing that since the beginning.)

If you think Google has been getting something of a free ride, then maybe you’ll see that as good news. But Poynter’s Amy Gahran cites a Forbes article that notes this “could diminish Internet traffic to newspaper and broadcast companies’ Web sites where those stories and photos are also found — a development that could reduce those companies’ revenue from online advertising.”

It’s all very complicated.