Wake up to Google's threat to journalism

GOOGLE'S CEO Eric Schmidt is a man known for candor. So perhaps it should have come as no surprise when he recently told magazine executives how they should run their businesses. The real answer, Schmidt said, was to "increase your relevance."

Relevance in this case means passing muster with the Google online advertising complex that increasingly decides which companies will prosper and which fail online. And the Internet, to be clear, is the only place where many newspapers and magazines are gaining advertising revenue. It is the future of nearly all media today.

What Schmidt does not understand is being "relevant" is what every editor and publisher does for a living. Media cannot stay in business without articles, photos and all the other things that matter to their readers. The real problem here is not journalism but Google itself, which is rapidly funneling the flood of advertising dollars flowing from print publications to the Internet directly into its own pockets, choking off investment that by all rights ought to go a few other places, too.

Google's emerging control over publishing is shocking and worse than most people think. It is the main driver behind the seemingly endless waves of layoffs that are destroying journalism today. In short, it makes previous concerns about media ownership and consolidation seem quaint.

Take for instance Google's 70-percent share of the text ads that appear automatically alongside search results and articles on the Internet. If you believe in competition, that 70 percent looks bad, but not as bad as the 90 percent of U.S. Internet advertising profits it already hauls in. Indeed, had the now-failed advertising deal with Yahoo not been blocked by the Justice Department and at least several states, Google and Yahoo together would have pulled in a staggering 99 percent of all Internet advertising profits in the United States.

So Schmidt talks a lot about "relevance." But what is relevance, anyway?

Relevance is not necessarily what you want to see, read or hear. It hasn't a thing to do with "editorial judgment." It is, however, whatever makes Google rank one Web site ahead of another on its search engine — in other words, whatever makes Google the most money.

Advertisers are slowly waking up to the problems. They know now there is little room for any but a few winners in the Google universe. And even when Google claims that it assigns ad space according to a competitive auction for keywords, the truth is those bids are adjusted — oftentimes radically — by a "quality score" whose precise inputs are secret and cannot be improved through anything but wild guesses. Put another way, the game is rigged.

Many businesses understand the threat, even if they don't want to talk openly about it. So far, objectors have relied principally on industry associations to do the fighting and shield them from direct attack.

But others stick their neck out still. Consider SourceTool.com founder Michael Savage, recently profiled by The New York Times. Savage had started a niche, industrial search engine that did well both as advertiser and seller of ads, only to see his hugely profitable business turn into a money loser in a matter of weeks. Google never could explain why things went badly, other than cite a vague quality score they could not help him improve.

Savage has an explanation of his own, however: monopolization. Google saw his niche business as an emerging competitor and cut it off before it could ever grow into something big.

Industry and consumer opposition — finally — has begun to build. Consumer groups such as The Center for Digital Democracy and US Public Interest Research Group opposed the Google-Yahoo ad partnership. Industry groups including the Association of National Advertisers, The World Association of Newspapers, the World Federation of Advertisers and the International Advertising Association also told law enforcers to block the deal. But there is still work to do.

Journalism — reporters and editors — create much of the content that drives Google. After feeding, pampering and protecting the beast that is devouring them, journalists only now are waking up to the fullness of Google's threat to the Fourth Estate. Publishers will deserve to lose their business if they continue to roll over and let Google play its totally rigged game of "relevance."

Scott Cleland is president of Precursor LLC and Chairman of NetCompetition.org, a pro-competition forum funded by broadband companies.