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The gravitational pull destroying traditional journalism -- the Internet black hole of scale

Tribune's bankruptcy is fresh evidence that the recession is accelerating the demise of journalism precipitated in large part by the advent of the Internet. And where is the Internet taking the journalism profession and business? Not towards the utopian citizen journalism of conventional wisdom, but inexorably towards the gravitational pull of the black hole of the Internet -- scale.  

  • To understand the future of the journalism business, and most content businesses for that matter, one has to understand The Internet Black Hole of Scale which is comprised of:
    • Audience size and reach:
    • Advertiser network breadth and depth;
    • Publishing breadth, depth and timeliness;
    • Sales/targetting data volume, integration and specificity; and
    • Infrastructure platform economies of scale and scope.  

So why can't the journalism profession/business compete long-term with The Black Hole of Internet Scale?

  • The scale/reach of offline audiences are limited by the economics of printing cost and delivery distance, and also by law/regulation to prevent concentration -- the exact opposite of Internet scale, which does not have any of those limits.
  • Offline audiences of thousands or at best millions cannot ultimately compete with the economics of Internet audiences of hundreds of millions or a billion plus.  
  • Advertiser scale is limited by audience scale.
  • Publishing breadth and depth are limited by audience and advertiser scale.
  • Offline sales/targetting data is sparse, primitive, under-integrated and out-of-date compared with, online sales/targetting data of user intentions and web behavior, which is plentiful, sophisticated, fully integrated and current.
  • Offline printing plants and physical distribution systems can't compete on cost with near free digital content and distribution.

Increasingly, the gravitational pull of The Internet Black Hole of Scale is becoming embodied in one entity, Google, the Internet's monetization monolith, which is headquartered in Mountain View California. So how much scale does Google bring to bear on the Fourth Estate?

  • First, in response to recession pressures, Google recently announced it plans to leverage its world-leading audience of over 700 milion Internet users to grow Google News and its revenues. To the extent Google gets serious about growing Google News, users will increasingly be encouraged to bypass branded journalism sites and directly access the content via Google's pages and database.
  • The DOJ in blocking the Google-Yahoo ad agreement said: "The Department’s investigation revealed that Internet search advertising and Internet search syndication are each relevant antitrust markets and that Google is by far the largest provider of such services, with shares of more than 70 percent in both markets." The DOJ's outside consultant on the case, Sandy Litvack said to AmLawDaily: "Google had a monopoly and that [the advertising pact] would have furthered their monopoly."   
  • Third, when one uses Google to access the Internet, one is not searching or accessing the actual Internet, but accessing a copy of the entire Internet which resides on Google's servers and which is partially updated every few seconds. 
  • Fourth, Google-DoubleClick has almost all advertisers who advertise on the Internet as clients -- every competitor only has but a small fraction of Google's advertiser clientele. 
  • Fifth, Google translates more languages, 34, than any other entity, allowing it uniquely to provide search/advertising to most all of the world in their native tongue.
  • Finally, with well over a million servers, Google has the largest scale cloud computing platform in the world.     

Bottom line:

Just as economies of scale and scope led inexorably to basically one big newspaper for most cities (and the need for an antitrust exemption), The Black Hole of Internet Scale will increasingly devolve into one predominant world news distributor -- absent antitrust action to prevent it. Big Media meet The Big Internet.

A monolithic paymaster for most of both online journalism and blogging would threaten Internet competition; free speech; localism; and the important check and balance provided by the Fourth Estate.