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Jan 21, 2010

Are Newstands Hazardous to Newspapers?

International Business Times reports on an Outsell study with the headline, "Nearly half of Google News users just skim headlines.

According to the IBT article, "The findings give further ammunition to publishers who insist that Google and other news aggregators are linking to their stories without paying any advertising revenue."

I'm not entirely sure why publishers need "further ammunition" to establish a stipulated fact. Yes, Google links to news stories. And no, Google generally does not pay for linking to news stories, just as it does not pay me to link to this blog. But the conclusion above is a non sequitur teetering on a counter-factual.

What would indeed be interesting and relevant is understanding whether Google is generating significant ad revenue from the 44% of users who scan headlines without clicking through to the underlying stories.

Here's an "above the fold" screenshot I just took of Google News (click to enlarge). If I come to this page to skim the news, it's hard to imagine there's much revenue associated with my visit. In fact, I'm at a loss to find a revenue-generating ad element on this page at all.


"But wait," claim the publishers, "If Google wasn't aggregating these links, then headline-skimming readers would come directly to our websites, where we'd make money by loading our landing page with display ads that these readers rarely notice." Well, maybe... but that's an easy experiment for any publisher to conduct; and if it were demonstrably true, publishers would be opting out of Google's indexing service in droves.

There's an alternative experiment that anyone can conduct. Stand next to a newsstand in a busy office building or subway station. Count the number of passers-by who glance at the papers ("stealing the headlines" as it were) as they pass. Exclude paying customers. At the end of the day, calculate the ratio of headline-glancers to newspaper buyers. Is it higher than 44%?

Extra credit: Calculate the revenue from the non-paying commuters who skim the headlines as they pass using two different methodologies:

(1) How much did they actually pay?

(2) How much additional revenue would you make if every one of them bought a newspaper?

If your answer to question (2) is greater than your answer to question (1) do you believe you can sell more newspapers by putting them in brown wrappers that hide the front page?

Alternatively, do you believe newspaper circulation would increase if newstands were abolished?

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