Large US Newspaper Companies buy 75% of News Aggregator Topix Where New
York Times Pays to Have Its News Prominently Displayed,
Philip M. Stone
Talk about two opposite ways of treating the power of news aggregators: Knight-Ridder, Gannett, and Tribune combined to each buy 25% of Topix.net that aggregates news from about 10,000 online sources. The New York Times believes having its news displayed on Topix is so important that it struck a deal in February to pay for the privilege. And yet Agence France Presse (AFP) far from happy having its news displayed at no cost to itself but without its permission on the larger Google News has sued for damages and wants the practice stopped. How come two such diametrically opposite approaches?
It’s all to do with those two magic words – wholesale and retail. AFP is a news wholesaler. Its clients are NOT you and me, but rather media entities that republish AFP news for you and me.
Take a look at afp.com and the first thing you may notice is that it is NOT advertising supported. Its site is aimed directly at media organizations for the purpose of selling its various products to those entities. For instance, AFP has a commercial arrangement with Yahoo and certain parts of its news are available to you and me via Yahoo sites.
So when Google says it shows only the first 30-40 words of an AFP story and then if the reader wants more they are sent to the afp site then that really doesn’t help AFP. It can protect its own news server from the Google crawl by adding code to its robot.txt files, but what about the 600 or so online subscribers who buy AFP news. If the Google robot hits their sites then that AFP news will appear on Google.
AFP is concerned that Yahoo, and other subscribers, could start asking why they should pay AFP for its news if Google makes much of that news available, anyway, via Google News? Since for structural reasons AFP is not about to turn into a news retailer, it has to defend its online wholesale business.
That news agency online policy is diametrically opposite to its arch competitor, Reuters. Much of the Reuters news product is available on its own advertising-supported reuters.com. The site makes a healthy profit and management has targeted it as a major profitability growth center over the next few years.
Even if they haven’t said so publicly, Reuters, the Associated Press and news aggregators like Factiva and Lexis Nexus are probably very happy to see that AFP lawsuit hit Google. No news agency/aggregator likes to see its news copy picked up without permission and without payment, and given away to the public.
Although Google had been asked several times before the lawsuit to withdraw the AFP copy it had not done so. Now the suit is filed Google says it is withdawing the AFP material, but AFP says it is keeping to its $17.5 million claim for damages already caused. The US lawsuit followed one AFP filed against Google in France a couple of weeks earlier for the same reasons.
AFP has a proud history as the world’s oldest international news agency, founded in 1835. But in the years following World War II it has been dogged by its ownership structure -- it has an independent status with autonomy from the French state – but it relies on the French government entities for more than 40% of its annual budget via subscriptions to its news service. AFP management get very irritable if one labels that a state subsidy!
It has an independent board of directors made up of its major French clients, but that causes financial problems because the board keeps the rates to French subscribers artificially low. Furthermore the board doesn’t want AFP competing with what the French media may be doing on the retail side. Management tried to change its structure a few years back to make it more competitive within the media revolution of the past few years, but the unions protested, threatened work stoppages, management backed down, and threw away the plans.
Since it is stuck within its narrow confines of what it can and cannot do,-- and that means remaining a wholesaler and not going retail -- management over recent years has put much effort into growing its international business, and AFP has been particularly successful in Asia. Its English language revenues now probably exceed what it receives for French language services minus the French government subscribers.
But for the three American newspaper groups to buy into Topix.net the situation is completely the opposite. The three groups operate about 140 web advertising-supported sites which have about 30 million unique visitors monthly. There will be cross promotion between those sites and Topix, which now has about 1.4 million unique visitors monthly (compared to 5.9 million for Google News), each driving traffic to one another.
The companies also jointly own several web sites for which there will be convergence. For instance, a Topix page about hospitals could include listings from CareerBuilder.com for jobs in the medical profession.
It’s all about increasing page views – sending the visitor from one site to the other. The New York Times is very pleased when visitors are sent from Topix to the Times’ web site to read the whole story, a strategy in which AFP has no interest.
While similar to Google News, Topix operates differently – about half of its requests are for local news that can be tailored to a visitor’s postal code. It syndicates its news feeds to other sites such as Ask Jeeves,
Topix has just nine employees. It launched a year ago and makes about $1 million from advertising, tailored to the news selected..
The purchase price was not released but analysts in Silicon Valley believe the price to be around $5 million, although a couple of analysts believe there could be a zero missing from that figure.
The deal marks yet another expansion by traditional media groups into online products. Earlier this year The Wall Street Journal completed its purchase of Marketwatch.com for more than $500 million, and the New York Times bought About.com. for $410 million.
With growth stagnating in the traditional print product, the US media are giving a whole new meaning to, “If you can’t beat them, join them” As for AFP, “If you can’t join them, sue them.”
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