Google: Brands Will Save Media

When Google CEO Eric Schmidt addressed a gaggle of magazine executives at the GooglePlex last week, he didn’t have a great deal of good news on hand. Newspapers, he declared, were likely to continue the trend toward less revenue and less relevance, until they will be a satellite of every media company’s larger online operation. In fact, he suggested, journalism may have to become a charity funded by foundations. “The evidence,” he said, “is not good.” On the other hand, reports the trade journal Advertising Age, online media outlets that invest in good journalism and build a strong brand can save the Internet from a “cesspool” of rumor and misinformation. People are hard-wired to recognize and rely on brands, Schmidt said, and companies that establish themselves as a reliable source of information can thrive amidst the muck.

But CNET’s editor in chief Dan Farber wasn’t that impressed with Schmidt’s remarks. “Brands, even those with long, venerable histories and massive ad budgets, can be decimated as we have seen over the last decade and in the current economic nuclear winter, with banks, automobiles, publishers, and retailers fading away,” he said, adding that investing in better journalism may be both impossible and irrelevant in the online world.

“With a major economic contraction underway, funding high-quality work will become even more difficult,” Farber concluded. “Relying solely on advertising revenues hasn’t proven to be a winning strategy for most publishers. Unfortunately, Web users come from a place in which paying for content is not part of the culture. If people are willing to pay $4.95 for six hamburger buns or $3.50 for a simple cup of coffee, why aren’t they willing to pay for content they value? One can only assume that people are willing to settle for content of generally less value that is free of charge – or that hamburger buns are more essential to life than a good, well-researched story.”

In fact, the New York Times reported yesterday that despite investing heavily in an online presence, newspapers have found their online ad revenue dropping. According to the Newspaper Association of America, online ad revenue fell 2.4 percent in the second quarter.