Chris Dixon on the revenue situation between Google and the newspapers:

Newspapers, like all websites, are suppliers of content to Google. In most markets, with genuinely competitive buyers and suppliers, the revenues are shared between buyers and suppliers in proportion to their relative bargaining power. Their bargaining power depends on how fragmented each side of the market is – how many genuine alternatives each company has.

– via cdixon.org

His point is that in the current marketplace – with Google the dominant provider of search traffic to newspaper sites – newspapers have no alternative. They can block Google’s web crawlers so we won’t find them (the internet equivalent of taking their content and going home) – and we won’t care.

Folks have written about newspapers’ over-capacity and monopoly thinking. The value of the newspaper business was based on local monopolies and ad delivery, which the internet have collapsed.

True, “there is nothing inherently un-monentzable about newspaper content,” as Chris says – once it becomes scarce.

But even if newspaper content becomes scarce (from bankruptcies, say, or collusion), can newspapers do what’s needed to succeed online? Newspapers that remain may get more savvy with how they bring their content to the web (with topic hubs and the like). But until they get serious about pleasing their online audiences – and, yes, Google – information scarcity won’t help them.

Even these basic facts of the web seem too hard for newspapers to act upon right now:

  1. Logins, paywalls and incomplete stories in RSS discourage linking
  2. Linking fuels Google
  3. And Google is likely the biggest traffic driver for newspapers

For newspapers, only the first of these is within their control. And yet talk of paywalls persists, while the papers rail against Google.

But let’s go with Chris’s idea. Say that the newspapers negotiate with Google and competitors for prime search positioning, and Google tweaks its algorithm to benefit the newspapers.

What content is valuable online?

  • Timely information -- reported faster than anybody else
  • Scarce or specialized content -- information we can't get anywhere else
  • Insight -- history and present fact brought together into a big picture
  • Aggregated content. Maybe not the fastest, but brought to a destination where we go for content discovery. Our breakfast-table overview.

Since TV, newspapers have been aggregators, and no more. Newspapers do answer our occasional “I wonder what’s on the Washington Post’s front page” query – but Google does just about everything else better. Google certainly does aggregation better.

And what about newspapers’ structure leads us to believe they would be any better at providing this value than blogs – or specialized online news sites like politico.com? At this point, there are so many things that blogs do better.

The problem for content lies on the supply side. There’s too much of it, and the cost of producing it – for those properly structured – can be low enough that I don’t see newspapers being able to compete.

I hope I’m wrong, but it reminds me of the old saw about attitudes in the steel business. Where Big Steel saw dumping by cheap foreign suppliers, Nucor said thank heavens steel is so heavy that it’s expensive to ship across the ocean.

Which attitude would you want on your team?

More to the point: would we notice if newspaper stories began turning up in Google searches?