Peter Coleman: Google chips in for some research of its own

A new $220,000 'independent review' of Australia's media sector by Queensland University of Technology is the latest in a raft of studies during the past year.

It comes in addition to the ACCC's Digital Platforms Inquiry report, a $100,000 regional broadcasting sector review produced by Korda Mentha, and another by former PwC partner Megan Brownlow, all funded by the federal government.

Privately, a new report titled Australian Media Landscape Trends, by Accenture subsidiary AlphaBeta Australia has been much quoted, although less so the fact that it was commissioned by Google.

The QUT report is focussed on "international precedent and best practice - rather than on developments in Australia - and on media content markets broadly, rather than just advertising markets and news production", and will be produced by the university's digital media research centre by the beginning of October.

The more retrospective AlphaBeta report is heavily quoted in a commentary by Google's ANZ News Lab lead Nic Hopkins on the site, and subsequently trade publication Mumbrella.

Hopkins compares his days as a reporter on Rupert Murdoch's Advertiser newspaper in Adelaide, when newspapers were "the main source of news to society", the internet - accessed through dial-up modems - was still a novelty, and classified's "rivers of gold" were still flowing.

He says Australian newspaper revenues peaked at $5.5 billion in 2007-08, just as Apple introduced the iPhone, "the smartphone in our pocket... almost a perfect disincentive to buying the next day's newspaper". Google ads had launched in 2003, with Facebook the following year.

AlphaBeta's research asserts that it wasn't Google or Facebook specifically that directly disrupted the newspaper business model... it was technology in its entirety (Hopkins' carefully chosen adverbs there).

He suggests - and it may be a matter of semantics again - that search advertising is "an entirely new category" and that if anyone is an incumbent publisher which has been disrupted by search ads, "it's directory operators like the Yellow Pages". He says search and social accounted for most of the growth in the total Australian advertising market between 2002 and 2018 from $8.9 billion to $16.6 billion.

It's the way you tell 'em: A chart from the Alphabeta report presents newspapers' share of online advertising as 29 per cent - but that's 29 per cent of a $1.88 billion 'regular display' segment, and amounts to only 6.1 per cent, or about $518 million, of the $8.5 billion total cake; Google took 41.5 per cent, a 96 per cent share of 'search' worth $3.53 billion (or almost seven times as much). Google also had small shares of other segments... and we haven't even mentioned Facebook.

He doesn't mention that news publishers developed their own classified sites, but acknowledges that that is what happened, with sites such as Domain, now a subsidiary of Nine, which bought Fairfax primarily for its digital strengths.

"Major publishers still own large stakes in these digital classifieds businesses but the revenues no longer fund journalism," he says.

Which prompts the thought that not all publishers were equally successful in attracting the "rivers of gold". In Melbourne and Sydney, it was the Fairfax broadsheets - much more than News' tabloids - which thrived on 'jobs, cars and houses'... and used the revenue to subsidise their editorial sections.

Ironically, it was in the regions - notably markets such as Noosa and the NSW Central Coast - and suburbs, that News thrived until recently in real estate, with glossy liftouts... and that these were mostly the print products it killed in June this year.

Search is, as Hopkins says, a relatively new market, although in addition to newspaper classifieds, print publications such as the now-defunct Trading Post - which folded in 2009 - served it in their own way... and didn't spend their profits on journalism.

And all these classified markets operated in print by putting an offering - whether it was a house, a car or a job - in front of someone who wasn't actively looking, in a way in which online search doesn't.

While Domain stands out as a success, mostly the transition from print to digital is one of missed opportunities, with publishers failing to invest in upstarts such as Seek and Carsales, and outsiders such as Autotrader - which (more irony) belongs to US publisher Cox Enterprises - moving in.

Hopkins espouses the wish that "Google can continue to support the news industry", as it does currently with training and transformation grants. Perhaps, one wonders, it sees itself as some sort of gracious modern-day patron?

Since that munificence seems to date only to pressure by governments, initially in Europe, I suspect it might last only as long as they continue to apply pressure.

Peter Coleman

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