Google and News Ltd are in the same business.

A cat named Hartigan has apparently put himself amongst the blogging pigeons. A generous amount of fur and feathers has flown as a result.

For example, Hartigan has defended traditional media reporting and newsroom methods; bloggers say that News Ltd don’t “get it”, or are already giving in, or their content sucks, or some combination of these.

As I pointed out about a month ago, what the content-producers for News Ltd and bloggers do is a total sideshow. This purely tribal confrontation between hacks, flacks and new jacks is just that: tribal. The internet is strangling News Ltd’s money supply, which is what counts.

It’s a mistake so common that even wise economists are missing the money.

News Ltd — ignoring the movies, music and games parts — is not a media company. They manufacture and sell advertising and classifieds inventory. That’s their core, actual business. That inventory is manufactured by journalists churning out the stuff which fills the gaps between the inventory and convinces the general public to pick it up. The problem for News Ltd isn’t that bloggers are somehow magically better at doing that, it’s that due to the internet there are no more expensive barriers to entering the advertising inventory market.

A similar mistake people make is thinking that Google is a technology company. They are not. Google’s real business is manufacturing and selling advertising inventory. Sound familiar? It should, because that’s the business News Ltd are in. On the surface these companies are chalk & cheese: one is a traditional media conglomerate with roots going back generations; the other is an upstart firm that sprung to world prominence with a vastly superior search engine offering.

But the thing that makes them money — the thing that people actually pay them to do — is to manufacture and sell advertising inventory.

Companies are usually categorised by what they market or what they spend R&D money on. This is just silly: just as economists care more about people actually do rather than what they say they will do, we should categorise companies by what people pay them for, not what they started off doing or what turns up in their marketing material.

If the term’s not taken, we could call this Revealed Industry, analogously to the concept of Revealed Preference. The revealed industry of both News Ltd and Google is selling advertising inventory. All else is, I regret to say, mere fluff. And right now Google is cleaning News Ltd’s clock. The horse has bolted from the barn, and all News Ltd and its critics seem to care about is arguing about the colour of the barn walls.

Disclosure: I was a classifieds department employee at a small News Ltd newspaper for 3 years.

This entry was posted in Business, Cross Posted from Club Troppo, IT and Internet, Journalism, Metablogging. Bookmark the permalink.

Leave a Reply

Your email address will not be published. Required fields are marked *