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September 03 2011

21:37

February 25 2010

17:00

The Newsonomics of profit: Google’s and newspapers’

[Each week, our friend Ken Doctor — author of Newsonomics and longtime watcher of the business side of digital news — writes about the economics of the news business for the Lab.]

Last Friday, Google finalized a modest acquisition. It bought On2, a video compression company for $124.6 million. A few days earlier, it bought reMail, a company put together by Google alums that has perfected a better email app for the iPhone, price undisclosed.

In the few months before that, it bought social search startup Aardvark, display ad tech company Teracent, collaborative real-time editor AppJet, VoIP provider Gizmo — and, most significantly, mobile ad network, AdMob, the latter for $750 million, in November.

Basically, Google’s been buying up companies at at least the rate of monthly, as CEO Eric Schmidt had bluntly forecast last September.

Of course, Google can buy lots of companies. That buying power is a rare commodity these days, especially if you compare it to what newspaper companies can do.

Google’s buying profit derives from its out-sized profits. Those profits reached almost $2 billion in the fourth quarter of 2009 alone, and totaled $6.5 billion for the year — and that the year of the Great Recession. Yes, Google hit the pause button as the country and the world tottered on the economic brink, but ticked the play button quickly as soon as it was clear the worst was over.

Google’s acquisitions in the last six months total something more than $1 billion.

Now let’s compare Google’s profit to that of newspaper companies.

Gannett — the largest news company in the US and second worldwide after News Corp — reported total revenue of $1.5 billion in the fourth quarter, and profits of only $133.6 million in the same quarter. Of course, the fourth quarter was Gannett’s best. For 2009 overall, profits totaled $441.6 million, after special items were taken out. That’s less than a half billion dollars in profits, or about 7% of what Google earned. And that’s the biggest U.S. news company.

The New York Times eked out a yearly profit of $19 million. McClatchy, a gain of $54 million. Media General, a loss of $35 million.

Positive or negative, those are all small numbers. They all point to the same reality: newspaper companies’ place in the business world is greatly reduced. They simply don’t have the wherewithal to acquire businesses that will be the building blocks of tomorrow’s growth. Their low profit numbers are proxies for their reduced horizons, their reduced reporting impact and their reduced institutional and community clout, as well, though those are issues for another day.

For Google, its profit has allowed it to lay the groundwork for growth. Its financial performance is hugely impressive today, but almost all of its revenue has been based on desktop/laptop paid search. As many have said, it’s a one-trick pony, but with the best trick found in the 21st century digital business. It knows that business is maturing, so we can see the theme in its company-a-month buying spree: mobile, social, video. That combo, what I call the new trifecta for this digital decade, anticipates where digital use — and ad spending — is going. Google is not only providing us pictures of our urban topography through StreetView, it is laying new roads for its own highly profitable future.

January 14 2010

19:22

Q&A 2.0: There's More Than One Way to Answer a Question

Since ReportingOn launched with a new Question & Answer format in July 2009, a few new entries in what I'll call the Q&A 2.0 space have popped up and grown their base of users. Here's a look at three Q&A 2.0 applications with wide appeal.

Aardvark

aardvark_idealab_011310.png

Aardvark allows users to ask questions via instant message, the website, Twitter, and an iPhone app, among other ways. I've used IM for the most part, answering questions about Twitter, iPhone apps, and journalism from time to time, while fending off questions about SEO, and using my favorite Aardvark feature to refer questions to friends.

Here's Aardvark's record of my question about a theoretically sustainable alternative to hardwood flooring, bamboo.

What you won't see on that page are the multiple ways I interacted with Aardvark along the way.

I submitted my question via the website, received the first answer via IM, and spotted the second answer as a push notification on my iPhone before reading it in the app. (My phone just buzzed again with another push notification as I typed that last sentence.)

Aardvark ranks high on the social scale: I'm getting real human answers from real humans with real experience buying, installing, and maintaining bamboo flooring -- and I'm getting the answers via any and all communication channels.

Hunch

Hunch is a different beast. Not content to simply act as a referral service to find someone who knows the answer to my question, Hunch aspires to answer my question by asking me about myself. About my personality. About my hopes and dreams.

Hunch is getting to know me so it can tell me what to do.

But not in a creepy way.

And if Hunch seems friendly, that could be thanks to co-founder Caterina Fake, who you might remember as one of the founders of the rather personable photo sharing network, Flickr.

In a blog post last year, Fake called Hunch a "decision-making site." It's not a place for questions and answers, but a place to climb "decision trees" that ask you the questions in order to determine what your best path of action would be, given the conditions you describe in your answers.

"In addition to helping you climb the decision tree, Hunch asks you a bunch of questions about yourself to find out more about what you're like and what you like. Hunch creates a kind of "taste profile" of you and people like you, which combine with topic-specific questions to deliver a hunch just for you."

So I gave it a shot. A search for "bamboo flooring" lead to the Hunch page for "What type of flooring should I choose?" OK, fair enough.

Next, the system walked me through a series of questions. Pets? Ground level? High traffic area? (For a moment, I felt like a kid home sick from school watching daytime television and its parade of household cleaning product commercials.)

hunch_idealab_011310.png

Eventually the possible flooring options were ranked based on my answers. Apparently, I want laminate, bamboo, or tile. So says Hunch.

Quora

Quora is a bit more conventional. Fire up your browser, visit the URL, and ask or answer questions. But it's well-designed, easy to use, and blazingly fast. When I say fast, I mean the whole site feels fast in the browser. Dig around, and you'll find Quora engineers answering questions like "Why is Quora so fast?" But there's another decision the builders of Quora have made to speed things along. They've removed some of the friction of average social sites, making the assumption that once you've logged in with Facebook Connect, for example, you want to automatically follow all your Facebook friends who are already on Quora. Instantly.

quora_idealab_011310.png

Quora feels like a solid piece of software, but the community seems to be heavily weighted toward Silicon Valley entrepreneurial questions at the moment, although I did manage to find one in the "journalism" category that I could answer.

(Quora is invite-only right now. I have 10 I'll happily give away if you're interested. Thanks to Andrew Gritt for getting me in to have a look around.)

What We Can Learn From Q&A 2.0

As we build question-and-answer applications geared toward solving civic problems in our communities, we can pick up a few tricks from these entries into the Q&A 2.0 space.

  • From Aardvark, we learn the value of reaching people wherever they are, however they consume and communicate information. Push notification on my iPhone during my commute home? Sure, I consume information that way.
  • From Hunch, we learn that if we hand a person a multiple choice quiz, we can record the results and let our algorithm learn something about them to bring to the table when they ask their next question.
  • From Quora, we learn the value of frictionless real-time interfaces. Don't assume your application has to follow patterns generated by its predecessors. You're building next year's tools, not last year's.

So. Any questions? How about answers?

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