Google to Media Companies: We're Your Friend
Traditional media companies should see Google as a friend willing to help them take advantage of online opportunities, and not as an enemy that competes with them.
So said David Eun, Google's vice president of content partnerships, at the Bear Stearns Media Conference on Monday.
Fears that Google will morph into a media company that produces content are completely unfounded, he said, responding to questions from a Bear Stearns analyst. "That's absolutely not the case for us," Eun said during the presentation, which was webcast.
This has been a common complaint from a wide variety of media companies worldwide that argue that Google has built its fortune by indexing their content and using it to power its massively profitable search engine advertising business.
But Eun argued that media companies -- such as newspaper, magazine and book publishers, as well as movie and TV producers -- should view Google as a partner that can help them transition their businesses to the Web and assist them with distribution, promotion and "increasingly, monetization."
One media company that remains resoundingly unconvinced of this is Viacom, which is suing Google for US$1 billion over what it calls massive copyright infringement on Google's YouTube video sharing site.
Google continues to believe the lawsuit is without merit. "We think that the lawsuit is a mistake. It's an attack on the Internet and on innovation in the Internet," Eun said.
Describing Google as "a huge supporter of copyright" that has thousands of partnerships with content owners, Eun said about 70 media companies are testing YouTube's tool for identifying copyright videos uploaded without permission. The tool, called Video Identification, has been in development at Google for more than a year and went into testing in October.
The tool will give copyright owners options for what to do if YouTube flags one of their videos for uploading without permission, Eun said. For example, the owner could have YouTube bring the clip down or it could turn the upload into "a monetization opportunity, a promotion opportunity," Eun said, without offering details of how that could be done.
He encouraged copyright owners to see uploaders of their content as ardent fans that can be dealt with in other ways besides punishing them. "How can you channel this energy and this enthusiasm for your content in a Web 2.0, very positive way?" he asked.
Tim Armstrong, Google's president of advertising and commerce for North America, said YouTube will play an important part in what Google expects to be a significant increase in display advertising revenue for the company. So far, most of Google's revenue has come from a single ad format: the pay-per-click text ads delivered along with its search results and in third-party sites in its ad network.
Google would be "disappointed" if this year and in 2009 it doesn't attain a significant presence in the display ad market, Armstrong said. Financial analysts have noted for years that, while Google's revenue and profit growth has been astounding, it has been based almost exclusively on pay-per-click text ads.
For example, in November, Yahoo ranked first in the U.S. in display ad impressions with a 19 percent share, followed by News Corp.'s Fox Interactive (16.3 percent), while Microsoft came in third with 6.7 percent, according to comScore. Google took seventh place with 1 percent.
Google has been trying to diversify its ad revenue stream in recent years, making moves not only in online display and video advertising but also in non-Internet ad markets, such as radio, TV, print and even billboards. However, those efforts haven't yet yielded any significant results.
Recent evidence of how jittery investors feel about Google's dependence on pay-per-click ads came about two weeks ago when the stock took a beating after comScore reported that Google's paid clicks had suffered a 7 percent sequential decline in January, compared with December.
On Monday, Armstrong tried to put a positive spin on that statistic, saying the decrease in paid clicks had been due, in large part, to Google's initiative to improve the quality of those ads' delivery, meaning that with more precise ad targeting, users had to click on fewer ads.
Still, Google's stock has continued to slide, dropping almost $100 since that comScore report, to close on Monday at $413.62.