Wednesday, October 26, 2005

What Does Googlebase Mean to the Newspaper Industry?

In case you haven’t heard, Google is building a massive database for user generated content, called Googlebase. Having studied this problem for years, I believe I can offer some insight particularly with regard to the impact this will have on the newspaper industry.

It appears that Google came to a similar conclusion I did on the classified ad market. Of course, this didn’t surprise me since Google’s VP Engineering (Adam Bosworth) and I were early XML/database/structured data guys. That conclusion is that current classified ad solutions, including Craigslist and eBay don’t provide a scalable user experience.

The systems scale quite well, but as the amount of information grows, it becomes increasingly hard for users to find what they are looking for. If you want to buy a 1985 Corvette on Craigslist, a search will find everything that has the term 1985 and the term Corvette. This can include a lot of junk (parts, services, etc.).

Furthermore, when an individual creates an ad, there is little to guide them. They simply get a blank text box. As a result, the ads are pathetically deficient. For example, when listing a car for sale, many people forget to describe the interior, transmission, engine, and various add-ons.

The answer to both of these problems is to use category specific forms for both data input and search. The forms then guide the advertiser in creating the ad, and allow buyers to search by field (e.g. year = 1985, Make = Chevrolet, Model = Corvette).

From what I understand, this is exactly what Google is building into Googlebase. They provide a variety of forms based upon what you are selling and, presumably, what you are looking for.

I believe that the combination of:

Google’s traffic/brand + Structured Data Entry/Search + Free = Killer!

There are a couple of areas where Googlebase may have an Achilles heel. They still need to develop a sense of community that eBay and Craigslist provide. They could also benefit from an online transaction mechanism a la Paypal, possibly a Google Wallet. If the final version of Googlebase provides these capabilities, then watch out.

So, what does this mean to newspapers? We’ll if you thought Craigslist and eBay were tough competitors, this is your worst nightmare. If newspapers still harbor any hope of being able to charge for classified ads, this should permanently dispel those outdated thoughts. Welcome to free, now deal with it.

Newspapers can only play in this game if they: (a) provide an equivalent or superior classified solution; (b) lead the way in offering free listings; (c) move quickly; (d) cannibalize the classified ads by converting usage with a hybrid online/offline solution (reprint the free listings in your newspaper for free or very cheap).

The newspapers have a local presence, users, local business relationships and a local brand. They MUST throw all of this at drawing a line in the sand against the Google onslaught. They must capitalize on their local presence or they might as well kiss off classified ads forever.

The problem is that newspapers cannot afford to kiss off the classified ad business. They need the fresh content and usage that classified ads generate. They need that local anchor. News is good, but that is being aggregated by everyone. How can newspapers differentiate themselves as a local portal? They need a depth of services, and classifieds is a big one.

I know what I’m talking about. Our company started by building a collection of destination sites offering classified ads services in over 100 U.S. cities. We decided back in March (two months after our release) to get out of this business because we cannot compete with eBay, Craigslist, all of the newspapers and now Google. But in the process we built the best classified ads solution on the market, complete with simple category-specific forms for data input and search, advertiser ratings, everything.

Instead of competing with these big guys, we have instead decided to sell our classified ad software to newspapers and others who want to put a stake in the ground around local classified ads. Our company isn’t big enough to be a combatant, but we’re happy to be arms merchants in this battle for local dominance. If you are interested in getting into the local classified ad business and you want a “Googlebase” of your own, drop me an email and mike.hogan (at)

Additoinal Insight into Googlebase is available from Greg Sterling at The Kelsey Group, Charlene Li at Forrester, John Battelle and others here too.