The New York Times has sparked controversy with a column arguing that the Google-Yahoo advertising hook-up won’t mean higher prices for advertisers. Critics say that defies basic economics – and point to the writer’s close links with Google.

The article, by author Randall Stross, argues that the market will continue to decide prices, regardless of Google’s market share, because of the bidding system for getting Google ads. He says a study suggesting Yahoo prices will rise 22% under the deal is misleading because it doesn’t take into account the better results advertisers will get from ads supplied through Google.

Stross’ theories don’t fly with some bloggers. Paul Glazowski of Mashable.com argues that Google being able to sell a higher proportion of online ads inherently makes its ads more valuable (and thus more expensive).

Meanwhile Michael Arrington at TechCrunch says the Stross column doesn’t take account of the publishing side: he argues that getting Yahoo on board relieves the pressure on Google to give websites a decent cut of the ad revenue.

The big problem is that the New York Times article (in its online version at least) makes no mention of the fact that Stross has just published a book titled ‘Planet Google: One Company’s Audacious Plan To Organize Everything We Know’. The blurb for the book boasts of his “unprecedented access” to the company in researching the book.

Nobody’s claiming there’s anything untowards about Stross’ author-subject relationship, but mentioning this in the article would certainly have given readers the opportunity to decide whether it gave him extra credibility, and whether the book might have given him extra motivation to write such a controversial viewpoint.

The debate comes as the anti-trust investigation into the deal continues to drag on and the World Association of Newspapers (an international industry body whose members include Google advertisers) condemns the deal. It says Google will gain too much power over online newspapers which could not only have to pay more to advertise but also receive less from the ads they host themselves.

Indeed, the group goes so far as to say “Never in the history of newspaper publishing has a single, commercial entity threaten to exert this much control over the destiny of the press” (It’s worth noting that the group’s US member, the Newspaper Association of America, has publicly stated its taking no position on the deal.)

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Entry was posted on Sunday, September 21st, 2008 at 4:41 pm under Advertising, Google, Legal, Yahoo!.  Print This Post

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