Google has effective business models and deep pockets but it must contend with copyright issues and traditional media holding on to their different advertising models. Even when it does get a partnership agreement, this doesn’t insure efficient cooperation with the traditional media.  

Traditional media companies are usually fearful about Google’s stated goal, to be the world’s information organizer, collector and distributor.

"For content providers, intellectual property drives revenue, and content drives viewers and ads. If content is snatched, revenue is lost," says Wharton marketing professor Patricia Williams.

The real problem, according to Wharton legal studies and business ethics professor Kevin Werbach, is that despite their fears, traditional media companies need the new platforms created by Google in order to reach new audiences.

"Google wants to be the center of the universe for all information and content. That's a scary thing for a lot of companies, including media companies," says Werbach.

"[But] the media companies want and need Google, because Google is extraordinarily good at the two things that underlie most media businesses: directing users to content, and matching advertisers to users."

Eventually then, newspapers and traditional media will have to bind because they can and must complement each other.

This leads to another challenge though: while both traditional media and Google may be important for the equation, one to provide content the other to distribute it, which is more important, or has more leverage?

Content providers are worried that Google will have too much market power in partnerships with them.

"The leaders of 'old media' aren't stupid, but they also aren't doing this for fun -- they are playing a high-stakes game to win. They will work with Google when it makes sense to them,” says Werbach.

To traditional media’s advantage though, Google is now being attacked by Microsoft, siding with US publishers. And since Viacom and CBS pulled out their video content from Google’s YouTube, they don’t seem to regret their move:

“Since we issued the takedown notice, video streaming traffic on our sites has increased dramatically. This is an important validation of our strategy,” says Viacom CEO Philippe Dauman.

Yet Dauman leaves the option open for compromise, acknowledging the possible benefits of a partnership.

“At the same time, we are interested in entering into deals that provide distribution for our content in a controlled way that respects our copyright.”

Source: Wharton University of Pennsylvania