When I first visited Korea a decade ago, the conversations centered on how the big three publishers — JoongAng Ilbo, Dong-a Ilbo, and Chosun Ilbo — could break out of their calcified battle for print supremacy. 

Newspaper reading habits die hard, and these three very serious news brands were not above crazy promotional wars to win over more malleable readers. My foggy memory recalls cars and refrigerators somehow in the promotional mix. 

Since all great truths come from taxi drivers and bartenders, I recall asking these truth-tellers which national newspaper they read — and why. These were the two answers that stood out: 

• A taxi driver said he read Dong-a because his father read Dong-a and his father’s father read Dong-a. 

• A bartender said she read JoongAng because her father read Chosun and her father’s father read Chosun. 

So much for family loyalty. Yet it illustrates the richness of newspaper tradition in Korea — whether a loyalist or a family rebel. 

Fast-forward to 2014.

The fight for marginal readers continues even as print economics in the broader sector is showing cracks. But the atmosphere is totally different. There is unity of purpose among the major publishers. They are joined by the broader family of news publishers from throughout South Korea.

What has united Korean publishers?

Naver.

Naver is the Google of the Korean language. Pronounced like the English “neighbour,” the word “Naver” comes from the word “navigate.”

Founded in 1999 by ex-Samsung employees, Naver is a search portal that holds 70% market share. Created as a Web portal with a proprietary search engine, Naver today has expanded far beyond its original purpose to be a news service, e-mail service, academic thesis search service, a donation engine, a gaming portal, and more.

It is the fifth most-used search engine in the world behind Google, Yahoo!, Baidu, and Bing. 

To understand how Naver unified Korean publishers requires only a mental picture of how news publishers worldwide — red-faced, veins about to pop — go stark-raving mad when talking about Google. 

Except Naver is close at home for Korean publishers. They share a very niche language. 

In two presentations in Seoul recently, the lion’s share of questions barely touched my global tour de force of big media industry issues. Instead, the questions were about my views of Naver and how I suggested they be neutered or otherwise defeated.

I visited Naver during my Seoul visit, and I came away just as I have my many interactions with Google. It is a lumbering giant whose mission is to change the ecosystem. This is in conflict with newspaper publishers who want to retain the old ecosystem.

In a nutshell, here is the unique Naver story for news publishers:

The Korean publishers, over time, sold their content to Naver for a fee — to a scale whereby 30,000 articles can be served daily by Naver. Some 450 newspaper, magazine, and digital publishers have agreements with Naver, and they want more money for their content. 

When the digital consumer wants news, they don’t go in sufficient enough numbers to the news brands. They go to Naver.

Now here is where this gets very real very fast. 

South Korea is as digitally disrupted from consumer and advertiser perspectives as any national market in the world: good 4G, the best mobile devices, and everything getting better by the day.

Yet newspaper publishers derive only 2%-3% of revenues from digital. By comparison, peer publishers in similarly disrupted markets now derive 10%-25% of revenue from digital.

The publishers blame Naver. My instinct is that while Naver is an issue, it is a proxy for cultural reticence among publishers to make the changes necessary to accelerate digital audience growth and digital advertising.

Whether it was intended or not, the dominant market power of Naver is wreaking havoc on the Korean digital content ecosystem. Publishers say that because Naver is a de facto monopoly, only Naver can adjust the system – not the government. 

Here are the three big issues for publishers: 

1. Algorithm: The algorithm of Naver is on the “newest served” basis. Since traffic from Naver determines the destiny of each news content provider, hundreds of virtually the same article are produced at one-second intervals. 
   
   
2. Search pricing: The main revenue source for Naver is search advertising. When it comes to the pricing of display ads, Naver keeps it low in principle. Since Naver is a de facto price maker, publishers have to accept that level – which makes the prospects of online advertising revenue gloomy. 
   
   
3. Outlink: What Korean publishers want from Naver is to do the same as what Google does to news providers: outlink service. Naver’s response is to pay news providers – unlike Google. Yet the majority of news providers only get several thousand Korean won per month. They provide Naver with news since that is the only sure way to get traffic.

Naver hears the feedback from publishers. It won’t budge on price. What’s the incentive in an ecosystem where they drive so much traffic to publishers and they are the dominant player? 

Yet the publishers are their clients. And, like Google, Naver has devised a series of programmes to address the brand worries of publishers. 

For example, a visit to Naver.com is greeted by front pages of Korean news providers who supply headlines, graphics, and links to create a more brand-friendly environment and connections back to their Web sites.

As another example, Naver has created a News Library and archived many Korean newspapers dating back decades – one of the most user-friendly archives I’ve seen.

Is Naver a friend or enemy? Obviously, a frienemy – that wonderful Silicon Valley term. It profits from keyword ads and value-added benefits. Size matters. It is in competition with Google. There are new competitors such as Kakao. Yahoo saw this landscape and pulled out of the market. 

Naver needs 450 publishers to provide content for its portal. It prefers the 450 it has today, but is quick to remind that there are 15,000 Korean news providers – a not-so-subtle hint.

Everyone in the market seems to know how to circumvent Naver – perhaps even Naver. Yet while publishers are united in wanting more money from Naver, they aren’t unified enough to create their own publisher-led alternative. Too many agendas, too many alternative reasons to own newspapers.

And so the tension continues. 

Korean publishers should be re-engineering their workforces to be digital-first. They should be building the power of their brands in the digital space.

Instead, the focus is about the Naver relationship. 

Would publishers gladly defer these big cultural choices if they could find the right price for content with Naver? Long-term, would they really want to encourage the white-labeling of content for a third party’s benefit, even if the price were right?

I asked a Seoul bartender what he thought of this brouhaha. He looked up from his smartphone dialed into Naver and distractedly asked, “What?”

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