Google’s Eric Schmidt Walks Into The Newspaper Lions’ Den, And They Let Him Out Unscathed

Philip M. Stone April 8, 2009 Follow on Twitter

It was probably the most anticipated speech to a newspaper audience for a very long time and yet what a disappointment – Google’s Eric Schmidt didn’t tell publishers how they and Google might work together to ensure print profitability and the publishers basically let him skirt around the copyright and fair use issues of Google News using their material.

Schmidt gave the closing speech to the Newspaper Association of America (NAA) meeting in San Diego on Tuesday and the build-up to the speech made it sound like it would be battle of two Goliaths -- Google, the company that allegedly was shredding copyright and fair use doctrines, and the very publishers who were making that claim. Instead, it was pussy cats, except there was no snarling, no heat under the collar, just a very civilized discussion. For one who didn’t know any better it was like old friends having a polite banter together. Where’s the White House press corps when you really need them!

You can’t help but admire someone who accepts going before an audience he knows should be very hostile, and perhaps that’s why Schmidt didn’t really talk about copyright and fair use in his presentation – rather he concentrated on how technological innovation will advance the Internet and how newspapers should be a part of that advance. It was really only afterwards in the Q & A session that some questions came up on copyright and the like – but far too polite, not nearly hostile enough.

So, what advice did Schmidt have to offer?  He firmly believes newspaper web site of the future will have to feature three access platforms – that part of the site that is free and advertising supported and that will make up the site’s bulk, access to everything by subscription, and a micro-payment system at around 1 – 3 US cents a story for those who just want to access specific items behind the pay wall.

He agreed that the micro-payment system at present is not feasible because transaction fees are too high, but he said a lot of work is currently being done on that technology to bring those transaction costs down. (Several bloggers have reported that off-site major newspaper publishers were holding meetings on how to charge for web access -- it’s always dicey when a trade group or many of its representatives get together to discuss things like that because such discussions can run afoul of US antitrust law, so no doubt the lawyers were present to ensure the discussions remained in generalities of how to do it rather than the specifics of how much to charge).

Schmidt made clear he is a true believer in the advertising model but he didn’t address, and no one asked him, how those companies that are not as big as a “Google” can make decent advertising money on the Internet these days with CPM rates as low as they have fallen and with Internet advertising growth projected to be much less in the future than it has been in the past. His only clue, “Advertising needs to be useful.”

He basically believes a newspaper will have its print and Internet numbers right if readership is at least five times higher – preferably 10 times higher -- on the web than it is in print. But again, he didn’t address, and no one asked him, how print was to stay in business with so much of the advertising spend diverted to the Web and how maybe that 5:1 or 10:1 ratio could mean that the print financials were no longer viable.

The only clue he gave to what sets newspapers apart from everyone else is that “it’s all about reporting.” He said the big thing that newspapers have going for them is “trust” – recent surveys may not agree so much with that premise -- but that is what Schmidt believes and it is that trust, he says, that separates  the reporting by professionals from the user generated reporting that makes up so much of the Internet.  

Indeed in describing news and information on the Internet he said, “Let me be clear about this, it’s a sewer out there.” His basic message there was that newspapers need to persuade Internet readers which news sources can be trusted -- newspapers – and those sources that cannot be trusted.

He was asked about the Associated Press’ announcement that it was now legally going after those sites and portals that don’t properly license AP news and he said he was very surprised at s reports in the past 24 hours suggesting that the AP was targeting Google.  “We have a multi-million dollar deal to host and distribute AP material. We have a very very successful deal with AP and hope that will continue for many, many years,” he said.

Finally the questioning got down to fair usage  and indeed one questioner pointed out that a problem with Google News today is that for many users the headline and extract of a newspaper story is enough, that’s all people rely on using Twitter, and people are not clicking onwards to the newspaper site. Schmidt said he “didn’t want to criticize users for being idiotic” but he then echoed the company line that for those newspapers that don’t want Google picking up on their stories at all they only have to implement code from robots.txt and the Google robot passes them by. Apparently no one from ACAP in the audience to ask why Google hasn’t adopted that system.

And then he used an analogy that should have wakened up the sleepy-heads, “Google News is not much different to what I hear on the radio,” he said.

It was a speech and Q&A session that generated no outbursts of applause, and there was really only polite applause at his introduction and at the conclusion. But there was one moment of laughter as Schmidt talked about fair use. He said the problem with lawyers is that they all went to different schools and thus they all have different interpretations of fair use. He admitted you could probably take fair use lawyers and put them into two categories -- B for all the Google lawyers and A for everyone else.

“There’s always a tension over fair use,” he said. We urge everyone to think of what the readers want. We try really hard to think that way.”

There were not any questions about Google closing its newspaper ad business; there were no questions about why Yahoo is big into newspaper advertising partnerships and Google isn’t; there were no questions on how print newspapers and/or their Web sites and Google might be able to work together. All in all, a wasted opportunity.

See also in ftm Knowledge

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