Google CEO: Newspaper Business Will Improve

The chief executive of Google has a message for the staggering newspaper industry: Things will get better.  And Google CEO Eric Schmidt told a group of newspaper executives Sunday evening that his growing company will be an integral part of those changes.Newspapers will make money once again, he said, but it will be from online advertisements and an altered subscription model. Schmidt said his firm is working on new ways to tailor advertisements and content for consumers, based on what stories they read.

“We have a business model problem, we don’t have a news problem,” Schmidt said.

Speaking to the American Society of News Editors’ annual convention at the J.W. Marriott in downtown Washington, Schmidt showered praise on the industry, calling journalism an “art.” Schmidt said he reads three newspapers, and called their work indispensible. And he blasted blogs, saying that any questions about the value of newspaper editors can be answered: “Look at the blog world.”

“High quality journalism will triumph,” he said.

But along with that praise came his advice about how the business should change: Organizations should refocus their attention on personalizing content and disseminating news through mobile devices – businesses in which Google is heavily involved.

Schmidt told the mostly full ballroom that “new forms of making money will develop,” and that Google is working on those forms. But he declined to divulge many details about that work.

“The web can ultimately be very good for news,” Schmidt said. “Think about it: You have more readers than ever, you have more sources than ever, for sure you have more ways to report and new forms of money. New forms of making money will develop.”

Schmidt, who hovered at the side of the lectern throughout his 25-minute speech, was firm that there is a robust future for both display advertisements and subscriptions – revenue streams that have shrunk as dramatically as the volume of free content online has expanded.

Google, of course, has a stake in that free content. It aggregates news through its search engine, directs users to sites with free content and has made the universe of free information much more accessible, even as the company has profited by displaying its own advertisements beside that information.

Much of Schmidt’s advice seemed to point to changes that might emerge from forms of technology that Google is developing, has developed or could foreseeably develop. Some of those advances in technology, he said, could create new revenue streams for news organizations.
News sites should use technology to predict what a user wants to read by what they have already read, he said – technology his company has. Schmidt said he doesn’t want “to be treated as a stranger” when reading news online. He also said he wants to be challenged through technology that directs readers to a story with an opposing view. Google, he said, can uncover why a news organization doesn’t have readers in specific areas.

Personalized technology for news could help in tailoring advertisements for individual readers.

The collaborative nature of the Internet – something that Schmidt thinks could save journalism – also has its downside, he said. The barriers for entry are “basically zero,” which makes everyone at once a potential competitor and partner.

“Figuring out when to compete, when to collaborate, when to go solo, when to work in a group strikes me as one of the sort of key questions for all of you to think about,” Schmidt said. “I don’t know the answer, by the way, but I know you’ll have a combination answer to make it right.”

One way newspapers can become commercially successful, he said, is to emulate Google: “Prototype early and often,” gather and analyze data and make decisions based off of hard data.

Boston Globe Editor Martin Baron told POLITICO after Schmidt’s speech that Google is “already a big part of our presence”: “The reality is all newspaper Web sites get a lot of traffic with Google.”

Baron, whose newspaper has been hit particularly hard in recent years, said Google is having a “dramatic impact” on the news industry, which he said needs to “adapt quickly” to the fast-changing media environment.

“What we need to do is probably sweat, but sweat from hard work, figuring it all out,” Baron said. “I think that’s why people are here, and that’s why they invite somebody like Eric Schmidt. If we can learn something, and apply those lessons to the way we do business, then all the better.”

Staci D. Kramer, the co-editor of ContentNext Media, which covers the economy of news online, said that Schmidt’s talk was “non-adversarial” to an industry that views his company with skepticism.

“What he said was ‘you’re right to worry, but don’t write your own epitaph yet,”” she told POLITICO. “He’s not saying you’re wrong to worry, but don’t worry about the wrong things. It’s all about the business model, it’s not whether you’re a valued or not-valued service, it’s how do you get people to pay for that service. Do you pay through advertising, subscriptions or a mix? That’s something we’re all working on.”

It’s an equation that’s not easily solved, Schmidt said.

“The fact of the matter is there are not simple answers to any of these questions. And in order to really find them, you’re going to have to run some experiments.”

{Capitol News Company/Noam Amdurski-Matzav.com Newscenter}