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Newspaper publishers have been blaming Google for their revenue decline long before the recession plunged them into chaos. Google scours the web and delivers their hard won news in an instant — for free. But it's not a one sided relationship, and today Google's CEO is fighting back — in Rupert Murdoch's pages.
Murdoch has been loudest amid the din of publishers who are demanding payment for their services. And today in his Wall Street Journal, Eric Schmidt made his pitch for how Google can help newspapers survive the digital shift.
For starters, he wants to clear Google's name:
"Google is a great source of promotion. We send online news publishers a billion clicks a month from Google News and more than three billion extra visits from our other services, such as Web Search and iGoogle. That is 100,000 opportunities a minute to win loyal readers and generate revenue—for free. In terms of copyright, another bone of contention, we only show a headline and a couple of lines from each story. If readers want to read on they have to click through to the newspaper's Web site. (The exception are stories we host through a licensing agreement with news services.) And if they wish, publishers can remove their content from our search index, or from Google News."
Schmidt acknowledges that newspapers are in a bind right now. (The piece is subtitled "Video didn't kill the radio star, and the Internet won't destroy news organizations. It will foster a new, digital business model.") It's the same thing that digital adopters have been saying for years, but publishers watching their business crumble around them are pretty nervous about where they'll fit in this "new business model."
In that direction, Schmidt offers some (Google created) solutions. He thinks the main inhibitor for newspapers in the digital age is the delivery method. Right now, online news is actually more difficult to read than a traditional newspaper. Google is working on solutions. Right now, they have Google Fast Flip. Says Schmidt:
"The theory—which seems to work in practice—is that if we make it easier to read articles, people will read more of them. Our news partners will receive the majority of the revenue generated by the display ads shown beside stories."
But another problem that Schmidt doesn't address is the issue of payment. While online news may be popular, getting people to fork over for it isn't so easy. And he even admits in his piece that Google has trouble profiting from the news:
"A typical news search—for Afghanistan, say—may generate few if any ads. The revenue generated from the ads shown alongside news search queries is a tiny fraction of our search revenue."
That same problem plagues news producers — but for them, they don't have a windfall of product search ads to fall back on. Publishers now need to find a better delivery method for their content — and a better monetization route.
Schmidt's piece may help in the PR battle to clear Google's reputation in the media, but it doesn't contain the answers publishers are looking for. Google may not be the cause of newspapers' problems. But they aren't likely to be the solution either.