Eric Schmidt: How Google Can Help Newspapers | Hacker News Reader

Eric Schmidt: How Google Can Help Newspapers

online.wsj.com

38 pointsilamont13 comments

People are willing to pay for indepth reporting - this type of content can be sustained by subscriptions. People are not willing to pay for newsbites or breaking news, since this type of content is widely available for free - this kind of content can be sustained by advertising. But can these two models combined match the pre-internet revenues newspapers are used to? Probably not because of the cost models of pre-internet news gathering and also because of the choices advertisers now have.

The problem with the industry is that the world is shifting to new (lower) revenue models but most newspapers/publishers are still living with old (HUGE) cost models.

I'm still waiting for the first big media company to make a truly radical shift in their cost structure... only then can they survive. (IMHO)

Schmidt contradicts himself : He tells us that newspapers can get good money using targeted ads , and then he tells us that google(which is the leader in ad targeting) get very little revenue from ads next to newspapers stories.

So ads might not be the solution for the current problems of newspapers.

But if you look at google news , every story gets published in hundred of newspapers with some little variation. Seems like a huge redundancy , that takes a lot of work , and shares the ad revenue between many many sources.

> every story gets published in hundred of newspapers with some little variation. Seems like a huge redundancy, that takes a lot of work, and shares the ad revenue between many many sources

Exactly. The newspaper industry as a distribution model, with many players redistributing content created by a few, and sharing the revenue, just won't make sense when distribution online is effectively free... both in terms of cost and expectation of cost.

However, the content creation industry will thrive. Non-syndicated, subscription services like the Economist will do just fine.

I think what annoys murdoch et al. is that they are dealing with a commercial entity (Google) over which they have very little leverage, if any. This puts them in a very weak negotiating position. However, I read an article recently speculating on whether it might be in their interest to foster competition between search engines for their content, and in particular between Bing and Google. To do this, the article suggested they ban Google from indexing their content, and get Microsoft to pay them for the privilege. http://www.economist.com/businessfinance/displaystory.cfm?st... The open question with this strategy is whether they could make enough money from Microsoft to offset the loss of click through revenue from Google. Moreover, it is unclear whether they could get sufficient scale to hurt Google in terms of the number of news organisations that participate.

The claim that we're making big profits on the back of newspapers also misrepresents the reality. In search, we make our money primarily from advertisements for products. Someone types in digital camera and gets ads for digital cameras. 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.

This argument is disingenuous.

Sure, the big G doesn't make any money off of news searches. But the triple-A content provided by newspapers are what makes Google so useful in the first place.

Google is then able to monetize its relationship with users when they do highly profitable product searches. It's like people going to the gas station and picking up a candy bar from the convenience store (where all the money is made.)

The revenue generated from the ads shown alongside news search queries is a tiny fraction of our search revenue.

Translation: We make so much money that the piddling revenue your entire industry generates means nothing to us.

I think that Google and publishers are placing far too much hope in targeted advertising. The reason: As Rupert Murdoch has pointed out in the past, there is a nearly infinite supply of advertising inventory thanks to the explosion of online outlets and social networks. How many billions or trillions of page views are served every day by media sites, YouTube, Facebook, etc? Even if ads were perfectly matched to the people who were reading them in terms of demographics and relevance to their buying interests, the problem would not go away -- there are still billions or trillions of pages being served, albeit with fewer wasted impressions. In this kind of environment, prices have to stay low.

Interesting that comment about atomicity of consumption. A similar thing happened to the music industry, who relied for so long on the ability to shift a lacklustre album on the back of a popular single. There were loud complaints from up high when consumers got the power to cherry-pick the good tracks and leave the dross on the shelf. I'll spend £2 on a Sunday paper and read less than 5% of it. Is that a good thing, to waste that much paper, that much labour on filler articles just to make a profitable package? If they attempt that same tactic on the internet once the paywalls go up, I can't see it working.

Also here: <http://news.ycombinator.com/item?id=974342>.

Why is he listed as "Mr. Schmidt" rather than "Dr. Schmidt"?

He's not a real doctor. :)

Seriously, though ... The WSJ probably has a style guide which tries to avoid honorifics and degree references. It is hard to track and verify, and is inconsistently used among recipients.

BTW, a problem which I think requires a solution is a degree verification marketplace -- not just for employers and reporters to check someone's credentials, but also for people who may need to get some sort of confirmation on their own for whatever purpose. My wife had to do that for a vocational school which wanted to make sure an earlier degree from a foreign college was legit, It involved mailing or faxing a copy of her transcript to some service which sends back a letter saying it's real -- and costs $75. Inefficient, labor-intensive prone to abuse, and way too expensive -- prime candidate for a software solution, IMHO.

A bit off topic, but there's a second problem to be revealed from this. It seems like google is trying to provide more, and better quality content to consumers. I feel as a consumer of information, its an addiction. Once I start reading I find hours have passed. There's a loop of finding something interesting, and thought provoking. Often questions arise, as I research the answer to those question more arise. Then i'll click another link and the loop continues. This is a problem I've thought quite a bit about solving. The solution always seems to be gain more will power. But I find it really difficult.

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