Google's Schmidt Strikes Back at Murdoch

It is perhaps ironic that the Internet companies most often blamed for “killing newspapers” have made little, if any, money doing so. Both Craigslist, which ended newspapers’ monopoly on local classifieds, and Google News are available free and with little or no advertising. It’s almost like they are killing for fun.

This week, the Federal Trade Commission held hearings on the future of news. News Corp. founder Rupert Murdoch again accused news aggregators--think Google--of stealing is company’s content and reiterated that he plans to start charging for his company’s online newspapers.

Google’s Chairman, Eric Schmidt, defends his company today in an editorial published in one of Murdoch’s newspapers, the Wall Street Journal. Schmidt mostly talks about a wonderful future, circa 2015, in which people are, for some reason, more willing to pay for content than they seem to be today. He also likes his company’s Fast Flip news delivery mechanism far more than is probably warranted.

Here is the gist of Schmidt’s comments about newspapers:

“Now they can offer a digital place for their readers to congregate and talk. And just as we have seen different models of payment for TV as choice has increased and new providers have become involved, I believe we will see the same with news. We could easily see free access for mass-market content funded from advertising alongside the equivalent of subscription and pay-for-view for material with a niche readership.

“I certainly don’t believe that the Internet will mean the death of news. Through innovation and technology, it can endure with newfound profitability and vitality. Video didn’t kill the radio star. It created a whole new additional industry.”

Well, actually, video did kill radio as the vibrant medium it had been in its pre-television era. Likewise, the Internet will likely be the final blow to news delivered using the medium of dead trees. Internet users also don’t seem willing to provide enough of a revenue stream to support the army of journalists necessary for free societies to prosper.

Surviving local newspapers will not provide “a place for their readers to congregate and talk” if Facebook and Twitter have anything to say about it. And Craigslist isn’t giving an inch on local classifieds.

The Internet Difference

What Schmidt doesn’t say is that on the Internet it is easy for users to move from one service to another and the “winners” are quickly creating links necessary to cement their developing relationships. Think Google, Facebook, and Twitter. Newspapers just aren’t a force in what has become known as social networking and seem unlikely to become one.

Mr. Murdoch’s argument, in counterpoint to Schmidt’s optimism, is that content provided for free isn’t likely to fund the cost of the original reporting; especially content that can be so freely repurposed by others. Lacking the considerable barrier to entry that paper distribution created, traditional news organizations are finding it impossible to compete.

Further, Mr. Schmidt’s prediction of a rosy future aside, news organizations are bleeding out during a technology shift that has yet to help them find a viable revenue model. By the time it becomes clear how a newspaper will prosper going forward there will be many fewer left standing.

As a journalist, I know Murdoch is telling the truth in describing the pressures journalism faces. As a technologist, I can’t say Google is to blame. If it wasn’t Google, it would have been someone else and Murdoch should take comfort that Google, at least, is making a sincere (and expensive) effort to be newspapers’ friend.

I see no sign that Google is happy with its unintended role in damaging the quality of news reporting and the long-term impact negative that will have on democratic institutions.

Murdoch is right in saying that news is expensive to produce and companies that produce news, such as his, are seeing their content widely reused without payment. The Internet has reduced barriers to entry such that anyone, well, almost anyone, can create a news site that costs little to operate and bases its stories mostly on the work of others.

Schmidt is correct that newspapers were in trouble long before the Internet sealed their fate. He is also correct that Google sends publishers a four billion clicks a month as readers go from Google’s search results to the publishers’ sites.

What Schmidt doesn’t say is that without Google, readers might have to find their own news, resulting in those clicks being spread across far fewer publishers.

When Murdoch talks about pulling is content from Google and creating a paid model, such as the Journal already uses, he is counting on the power of his brands and quality reporting, plus subscribed-derived revenue, to see him through.

That may work for a small number of publications, but will not support the local reporting necessary to keep government in check.

In short, Murdoch is talking about the business of journalism and the problems it faces, while Schmidt is saying, essentially, that progress can’t be stopped and newspapers need to find a better way to cope with it. (Should they survive long enough, I might add).

The problem is that newspaper companies were complacent in addressing the threats to their industry and the traditional advertising models they relied upon have gone away, with nothing comparable--in terms of revenue, at least--to replace them.

Journalism needs help now and technology has been quick to create problems and slow to provide answers. For readers’ sake, Murdoch and Schmidt need to work to be working together rather than fighting in out--in newspapers, of all places.

David Coursey has been writing about technology products and companies for more than 25 years. He tweets as @techinciter and may be contacted via his Web site.

Original story -