Google CEO Eric Schmidt On Newspapers & Journalism

Is Google a newspaper killer? Not by a long shot, says Google CEO Eric Schmidt. Nor does he want it to be. In a long interview about his company’s relationship with newspapers and the print journalism industry, Schmidt made it clear he wants established players to survive. In fact, he thinks Google has a “moral responsibility” to help. But help doesn’t mean a handout.

I spoke with Schmidt on the topic about two weeks ago in his office at Google. In summary, he felt that Google takes most of the blame for the internet as a whole, in how it has changed news reading habits that have impacted the newspaper industry. But despite that impact, he felt newspapers would survive in some form.

Schmidt would like Google to help by experimenting with new ways of reading news that might help print institutions make it through the transition they face. That’s especially so in that Google has no plans to produce news content itself. Google’s success, he says, is tied to pointing its visitors to sources of quality content.

Moreover, Schmidt said Google has a responsibility to help, given that part of his company’s vision is to make the world a better place. Without journalistic institutions to do professional investigative articles and other “deep” reporting, democracy would be harmed.

That argument is one many beleaguered newspaper executives themselves have made. If hearing that Schmidt agrees with them is a relief, there’s more goodness flowing their way. Schmidt largely believes that only existing mainstream news institutions have the resources and established trust to do deep journalism. He acknowledges that new online publications have emerged, and that there are journalists working independently of large companies. But his faith is still with the old school, so to speak.

As for the ongoing discussions with the Associated Press, he expects a new deal will be reached. More on that, and the other topics I’ve summarized, below.

Google’s Not A Newspaper Vampire

This year, Google has been blamed by some in the mainstream journalism industry for everything from being a vampire that’s sucked the life out of newspapers to undermining democracy by somehow short-changing publications of ad revenue. How does Schmidt view these accusations? He sees them as Google taking the brunt of disruption caused by the internet itself:

I think in this case Google is a proxy for the internet as a whole. So the people would make the same statements about the Internet as they do about Google. Substitute the internet for Google and you get that idea. And because we play such a central role in information, we’ve become somewhat used to being blamed for everything. In some cases people don’t understand that we’re a conduit to other people doing things. They think Google did it when in fact somebody else did it and made it available.

Rereading Schmidt’s answer when writing up this interview, I was struck how it brought to mind something he started talking about back in 2006, his “don’t bet against the internet” line. That’s the idea that the internet was transforming the world and that only foolish businesses would effectively think they could stick with “old” ways.

Newspapers Will Decline But Won’t Die

So it’s the internet that’s killing papers? Schmidt immediately stopped me from suggesting that he’s saying newspapers will die. He thinks they will survive in some form:

Killing newspapers, that’s your words, not mine…

The number of readers for newspapers is declining. The market is becoming more specialized. There will always be a market for people who read the newspaper on a train going into New York City. There will always be a market for people who sit in in the afternoon in a cafe in the city and read the newspaper in the sunshine. The term “killing” is a bit over[blown]. Newspapers face a long-term secular decline because of the shift in user habits due to the Internet.

So again, if you take the criticism as a statement about the Internet, how will Google fix that? I think that’s just politically a better answer from our perspective. Let me put it this way: Imagine if Google didn’t exist. Would the same criticism still exist? You betcha. See my point?

Online Solutions To Newspaper Woes & Google Wants To Help

As for newspapers specifically, Schmidt feels they have three major problems: physical production costs, loss of classified revenue and loss of print ad revenue. Google’s role is to help with online fixes for these, Schmidt said:

In the case of the newspapers, they have multiple problems which are hard to solve. If you think about it there are three fundamental problems. One is that the physical cost of things is going up, physical newsprint. Another one has been the loss of classifieds. And a third one has been essentially the difficulty in selling traditional print ads. So, all of them have online solutions. And we’ve come to the conclusion that the right thing to do is to help them with the online.

One Solution: New Ways To Read News Online

In terms of the physical production issue, Google’s contribution seems to be experimenting with new ways of reading journalism online. Said Schmidt:

We think that over a long enough period of time, most people will have personalized news-reading experiences on mobile-type devices that will largely replace their traditional reading of newspapers. Over a decade or something. And that that kind of news consumption will be very personal, very targeted. It will remember what you know. It will suggest things that you might want to know. It will have advertising. Right? And it will be as convenient and fun as reading a traditional newspaper or magazine.

So one way one to think about it is that the newspaper or magazine industry do a great job of the convenience of scanning and looking and understanding. And we have to get the web to that point, or whatever the web becomes. So we just announced, the official name is Google Fast Flip. And that’s an example of the kind of thing we’re doing. And we have a lot more coming.

Google Fast Flip is out there now for anyone to use. As for the intriguing idea of a personalized news reader, Google’s Marissa Mayer hinted at experiments with this in August (see Of Living URLs, Newspaper Rankings & California Fires). Schmidt also talked again about the concept yesterday. Stay tuned.

New Ads For News Will Come

What about those lost revenues? Schmidt didn’t address the classified revenue loss, perhaps because Craigslist is the poster child for blame there. As for print display ad decline, Schmidt suggested new ads will follow through into the new reading models:

On the business side, which is what people are really talking about, it seems to me that we should be able to get very powerful advertising in display formats that people will like in this new model, invented, built and sold. Now I don’t know how much revenue that is, but it’s a lot more than they’re getting now.

Speaking of revenue sharing, some noted that Google’s Fast Flip seemed to mark the first time Google has shared revenue with news sites. When I asked Schmidt about this, he disagreed, noting that Google has ad deals with a variety of newspapers where revenue is shared.

However, those deals are for ads delivered on the news sites themselves. Publications like USA Today or the Washington Post carry Google search boxes and share in revenues generated by search ads. Other sites also carry display ads through AdSense. How about sharing revenue with news sites for content hosted on Google itself, as Fast Flip does. Isn’t that new?

Google’s Not A Content Company

Yes, that’s “probably true,” Schmidt said, though he stressed the goal is not for Google to be a content company but rather to help those with content thrive:

We need these content partners to survive. We need their content. We are not in the content business. So, you could decide that we’re just evil businessmen trying to give money to the newspapers [through the Fast Flip revenue sharing], or you could decide that we’re altruistic and trying to save an important Fourth Estate of American political discourse. Whichever one leads to the same outcome. I hope you believe the second. But even if you believe the first, it’s still good business. We need their content.

It should be noted that Google has worked to help newspapers with offline newspaper ad sales, but after trying for two years, it shuttered its program this past January. Meanwhile, Google competitor Yahoo continues with its own two-year-old Yahoo Newspaper Consortium that allows nearly 1,000 papers to sell online ads at their own sites and through Yahoo. The consortium has gotten a lot of positive reviews through it is far from a short-term solution, as even Yahoo admits.

Google Has A “Moral Responsibility” To Help The Press

Moving on, I asked Schmidt if Google felt any obligation to help the newspaper industry. Definitely, he agreed, saying:

Google sees itself as trying to make the world a better place. And our values are that more information is positive – transparency. And the historic role of the press was to provide transparency, from Watergate on and so forth. So we really do have a moral responsibility to help solve this problem.

If You Teach A Newspaper To Fish, They Don’t Need A Short Term Bailout

Sort of like the adage about teaching someone to fish, rather than giving them a fish, Schmidt sees Google’s responsibility as helping the press get into a healthier position in the long-term, not by providing subsidies that don’t solve their current problems:

The next question that the journalists who inevitably ask these questions say is, OK then why don’t you just write us a large check? Let me just posit that that’s a question that people might ask, because I know I’ve had it before. And the problem is that just transferring money from an area where we’re making a lot of money to an area where we’re making little money does not solve the problem for the long term. You’re fundamentally better off building the new product that is profitable and growing – again with the news, with magazines and so forth. It’s better for everyone. Because ultimately a subsidy model is a temporary solution. It’s not a long-term solution.

Google Wants “Well Funded” & “Professional” Investigative Journalism

So far during the interview, I’d largely used newspapers as being synonymous with journalism. But they’re not the same. Journalists don’t all work for newspapers; some publish through blogs. So I wondered, when Schmidt talked about feeling an obligation to support the press, did he mean large press organizations?

I specifically am talking about investigative journalism when I talk about this. There’s no lack of bloggers and people who publish their opinions and faux editorial writers and people with an opinion. And I think that one of the great things about the internet is that we can hear them. We can also choose to ignore them. So it’s not correct to say that the internet is decreasing conversation. The internet is clearly increasing conversation at an incredibly rapid pace. The cacophony of voices is overwhelming as you know.

Well-funded, targeted professionally managed investigative journalism is a necessary precondition in my view to a functioning democracy. And so that’s what we worry about. And as you know, that was always subsidized in the newspaper model by the other things that they did. You know, the story about the scandal in Iraq or Afghanistan was difficult to advertise against. But there was enough revenue that it allowed the newspaper to fulfill its mission.

Few Bloggers Can Do What The New York Times Can Do

But what about people who go out and do professional journalism on their own, who don’t turn around and complain they’re unable to succeed because Google’s hurting them? Said Schmidt:

Let’s talk about Afghanistan. How many free bloggers are there that are in a safe-house in Afghanistan with the necessary support structure to do the kind of deep investigative reporting on what’s really going on in the war? I’m not talking about the ones that are embedded in the government. That’s an example. The kind of articles about the scandals in the various government bureaucracies. All of those kinds of things. There are very few bloggers, to use the term broadly, who have the time and the resources – I mean these are stories that take months to develop, they take confidential sources.

Another example that people in our world often miss: Let’s assume you’re a mid-level government executive, not necessarily in the United States, and it’s a crime to leak information for purposes of discussion. Are you willing to leak to a blogger who has no track record of protecting his or her own sources, versus the New York Times, which routinely sends its people to jail over this question of a shield law.

So again, it’s facile in my view to say that the two functions are similar. There’s no question that a large part of the function of newspapers and magazines is broad communication that’s not particularly controversial, and helpful and it’s great. But whatever percentage that is that requires the protection of sources, deep investigative journalism, is very important in a democracy. You would be crazy to not understand the history of that.

People don’t like it, by the way, because it’s very controversial. The Pentagon Papers is a classic example. It was incredibly controversial: Was Daniel Ellsberg a patriot or was he a criminal? He was actually adjudicated and was not a criminal because the government was doing something inappropriate. People disagree over these things. But the point is that that’s the kind of stuff I’m talking about.

Hearing Schmidt talk of this, I could only think that some newspaper executives who have attacked Google ought to be lining him up as a chief spokesperson for their industry.

It was also somewhat amazing to hear. Could I imagine someone leaking information to a blogger? Of course, I thought — to me! I was blogger (according to some) sitting right across from him, yet someone who has routinely honored embargoes and confidential information I’ve received from his own company.

To be fair, Schmidt did talk about bloggers with “no track record” (I think I’ve got one) versus the New York Times as an institution that has a well known track record.

But still, when I started as an independent journalist over a decade ago, I had nothing behind me (I’d have been called a blogger, but we didn’t have blogs back then). My site built its own audience because the traditional press was not covering search engines as well as or in as much depth as my publication was. It thrived because of the internet.

I countered. Aren’t there journalists out there who are independent of mainstream publications but who have good track records and relationships? Not for the deep journalism that Schmidt is worried about:

Not at the level I’m talking about. Name a blogger who today has the kind of deep embedded reporting that a traditional newspaper does for this kind of, for scandals. It just doesn’t exist yet. They may develop. It’s perfectly possible that they will develop. It’s a different kind of reporting. The online world is so immediate, it’s so competitive, you know people are like having heart attacks just keeping up with the publication demands in the online world. So there are some attempts at this. For example, ProPublica, which is funded by the folks [the Sandler Foundation] in Berkeley, San Francisco actually, is an attempt to replicate what I’m describing in a nonprofit way. So there is an example. It’s run by journalists, run by professionals.

Name a blogger doing deep investigative reporting? Schmidt’s got me there. I can’t name them off the top of my head. It’s not an area I focus on. I do suspect some are out there, though — if you know of some, drop them in the comments below.

Personally, I feel the big challenge to large, investigative reporting isn’t figuring out how to fund it or how to develope the trust factor needed. It’s dealing with the aftermath, when some large corporation or government body decides to sue you. That’s the chilling effect to me, for independents, especially when there’s still little clarity about how protected they are by various shield laws for journalists.

City Hall & Local Coverage At Risk

Assuming the mainstream journalism outlets did go away, would we lose investigation? Or would something spring up? Schmidt’s response that something might replace coverage on big issues but “city hall” or local deep reporting is at risk:

It’s a speculation. As I said, ProPublica is a good example. There’s a couple of groups that are funded out of political groups. There’s one that’s under Center for American Progress [Media Matters] …. Their basic job is to keep what they claim is the Republican spend machine honest. So that’s sort of an example of this. But it’s not quite. Again, think Iraq, Afghanistan, Defense Department errors, you know, corruption in governments, local governments. It’s fair to say that, though, I think the biggest worry is actually for local reporting.

Media Matters is an example. I think most people believe that in, hopefully, the unlikely scenario of the loss of all of these voices, most people believe that there’s enough emphasis and interest at the national level. But what happened to the guy who’s investigating the misdeeds of the CFO in the mayor’s office? And again, I’m talking about the stuff you can’t do in an hour. The gumshoe kind, walking around talking to people. There are very few of those people.

The loss of local coverage certainly resonated with me, since my roots in journalism started there. Last year, I did a piece talking about how over the years, the Los Angeles Times greatly reduced its local reporting from the heyday of when I worked there. So there are very few of these people? My response was that I know lots of them — they’ve all been laid off. That prompted Schmidt to say:

But they’re not doing it anymore. Or if they do it, they’re doing it on their own time.

It turns out there’s not enough money there — even with the improvement in overhead costs, because you don’t have a lot less overhead. There’s not enough money yet. Although for the most popular blogs you know, it’s the 1% phenomenon, the head of the tail, they do make money. But the vast majority of blogs end up being, it’s a little bit like wine-making. It’s a lifestyle as opposed to a real profitable business.

Last week, New York University professor Clay Shirky also had much to say about the issues of funding journalism, and the impact it might have on regional reporting. His comments are well worth reading for more on this topic. Shirky also has an interesting dissection of a local paper, looking at how few on a large payroll are actually involved in the reporting.

Schmidt: Institutional Brands Over Individual Journalists

Next the interview moved on to Schmidt’s statements about the internet being a “sewer” that brands such as major newspapers can help sort out. Is it just newspapers that have the important brands that people recognize as trusted sources, when it comes to journalism?

There are two different views. There are two different views even within Google. So one view goes like this: The institution becomes less important but the writer remains as important. So that’s sort of the new view.

I don’t happen to agree with this, but I want to make sure I report it accurately. And the rough argument goes like this: Newspapers existed because you needed an aggregation point of great talent. But you really go to a newspaper to read the writers. And because they have so many other outlets, they will become more like freelancers in this model. They will be paid by institutions and they’ll make enough money to get through the day and people will follow them. And some writers will become so famous that they’ll be like basketball stars – they’ll have large salaries and speaking [and] book deals and things like that, although the majority won’t get there.

I disagree with that view, because I believe that there is a value to the brand of the aggregator as well as this trust issue that I was discussing earlier that ultimately a freelance reporter, that ultimately it would be difficult for freelance reporters, as much as we favor them, to operate without at least some institutions of trust. And trust in two ways: trust to the reader, and trust to the sources.

I found his response fascinating, especially the discussion of a split within Google itself. All too often, there’s an assumption that Google has a monolithic view of everything. When it comes to newspapers, I think many newspaper business executives assume Google’s goal is to destroy their brands, to favor the blogs and aggregators, to be a newspaper-killing aggregator itself.

Instead, Schmidt’s not endorsing some massive revolution that will sweep mainstream publications away, with an air of good riddance. He seems to view the institutions that we now have as essential.

A Rise Of New Brands? Some…

Does this mean the institutional journalism brands we have now are locked in stone? Are there new brands that have arisen, new online ones?

Well, the most obvious one is Politico. So there is an example. I think it’s reasonable to say that there will be, in every category of information, there will be a couple of new brands that are Internet-only. An example in our world is TechCrunch….

All Things Digital is another one. So those are some of the brands that didn’t exist 10 years ago. And if you think about it, they’re defined by the personalities of their founders.

I asked if we should mourn some of the mainstream brands that will inevitably disappear.

Well I’ll tell you a story. I’ve been in this industry for 30 years, and during this time there has always been headline conferences that were very exclusive. And when I was a young executive I assumed that they would live forever. So the Agenda Conference was an example. For me, that was the most important professional event of the whole year. I would make sure that if I was invited I would go. I really enjoyed it. It was very, very important. When was the last Agenda conference? A long time ago.

So, do I mourn that? Yeah, I had a really good time. But society moves forward. New brands emerge. How old is the Starbucks brand? What would we do without Starbucks today? So the point about brands is that while it’s true that brands do end, new brands emerge. So it’s possible that the sum of the brands we were just talking about could ultimately… I’m not suggesting it can’t happen, I’m suggesting it’s very hard.

So, San Jose news. What is the brand that I will go to for news about San Jose? Well, I’ve got the San Jose Mercury News. Let’s assume for the purposes of argument that that’s in decline, which I think is without question. What’s the new brand that I’ll go to? I actually don’t know.

Google & The AP

Next I asked about Google’s current negotiations with the Associated Press. The AP ratcheted up suggestions earlier this year that it wasn’t getting a fair deal from Google from its current agreement, which was cut in 2006. The AP has also suggested that Google should be rewarding “recognizable news brands” more in its regular web search results. What’s the beef? Did the AP not get a good enough deal in the first place?

I would rather not discuss a business negotiation. But you’re smart enough to understand that this is a business negotiation. I am sure we will come to a good deal for all parties. How’s that? I was rather humored by the public criticisms because – there was all this criticism – we have a deal with the Associated Press that’s in place today. So, and surely they’re aware of this.

Indeed, I expect a deal will be struck. But my worry is that “must-carry” publications like the AP will get attended to at the expense of online publications that, as even Schmidt says, struggle to build their own revenues. And given how we’ve had suggestions that the health of democracy is at stake, if mainstream publications can’t get deals with Google, shouldn’t the AP terms be public. So that everyone knows what’s being given?

The fact of the matter is, the problems that are occurring in the industry are intrinsic. They need to be addressed. We’re doing what we can think of and we’ve been upfront about working on those. This is ultimately about money and the difficulty people are having of bringing in revenue. Again, I understand that.

So, in the private discussions with the AP, if the AP wants to do everything public then I’m sure we would consider that. But usually business negotiations are done in private for precisely the reason that people think it’s competitive.

OK, AP, so how about it? I sent the AP what Schmidt said and asked if it would be willing to publish the terms of any deal with Google. No luck. I was told:

As a longstanding corporate policy, The Associated Press has refrained from discussing the terms of its business dealings.

I was also given a quote from Sue Cross, the AP’s Senior Vice President, Global New Media & US/Americas Media Markets:

Commercial agreements are crucial to helping the AP offset the costs of its global newsgathering operation and keep member assessments lower. They allow AP to continue providing vital breaking news, including coverage of this week’s deadly earthquakes and tsunami, and to continue reporting from critical war zones, such as Iraq and Afghanistan.

Back to my interview with Schmidt, I asked him how Google may deal with a situation where if the AP gets a new deal, others may feel left out. He said:

Well, the Associated Press is different from other publications, remember, because the Associated Press is really, they really are an aggregator at some basic level. Again, I don’t want to parse the specifics. But the fact that there’s a deal with AP does not mean that you have the same deal with the New York Times. And in fact we do not.

Finally, I was curious if Schmidt actually read a newspaper regularly. Yes, he does. Two, in fact. But the exact two are the only part of the interview he asked remain off the record. And I have a pretty good track record of dealing with that type of material :)

Also from the interview, on other subjects:

• Google’s Schmidt To Book Settlement Critics: What’s Your Solution?
• Google’s Schmidt: Independent Yahoo Still Important To Competition
• Eric Schmidt’s Favorite Google Product? Chrome!