Google’s Schmidt responds to Murdoch – and well

Google’s Eric Schmidt has written an op editorial in the Murdoch owned Wall Street Journal.

The best paragraph is where Eric gently explains to Murdoch, in his own newspaper, exactly how Google is helping and not hindering the news industry. Microsoft, for all its offers to pay for exclusive rights to New Limited’s content, knows full well that News Limited would be mugs to walk away from this much traffic:

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 starts the piece of with a vision of the future – one which I feel that most players can agree with, so there will be squabbling over the details.

It’s the year 2015. The compact device in my hand delivers me the world, one news story at a time. I flip through my favorite papers and magazines, the images as crisp as in print, without a maddening wait for each page to load.

Even better, the device knows who I am, what I like, and what I have already read. So while I get all the news and comment, I also see stories tailored for my interests. I zip through a health story in The Wall Street Journal and a piece about Iraq from Egypt’s Al Gomhuria, translated automatically from Arabic to English. I tap my finger on the screen, telling the computer brains underneath it got this suggestion right.

Some of these stories are part of a monthly subscription package. Some, where the free preview sucks me in, cost a few pennies billed to my account. Others are available at no charge, paid for by advertising. But these ads are not static pitches for products I’d never use. Like the news I am reading, the ads are tailored just for me. Advertisers are willing to shell out a lot of money for this targeting.

Those details will be things like who gets what percentage of the content payments – from the device supplier, the delivery channel and the content provider. Current examples are 70% to vendors and 30% to Apple for iPhone apps, 70% to Amazon and 30% to content providers for Kindle books and so on.
Amazon and Apple provide mechanisms for extracting relatively small payments from their customers, but we still need a system to cheaply process payments in the cents and parts of cents.
Meanwhile this needs to work world-wide, across multiple jurisdictions, devices and languages. It’s a fun ride, and one that Apple, Amazon, B&N and many others are playing to win.

Published by Lance Wiggs


2 replies on “Google’s Schmidt responds to Murdoch – and well”

  1. 4 billion clicks divided by the number of news publishers globably, isn’t really that much.

    One problem that Rupert and the news industry has with Google traffic is that they have low monetisation or economic value because they’re often not part of the site’s target market.

    This whole “Google is great because without it you’d have no traffic…” is a myth. Google is probably the strongest search referrer among other search engines… but it is far from being the main source of traffic and more importantly, depending on the site, should not always be relied on to be the primary traffic source.

    There’s a perception out there that Search forms >50% of a news website’s traffic…. it does not. In fact, you’d be in real trouble if it does.

    The biggest chunk of a site’s traffic activity and interactions are generated by the smallest chunk of their audience; their core.

    TBH, you could probably apply the “80% of my revenue comes from 20% of my customers” adage to site traffic/user interactions


  2. Don’t forget also that Google has been in the race with their competitors to ensure that they get a piece of the paid-content pie. Their recent submission to the Newspapers Assoc of America outlines their vision of using Google News as the mechanism for audience building and by proxy, the primary source of content… in addition to making Google Checkout the primary payment/transaction service for the American news industry.

    Perhaps the most telling line from their submission: “Google believes that an open web benefits all users and publishers. However, “open” need not mean free. We believe that content on the Internet can thrive supported by multiple business models — including content available only via subscription.”

    Let’s not forget that Google, like everyone, are in the business of making money as well. And as with all businesses it’s better to have friends than enemies and sometimes, enemies can be made friends if their common interests are important enough to put their differences aside…

    In a political and economic climate like this, Google still needs Murdoch’s support and influence, or at the very least they cannot afford for Murdoch to isolate them.


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