Google talks about newspapers

Google's CEO, Eric Schmidt, is speaking quite sensibly about newspapers. I suspect many in print media know he's right but don't want to admit it:

FT: Some people, in their concern about the sorry financial state of a lot of American newspapers, they’ve talked about the idea that some papers should become not for profit. Do you think that’s a good idea? Is that going to be the model for the future?

ES: There’s an old joke about newspapers – that some of them have been not-for-profits for many years. So I think the reality is that news gathering and the profitability model was always an uncomfortable relationship because it’s very difficult to make money from a story about a tragedy or murder or so forth - and yet it’s enormously valuable. So the structure of newspapers that evolved, where the majority of the revenue came from classifieds and these big, untargeted print ads, the content was fascinating but they were not connected to... it was ultimately destined to be challenged by technology and that’s indeed what happened.

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FT: In their quest for revenues newspapers have started talking about trying to persuade you, Google, and specifically Google News, to share a little bit more of the revenue, specifically from their stories that appear on Google News. Wouldn’t that be a good idea?

ES: We’ve decided that the value we provide to the partners is the traffic. So we want to provide incredible numbers of users going to their sites, their content, which is why we urge them to make it deeper, stronger and use better tools and so forth. From our perspective, that’s where the real source would be. In our model, and what we’re doing today, the vast majority of the revenue that comes directly from reading newspapers, in fact, goes to them through all these mechanisms. The real issue here is that when people are reading the news online, we’re not monetising it in aggregate, so if we were to transfer money we would be taking money from something unrelated to newspapers and just paying them, which doesn’t seem like a good sustainable model for anybody.