Schmidt: micro payments and subscriptions will happen

More newspapers were talking of charging yesterday as Google CEO Eric Schmidt told executives in San Diego that forms of payment for content would come, but advertising would still lead in terms of revenue.

“I think you’re going to end up with all three [advertising is the third],” Schmidt said speaking as the closer speaker at the Newspaper Association of America convention.

It’s probably the most critical year for the US newspaper industry, with 25,000 plus jobs lots in 2008 and 2009 it is grim out there as this map from programmer and journalist Erica Smith’s Paper Cuts blog shows. She has been tracking the decline of the newspaper industry in detail since last April.

As he said that he also told newspapers execs that (what we all know to be true) people will still get most of their online news for free as they do now. “It’s very difficult to hold information back”.

Schmidt was speaking as Associated Press declared war on the misuse of its content online and said it planned to begin protecting its news and content from misappropriation online. It is planning a series of initiatives including taking legal and legislative action against websites.

You can understand why AP have acted, but it feels a like it is a little too late. While many newspapers have great websites, overall they have been out paced by the growth of technology and news aggregators are a big part of that.

Speaking just before Schmidt spoke William Dean Singleton, chairman of Associated Press and chief executive of the MediaNews Group, said: “We don’t plan for anyone to use our content unless they pay for it. The licenses we do in the future will limit how and where our content is used.”

Furthermore Singleton said that the MediaNews Group, which owns titles such as The San Jose Mercury News and The Denver Post (rival to now defunct Rocky Mountain News), would come up with a way to charge for some of their content by midyear, a model that a growing number of publishers are considering.

“It’s a balancing act,” Singleton said. “We’d like to have a pay wall but we like the traffic we get from search engines.”

Back to Schmidt. His main mission in San Diego was to reassure newspapers owners and publishers and try to persuade them that Google is their “friend” and not the bad guy.

It is sometimes difficult to believe this if you own and publish content. Earlier this year Robert Thomson, the editor of the Wall Street Journal said Google “devalues everything it touches”. He said Google was great for Google, but terrible for content providers.

Google’s search engine does seem to favour some content over others. And there has been much discussion recently the use of excerpts and content scraping where blogs take a lot of content, mostly from newspapers, and republish it.

Newspaper execs were pushing Schmidt on this and he said that, despite the appearances to the contrary, “for general search” Google has been careful not to be biased. Not sure if “general search” is some Google get out clause that no doubt has a large entry in the Google manual.

Schmidt for his part said he was “a little confused” by news reports that singled out Google as a target of AP.

While the “fair use” of excerpts of content is a hugely serious issue for the newspaper industry, Schmidt told the audience that he didn’t understand all the excitement AP’s announcement caused. “The ultimate resolution of all is this will be determined by how you interpret fair use” adding that he was “a little confused” by news reports that singled out Google as a target of AP – Google does have a deal with AP to licence its content.

On the issue of charging for content Schmidt said he expected the newspaper industry to eventually resemble television, where some content was free, some was purchased by subscription and some was paid for every time it was viewed. However, advertising would, Schmidt said, remain the leading revenue model.

Schmidt also told journalists that if newspapers introduced charges for content Google would not pay them – much in the same way it does not pay the Financial Times of the Wall Street Journal although there content is free accessible in the most online.

“In a scenario where a newspaper had a subscription product, what would Google do? It’s highly unlikely that we would buy a subscription and give the content away free. We might be able to help the distribution of that content, but the user would have to pay.”

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