publishers to the rising costs of buying paper, printing the news, and delivering newspapers to readers. Broadcasters and wire services like the Associated Press face similar problems.
“Why has this been so hard?” Schmidt asked. “Why is everyone so worried? Well, it has been a very difficult transition. The fundamental issue is that Internet distribution doesn’t work on scarcity. It works on a very broad distribution.”
Schmidt did not directly address the concerns raised by the AP in his talk. Some of his most revealing comments, however, came in response to questions from the audience.
When asked what impact the AP’s more aggressive approach to enforcing its intellectual property rights will have on Google, Schmidt said, “I’m a little confused by what’s been said over the past 24 hours and what it means.” He noted that Google has a “very successful” multi-million-dollar deal with the AP, “not only to distribute their content, but to host it on our servers.”
With regard to complaints from news organizations about the online world’s overly liberal interpretation of “fair use,” Schmidt said there always is tension around fair use. “I would encourage everybody, think in terms of what your reader wants. These are ultimately consumer businesses and if you piss off enough of them, you will not have any more.”
In response to another question, Schmidt suggested a future business model based on differing market segments, and which relies on differing payment methods, could support the business of gathering and reporting news. Schmidt used television as an example in that some TV broadcasts are free and other programs are supported by cable service fees, while pay-per-view represents a premium category.
In the online world, Schmidt suggested news organizations could take advantage of emerging technologies that impose micropayments of two to three cents for accessing some articles. “That structure looks to us like the structure for all of these systems,” Schmidt said. “From your perspective, there’s a category (of news) you’ll want to distribute for free, some with micropayments, and some through subscriptions.”
