Eric Schmidt: Google Wants to Help Newspapers

Fortune Magazine's Adam Lashinsky has an interesting interview with Google CEO Eric Schmidt in which they discuss the future of the newspaper industry. The bottom line? Google would love to help, Schmidt wants newspapers to succeed, they just don't know how to do it. It happens that Dan Froomkin has some good ideas.

I agree entirely with Schmidt on this:

They don't have a problem of demand for their product, the news. People love the news. They love reading, discussing it, adding to it, annotating it. The Internet has made the news more accessible. There's a problem with advertising, classifieds and the cost itself of a newspaper: physical printing, delivery and so on. And so the business model gets squeezed.

Yes, that's exactly the point. People WANT information. They demand it. It's a strange industry in which demand is high, supply is strong, but it still can't figure out how to sustain itself.

For years the industry has been giving us the news for free while feeding us ads. Even when we subscribed to physical newspapers we never paid full value for the news. Those pages upon pages of classified ads, as well as the display ads paid for by the likes of Macy's, Filene's and Jordan Marsh managed to keep our news fully subsidized.

Those days are gone. The business model just doesn't work. We need something else.

YouTube, Viacom and the Billion Dollar Hammer

Viacom is taking out the hammer and going after YouTube for $1 billion. I know the blogging folks are going to jump all over this saying this like "doesn't Viacom like the free exposure?"

The dirty little secret of YouTube is that much of its content isn't so much "user-generated" as it's "user-posted." Yes, there is a ton of user-generated content out there, but it's also where we all go to see the Saturday Night Live skit we missed when we fell asleep too early (because some of us have 3 kids and can't be up until 1am on a Saturday anymore... though I don't know anyone like that, nope... not me).

Also, consider that as Google looks to start actually making money on its investment it is, of course, looking to advertising. So if YouTube starts putting ads on its contributed site content, and some of that content belongs to other companies, like Viacom or GE, isn't it a case of YouTube getting something for nothing?

I also wonder how much of YouTube's success actually comes from the failure of video search. Every once in a while a company comes along that claims it's going to revolutionize video search. But that just never happens, searching video isn't easy. So people go where the video is and the video is at YouTube, complete with tags and handy comments from others telling you what's cool and what isn't. It's a big TV Guide for the Internet.

Maybe if YouTube did what it's parent does, by directing people to Web sites where the content owners can still own that content and sell ads on it (or make money any way they see fit) then there wouldn't be so much yelling.

But then YouTube wouldn't be YouTube.

Oh, and as a side note, Google's market cap is at $139.8 billion, while Viacom is at $27.6 billion.