Eric Schmidt Confronts Murdoch On Murdoch’s Turf

Eric Schmidt, the head cheese of Google, has written a lengthy article appearing in the Murdoch owned Wall Street Journal. In the piece Schmidt not only clarifies the distortions Murdoch has been laying out these past few weeks, but also what Google is doing to help the news industry.

First off here is Schmidt talking about Murdoch’s claims:

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.

The claim that we’re making big profits on the back of newspapers also misrepresents the reality. In search, we make our money primarily from advertisements for products. Someone types in digital camera and gets ads for digital cameras. A typical news search—for Afghanistan, say—may generate few if any ads. The revenue generated from the ads shown alongside news search queries is a tiny fraction of our search revenue.

That is exactly what I have been saying all along. Google isn’t “stealing content”, they are simply indexing very small tidbits of it so people can easily find it, and they do find it at a rate of one billion per month. I don’t think that’s something any serious news publisher would want to turn away.

What is interesting is how Google is actually working to try and reshape technology to help out the news industry:

We recognize, however, that a crisis for news-gathering is not just a crisis for the newspaper industry. The flow of accurate information, diverse views and proper analysis is critical for a functioning democracy. We also acknowledge that it has been difficult for newspapers to make money from their online content. But just as there is no single cause of the industry’s current problems, there is no single solution. We want to work with publishers to help them build bigger audiences, better engage readers, and make more money.

Meeting that challenge will mean using technology to develop new ways to reach readers and keep them engaged for longer, as well as new ways to raise revenue combining free and paid access. I believe it also requires a change of tone in the debate, a recognition that we all have to work together to fulfill the promise of journalism in the digital age.

Google is serious about playing its part. We are already testing, with more than three dozen major partners from the news industry, a service called Google Fast Flip. The theory—which seems to work in practice—is that if we make it easier to read articles, people will read more of them. Our news partners will receive the majority of the revenue generated by the display ads shown beside stories.

News must thrive and must be available – that is a cornerstone of our democracy and Schmidt is acknowledging it. Instead of taking to the airwaves, like the grumpy old neighbor who shakes his fist in rage when you step off the sidewalk onto his lawn, Schmidt is having his company work to help the media industry better conform to a 21st century existence. I particularly like how Schmidt is calling out Murdoch for a “change of tone in the debate”.

If Murdoch is serious about coming up with a solution to thrive in the world of online media, then shouldn’t the first person he turns to be the guy who leads the number one name in the internet world? Schmidt can become a very strong ally for Murdoch and the rest of the media organizations out there and I really hope they work with him to come up with a solution that works for everyone.