Thursday, June 12, 2008

Do no evil and channel Tom Jefferson

Sometime after declaring independence from the Brits, our 3rd president famously said

were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should not hesitate a moment to prefer the latter.
Of course, this was before Medicare, crop price supports and even compulsory public education. (The Church and the Mafia have been able to handle such unrelated diversification, but I doubt any newspaper could pull it off).

In an interview yesterday with writer Ken Auletta, Google CEO Eric Schmidt said it had “a huge moral imperative to help” newspapers.

On that same theme, in a speech Monday in Washington (audio), Schmidt promised to do something to save newspapers:
"We all care a lot about this. Newspaper demand has never been higher. The problem is revenues have never been lower. So people are reading the newspaper they're just not reading it in a way where the newspapers can make money on it. This is a shared problem. We have to solve it. There's no obviously good solution right now."
However, that help doesn’t include bailing out shareholders, as several months ago Schmidt was quoted as rejecting vertical integration:
So far, we've stayed away from buying content. One of the general rules we've had is "Don't own the content; partner with your content company." First, it's not our area of expertise. But the more strategic answer is that we'd be picking winners. We'd be disenfranchising a potential new entrant. Our principle is providing all the world's information.
Blogs aren’t going to replace paid journalists, and clearly the print (or written) media are hurting. (Only this week, #3 weekly magazine US News is dropping back to online and biweekly in print).

Google obviously has been able to generate online revenue, while newspapers have been facing a traumatic adjustment to online competition — failing dramatically at both charging for content and giving it away free.

Will it be enough? My hunch is that Google won’t pay enough for content to preserve the current newspaper staffing or business models.

Large monopoly big city papers enjoyed monopoly rents, which benefitted both publishers and journalists. Without pressures on profits, the big papers tended not to be very efficient, with a few elite reporters writing a dozen articles a year. (At the smaller papers, we would write a dozen articles in a week or certainly every 2 weeks). So further wrenching changes are necessary before the big papers can hope to have a sustainable business model in the 21st century.

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