Google CEO Eric Schmidt’s comments
July 31, 2008:
“When you go to conferences where you mix people with my background and the content folks, the end state is a kind of optimism which goes like this. More people are online than ever, the existing ‘older business’ will discover how to monetize in the new formats and we will all get through this.
The evidence does not support that view. I’m sorry to be such a downer, and I’m very worried about it, so I’d rather just confess. I’d love what I just said to be true; it’s so important for it to be true, but the evidence doesn’t suggest that. What the evidence suggests is that the monetization models that have historically driven the profitable and growth of these businesses are not being replaced dollar-for-dollar or pound-for-pound in the new form.
There are several reasons for this. One is that the advertising technology, the new technology has not caught up with the older models; the second is that the behavior is different. They spend less time on content. So if you view it on a per minute basis, they spend less time being monetized. The newspaper business is particularly bleak; we all know this from reading about the layoffs. It’s a tragedy for America because newspaper investigative reporting is so fundamental to how our democracy works. The classic example is ‘how many people covering the war on Iraq to find out what’s really going on after as a country we have spent a trillion dollars on it, it seems we’d spend more money covering it but the economics doesn’t justify that.
Newspapers are hit by three things. The loss of yellow pages and classified types ads; Google is one of the replacments so I guess we are part of the problem there.
The second is the cost of newsprint, the physical cost.
The third is the decline of non-targeted ads and we as a community need to find ways of creating economic models that will fund really creative content.”
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