By Julie Moos
his is an unofficial transcript of Google CEO Eric Schmidt's brief question and answer session following his speech at the Newspaper Association of America convention.
It has been edited for clarity (incomplete sentences have been removed
in places) and where audio was unclear, ellipses have been used.
Question:
You have mentioned the importance of advertising. But in your opening
remarks you also indicated a bit about micropayments and subscriptions.
Would you elaborate on each of those other two potentials?
Eric
Schmidt: I think you're gonna end up with all three. An analogy I would
offer is television. There's free television, over-the-air television,
there's cable television and there's pay television. And they have
smaller markets as you go from free to more highly paid. And that
structure looks to us like roughly the structure of all of these
businesses.
Today there are very effective subscription based
models, but there are not very good micropayment systems, micropayment
meaning one cent, three cent kinds of systems. They clearly need to be
developed by the industry. I think from your perspective you should
assume thatthere's a category
of information you all produce that you'll want to distribute freely.
There's a category you'll want to have a per click basis. And there's
some that you'll want subscription for. The reality in this model is
the vast majority of people will only want the free model, so you'll be
forced, whether we like it or not, to have a significant advertising
component as well as a micropayment and a traditional payment system.
The
technology around micropayments is getting to be possible now. The
transaction cost was so high before you couldn't do the one cent, three
cent model, and it looks like the new technologies around aggregation
are will allow that.
Question:
You've been quoted as saying a number of times that there should be a
"flight to quality," that there's an awful lot of garbage out on the
Internet --
Schmidt: Let me just say precisely: It's a sewer out there.
Question: Recognizing that the brands in this room for the most part are credible brands and --
Schmidt: I would say 100% are credible.
Question:
-- Is there a way to look at search and when you search on a particular
topic, that news organizations with credible brands, that somehow the
algorithm could be tweaked to reflect that, not only for the benefit of
the publishers, but for the users?
We actually do
that in the case of Google News. Google News uses a relatively fixed
set of sources which are selected based on exactly the kind of trust
that you're describing. So the answer to your question is yes on Google
News.
For general search, we've been careful not to bias it using
our own judgment of trust because we're never sure if we get it right.
So we use complicated ranking signals, as they're called, to determine
rank and relevance. And we change them periodically, which drives
everybody crazy, as or algorithms get better. There's no question in my
experience that the top brands represented in this room would, in fact,
float to the top in our search ranking. The usual problem is you've got
somebody who really is very trustworthy but they're not as well-known
and they compete against people who are better known, and they don't,
in their view, get high enough ranking. We have not come up with a way
to algorithmically handle that in a coherent way. But we're very
sensitive to not do that on search we don't want to do the kind of
thing you're describing unless we can do it across the board and for
all categories of trusted institutions, not just newspapers.
Question:
Speak frankly about how you feel newspapers have performed digitally,
and if you became CEO of an American newspaper company, what would be
the top two or three or four things that you would do in the digital
space?
Answer: I was very impressed by how quickly all the
newspapers that I talked with in the mid- to late-'90s embraced the
Web. And essentially all of them quickly understood first the
re-purposing of existing print stories on the Web and in the creation
of reporters' blogs.
The criticism, if I can offer one, is
there wasn't an act after that. In other words, that was great, you
guys did a superb job. The act after that is a much harder question.
It's how do you keep engagement? How do you avoid being just mediated
with a set of stories that are aggregated with your brand on them,
which is what's happened to some newspapers?
So in the case
you were describing, if I were involved in the digital part of a
newspaper, trying to understand to do, I would first and foremost try
to understand what my reader wants.
It's obvious to me that
the majority of the circulation of a newspaper should be online, rather
than printed. There should be five times, 10 times more circulation
because there's no distribution cost. It doesn't cost anything to read
it online from an end user perspective.
I would start with -- My
diagnosis is: how do we get to 10 times more readers online? What do
they want to see? What is their style?
My own bias, by the
way, is a technology one: I think the sites are slow. They literally
are not fast. They're actually slower than reading the paper, and
that's something that can be worked on on a technical basis. I should
also mention that at Google we're working hard to try to address the
technological question that you're asking but we don't have easy
answers here. This is something where better development tools, better
hosting tools, and so forth from the industry as a whole will make a
big difference.
Question: The
Associated Press resolved over the last few days to take a more
aggressive approach to enforcement of intellectual property rights.
Speaking from your perspective at Google, what impact, if any, do you
think that would have on the relationship between Google & the
Associated Press and the members it represents? Secondly, looking
ahead, on intellectual property generally, how effective do you think
that more aggressive approach might prove to be?
With respect
to the Associated Press, we at Google have a multimillion dollar deal
with the Associated Press not only to distribute their content but also
to host it on our servers. So I was a little confused by all of the
excitement in the news in the last 24 hours. I'm not quite sure what
they were referring to. But we have a very, very successful deal with
the AP and hopefully that will continue for many, many years. ...
The
ultimate resolution of all these will be determined by how you
interpret fair use. And in my position I've come to learn that lawyers
go to different schools and if you went to school A you learned it one
way and if you went to school B you learned it another way. And if
you're Google all your lawyers went to school B and if you're the other
side, all your lawyers went to school A. And I am not a lawyer. So I
will simply report what the school B lawyers say. And then if you're a
lawyer and you went to school A or B you can tell me so I can figure
out how to talk to you.
From our perspective, we looked at
this pretty thoroughly and there was always a tension around fair use,
but ultimately fair use is a balance of interest in favor of the
consumer. And I would encourage everybody when they think about -- in
all the rhetoric, all the concern about this or that -- think in terms
of what your reader wants. Try to figure out how to solve their
problem. These are ultimately consumer businesses and if you piss off
enough of them, you will not have any more, right? Or, if you make them
happy, you will grow them quickly. And so we try really hard to think
that way. ...
Question: Do you think intellectual property rights will continue to erode given the digital future as you see it?
There
are laws that cover these things. It's important that all of us respect
the law. And it is a balance of interest between the copy right holder
and we try very much to respect the copyright holder. There are all
sorts of examples when Google is the company in the middle of these
disputes that never really resolve. We came to what looks like a very
good settlement with respect to, for example, books.
I
disagree with your premise that they will continue to erode. What I do
believe is that all these partially-thought-through legal systems are
being challenged by the ubiquity of the Internet. Just as free speech
is being affected by the fact that people are free to speak whatever
they think even if we really don't want to hear them. It's the same
problem.
We've faced these issues for many, many years in our
society generations before us and we resolved them in ways that caused
the right things to occur. Businesses were built, entrepreneurs were
able to create new businesses and consumer needs were ultimately being
met.
I disagree with you that it's obvious that there's an
erosion of future intellectual property rights. There is a problem. If
by that you mean people stealing, there is a problem where countries
outside of America do not have the same kinds of laws, and it's really
an issue. If that's what you're referring to, then yes it is an issue.
Question:
Google has been at the forefront of conditioning our audiences that a
headline and extract is enough. So they've gotten to the point now
where we do a Google search, come up with a list of topics or from
Google News we look at the headline and extract and that becomes
"enough news" in the Twitter world. So that what happens is that Google
becomes the point in the middle between that audience, that consumer
supporting the creation of that professional content. So the real
question becomes how can the media industry in general partner with
Google to help support that professional content when the headline and
the extract is good enough.
Again, I want to be careful
not to criticize the consumer for doing things that are idiotic. You
can have your opinion, but my position here is, we love our consumers
even if I don't like what they're doing.
In Google News' case,
when we first built Google News, I remember being absolutely terrified
the first meeting of this category I was in, and then one of the
editors came up and said this is a great product. And I said, "Why?"
And he said, "Because it provides me a summary every day from which I
can then do quality work." And I thought, "OK, that's a good answer."
Everyone
here understands that everyone here has an opportunity to opt out of
all of this by using robots.txt and other -- these are one-line changes
that can take all the information out of Google. It's your content and
we respect that and so forth.
Given that it's a problem we all
share, that consumers want to do this thing, I would first off observe
that Google News is not very different from the news that I get on the
radio. When I listen to the radio I hear roughly the same headlines
that I get on Google News. So I'm not sure that it's a new form, it's a
transmitted form.
My general answer to this question has to
do with getting people to take the next step. If you see a headline
what I want you to do is I want you to think, "Oh that's interesting, I
want to know more," and then based on that I want you to click to the
newspaper Web site or to Wikipedia or to wherever. If we can build
products -- and we have teams at Google working on this -- to roughly
work like that where there's a one-liner that's interesting and you
click and go into layer after layer after layer of information -- and
by the way, not just text but also video and entertainment, and so
forth and so on -- that's personalized, we think we can build a
business -- again, with you guys -- with significant advertising
resources, where the advertising is targeted to the content. To me
that's the only solution we've come up with to this problem.
I
don't think we're fundamentally going to decrease the fascination the
world has with Britney Spears. I just think it's fundamentally going to
continue.
Question: Fourteen or
15 years into the Internet for us, there are no defined standards of
what an eyeball is. ... What is truth to you when it comes to internal
or external sources of audience counting that make the most sense to
develop into a standard over time?
We look at clicks
and we also look at how long people stay on a page. And we can then
infer interest. Your question is so good because it shows you how early
we are in the industry. We don't have combined, accurate, audited ways
of measuring audiences, counting advertisers, all of which has to be
developed as a technology behind the businesses that all of us are
going to build.
It took many, many years for the same
business structures to be designed for the audit circulation bureaus
for magazines. The same thing is going to occur and it will occur
because it needs to. For our purposes, we use our internal information
which is accurate, but as I agree, there is not a uniform standard.
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