Monday Note

CEO Eric Schmidt spoke in San Francisco, at an event hosted in San Francisco by Syracuse University’s Newhouse School of Public Communications. There, he addressed the collapse of advertising revenue in print media: “It’s a huge moral imperative to help here”. Schmidt didn’t provide any detail on how the search company could throw a lifeline to the newspaper industry, but he hinted that DoubleClick, the ad server firm Google acquired, could generate “significant” revenue online for newspapers. But he acknowledged that it wouldn’t be enough to restore the profit margins that newspaper publishers historically have enjoyed from print advertising. “What we don’t know and we have not yet solved, is how to come up with digital products that will monetize at the same rate as the print ones. Once we’ll have done that — and we are on it — most of the concerns will go away”.

Let’s read between the lines: Schmidt is very concerned Google appears to be the main cause of the upheaval in the advertising sector. Google cuts off most of the lucrative links in food chain and it has no rivals for targeted advertising. To deal with such negatives, Schmidt’s idea appears to be to apply Google’s knowledge and power to funnel ad money into newspapers. But like everyone else, Schmidt also worries about the huge ad revenue gap between a print media consumer and a digital one. (To make matters worse, the gap is widening as the inventory of web pages available for ads grows faster that the number of page viewes by the users.)

In this talk, Eric Schmidt addressed other issues: – the monetization of unprofitable Google properties such as Google Maps, YouTube – the delicate situation of being a member of Apple’s board of directors and developing the competing mobile platform Android — he hinted that the two firms where far from being absolute rivals in this field – the next two big things for Google: language translation, geopositionning and related applications – his biggest worry for Google: the scalability of its culture as the company expands. This 56 minutes video of this Q&A session is definitively worth the click.

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