The media blogosphere has been buzzing over a short interview with Google CEO Eric Schmidt in Fortune in which the executive laments the loss of newspaper journalism but doesn’t offer to lift a finger to help the industry financially. Schmidt’s remarks may appear disingenuous at first, but if you consider Google’s philosophy, they’re actually consistent with his previous statements and make sound business sense.
Among the digerati, Schmidt has been outspoken in his concerns about the damage that the industry’s troubles are inflicting on the public’s right to know. However, it makes no sense for Google to intervene to prop up a business model that doesn’t work any more. Google stands to lose plenty from the industry’s collapse. Newspaper content is one of the most valuable assets in Google’s index and users of the company’s news aggregation service are its most attractive demographic audience. Newspapers “don’t have a problem of demand for their product…People love the news,” he tells Fortune.
Google is in an awkward situation: it has the money to prop up the industry, but doing so would be bad business judgment. Schmidt notes that Google can do nothing about the structural problems that plague the industry. Investing in failing business models is simply throwing good money after bad. So, to some extent, people like Schmidt must stand by and watch helplessly as a business that they respect and admire comes apart at the seams.
Schmidt’s position is based on sound business judgment, the kind of judgment that has gotten Google where it is. He shouldn’t be blamed for doing what’s best for his shareholders and employees.
This entry was posted on Friday, January 9th, 2009 at 8:12 am and is filed under Advertising, Business News, BusinessModel, NewMedia, Solutions. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.