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Schmidt Describes Future Media, Still Driven by Advertising


Google chief executive Eric Schmidt’s media service of the future looks like this: it delivers professional content from sources like newspapers, but the meat of it is user-generated stuff–such as Wikipedia-style reference information, real-time updates from services like Twitter and other content users are posting themselves online.

The content will stream out of superfast Internet pipes to desktop PCs and other digital devices. Users can tap the stream from their cellphones. The service won’t show you things you already have read and can predict what will interest you.

Schmidt said it could be called, for the sake of example, “Entertain Me.” And it will be primarily advertising-based.

While newspapers rattle their swords at Google and other Web sites they believe are stealing their content, Schmidt reiterated his advertising-is-king message at keynote address as the Newspaper Association of America’s annual conference Tuesday, in a talk that also touched upon technology role’s in the economic recovery, freedom of speech and cloud-computing.

There’s room for other media business models–like subscriptions and micro-payments–but not at the same scale, he argued. The reason: those models rely on scarcity, which the Internet continues to break down. “The Internet distribution model doesn’t work on scarcity, it works on ubiquity,” he said.

It’s the issue that underlies a lot of problems facing content owners and technology companies these days. Providers of software and content services are struggling with the “everything is free” mentality of the Web. Online ad dollars, for most of them, have not been able to compensate for the loss of more lucrative traditional business models.

So how can newspaper publishers and others with professionally generated content make money online? Schmidt advises that they continue to look to the business model that he believes is best suited to digital age, and which is the source of 97% of Google’s revenues–advertising.

Of course, most newspapers already have ad-supported Web sites, and are still struggling. But Schmidt said ads will get better and more interactive. Instead of simply showing text about an espresso maker, he said, they’ll display pictures and come with e-commerce tools.

“Advertising that is useful is going to work,” he said.





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