Google addresses newspaper woes

By Maggie Shiels
Technology reporter, BBC News, Silicon Valley

Some say it is time to 'reboot' the system and redistribute the wealth

The majority of newspapers should be online, says Google boss Eric Schmidt, amid criticism it should share some of the millions it makes from newslinks.

Media owner Rupert Murdoch has questioned if aggregators like Google should pay to use content.

The Associated Press is to sue to protect its content at a time when the industry is losing readers to the web.

"I would encourage everybody to think in terms of what your reader wants," Mr Schmidt told newspaper bosses.

"These are ultimately consumer businesses and if you [annoy] enough of them, you will not have any more," he warned the Newspaper Association of America's (NAA) annual conference in San Diego.

While he praised the way newspapers initially embraced the internet, Mr Schmidt said they had since dropped the ball allowing the likes of Google to take over content distribution.

"There wasn't an act after that. You guys did a superb job, and the act after that is a harder question."

"Fair use"

In a question and answer session at the end of his keynote address, suggestions that Google and the internet were eroding the intellectual property rights of newspapers was downplayed by Mr Schmidt.

More and more readers are getting their news online

"From our perspective, there is always a tension around fair use - and fair use is a balance of interest in favour of the consumer."

Industry analyst Ken Doctor of Outsell told the BBC this was the wrong way to look at the argument over how Google profits from newspaper content.

"The real question is, 'Is it fair for news companies to produce all this content for Google and for Google to keep the lion's share of revenue?'

"What we should be focusing on is 'fair share'." said Mr Doctor.

In a blog post, the search engine giant claimed it did provide a financial kickback for newspapers through online advertising.

"We drive traffic and provide advertising in support of all business models - whether news sources choose to host the articles with us or on their own websites," wrote Alexander Macgillvray, Google's associate general counsel for products and intellectual property.

"Users like me are sent from different Google sites to newspaper websites at a rate of more than a billion clicks per month."

Techmeme, which is an aggregator of technology news, agreed that the value of what they did was in driving traffic back to the original publisher of a story.

"Web-native publishers have long come around to the view that short quotes with attribution are not only 'fair use' but highly beneficial," founder Gabe Rivera told BBC News.

"Parasites"

Throughout the last few days, Google has been in the firing line with some in the industry pondering their relationship to the company and other online news aggregators, which link to news articles while selling search terms or ads on pages that provide the links.

The industry faces financial turmoil and massive lay offs as advertising falls

"Google is a wonderful company and has done wonderful things as an aggregator and search, and built a model on the fly that means whoever gets the last click gets all the benefit. It's time to reboot the system," said Mr Doctor.

Mr Murdoch, the chief executive of News Corp, was among the first to hit out at Google, one of the biggest aggregators through its Google News service.

"Should we be allowing Google to steal our copyrights? If you have a brand like the New York Times or the Wall Street Journal, you don't have to."

Robert Thomson, the managing editor of the Wall Street Journal which is owned by News Corp, went further in his attack.

"There is a collective consciousness among content creators that they are bearing the costs and that others are reaping some of the revenues.

"There is no doubt that certain websites are best described as parasites or tech tapeworms in the intestines of the internet," said Mr Thomson.

Wait and see

At the NAA conference, the Associated Press waded into the debate and said it would protect online versions of its content from so called "misappropriation" by a variety of online news outlets.

"We can no longer stand by and watch others walk off with our work," said AP chairman Dean Singleton.

At the NAA, Mr Schmidt addressed the AP move with some bewilderment.

"At Google we have a multi-million dollar deal with AP so I was a little confused by all of the excitement in the news in the last 24 hours.

" I'm not sure what they are referring to. We have a very, very successful deal with AP and hope that will continue for many, many years."

The row is being closely watched by analysts and other news aggregators like Techmeme which is adopting a wait-and-see approach.

"I don't see publishers and aggregators suddenly signing up for licensing deals a result of these statements. I think most of us are just waiting to see what they do next," said Mr Rivera.