Google Almost Bought a Paper

That's what CEO Eric Schmidt told the Financial Times yesterday. In an extensive Q&A with the newspaper, Schmidt reveals that Google (GOOG) seriously considered either buying a newspaper as a for-profit enterprise or hiring a pack of smart lawyers to reconfigure the paper as a nonprofit venture. He doesn't name which paper, of course, but the Financial Times reporters pointedly remind their readers that the hedge fund Harbinger Capital Partners offered Google its twenty percent stake in the New York Times. Ultimately, however, the company decided that going so far as owning an outlet that actually produced copy, rather than simply aggregating and organizing it, would be "crossing the line" between a content company and a technology company. Wall Street Journal writer Jessica Vascellaro argues that this position is growing increasingly flimsy. After all, she writes, both YouTube and Google's Book Search project are awfully close to resembling content production.

The real reason may be twofold. First, as Schmidt readily concedes, the targeted papers are either far too expensive or burdened with too much debt and liabilities. Second, the advertising model for general news reporting is obsolete, and Google's execs have decided instead to work with papers such as the Washington Post (the parent company of which also owns TBM) to come up with a new model that can subsidize serious general news gathering. The days when general display ads would float on the page, contextually disconnected from the substance of the stories, are over. But who wants their ads tied to stories of Gitmo torture? Unless the business model radically changers, there will be no revenue stream that props up the most serious and important news stories.

So what does Schmidt have in mind for the Washington Post? "It seems to me that the newspaper that I read online should remember what I read. It should allow me to go deeper into the stories. It's that kind of a discussion that we're having." In other words, the paper will store and archive a catalogue of the stories you read, steer more stories along those lines to your eyeballs, and keep you coming back for more by knowing what you're most interested in. Google already remembers what you search for, in order to more accurately match ads to your search screen. Now, it seems, Schmidt would like to apply this technique to news gathering.

In other news, Schmidt flatly refused to share more revenue with newspapers whose headlines Google aggregates. He argues that the traffic Google steers toward media outlets more than makes up for the ad revenue it gets from collecting headlines. And he's probably right. If you want to read the entire Q&A, click here.