“Advertising revenue is dipping even as costs are increasing”

When media organisations are grappling with the issue of how to leverage online content and the rise of new media even as traditional sources of revenue grow haltingly, stagnate, or slip, Google’s Executive Chairman Eric Schmidt has suggested that a new model will emerge to sustain news organisations.

Responding to a question by The Hindu’s former editor-in-chief N. Ram on the future of journalism at the Big Tent Activate Summit hosted by Google, Mr. Schmidt said that newspapers were confronting the problem of advertising revenue dipping even as costs were increasing. In some markets like India, however, newspapers were continuing to do well.

He said there were two very good models in the U.S., which used online space. “Politico emerged as an online only with a newspaper attached for ad ... Huffington Post has got a lot of readers. A reasonable model is that new starts are probably going to be advertiser-supported, and will go for the widest audience and make small amounts of money through ads.”

Mr. Schmidt said it was a “reasonable prediction” that incumbent businesses with print subscribers would “transition them into online subscribers.”

Speaking of the average reader in five to 10 years from now, the Google chief said, “The readers will have an ultra-powerful tablet, and a subscription on the tablet. The knowledge in the tablet about them and things they care about would be incredibly more than the newspapers of today. And it would be possible on reading a story to go instantly deep about the origins, history and positioning of the debate.”

Newspapers, he suggested, would thrive in such a model with “subscriptions, sponsorships, and free model in some cases.” Mr. Schmidt added that the newspapers that have been “most effective” are the ones at the “middle level.”

At a subsequent panel discussion, Siddharth Varadarajan, the Editor of The Hindu, mentioned that Indian media had been in a “happy situation” where all forms of media had grown. “But that sweet spot is coming to an end with the advent of hand-held devices. The moment of realisation for me came when I held the I-pad for the first time, and thought this is pretty fatal for newspapers in the long run. The writing is on the wall.”

He, however, added that newspapers were getting “more adept” at using multimedia and the challenge was in “layering different narrative forms” to make it a richer reading experience.

“Democracies require citizens to be well-informed and a viable model will come up.” He highlighted the importance of investment in news gathering, and editorial vetting processes to maintain the credibility of organisations.

Eric Schmidt’s favourites

Alan Rusbridger, Guardian Editor, asked Google Executive Chairman Eric Schmidt to pick his tech-favourites at the Big Tent Activate Summit.

Kindle or BlackBerry?

I am a BlackBerry user. I like the keyboard, though BlackBerry is sorely in trouble.

Facebook or Twitter?

Twitter has a more distinct model because of the celebrity and publishing model. Facebook is in a transition, and I don’t know enough about what they are transitioning to. I will tell you, if you have a billion users, you will make money.

Amazon or Apple?

I was on the board of Apple and so have a soft spot for it. They are both going to do well. Apple will continue to be a tremendous technological innovator and build beautiful products, regardless of the market share of the product … Amazon has well passed any expectation of its ability to change its distribution or marketing. It is an important Google partner.

iPad Mini or iPad?

iPad. I have both ... Mini is too small.

India or China?

In the short-term, China gets all the attention. But maths favours India. And I am a mathematician.