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Google CEO: Android could make $10b with newspaper service

updated 03:45 pm EDT, Wed July 28, 2010

Schmidt says Android could have subscription news

Google chief Eric Schmidt floated the possibility today of a subscription news service for Android. When asked whether Android could be a significant money generator, the executive was confident the OS could make $10 billion a year by adding paid access to online newspapers. As 160,000 phones are sold each day, it would only take a small subscription to immediately generate a a large amount of revenue.

It's unknown how much the WSJ talk reflected serious plans, but the search leader has increasingly conflicted with traditionalist publishers like News Corp. head Rupert Murdoch. He and others have accused Google of 'stealing' news simply by indexing partial stories from subscription websites that reduce the incentive to pay. Murdoch has repeatedly warned he may hide articles from Google search results or has asked Google to obscure the results. Newspapers like the WSJ and now the Times rely chiefly on paywalls to generate income by charging for access.

Any such move would be a further tightening of competition between Google and Apple. Apple launched its own reading effort with iBooks in April but doesn't have an automatic periodical service like that mentioned by Schmidt. Android already has e-reader apps like Amazon's Kindle app and Barnes & Noble's Nook for Android, but these again aren't designed for newspapers.

Unlike Apple's deep link between its OS and its hardware sales, Google makes no money on most Android licenses as the platform is normally free to license and use.



By Electronista Staff
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Comments

  1. iphonerulez

    Fresh-Faced Recruit

    Joined: Nov 2008

    0

    That sounds like pretty easy money to be made,

    however, Apple is in an even better position since it's been said that the typical iPhone user is supposedly a big spender and won't mind paying for subscription services. We could be seeing subscription services when the Apple Data Center is ready. $10 billion would be a nice boost in revenue just for newspapers. Magazines subscriptions will be added on top of that. Sweet. Just perfect for the iPad.

  1. cal6n

    Junior Member

    Joined: Nov 2003

    +1

    Really?

    Android?

    Mobile OS of choice of the freetards?

    Raise revenue from its user-base?

    You have got to be kidding...

  1. mhartt

    Fresh-Faced Recruit

    Joined: Jul 2010

    +3

    Proprietary news services?

    What's interesting is that Schmidt's talking in terms of a news subscription service for ANDROID, and not a news subscription service for WEB. If Google is planning to build a news service to promote solely its own operating system, then their business strategy has indeed changed radically. Instead of continuing to build open services, and profiting from the advertising across platforms, they'd be building a closed service designed to drive consumers to their OS. That would be a fundamental shift in their business behavior so far and effectively make them no different than Microsoft or Apple.

    Of course, there's no reason why they couldn't build the news system as an open service, but if OS domination is their objective, then Android exclusivity would be the way to go. Perhaps next we'll find that Gmail will become exclusive to Android as well.

    By historically offering so many open services, its been relatively easy for Google to command market share, but it'll be a different story if they make their news services proprietary. This would create a real opening for alternative services, and that could fracture Google's dominance more than they imagine.

  1. Ppietra

    Fresh-Faced Recruit

    Joined: Jan 2005

    +3

    10 billion!??

    Even if you paid on average 200$ a year in subscriptions, you would need 50 million people to come up with that number. Does anyone really think that something like that will happen in the near future... I mean, no one is going to pay that money to see news in a small screen, and the Android platform will only get that many people by the end of the year or next year (in the whole world).
    And to give a better perspective of what can happen, consider that for 2009 the US Newspaper industry had revenues of about 30 billion$, with about 80% coming from advertising - only 6 billion didnt come from advertising.
    So how can one limited platform come up with better revenues than what is already established!? Pipe dream!?

  1. wrenchy

    Forum Regular

    Joined: Nov 2009

    -4

    re: That sounds like pretty easy money to be made


    >>since it's been said that the typical iPhone user is supposedly a big spender and won't mind paying for subscription services.

    Oh please keep smoking whatever it is you're smoking.

    Now that the iPhone has gone mainstream, you are now dealing with the general public not a bunch of elitist fanboys. The general public is demanding, unforgiving and most of all, CHEAP. If anyone here has worked in retail or any public service sector, you'll agree.

  1. mac

    Fresh-Faced Recruit

    Joined: Oct 1999

    +1

    Re: $10B

    He's got to be figuring advertising dollars into that ... my guess is they're going to try to insert themselves as the middleman to serve up the adverts. They will make it appealing to the publishers by initially giving them a cut of the ad revenue. Since google owns search and has the backend to serve up geo aware adverts, the publishers (with static ads) will have little chance to compete with personalized and geo aware adverts. This is likely google's vision of the future - they want to be the only player in advertising eventually. There's something scary to me about relying on the advertising model to fund everything. Not looking forward to a world dominated by google ...

  1. bauhaus

    Fresh-Faced Recruit

    Joined: Sep 2003

    +1

    Murdoch

    Murdoch can suck it. He knows that it is really, really easy to opt out of Google searches but he also knows that a paywall-only approach will kill any internet ambitions of his properties. That's why he's all bark and no bite with Google. He could drive the WSJ to irrelevancy if he so chooses, but he won't. (pull it out of the biggest search engine on the net and see how many people get there news from other sources.)

    Also, the Times (NYT) does not rely on paywalls. It's free registration for web access. Also, not a Murdoch company (though he's tried before.)

    Paywalls have already proven not to work (you can see the fiscal reporting from Murdoch's papers to prove that -- an 80% drop off when payrolls were put in place and on some sites, less than a 1000 subscribers.) Not to mention the ridiculously higher rate for iOS access than web access (and both higher than dead-tree access); and no synergy for subscriptions.

  1. peter02l

    Fresh-Faced Recruit

    Joined: Mar 2009

    +1

    comment title

    It's actually $171 for Google's portion of subscription revenue per user if every single one of those 160,000 customers paid up for news subscription. Now, again, this is supposedly what the OS will generate generate for Google. Someone still has to pay the sources who generate the news, the news organizations, journalists and such.

    Schmidt sounds even nuttier than Ballmer.

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