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Schmidt sees online profits in newspapers' future

Google's CEO tells a group of newspaper editors that newspapers can make money online by formulating a new business model.

His company publicly derided as a leech of the newspaper business, Google CEO Eric Schmidt told a group of newspaper editors he believes newspapers can make money online.

In a keynote speech to open the annual conference of the American Society of News Editors on Sunday, Schmidt lauded newspapers as "fundamental" to democracy and predicted the newspaper business would formulate a new business model based on advertising and subscription revenue, according to an Associated Press report.

"We have a business model problem; we don't have a news problem," Schmidt said, adding that "We're all in this together."

He also suggested that newspapers tap social networks and personalized content to engage readers, the AP reported.

"Technology allows you to talk directly to your users," he reportedly said.

As readers have increasingly gone online for their news, papers have suffered declining subscriber numbers and lower advertising revenue, resulting in a dramatic industry contraction. Newspaper publishers and the Associated Press have blamed Google and other news-aggregation sites for their woes, leading to threats that they will delist their content and begin charging online readers.

In January, the New York Times announced that it would institute a metered pay plan next year in which readers would have access to a limited number of free articles before being invited to subscribe. Another New York newspaper, Newsday, announced plans in February 2009 to begin charging online readers for access to its content.

In a more innovative direction, word surfaced last May that The Wall Street Journal was planning to begin charging nonsubscribers micropayments for access to individual articles. The system would reportedly charge small fees to occasional users who may not be willing to pay more than $100 a year for a subscription to