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Soul-searching for papers, Web 2.0, open source

The Web is disrupting old ways of doing business, which requires entrepreneurs to be willing to experiment with new models.

Even as open source seeks new models for funding its explosive adoption, open-source business executives can take heart: the newspaper and, indeed, the Web 2.0 world, are undergoing the same soul-searching.

It is therefore instructive to hear what Google CEO Eric Schmidt has to say on the matter, since Google is one of the few Web companies that has learned how to make serious coin on the free Web. TechFlash has excerpted his comments Tuesday to the Newspaper Association of America, some of which are highly pertinent to anyone trying to make money in freely distributed goods:

I think you're going to end up with all three [advertising, micropayments and online subscriptions]. An analogy I would offer is television. There's free television, over-the-air television, there's cable television and there's pay television. And they have smaller markets as you go from free to more highly paid. And that structure looks to us like roughly the structure of all of these businesses....

[Y]ou should assume that your information -- that there's a category of information you all produce that you'll want to distribute free -- freely -- there's a category that you'll want to have a per-click basis, and then there's some that you'll want subscription for.

The reality is that in this new model, the vast majority of people will only deal with the free model. So you'll be forced, whether we like it or not, to have a significant advertising component, as well as a micropayment and an additional payment system.

Hmm....This sounds eerily similar to the business-model somersaults that the open-source world is also going through, and which the Web 2.0 world must soon explore in earnest.

Free adoption is the hallmark of the Web, whether expressed in an open-source download or an online service. But real businesses need to find ways to charge for value beyond that initial taste of "free," or they will discover that there is no such thing as a free bankruptcy. (Lawyers tend to charge for that sort of thing.)

Schmidt's counsel is wise: find different ways to charge different types of users. Marten Mickos, former CEO of MySQL, suggested that a good open-source model segments users into those willing to trade money to save time, and those willing to trade time to save money. One pays in cash, the other in code. It's a nice approximation of the principle Schmidt outlines.

We're still in the early days of the Web. It's nice to see that even the big vendors like Google are still experimenting with the right business models to monetize the Web's tremendous growth.

Follow me on Twitter @mjasay.