Google’s (GOOG) Advice Won’t Save The New York Times Company (NYT)

Google’s (GOOG) CEO Eric Schmidt told the Newspaper Association of America that all was not lost for its industry. Newspapers  have a chances to create new forms of revenue, if only that will take them.

At the heart of Schmidt’s proposal is the mimicking of the TV business. A large amount of television content is free and supported by advertising. Another set of content is part of basic cable, and there is some income in being a part of that distribution channel. Finally, pay TV creates a wall that the consumer cannot get over unless he is willing to shell out for super-premium content like movies.

To allow consumers to pay for the portion of content that is not free, Schmidt suggests that a micropayment system needs to be created so that subscribers can “pay as they go.”

Schmidt’s ideas are deeply flawed and, even if they were valuable, they come too late in the cycle of destruction that marks the end of the financial viability of newspapers.

The first hurdle to a paid subscriber system is creating it and testing it. Deciding what technology to use to cut subscribers into groups based on what they will pay for and what they will not and then billing them accordingly is a complex process. Determining which content is “valuable” enough to charge for is also time consuming.

Perhaps the most highest hurdle in the way of getting newspaper subscribers to pay for content is that most of it is available somewhere else. The New York Times (NYT) has good international news. But, a great deal of similar content is available at CNN.com and MSNBC.com. Those sites also have real-time video of breaking events. The sports section of  The Times may be good at covering local teams, but most of the national sports news is available at sites like CBS Sportsline and Yahoo! (YHOO) Sports.

Technology news is probably more complete at sites including CNET than at NYTimes.com. CNNMoney.com covers most business news well, and so do Reuters.com and Bloomberg.com.

That leaves The New York Times with its columnists. It used to charge subscribers for most of the opinion sections in the paper. It did not work well enough to be sustained, so that content was made free along with the rest of the paper.

The New York Times newspaper will almost certainly loss money this year. It can experiment with paid online subscriptions, but it does not have much to offer that smart consumers cannot find, in one form or another, elsewhere on the internet. Americans are used to free news now. Reversing that will be nearly impossible.

Douglas A. McIntyre