Google CEO Eric Schmidt had a lot to say at his latest interview in San Francisco. He says Google is striving to live up to "don't be evil", but is facing some challenges that leave it misunderstood.  (Source: Stephen Shankland/CNET
Hearing the call of duty to fix the online ad business, Schmidt comments on publisher fears and a broad array of issues

We're not your enemy, we're your friend -- that's the message Google's Chief Executive Eric Schmidt said media companies should take home about Google.  In an in-depth interview with Ken Auletta, The New Yorker's media reporter, Schmidt portrayed that by "fixing" the advertising system and bringing offline advertising online, Google is bringing advertising into the twenty first century and is doing what it takes to save advertising.

Schmidt reaffirmed his claim that Google wasn't out to just make money, but was trying to promote a greater good.  He states that concerning publisher's problems with advertising, "It's a huge moral imperative to help here."

Google will certainly make a lot of money, though in the process if it succeeds.  After growing large business selling text ads, it now is upping its graphical advertisements, thanks to its acquisition of DoubleClick, among the internet's largest and most experienced advertisers.  Schmidt said this unified approach is the key to success, stating, "By combining DoubleClick with that (search-ad) architecture, we can provide a single platform for publishers that over time will begin to generate significant revenue for publishers."

However, Google is fast finding that graphical ads, which command a price premium are much more vulnerable to the economy.  While Q1 2008 did see significant 8.5 percent annual growth, up to about $2.9 billion total annual revenue, this was significantly slower than the early growth rate of 16.7 percent.

Schmidt commented on Viacom's suit against Google for its property YouTube which Viacom contends intentionally allows or condones infringement of copyrighted materials.  He labels the claims as baseless and says that media companies like Viacom are just insecure about Google's role as a leader in the online advertising and media revolution.  He states, “There is a sea change from one model to another. Many of the criticisms I see seem to be merely about the change, and Google happens to be the messenger.  Those changes are going to occur independently."

With YouTube, Google fills the shoes of both being a publisher, like Viacom, and an advertiser.  Thus it's in its best interest, it argues to make graphical advertising work as well as possible.

Curiously Schmidt remarked that he found the fact that internet users were getting more and more while paying less and less to be disturbing.  He states, "That's bad for Google. We are critically dependent on high-quality content."

Schmidt insists that despite this profit first mentality, Google is really only using its profits as a vehicle to achieve great and noble things.  He dropped a number of statements such as, "The goal of the company isn't to monetize everything. The goal is to change the world."

When challenged to provide more detail of what such a lofty and ambiguous goal meant, he quipped, "For the better."

Schmidt says of his company "we don't have an evil meter we can apply," but he says they do apply the line of thought in making their most important decisions.  He says that cofounders Larry Page and Sergey Brin were responsible for the attitude and at first he was incredulous and thought it was a joke.  He states, "I thought when I joined the company this was crap--companies don't have these things. I thought it was a joke. It must be a Larry and Sergey thing.  o I was sitting in a room six months in, and an engineer said, 'That's evil.' It's like a bomb goes off in the room. Everybody has a moral and ethical discussion that, by the way, stopped the product."

Schmidt says Google doesn't have listen to what Wall Street says, rather, "We respond to end-user satisfaction.  We have enough leverage that we have the luxury of time.  Most businesses can't invest for scale. They have to make money now. That short-term focus does make people sometimes make the wrong trade-off."

While money is not usually the main objective, it is sometimes he admits.  He confirmed reports that Google held an important meeting with the YouTube staff demanding they move the business into profitable, cashing in on its success.  His details on the plan were vague, but he stated, "We have a revenue plan, a usage plan, a scale plan, a bandwidth plan."

YouTube accounts for most of Google's outbound traffic, so it must start making money.

While Schmidt's comments, particularly the amount of service one, may strike some users as a bit odd, it’s hard to deny Google's success and power.  With the internet ruled by Google for now, we can all only hope that it lives up to its motto -- "Don't be evil" -- as Schmidt says it will.

"Spreading the rumors, it's very easy because the people who write about Apple want that story, and you can claim its credible because you spoke to someone at Apple." -- Investment guru Jim Cramer

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