October 27, 2005

Zeitgeist '05: The Google Partner Forum
"Proprietary Information in the Age of Search"
Eric Schmidt, Donald Graham
Moderator: James Fallows

Fallows (JF):

We close with two other aspirational figures to try to put what we've been doing into some kind of context. You heard my main summary this morning, a kind of thinking how the themes we've been discussing over the last 36 hours fit together. I'm sure that you're reaching your own conclusions, sort of day by day, or session by session, minute by minute, and you'll reflect on them, we hope, as you go away and think about what you've learned here.

One of the purposes of this panel is to try to hear from our two distinguished panelists, what they think the big message is of a lot of the themes we've been discussing here. But, in a final demonstration of fealty to the "Wisdom of Crowds" thesis – to the idea that has made Google strong and this industry strong – I'm going to do a relatively short job of asking them questions myself, allowing a relatively long amount of time for you all to ask the questions you want. So if there's something you want to hear resolved, you want to hear put in perspective, the burden is on you, when we turn over to the question period after about halfway into this session.

So to lead us in this placing of things into context, I'd like to welcome first somebody who, in this context a least, certainly needs no introduction. But I'll give it to him – Eric Schmidt, whom you all know is the CEO of Google. I can say that he is the resident grownup here: I'm allowed to say that both because I'm friend, I'm his friend, and I'm older than he is, so I can make that kind of joke about him. He is widely and well experienced in the technology world, from his experiences at Novell and at Sun. He's also more broadly experienced than that: A public-spirited man who's been involved in all sorts of public projects over the decades in addition to his very important corporate role. Please join me in a sincere welcome to Eric Schmidt.

Joining Eric on the panel is somebody about whom I'm not allowed to make jokes, because he's slightly older than I am, and he's physically much more intimidating than I am – and I first met him when he was a D.C. policeman, so I kind of have a standard, a long imprinted physical fear of him. So I'll be only respectful to Donald Graham, who is the publisher the Washington Post, and is one of the great central figures in American journalism now. He's worked in every single part of the Post company's enterprise, from being a sports reporter, selling ads, working the pressroom, everything else. He knows his enterprise, and so he has a lot to say about the role of news and of media in the face of the pressures we've been discussing now. So please join me in welcoming Don Graham. Don. (Don't hurt me.)

Schmidt:

I didn't know you were a policeman!

Graham:

I think I arrested one or two people in the audience.

Fallows:

And you should see him in uniform, he can really put the fear of God into you.

And speaking of the fear of God, I'm going to start by asking each of you what I pre-announced as a somewhat hostile or challenging question. I'm at a safe distance from you, Don, so I can ask this. A reasonable inference from everything we've heard discussed, since yesterday morning, is that basically your business is doomed. And what you've given your life to and the role that mainstream news plays in American life really can't stand up very long. Why is that inference wrong, and why should it be wrong?

Graham:

God! What a thoughtful question! Actually, it's even worse than that. But I do want to start by saying that this question is so in keeping with the tone of this whole conference. It was really special of you guys to invite Craig [Newmark of Craigslist.org] and Arthur [Sulzberger of the New York Times] and me out here, and then announce the free classified program, while we were around. Not many conferences will do that for a speaker. I don't want to take up too much time on your question, Jim. But I will. And it's even worse than that, because you've been [undecipherable]. [News Corp. COO Peter] Chernin and [Yahoo CEO Terry] Semel had an interesting back and forth on content today. And News Corp….let me tell you who we [The Washington Post Company] are. If you look for us, if you look in the Fortune 500, you'll find these guys shooting up to the top, and you'll find Viacom and News Corp. and Yahoo! way up there. We're not there. We're the 526 th largest corporation in the United States . And a third of our revenues – Fortune 500 is rated by revenues – don't come from media, they come from education, which is the fastest growing part of our company, in Kaplan [University Online]. So The Washington Post newspaper is this little speck of dust in the corporate world, but we are one very feisty, independent, little speck of dust! And we've got wonderful people working there, at the paper, at Newsweek, at Slate, and at the Web sites. And I think, much in keeping with what you've been bringing out from many speakers, and much in mind with what Arthur [Sulzberger] said yesterday, it's occurred to us – we're slow – like so many of you, but we've come to realize in the last year that the Internet isn't just a way to put the paper out electronically, it isn't just a different version: It's a way to do what we've traditionally done much, much better. We can do things in this format that we could never do in newsprint. And we're pretty good in newsprint. And we can do them partly on our own, [and] we can do them partly in concert with the rest of the Web community.

But how are we going to survive? This morning more than 50 percent of adults in Washington rolled out of bed and read a Washington Post physical copy this week 82 percent will either read the Post, go to [Washington]post.com, or read our free paper Express – now if we can't make a business out of that, shame on us. But it'll be a very fast changing business. Excuse the long-winded answer.

Schmidt:

And the single factor that most increases the market for the Post these days is not indictments, but a small black and white creature.

Graham:

Jim's wife, Jim, and my children are completely obsessed by the baby panda, who is a rock star. And every time the panda goes and gets a physical exam and a shot, page views on Washingtonpost.com go nuts.

Fallows:

So your feistiness, your innovation, your ability to go to the Web will keep you strong, and that will do for now. So Eric, I know that I probably, I should have asked you early on, for an official statement from the Google hierarchy; [that's] what I'll ask you now for too, and then I also have a question.

Schmidt:

First, I thank you all for coming to this conference. When Tim Armstrong, who I think is in the audience, originally suggested that we do something like this, it was an intriguing idea, and we debated it, as we do everything. And we said that we would want to have a conference that we would actually want to attend. And so that meant that it had to be one that was about the themes that affect all of us. And Curt Abrahamson, Patrick Keane, and the team that organized this worked very hard to make all of this happen. Allegra Tudisco, who did a lot of the logistics, is the real heroine here. As part of that, they identified in their thinking who would set the right tone. And there was no question that that was Jim Fallows. And I'm saying this now, in anticipation of your questions, trying to moderate some of your questions. Jim did this very well at Agenda, when he ran that. And what's interesting about Jim is that he has the integrity of one of the most senior journalistic forces in the world, and it is that integrity that we always want to be part of, and we want to be judged by. Because ultimately, in business, everybody's always looking for an angle. And I think for you, as people who are looking at this, Google is just one of the companies, as part of this mass diaspora of change, and I think Jim, by his demeanor and his sort of science and discipline, has really set the right tone. So Jim, thank you very, very much.

Fallows:

Thank you, nice to say I've enjoyed being here at Google, an honor to be here. [applause]. Well, I'll ask you a kind of middle range question, then a harder one. Is there anything you think you know that Don doesn't? About how enterprises like his can survive the onslaught of free classified ads, of search, of everything else?

Schmidt:

I think it's very arrogant for people in one business to judge the business decisions of others. I've seen this pattern in hi-tech, where somehow people like myself say, well, there's this other business, and they're all old, and they don't really get it and so forth, and we'll just sort of roll into them. And they often then buy them, and discover that these businesses are much harder. I learned a long time ago as a computer scientist that when you're going to criticize something, first understand what is elegant about it, so that you can properly criticize them. And I think Don's answer with respect to the Washington Post is very interesting.

The Post is first and foremost, the local paper. And so given the tremendous change that it faces, I would observe two things. First, the Post has done very, very well with getting its online presence. We read it all the day, we see it through Google News, so we send a lot of traffic to The Washington Post that way; it's not available in physical form here in California. But the other thing that's interesting, and it's touched a little bit in the conference in the last day, is that the network effects that are inherent in the Internet means that virtually everything is now global. So the most likely pressure that, in the publishing part of The Washington Post - I'm not referring to the education part, which should do extremely well based on the incredible products they offer – is two things. It's sort of a bifurcation of their strategy. First, local coverage, literally the panda, which seems to be a great story, a great local story…

Graham:

You would not believe how cute it is. It's just unbelievable.

Schmidt:

I'm just overwhelmed by the cuteness of this panda. And then the second thing is, truly national/international coverage. What happens in newspapers is that there's a middle ground which doesn't really affect the local audience, and isn't really truly distinctive coverage. That coverage is going to become commoditized. So think of it as a binomial, as a two-humped camel. And they'll end up having to put the majority of their resources on either the traditional, incredible coverage they've had that affects the nation and the world, which the Post is particularly good at. And also the local coverage. The stuff in the middle, they're going to get from other sources, they're going to get it from blogs, and that's how they'll be forced, in my view, to change their model. And I think they can do both well.

One of the things that bothers me about the premise of your question is news consumption is not declining. It's not like there's the lack of interest in the product. The question is how you monetize it.

Graham:

No, readership for The Washington Post journalism has doubled. But Eric's being much too modest. Eric knows vast things about companies like ours that we don't know – specifically because I take Eric to be in the running, if you ask the question who's the greatest technologist in the room, that would be a very tough question to answer. But I'm in the running if you ask who's the least technological person. In fact I think I'm in the bottom three.

Terry Semel is right. Technology along with content and distribution becomes a driver of what we do. Under [Washington Post Online head] Caroline Little, who is definitely not among the bottom three people in the room, technologically, post.com is struggling at a level where companies like Google and many others of you in the room can help us. And we are looking everywhere we can for partners, large or small, in advertising or in technology, to help us do what we do better.

Fallows:

Since most of the discussion here has been appropriately positive and optimistic and visionary and futuristic and all that, let me just skip past that and ask you both – I'll ask you about the two things that actually worry me, about the trends that many people in this room are involved with. One is a question more for Eric, and the other one more for Don, but I'll lay them both out first. First, mainly involving Eric, is the whole question of privacy. I've gotten a number of notes from people in the crowd, asking why this hasn't been raised. Everything we've been discussing so far involves having somebody or some machine or someone or some cloud of information know more and more and more about me. Everything I click through on TiVo, everything I see on the Web, everything I want, how I can be micro-targeted. I like that sort of, but I don't like it in other ways. And it implies a tremendous amount of trust in the machines and the people and the institutions that are going to protect this, and why will these institutions be, in the long run, more trustworthy than others we can think of? I'll just give you that first question, so that's for you.

Schmidt:

When I've heard these arguments, it has been suggested that the government should play a role here. So I would like to read, this is an article entitled "Recipe for Destruction" by Ray Kurzweil and Bill Joy. We had the privilege of hearing from Ray yesterday. "After a decade of painstaking research federal and university scientists have reconstructed the 1918 influenza virus that killed 50 million people." It turns out that the United States Department of Health and Human Service published the full genome of the 1918 influenza virus on the Internet in the gene bank database. This is extremely foolish. The genome is essentially the design of a weapon of mass destruction. Okay, so that's what our government is doing. I mean, let's just call it what it is, taking information that could kill a billion people and publishing it is not only immoral, it's just not the right thing. And how democracies can work themselves into a scenario where that logic is correct, is beyond me. And maybe there's some principle at work that's not obvious to me, but this seems like a pretty straightforward argument from Ray Kurzweil and Bill Joy. So the question here is, how do you make these judgments?

Another example, in California there was a very unfortunate case about ten years of a woman who was murdered by someone who got her information and home address out of a driver's license database. And again, reactively, because that's how governments work, the government changed the law. The problem with this, is once the secret is out, you can't put it back in. So it seems to me that there has to be a national, in fact, an international debate on the limits of this kind of information. And I think it's obvious and self evident that information that can be used to harm people, either specific people or categories of people or races, or classes, or whatever, should not be made broadly available. And Google will do its part to make sure that doesn't happen.

So now the question is, who gets to make these decisions? And it's unclear to me. One of the reasons that Google has such a strong statement from our founders about our principles, is because we care very deeply about these issues. So although I'm not suggesting Google is the perfect repository, until these issues are resolved, we will make a commitment to everybody that, to our part, we're not going to make the problem worse, and we do spend a lot of time on this. Ultimately, I believe this is a societal discussion, and it will require some form of a consensus and it has to be not just at the U.S. level, but in fact global.

Fallows:

Do you have anything to add on that privacy front?

Graham:

No. I heard Andy Grove at a forum describe privacy as "the landmine under the Internet," and I think you're saying the same thing.

Fallows:

Let me ask you about a landmine under democracy, if you will. I take very seriously your argument about how the Post itself, as a company, is going to surmount these technological challenges and find a way…

Graham:

Going to try.

Fallows:

You're going to try, and if I know you, you will really try, and you will succeed. One could argue that one function of news and public information is really much more under pressure than the Post is or The New York Times is, which is the idea of sort of common democratic, trustworthy, authoritative news that people can rely on in making democratic decisions. The more we have communities of affinity, of education, of like interest, of whatever, the less people can agree on basic facts. This is the issue I was raising with [News Corp. COO] Peter Chernin this morning. I was not trying to blame Fox News, but just having that as a symptom of these separate fact universes that people now exist in. Is that… do you have confidence that news of the sort that entitles you and me to first amendment protection will survive in a way that lets us deliberate, in what people around the world deliberate democratically?

Graham:

Well, I'm good at some things, but knowing the future is not one of them. You keep using the word authoritative. If we were that damn authoritative, I'd charge more than 35 cents. [Laughter.] This is an interesting subject. We do our damnedest. You've been a reporter, and there's a lot of people in this room who have been reporters, including me. We do our damnedest to get a complete report of what goes on in the world yesterday in The Washington Post. Can we write about what's really on that grand jury's mind? Of course we can't. We don't know. So we'll take another stab for 35 cents tomorrow.

One of the things the Web enables that we again barely have a toe in right now, is including other people in the conversation. Every article on the washingtonpost.com today has a Technorati[.com] link, and you can see who's blogging about that article, and you can add your comment or whatnot. But that's the beginning for us. If you think about who reads The Washington Post , you have a chance for really interesting conversations. Some are the very stereotypical kind: "Bush is great." "Bush is terrible." But with our readers, you have a chance for comments that really enrich what's in the article, add to it, supplement it, and move the conversation way along. And that's one of the things we're going to be trying to do.

Schmidt:

Just to amplify that. I always worry with the empowerment of individuals that we end up with separate reinforcing islands around information. I think that's what you're getting at. So for purposes of argument, you have the people who believe the world is flat, and so they send e-mails to each other reinforcing their view, and they blog to each other, and they create self-reinforcing structures. And we're beginning to see that. As a technology optimist, I believe that those islands – which spend time ignoring other inputs and reinforcing their own belief system – are a product of bad education. Basically a modern liberal education says that you should be open to new viewpoints, you should listen to them, link to them, and so forth. And the Internet can be used to both close off communities, as well as open them. As an optimist, and I genuinely believe this, the Internet has done so much more to open these points of view than this corresponding loss. Larry and Sergey talked a little bit yesterday about some of the issues of automatic translation. And language has typically been a barrier for communication. If we can automatically translate between the two, that can help. So, speaking as a technologist, and a person who's been part of the Internet for some time, the Internet and the people who do it have a responsibility to extend the communications, not close it off.

Graham:

Your question is so important, and Eric's comment is so enlightening, that I want to take once more swipe at what you're talking about.

Fallows:

Go for it.

Graham:

Chernin's Fox News Channel is incredibly popular, no question about it. But we made our decision on that one hundred and some years ago. We are for better, for worse, in the following position, and we're not changing. We're not Red, and we're not Blue. We're trying to find the facts as best we can, and then the conversation between Red and Blue can begin. We want some of that conversation to take place on the side. But the work of the reporters ought to be as straight down the middle as we can make it.

Now, if you say, what do you think of the media? One of the first questions people want to go talk to is bias. But I hope everybody watched that little bit of Arthur's tape yesterday from Dexter Filkins in Baghdad . Do you think that guy is out there to write somehow what Arthur Sulzburger tells him? I'll believe anything about the media. But that very, very brave man and his four comrades from The Washington Post are there to tell you the truth as best they can. Not that we can learn it all, of course we can't.

Fallows:

Not to belabor this point, but if the economic underpinning of institutions like yours and Arthur Sulzburger's is weakened, then being able to send people over there becomes more problematic.

To the audience] True to my promise, I'm going to start inviting you to come to the microphones. I have one other question for Eric while you're queuing up to take your questions. I've heard you, Eric, often and eloquently talk about the unforeseeability of the pace of change, of just how many things we can't even imagine will be commonplace ten years from now. Of the things you can foresee, you can predict, you can imagine, what is most exciting to you, technologically?

Schmidt:

The process of Moore's Law writ large – which is the computer revolution, PC revolution, the DRAM revolution, the fiber optic revolution and the storage media, the disk revolution – is showing no signs of slowing down. There is some evidence that they hit a lithography limit in somewhere around ten years. And the scientists will tell you that that 10 year horizon has been true for the last 20, so it's at least 10 and maybe longer. So you have a situation where things are getting faster at a compounding rate of roughly doubling every 18 months. Fiber optics roughly every 12 months, disk storage somewhere around 15 or 18. This has a lot of implications for information. It's possible within the next five years to imagine the equivalent of an iPod with, essentially a static version of all the world's information.

I have no idea how that will change education. I already know that professors are having trouble when students are busy blogging their talk and checking for all their statements during class. It's a real societal problem. So the unintended consequences of how people interact and so forth. When you have this enormous transmission of information, for good or bad, to individuals, is unprecedented in the history of the world. Larry talked quite eloquently yesterday about advertising and [as a computer scientist] says, 'Why can't I know all of the following questions right now?' So I think you should assume that when you walk down the hall, or you go to a store, or you're watching television, or you're reading the newspaper, the big change is that it'll be possible to ask almost any question and get a real-time answer about what society is thinking.

Fallows:

So there's a microphone here, and there are microphone bearers here. Well then, in the absence of a question from the crowd – No, we're not going to call things off early. I'm going to ask Eric another one, actually.

Q:

[This is] a question for Don, but also for Eric. When will paper disappear from newspapers? Do you have a vision of if or when that would happen?

Graham:

Well, you know, as I say, more than 50 percent of the adults in Washington D.C. read a Washington Post printed copy this morning. And that, [the] Web penetration statistics, Jupiter [Media] is still doing every two weeks or something, that's penetration on a Web site… that is an awful big, awful good business, and that print business is not going away for a long time. It's funny, the newspaper business has always been a kind of anti-Google in this sense. The 'pre-Google,' as John Battelle writes in that marvelous book [Search], was the Yellow Pages. That was where you went when you were searching. Newspaper advertising worked on people that weren't searching. You turned to page five of the paper, you saw an ad for shoes, and the company placing the ad sold a hell of a lot of shoes tomorrow morning. They knew how many shoes they sold yesterday, and they knew how many shoes they sold, and they wouldn't run the ad if it didn't work. But Terry Semel raised also the question of non-search advertising. And all you advertising people in the audience, the creative solution of that on the Web is about as far away as… you know, that's a big one.

Schmidt:

Actually you highlighted this a little bit in the panel, about [the fact that] you need sort of both the computer science view of advertising, as well as the creative view. The analytical view and the creative, and both, I think, will work together. It's perfectly possible that a restructuring of the advertising market, which will affect everybody, will occur. Such that, not only will you have amazing, interactive, graphical experiences, but that will also be highly analytically-trackable.

Today, you have some of the best creative minds, but they have no way of proving anything. When you have all the scientists who couldn't be very creative with respect to visuals, who can basically do all the math, it's possible that over the next few years, the synthesis of those two models will completely transform what is today about a $600 billion industry. I think frankly that is why everybody is here.

With respect to the penetration question… in the countries where you have more than 50 percent broadband penetration, it's reasonable to expect that – and these are typically Asian countries, because of the way our country's broadband strategy has been regulated – it's reasonable to expect that you'll see a very quick change away from paper goods into the sort of interactive video equivalents. In the U.S. , the broadband penetration has been slowed by numerous issues. We, Google, are working hard to accelerate that, along with our competitors, who all care about the same thing. A broadband policy at the national level in the U.S. would help a lot here. There's a lot of money to be made both at the infrastructure level for broadband, as well as getting broadband services and using it as a new forum. Remember that fiber optics is an infinite bandwidth pipe. There are literally no restrictions with respect to frequency. So here we are arguing about the SEC all day, and all of a sudden, get that pipe to everybody's house. I was just in Japan literally yesterday, and also today, because of the nature of time zones, which is the one thing we can't seem to change in life. And they now have a very large number of fiber [lines] to the home.

Q:

How much does a paper in a daily weekday edition of The Washington Post cost

Graham:

There is often more than 35 cents worth of paper in the paper. So if you read it on the Web, it's probably a better deal, if we can make the ads.

Q:

Question for Eric. You're now sitting, I think I can say, with a group of people that are more or less your friends. And I think most of the users of Google, and a lot of the companies that use Google for their benefit through the AdWords program, very much like Google. But recently we've heard all kinds of new directions that Google has taken – of course the huge market cap, and all the money that you have. How do you make sure that, coming from this very good situation, where everyone likes you, how do you avoid becoming everyone's enemy?

Fallows:

And to pile on that, is there any precedent of a company doing that? What's the best analogy of a company that stayed in the good guy category?

Schmidt:

3M, that's a very good example. To answer your question: When we work on the strategy of Google, Google is run very differently, I think as everybody in the room knows. And we often do things that don't make any sense from traditional norms. And we're proud of that, and we talk about that. The founders have set the mission of the company – that we work on big problems that affect people at scale that have not been solved before. The reason that opportunity presents itself is precisely because of the infrastructure of the tremendous investment that preceded the company. The buildout of broadband, the routing networks, and the adoption of the Internet. It's possible to think of very large problems that have not been solved at all that could be solved by companies like Google. That's how we think of ourselves.

Along the way, we're trying very much to not do things that other people have historically done, or even things that our competitors are doing. We're having an awful lot of trouble getting that message out. So when we actually talk about a new product, everyone compares it to something that somebody else did. But, in fact, we define it as something new. And it may or may not succeed. So the answer for you as a customer, partner, shareholder, employee, or whoever you may be, is that we've organized Google in a different way to essentially be the innovator, and the innovation carries this sort of bizarre structure around it. It carries risk, it carries failure, it carries opportunity, it carries cache, it carries mystery, if you will. But it is out of that that a set of companies, hopefully with Google, will literally change the world, we hope, and hopefully in a positive way, by virtue of the infrastructure that has been put behind us. So that's what drives us. It's not the stock: The stock price and the cash and those kinds of things. I think the company would behave this way independent of those things. It's how we define ourselves. It makes us hard to work with sometimes, and I know that that's a frustration. On the other hand, the spaces that we've gone into are so large that it is possible to build massive businesses. When I first met Larry and Sergey, they said to me, 'There will be very, very large companies in this space. The question is will it be us and our partners?' And we hope it will be.

Q:

Tim O'Reilly from O'Reilly Media. Eric, I was a little surprised to hear you talking about Bill and Ray's piece so approvingly, I mean, given Google's mission of access to all the world's information. I understand it's a very charged issue there, but there are two sides there where the researchers who published that information felt that they made a determination that the information would be relatively accessible anyway, people could discover it, and this would actually further the research into producing vaccines. So there is always that trade-off between sharing information and keeping it private. Google often makes the decision, actually, to keep its own information very private, obviously… And that sometimes goes back to the other questioner who was just before me – maybe one thing you could do to keep the enemies from piling on, is to work on increasing your transparency. But how do you see those trade-offs? And how do you make appropriate judgments?

Schmidt:

Let's talk about two themes. I think the word transparency is very important. Because of the unique role that Google is now playing, or at least it feels like it because we're getting our heads hit all day about things. We're trying very much to be more transparent with respect to what we're doing and why we're doing it. The issue is that we prefer not to pre-announce things. Every once in a while there's an error, and something gets pre-announced. But from a business principle perspective, it's better if we have more time to bake things. We don't pre-announce things. There's no need in our market to pre-announce our roadmap for the next two years, like some of our competitors do. Plus, we wouldn't hit it anyway, because it's too innovative a culture.

I'm old enough to believe that evil still exists in the world. And I never personally, nor do I want Google to be part of, a genuine evil. It does exist, I think – and so any form of absolute right to information, absolute right to communication is not realistic. There have to be some limits. For example, if your phone number is found on a Web site, we will actually allow you to fill out a little form, [and] we'll take it out. If there's information that can be used to hurt you, we will also take it out. We don't filter it, we'll literally remove it. So we have a set of policies about that. Exactly what those policies should be and how we should define them, I guess this is a question for debate, but we – the world does not have an absolute right for every bit of information, including information that can destroy it. This is the '12 Monkeys' principle. And I think once you accept that, then it's a question of what is the definition of that boundary, and who gets to make those decisions. We have taken a very liberal definition of information, which has served us all well. Most people seem to have a less liberal definition of information, and a whole bunch of governments disagree with us, which is also putting us into trouble with some of those governments. So we've tried to be as liberal as possible with [publishing] information, consistent with the principle of not hurting people, essentially.

Fallows:

First, do no harm.

Schmidt:

That's right. And again, I would encourage you, if you or anyone in the audience, has a different way of defining it, then let us know. We've made a decision to not filter, unless it's required by law, we're trying to be as libertarian as possible, consistent with not killing people.

Q:

Don [Graham], one of the questions that we – we started a discussion in the hallway yesterday about metaphors for how people approach information. And I'm a publisher – and one of the things that I've discovered is that search has transformed the nature of how people look for certain kinds of information. Because we've gone for many years with metaphors that define our products. It's a story line, for example, in a novel. Or it's an alphabetical organization of a reference work. Or the chronological organization of a newspaper, and the front page metaphor that says these are the important stories. And yet increasingly, with Google as the chief exemplar, we are moving towards a world in which sort of search has become the dominant mode of finding information. And clearly, both you and I are struggling with how that changes our business model. Can you talk to us at all about how you're thinking about search at The Washington Post ?

Graham:

Search is great for people seeking for information, including for people seeking news. And a big, big number of our readers come to us for one story, or one quick couple of page views, and go on to something else. But – and we offer that – but we also offer people who want to spend ten minutes with us this morning they'd have read this: If you take one thing away, if you're a baseball fan at all, read Tom Boswell in The Washington Post. Today on the World Series, and every time there's a good game, and you know, you can read that, you can learn that a judge in Virginia is dismissing DWI cases because he thinks it's against the Constitution to presume guilt if somebody's got a .08 blood reading. You can read a piece by an Iraqi journalist who follows around a guy who says that he's an insurgent, and we believe he is, as he participates in the political process and gets other Iraqis who respect insurgents and whatnot to go vote. The author of this is a Washington Post journalist from Iraq , so you can read a lot more. So search is an entry into the Post that'll make one story in the Post the answer to somebody's question. But if you come to us in the morning, you'll find some things you may have known you were searching for, and some things you may not have

Schmidt:

I think there's a celebration of search as sort of the only paradigm in the world, and I think it's completely not correct. The problem with thinking that search is always the only answer is it ignores the fact that editors become more important when you have more information. And we have not yet developed algorithms – [though] we're obviously going to do our best – that can do the kind of judgment about what's important and what's not. And it's unlikely until the broader AI issues in computer sciences are solved, which is going to be – maybe not in my lifetime, to really be able to do that. When you think about the rate in which information and new voices are coming out, it's even more important that those editors exist. Because editors are fundamentally the institutions of journalism, magazines, and so forth. The issue is not their value: The issue is how they get monetized.

Graham:

But search is amazing, and every month you guys make it better and more interesting, and organizations like ours are crazy if they think they're going to swim against that tide. We have to figure out how it can help us.

Fallows

We are near the end of our time. There's two people queued for questions. I wonder if you could each ask your question, then we'll have them answered.

Q:

[James Billington, Librarian of Congress.] Just very briefly. I may have missed it, but until Don Graham mentioned the word, I didn't hear anything said about education. There is hardly any problem that America faces, including the context in which this marvelous new developing industry will go in the future, that won't be improved by education, and particularly K through 12 education, which is a very close to a disaster area in this country. Now there's a lot of content, we've put a lot out in seven states, the Congress congressional delegations have been interested in and have developed through us also, programs for training teachers, the educational use of the Internet. You now have connectivity, you have a lot of content developing. But very little has been done to train teachers who are frightened by this, because the kids are so far ahead of them in the use of this new media. The teachers that have knowledge, old knowledge, but are not familiar with or frightened with, even though there may be technical connectivity, the educational use… What is this industry going to do, broadly speaking, to help train teachers who are on the forefront, and have all kinds of problems to deal with? This isn't rocket science, it's not brain surgery to give educational use of the Internet. We've had a small program for doing this. But what is the industry going to do? Because the future, not just of this industry, but of our country and in the long run, the health of the world, depends a lot on whether we can revive or do something serious about K through 12 education.

Fallows:

That will be one question for you to address, and [here is] the other question for you.

Q:

I would like to step into the responsibility of the industry about the privacy issue. We work for the IAB [Interactive Advertising Bureau], a trade body that is here present in the U. S. , Canada , and also 14 European countries. We started in 1997 to tell the government in the U.N., Brussels , which made the most important decisions in Europe : 'If you're going to be spend, you've got to make laws, you've got to give fines, you've got to act now.' They acted in 2002. The same will be the issue on our privacy and other new upcoming issues. There is ignorance, lack of knowledge, and I think that the industry should really get responsible and try to teach politicians as well. They want to stop cookies, they say, 'Yeah, you get all these big spam ads if you use cookies.' So we made a presentation and the slides to the 15 EU countries in Europe , and say, 'This is how it happens, if you take the cookies out, you would get the pop-ups all the time.' It was almost a law. So there's a lot of work to do, and I think that's one of the biggest threats for the online industry for the coming years.

Fallows:

So two questions about the responsibility of your industry, as a way for us to close.

Schmidt:

What's interesting about education is that people in my position believe that if we simply wired up all the schools, gave everybody computers, everything would be fixed. And all the studies have indicated that there is no normative outcome. In other words, the presence of the negatives and the positives pretty much overlap each other. So it's obvious to me that the issues raised in your questions are something beyond what a technology view can solve, and I'll let Don because he runs a very successful business in this space.

With respect to the question of working with the government, governments… the Clinton administration famously announced an Internet strategy which started with, the government would do nothing about the Internet. And that strategy has worked extremely well. I'm pleased to say that the Bush administration has largely continued that approach, with respect to regulation. We have all felt that the issues, the issues around child sexual abuse imagery and spam and illegal acts and so forth were largely already covered in specific laws, and we've typically not asked for additional regulation, preferring technological solutions.

So for example, many people would like to outlaw junk e-mail. It may be possible technologically to simply eliminate it by various other techniques. So there's always a trade-off. It's usually better to have responsible people in the industry, such as yourself, state the problem. Let's work on a solution, rather than getting a premature legislation which we cannot work around.

Graham:

First, on behalf of everyone else who has spoken, the thoughtfulness of the three Google people who have spoken up here, the thoughtfulness of Eric's answers to these questions, is so impressive and reflect so well what makes your company special, and why you're riding this tidal wave of success. Second, as a journalist, I want to echo what Eric said about Jim [Fallows]. Jim's synthesis this morning as we opened the meeting of what had been said yesterday was astounding. If you've ever been a reporter, and you try to put that together what he's done in these forums, is fabulous.

Jim Billington, to your education question: The Post Company owns Kaplan, which started of course in test prep. And I'd like to thank all of you former B school students for your contributions to our corporate welfare. But Kaplan started two wonderful businesses. Here in the Bay Area, we started a business that's now spreading nationwide, called Score, which is an after-school center for K through 12 kids. Some of you Bay Area parents may know it. Kids come there for an hour a couple of times a week to study math, reading, and spelling, to have fun in a wonderful setting with three of last year's hotshot graduates from Stanford or Cal nearby. In the room with 25 kids to work at a computer, and go to work on math, reading, and spelling. Win prizes, shoot baskets. And that's the beginning of Score. It's going to be a very interesting business, and it's going to help a lot of kids do better. The two biggest Score centers are Bedford-Stuyvesant and Harlem . Stay tuned about that one.

he fastest growing business in our company, and the biggest Internet business in our company, is not Washingtonpost.com. It's Kaplan University , the online education center at Kaplan. One of Kaplan's many businesses is two accredited masters of arts and teaching programs. Harold Levy, the former chancellor of New York City schools, is the general counsel of Kaplan, and has specifically shepherded the creation of these degrees. This is for mid-career people who decide they want to be a teacher or whatnot. If you haven't looked into what online education does, take it from a good provider – it is serious, it is intense, it is harder than a lot of traditional universities. We own today what I think is now, but certainly soon will be, the largest law school in the world, all online. And the first couple classes of graduates of that law school passed the California Bar at a higher rate than the average graduates of accredited traditional law schools. So Internet education is not a killer app, but it's a big interesting application, and that's one way, Jim, companies are addressing the questions you're talking about.

Fallows:

Don Graham and Eric Schmidt have done an extraordinary job which is keeping with the role they played at both their institutions. Omid, Larry, and Sergey, and a team of literally hundreds of other people in Google have worked for a very, very long time to make this conference possible. Gary Bolles, and his colleagues at Microcast Communications, are responsible for everything working the way you've seen it.

want to thank, again, everybody who's been involved in producing this. But most of all, you for coming and for sharing your interests, your intelligence, and making this work. I hope you found it worthwhile. I hope there are things that changed your ideas, your businesses, and we hope to see you again. Thanks very much.

end of session