He’s probably right when he says that people won’t pay for “common news”, but as we saw yesterday, that’s starting to become prevailing opinion anyway. It’s a jump to say that because of this, only advertising will work; people will use micropayments for specialised niche material, and subscriptions to get that common news packaged alongside lifestyle, opinion, analysis and good quality writing, from a brand they trust. And advertising will bump up revenues, but not be the core. That’s our take, anyway.

For now, Schmidt is staying away from making Google make the shift from information distributor to information creator: “We’re trying to avoid crossing the line between the infrastructure and technology that Google provides and the content that our partners provide. There is a line and we’re trying to stay on our side of it.”

He also refuses to be drawn on Google sharing search revenue with newspapers: “We’ve decided that the value we provide to the partners is the traffic. So we want to provide incredible numbers of users going to their sites, their content, which is why we urge them to make it deeper, stronger and use better tools and so forth…if we were to transfer money we would be taking money from something unrelated to newspapers and just paying them, which doesn’t seem like a good sustainable model for anybody”. Maybe that’s fair, but he also admits: “we depend on the production of very, very high-quality content”. Will Google deem the production of content financially valuable enough to try and preserve it, if new business models still prove unsustainable? Could make for some interesting manoeuvres.

While he says he won’t be buying anything else for a while, thanks to the fact that “corporations or institutions come with liabilities that we don’t want to take on”, he nevertheless expresses faith in his last liability-laden purchase YouTube, hinting at future “subscription models” being a way to monetise the meme-strewn cash vortex. Ah, so the people won’t pay for news, but they will pay for Keyboard Cat? Actually, maybe he’s right, even though that’s really quite depressing.

The US newspaper business is in dire straits. Recent death rattles have included Sam Zell’s Tribune group filing for bankruptcy protection and its LA Times title whoring itself ever more shamelessly to advertisers; the Boston Globe, who is owned by the same company that own the New York Times, is scraping together its existence – its unions have just approved cost-cutting measures, like pay cuts and the scrapping of lifetime job guarantees to try and make enough savings to warrant the paper’s ongoing existence.

Now the WSJ is poised to try and fill the gaps in content created by these cost-cutting papers: “We’re going to move in on each of the big cities”, said managing editor Robert Thomson. The paper currently allows free access to certain articles, but has a subscription plan for its premium financial content as well as a fair chunk of its other stories. Now it’s looking to make that more sophisticated, and allow, for instance, a reader interested in today’s Clearnet bid to buy just that story without having to fork out for a whole subscription. They’re also going to create premium subscriptions for their truly niche, high-quality business content, in areas like “energy, commodities, wealth management”.

It comes as the New York Times Co.’s chairman Arthur Sulzberger Jr. hinted a couple of week ago that the NYT might install a micropayment model: ”We continue to take a fresh, hard and deep look at various subscription, purchase and micropayment models”. Ariana Huffington is a fan too – in an interview with German paper Die Welt, she said the following:

“The idea that you can go back to a pre-Internet world where you can create walled gardens around content, and charge for admission, is simply futile. Those who try that are going to fail. Today we live in the linked economy, not a walled-off content economy. The challenge is to find different ways to monetize links among media through advertising or micropayment or whatever, not subscription for exclusive content.”

Well, it’s going to be a bit more sophisticated than that. Micropayments make sense for the WSJ, given their specialised content for specialised readers – you can maximise the profitability of a niche through micropayment, when a businessperson finds they absolutely need its individual bits of information. But a more casual reader will find the barrier of individual payment pretty offputting – a subscription model makes more sense for them, because after one payment they can go back to the browsing style they’re used to.

Micropayment probably needs to be not at the truly micro level of individual stories, but payment for a week’s worth of, say, green tech stories. Bundling a story from elsewhere on the site for free along with the paid package could work well too, both as an incentive to purchase and a means of drawing readers to other parts of the site. The beauty of online means that there is this freedom to offer these different payment structures at once – Huffington et al should be thinking of all of the possible ways to monetise their product.