>> i knew that i wanted to write a narrative that told your story, but in the context, also, of how you begin to change from just a search company to what you came to call yourself, which is a media company. and how gradually you started to bump into be it book publishing or newspapers or advertising or telephone companies or television companies or microsoft. and how most of these other industries really ignored you. in fact, i begin the book with
the story of a visit that mel carr is on who was then running viacom, cba, mtv, simon & schuster, etc. and how he came here, and he met with eric and larry and certificate day -- sergei, and he thought he'd do some kind of deal, maybe even acquire you guys. this was before you were public. he had no idea what kind of revenues or growth potentials you had. and so he explained the business at one point as eric described to me, he tried to sell a super bowl ad to google which was going for $2 million for a 30-second spot at the time. it's now $3 million, by the way. of course, they were appalled by spending that kind of money, and you don't have any idea, you don't know who's watching the ad, who's buying your product, but they let mel speak. and then they describe the
google business, how you actually -- there wasn't waste, you could tell who was clicking, you know, who was buying, and it was much more intelligent. and then mel said, wait a second, this is very -- we don't want that kind of efficiency. we want to get people all caught up in the sizzle of buying tv ads and that's what really matters. we don't want the advertiser to know what they're getting. and, of course, eric and the google people were appalled by that. and carpalson at the end of a three hour visit leaned over in his cuff links gleaming, and he said -- and you'll pardon the language. i think c-span is here, so i'll be polite. he said, you guys are messing -- he didn't use the word messing -- with the magic. and, of course, the tgif that friday larry and sergei and eric tell the story, we had an interesting visitor this week, and you know what he said to us?
you're messing with the magic, and, of course, that's what you do here. so among the things i learned on my visit is what engineers do. and if you start from the assumption, as the three guys who run this company start from, that the old ways of doing things are often inefficient and you could achieve greater efficiency, and if you think about the business i'm in, the printing business, totally inefficient. the idea that you're killing trees, expensive paper, expensive printing presses and expensive distribution. versus doing it online in multimedia form. you say, that's a pretty inefficient system. so the engineer comes in and says, why? why does it have to be that way? why can't we sell ads and know who wiewr selling them to and charging on clicks rather than you think they have an impression you've made on them, and why can't you digitize all the books ever made? and why can't you have google news and aggregate 25,000 news
sources from around the world? etc., etc., etc. and, of course, as you do that, you start bumping into traditional media companies, and they get very upset. and the truth be told, you were very late to understand as a company that you were upsetting these people. you were pushing the envelope of, say, copyright. you were pushing the issue of fair use, and youn't whatted -- wanted to be able to do a search, and a search is wonderful. i love the idea that the now 11 books i've written could be searched and people could have access to a book that didn't sell so well of mine can be brought back because of google. that's terrific. on the other hand, i'd like to be consulted as an author before someone puts my book online and makes it available. and at one point i tell the story in my book of my second interview with sergei, and he comes in the room, and he says to me, ken, let me ask you a question. he said, why don't you just
publish your book for free online? just put it out there. many more people will read it. i said, well, that may be true that many more people will read it, but let me ask you a question. i said, who's going to pay me to write this book? i need to earn a living, right? and who's going to pay for my trips out here? i made many trips out here. and who's going to pay the air fare and the hotel, and who's going to send me on a book like i'm on now and index -- sergei at that point wanted to change the subject because the truth is he was approaching it like an engineer does or someone who doesn't know the book publishing business. but he was also approaching it, i would argue, as someone who didn't have a full appreciation of copyright, and the appreciation that you need the cooperation of people who own the content in order to share
it. but i also want to make sure i can earn a living because that's how i make money. so one of the reasons you got sued initially was exactly for this reason, that larry had this brilliant idea starting in 2002 to digitize all the books, and wouldn't it be great, and it would be great. and you got the permission of libraries, but you didn't spend enough time as executives admitted to me in the course of recording this book, seeking permission from the people who own the copyright be they publishers or authors. obviously, you bump into when you buy youtube, you bump into when you buy viacom, and i think they're trying to hold you up. but nevertheless, they sue you for a billion dollars because they're saying you can't take jon stewart off the air. so i saw that, and i saw basically, i think, in the course of the two and a half years that i spent that you are brilliant engineers, but you
often are narrow in your approach to the world. and copyright is one issue. i would argue you're sometimes narrow about the privacy issue, and one reason you have, you're getting static from not just the u.s. government, but governments particularly in europe is on that privacy issue. i know eric is very sensitive to that. but the truth is that there is a belief, and i encountered this and a i report this in the book, there's a belief if you spend time on facebook you say, how can you say people are concerned about privacy? so you kind of become convinced that privacy is not a big issue. but it might be because you collect a lot of information about people. not by name unless it's, you know, some of your sites, but mostly you don't have their name, but you have a lot of information about them. and people get concerned. so you now face, i would argue, that three issues that you deal with that arouse the concern of
governments around the world. one issue is concentration of power, and to go back to moth, when i was interviewing microsoft for the book i did and i covered their trial, one of the things that was quite astonishing was how out of touch they were, and bill gates almost pleadingly talked to me about how could you think that we are not doing good? how can my government think that i'm, microsoft, is not doing good? he thought if 95% of the people were using his operating system, it was like he was building one track for every railroad all over the world. so he was extending, he was a common source he was providing. he didn't, he wasn't thinking that, in fact -- and it's one of the distinctions i make between my visit to planet microsoft and my visit to planet google -- microsoft were cold businessmen.
gates and balmer and company wanted to destroy netscape. i came away from my visit to your planet thinking you're not cold businessmen, you're cold engineers. [laughter] and, but you're not, you're not, you don't mean to harm people, but inevitably as larry page said to me at one point, i said, is it true you will sometimes bump into traditional media? and he said to me without any glee -- bill gates would have been gleeful in 1998 -- larry said to me, i wouldn't say sometimes, i would say always bump into. you're engineers, and you're figuring out ways to do things more efficiently. the old media world tends to do it, oftentimes, inefficiently, but there are a lot of people doing that. i learned something else. let me finish the other point. so one is concentration of power, americans don't like powerful companies, and you are a powerful company today. and not only a powerful company,
but as happened with microsoft, you've got a lot of industries that want to create competition or lessen your power or use the government to attack and weaken google. and they have a lot of influence, telephone companies do and advertisers do and television companies in washington. but not just here, you're talking about europe, and you're talking about china, and there you bump into authoritarian governments who want searches that don't have anything about tanks and tiananmen square. so you're dealing with that issue. you're also dealing with the copyright issue which is something i argued you weren't particularly sensitive to and that governments are sensitive about, and you're dealing with the privacy issue. and that, too, is an issue that different governments deal with different ways. thanks, harry. and so i would worry about that if i were you more than i think -- i think you're late to understand that menace to you, the government menace to you as i think traditional media was late to understand the digital
menace to them. i learned something else. i learned as i sat in the engineering meetings here that i was allowed to sit in, and i probably understood half the words that were spoken. i mean, you could have been speaking swahili. i didn't, literally, understand what was -- but i had the luxury of time to ask people, tell me what that word means or something. but i kept on thinking as i'm sitting there of terry at yahoo! in 2003, or john scully at apple in the mid late '80s and early '90s, and he wasn't an engineer, and is that why these two companies, for instance, fell behind in engineering? because the people at the top unlike eric and larry and sergei couldn't understand the language? that their engineers were speaking? but as i listened to the engineers in those meetings and as i listened to larry and sergei and eric asking
provocative questions of them and saying, but wait a second, i heard what you said, but that doesn't make any sense because of xyz, i kept on thinking that, in fact, the engineers were the content creators at the company. you don't think of engineers as content creators, but, in fact, i came to think of many engineers at places like google as the martin scorsese's of this world. the applications that you're creating become content, and if i spend two hours doing google search on google maps or one of your other products, if i spend two hours on that, i'm not spending two hours with cbs or with a book. facebook is content. anything that occupies your attention, i would argue, is content. including how content changes for the internet. it's not the same. story delling is not the same -- story telling is not same, etc. so i learned that in my visit
here. i also learned as i went from here back to the world of traditional media, to book publishers and trftion executives and movie executives and newspaper and magazine and microsoft and advertising agency and telephone companies and i interviewed those folks, i came to realize how retrograde they had been. there are two types of people in the world, i think, particularly people who are dealing with challenges. there are people who lean back, and there are people who lean forward. the people who lean back are the people who are protective, defensive, worrying about how do i preserve what i have? the people who lean forward are proactive, and they're people who say, this is a challenge, and i'm going to seize the day. i'm going to be an optimist, i'm not going to be a pessimist. i'm going to forge forward, i'm not going to whine, i'm not going to complain, oh, woe is me, google is killing me, the internet is harming me.
and, in fact, you hear more of that whining. and it really makes me sad because i actually think that many people who are whining, particularly, say, people at "the new york times," are doing god's work. the blogosphere is never going to replace the kind of reporting and expenses that "the new york times" invests in a place like afghanistan today. or that some newspapers, most newspapers -- not very good newspapers, i would argue -- but there are some that are wonderful newspapers and sometimes spend two, three, four months investing in investigative reports or covering state and city capitals. and in the digital world you have a way of proving who is reading or watching what. and what editors in the digital world, and larry page and i talked a lot about this, he said to me, once, he says, i worry that people are going to, editors or publishers are going to see that people are interested in britney spears,
but they're not interested in government news. and those papers will start covering what is most popular with people. and that worries him, and it should worry him. it worries him in terms of search. you need good search information. so he said to me, as did eric, that we really want to see if there's some way to help "the new york times." and, in fact, at one point they acknowledged that they discussed internally the idea of buying "the new york times" at google. they never talked to "the new york times" about it, and they never did anything about it because in the end they decided that you, as a search engine, have to be a neutral switzerland. you can't take side, and you can't be perceived as favoring one content over another. and, in fact, one of the things that actually enthralled me in the reporting of this book, and i look at my friend, david crane, who i spent many hours with and most people i interviewed here i would ask, where did these two founders of this company get the clarity
that they had? how did they come at 25 years old to say, i'm going to have a simple home page, i'm not going to allow visa to spend $3 million to have an ad on my home page, and i'm not going to build what yahoo! and aol were doing which is a portal. i'm not going to try and attract people. they're going to do a search, and i'm going to send them to the search destination they want. and advertisers, i'm going to charge them in an auction only a penny more than the second and then the third highest bidder, right? and how did they know that building trust of the user was essential? and if you think about if you have that as your guidance, you automatically know you can't buy "the new york times" because if you buy "the new york times," you may be helping save a great institution, but you're undermining the trust you need to function. just as i would argue that you should be worrying much more than i know you did certainly
when i finished reporting this book this spring about governments. and if you think about it, as brilliant as many of the engineers at google are, as brilliant as the founders are and eric is there is a, like bill gates at microsoft, they are not necessarily the best people to determine things that are not easily measurable. that is to say something like people's fears. if people fear microsoft as they did or they fear google as many do and certainly other companies do, that's a fear that can build and infect and go to washington, go to the european union, go to other countries that you're dealing with. and that's not something that as sergei said to me when i asked him about this, he said, look, we're not strong in the
emotional intelligence department, and that's true. so where does that leave me? when -- what do i, what do i take away from this book? i call this book googled because i think google has basically changed the world. as hal varian said to me at one point, your chief economist, he said to me that the internet made information available. what google did was make it accessible. the great navigation system for the universe. and that changed the world. it changed my life as a writer and reporter. i mean, i have a library at my fingertips, and every day i thank the fact that i can have a google at my fingertips. and do thoughts that i can have books as well as scholarly journals available to me, too, it's very efficient for my time. i'm not getting up and going to the new york public library, and
i can work at night or early morning, and it's just fabulous. but the reason for the subtitle of my book, the end of the world as we know it, is that the world, the traditional world of all those media institutions i spoke about is forever changed. and that's a profound change. and some of that is wonderful, and some of that is not so wonderful. and when i hear bloggers say what's important, for instance, about journalism is just preserving the journalism, and you could have one individual do good journalism and that's enough. and, in fact, bloggers can do wonderful things, and one individual can do wonderful things. i think of people like i.f. stone, for instance, doing great reporting. but journalism, really good journalism, is a team effort just as google is a team effort. and you need editors, and you need, in new yorker's case, copy editors and fact checkers. but when you do an investigative
report or i go out and do a piece for the new yorker, i have lots of people who are constantly involved in my life. and when i hand that piece in to them, they'll say, hey, ken, you buried the lead, it's really in paragraph 20, not where you put it. or i think the story's a little off, i would go back and do a little more reporting. that's, that's the nature of the way journalism really works. a team is essential for great journalism. that's the truth of "the new york times." you can't replicate that unless you have the resources of some kind of institutional support to do that. and if we lose that, we lose a lot in our society, in our democracy, and the kind of checks and balances in trying to keep governments and powerful institutions honest. but i came away thinking, to finish my remarks and welcome any questions you may have, i came away thinking you're a really great company. and i mean that. i'm not saying that just to,
just to placate an audience and just to prove it, you also are tremendously challenged. and it seems to me you face both external threats and internal threats. the external threats are the obvious competition being other search engines though bing has not done well as, certainly, they expected to. and when i was reporting this book in may of '08 i went to a microsoft conference, and literally microsoft executives were whispering to me, we have a game changer here. we're going to announce something called cash back, and it's going to change the world. has anyone heard of cash back since then? nada. and, and -- but, so, you have to worry about facebook and twitter and the form of vertical search they might do. it'd be a much more valuable search to me to be able to consult if i want to buy a camera 20 friends on facebook or twitter than getting 10,000
answers from a google search. i mean, i did a search -- i describe in the book, i said, who is a real william shakespeare? i punched it into my google search box. how many answers do you think i got? anyone have a guess? how about if i said five million? that's preposterous. that's totally inefficient. it violates every rule you say you believe in at google. and you couldn't give one answer to that because it's the controversy whether william shakespeare did exist or was someone else. but five million guys? huh-uh. and so vertical search is a threat. government is an external threat to you. governments, i should say. you've got to worry internally about your size, whether you move with the same speed as you always have, the loss of good people, and you've got to worry about hubris. and i saw this at microsoft too. and i know all the differences -- i think i know at least some of the differences
between you and microsoft. people were locked into their operating system. you're one click away from escaping google, i understand that. but when you're that successful as you've been and your life is really pretty, i mean, you're given lots of things from your laptops to your food to your buses, etc., it is very easy to lose sight of the real world. and if you're an engineer and maybe living in this tight community, you have the advantage of being on the internet which microsoft avoided and didn't have, you know, that kind of exposure that you have to other opinions. you're at risk. and it's worth probably thinking about. in any case, in my visits to your planet -- and i'm not coming back in any regular way though i'll miss the food -- i learned a lot, and i thank you
for that. i had nothing but hospitable people and wonderful interviews here. thank you, welcome your questions. [applause] just raise your hand, i'll call on you if you've got any thoughts. if not, we'll -- yes. oh, i'm sorry. >> how do we save "the new york times"? >> i wish i knew. i wish i knew how you saved "the new york times." i mean, you're, obviously -- they're gonna, i think newspapers are going to try and create a payroll, and i do, i address this issue in my book. i think they have to try to figure out how to get another stream of revenue just as you do. i mean, i think the notion of being totally dependent on one source of revenue advertising -- i'll tell you a story, for instance. eric schmidt, in my 11th interview with eric last
december i said to him, i just left john hennessey, the president of stanford, and he said he thinks the original mistake that was made with the internet was not having either a micropayment subscription, not just being reliant on advertising. do you agree with hennessey who is on your board? he said, i do not. i think free is the best model. and my last interview with eric which was april of this year, so four months later, i said, eric, do you still agree with what you said to me in december? and he said, i don't. i've changed my mind. and if you think about, chris anderson wrote a book called free, it came out in july. he added a chapter at the end of that book which is called coa da. and essentially what he says in that last chapter seems to contradict much of what he said in the rest of the book. he said, free is not the answer. and i think what happened, the recession which began in late 2007 really was a wake-up call for silicon valley and people
whose business is the digital world to realize you are making the same mistake that the broadcast networks make. you were going back to the future and relying on a source of revenue that was shrinking, advertising. and you had to figure out some way of getting another source. "the new york times" has to try and figure out another source of revenue. in fact, when i left eric's office, i came downstairs to the cafeteria, and who was in the cafeteria? arthur sulzberger jr., the chairman and publisher of "the new york times," and he was going up to see eric and the founders. to try and, is there some way we can pump more advertising dollars, some other -- obviously, i'd love google to pay the fee for the content. so far there hasn't been a good answer. you get some, but the danger is if they create a payroll, as they're going to, what if every newspaper and every newspaper won't have a similar payroll? people will get information from
the wire services, maybe from the "christian science monitor" which is six days a week online or the seattle intelligence which is only an online newspaper. you reinforce the notion that news is a commodity which is exactly what the papers are trying to combat. that's one problem. the other is how do you educate, how do you change the culture of the web which is a culture that basically says information should be free? then you've got the hacker question. so i read what murdoch said in australia to sky tv and that, you know, we're going to stop google from searching and i think of that in two ways. one is murdoch doesn't even -- his e-mails are printed out so he can read them. [laughter] seriously, by the way. two, he's negotiating. he's trying to, you know, trying to put you guys on the defensive and get you to pay something, as others have gotten you to pay. you're paying 125 million to the publishing industry. and, in fact, google is coming to realize as you have with
youtube that you need professional content. the engineers at youtube made a mistake. they thought user-generated content would be the way, and the truth is the advertiser doesn't want their friendly ad next to some dog pooing, you know? [laughter] so you have to have more professional content, and you're going to have to pay for it as you're starting to, and you're starting to generate more income at youtube because of it. i don't know, i wish i had a good answer for that question, i wish "the new york times" had a good answer for that question. but i would rather be the new "w york times" than the detroit news or, you know, a lot of -- san diego union, a lot of other newspapers. the times has some advantages, but they have a particular problem, like a lot of newspapers do, they have a huge debt load, and the debts are coming due, and they've got to pay them. can they? >> in an interview you gave on npr's fresh air, you said that google culture is one full of contradiction.
what are those contradictions that you experienced in your time here? >> well, some of them are benign, and some of o them are less benign, but one of them is if i come here and ask any one of you if i put my pad out and i say how much does an engineer make or how, how, how many people from india, how many indian citizens or former -- were born in india work at google? you ask any factual question i may as well be talking to a cia agent. i don't get an answer. so the notion of transparency has its limits at google about that. and some of that, i know, comes from larry page who all his life he read a book very early in his life about tesla who, arguably, invented electricity, but because he was very generous and shared his secrets wound up dying a very bitter and poor man, and thomas edison got all the credit. so larry page talks about this.
he's talked about it not just to me, but he's talked about that elsewhere, the importance of keeping things secret. and there are secrets that are worth keeping. you keep your black box of what your algorithm is to determine search is a secret for good reason. you don't want people to game the system. if they did, you would lose the kind of trust that's essential to your success. the other contradictions are there is a genuine idealism here, and when the slogan don't be evil was created by paul, that resonated on this campus because you can embrace that as being true, as fitting, as befitting, you know, who you were, your self-identity. but then in the real world you make compromises like you did in china, right? and that, you know, that's a contradiction inevitably. and the, here you are with all
your idealism, you've hired some nice priced lobbyists in washington, contradiction. those are just some of the contradictions, but the truth is that's the adult world, you know? and the adult world is full of compromise and contradiction. it doesn't mean it's evil, but that doesn't mean it's good either. and you think about it, don't be evil is really a slogan. i mean, it may satisfy you and all that, but i was at a tgif meeting here, and someone said, how -- to larry and certificate day were up on the stage, and they said, how could you close the phoenix office? this was in the fall of '08. it's evil, you know? well, to the people in the phoenix office it may have seemed evil. you know, i don't think it is, i mean, i think we're making a business decision. but, again, evil is often in the eye of the beholder. yes, sir. >> so you talk a lot about how many critters google have, the
book search issues, there's the viacom lawsuit, there's newspapers. however, there's also the music industry which has similar problems, but google isn't involved there at all. so how much of these issues do you think are related to missteps google has versus the realities of the changing swiss with the -- business with the internet. >> i think it's much more the changing business than it's google. google is really a surrogate for the internet, and music is a classic example. i mean, if you think about how the music companies, i would argue, committed suicide. they weren't murdered. and the suicide is to have a business model that says we are only going to sell cds, you have to buy all of the records in this album, even if you don't like them. and along in 2001 comes itunes, and they say, hey, just for 99 cents you can buy any song that you want, and you can listen to a portion of it before you decide to click and buy it. where was the music company? why didn't they make a deal with the online stuff that the people -- what do you call it?
what was the company that they sued? yeah, napster. why didn't they buy napster, you know, and do that? why did they resist? you know, why did newspapers, for instance -- if you go back, newspapers can tell you, honestly, that 15 years ago, a dozen years ago[ñ had online editions. but if you go back to that point iniq time, an" i/f was writing r this at that point in time, the online edition reported to the newspaper editor, not to -- they didn't have a separate online editor who was conversant with the internet and realized that the internet was just not a print model, it was a multimedia, and it was a different medium than the newspaper. not only that, but you couldn't break a story in your online edition until it appeared in the next morning's newspaper. that's insane. and by the way, craig's list. i mean, "the new york times," people approach "the new york times" and other newspapers with the idea of a digital classified. newspapers used to get one-third of their advertising revenue
from classified advertising. before craig's list was born, it was proposed to "the new york times" and others to create a digital consortium to sell classified ads online. oh, no, we don't have to do that. hello? you know? so i, you know, i don't -- again, this is the whole engineer point i was making as opposed to c