Can the parasite save the host? Or will it try?

There’s a lot of doom and gloom and gnashing of teeth in the newspaper industry over shrinking advertising dollars, which leads to expense cutting, laying off workers and shrinking the size of the newsprint product.

In a Q&A with Fortune magazine, Google CEO Eric Schmidt laments the situation but offers no solutions. Google specifically and the Internet in general have been widely blamed for a national decline in newspaper circulation, though I think they may be given more credit than the real culprit — a general decline in news consumption in any form. If people were getting more news from online, they’d be more informed but survey after survey shows this to not be the case.

Google’s job and search of revenue is its aggregation of information, and its principle source of current events information is newspaper Web sites, which Google spiders and indexes and makes accessible in various forms along with their advertising messages.

Asked what Google could do about the newspaper industry’s problems, Schmidt virtually shrugged:

“Google can't make the cost of newsprint go down. We also can't materially change the way consumers behave, and consumers are in fact moving their lives online. We have been able to send clicks to their Web sites, which they can monetize. So that provides some revenue. The problem is that doesn't provide enough revenue to offset the loss of the other revenue.”

Schmidt contends people love news, like discussing news, but the problem is advertising and cost of producing a newspaper and delivering it.

Well, as the kids say, duh.

Schmidt rejects the idea of just buying the newspapers. He prefers profits. He and the interviewer discuss various options.

At the end the Google guru is asked: “What if the newspaper industry does go down?”

Schmidt replies:

“To me this presents a real tragedy in the sense that journalism is a central part of democracy. And if it can't be funded because of these business problems, then that's a real loss in terms of voices and diversity. And I don't think bloggers make up the difference. The historic model of investigative journalists in any industry is something that is very fundamental. So the question is, what can you do about this? And a fair statement is, we're still looking for the right answer.”