Google Compensating Newspapers?

Google News has no ads, otherwise the news sources could claim that Google is making a profit from their content. One would expect Google to at least try to monetize Google News, and the first signs of that are appearing:

"The people who own the content did a lot of work to generate the content," Google Chief Executive Eric Schmidt said in an interview with the Mercury News. "We want them to get the majority of the revenue from advertising."

My guess is that Google will get as many news sources as possible to agree to be paid per click-through to their site, and then, after they have signed up as many as possible, start placing ads on Google News.

They will then drop all non-agreeing news sources from Gogole News, with the expectation that, when they realise they are getting fewer visitors, and missing out on revenue, they will sign as well in the near future.

What sort of ads? I'm unsure if Adwords ads are best suited to news. My guess is that a banner ad along the top will be supplemented by Adwords ads halfway down the page.

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