“History shows that in the face of new technology, those who adapt their business models don’t just survive, they prosper. Technology advances, and no laws can preserve markets that have been passed by.” Google chairman Eric Schmidt may not have intended those remarks as a verbal grenade, but many in his audience of 2,000 television industry members took them that way.

Schmidt was speaking at the 2011 MediaGuardian Edinburgh International Television Festival, where he gave the prestigious annual MacTaggart Lecture. The festival is attended by over 2,000 people with a business interest in television, including on-air talent, broadcasters, distributors, support services and digital innovators.

Schmidt was the first person invited to give the MacTaggart Lecture who was not in the television industry. His remarks therefore were tailored to address the interests of his audience, many of whom believe Google has a destructive effect on their business and a cavalier attitude toward copyright.

His tone was generally reassuring to people who love and make their living from traditional television. Schmidt said that in 2010, over 90 percent of broadcast TV viewing was live, and that he didn’t expect TV would ever switch to being entirely on demand due to the “cultural pull” of some shows.

“But I sense the default mode of viewing will inexorably shift,” he went on to say. “Try forcing a 6-year-old who’s grown up on DVRs to only watch live TV. Once you’re used to such things, it’s hard to give them up – no pause, no rewind, no choice.”

Schmidt pointed out that the Royal Wedding of Prince William and Catherine Middleton was live-streamed 72 million times on YouTube by viewers in 188 countries, despite the huge number of broadcasters airing footage of the event. He also got a laugh when he repeated the U.K. industry’s belief that more people watch the very popular reality show The Only Way Is Essex – think Jersey Shore – online than on its ITV broadcast, “although I confess I haven’t seen it myself.”

He warned his audience that “the Internet is fundamental to the future of television for one simple reason: because it’s what people want.” Schmidt continued that the Internet is a platform for things that traditional TV cannot support: “It makes TV more personal, more participative, more pertinent.”

The U.K. has had interactive television since 1999, albeit in a very basic version back then, Schmidt reminded his listeners. “Now we’re riding a second, much bigger, wave of interactivity. It’s a convergence of TV and Internet screens. … It’s on the web through your laptop, tablet or mobile. But most important of all, this time it’s social.”

Schmidt summed up the three most important trends as mobile, local and social. “New genres of online content and services are emerging,” he said. “If content is king, context is its crown – and one of the most important contextual signals is location. If you search for coffee from your mobile, odds are you’re looking not for a Wikipedia entry, but for directions to a nearby cafe.”

He then encouraged his listeners to consider the potential future revenue streams that technology makes possible. Global and on-demand make outdated the broadcast model of showing programs in a “drip-feed” schedule, he said, whereas new approaches are better suited to the modern world, like the way Netflix releases House of Cards episodes in “clusters.”

Many British headlines grabbed onto Schmidt’s criticism of the education system. He said that the U.K. should think back to when art and science coexisted: Lewis Carroll taught mathematics at Oxford when he wasn’t writing about Alice’s Adventures in Wonderland, and Albert Einstein’s physicist peer James Clerk Maxwell was also a published poet.

“There’s been a drift to the humanities – engineering and science aren’t championed,” Schmidt said. “Even worse, both sides seem to denigrate the other – to use what I’m told is the local vernacular, you’re either a ‘luvvy’ or a ‘boffin.’”

He continued, “I was flabbergasted to learn that today computer science isn’t even taught as standard in U.K. schools. … That is just throwing away your great computing heritage.”

Schmidt also brought up the controversial issues of copyright and anti-trust, explaining Google’s position on each. He also apologized for the times “we’ve inadvertently made things worse, by sharing our delight in innovations without appreciating other’s discomfort,” but added that the company is more sensitive now about disrupting other people’s businesses.

He ended by emphasizing that governments and legislators shouldn’t interfere too much. “To be clear, I’m not suggesting a completely laissez faire approach is appropriate,” Schmidt said. “Alongside the Internet’s benefits, there is content and behavior none of us want to encourage. From copyright infringement to phishing scams to sexual abuse imagery – none of this is good. But when legislators try to figure out how to minimize the harm of online content, technology solutions rather than laws should be their first thought.”

Related Links:

2011 MediaGuardian Edinburgh International Television Festival –

Photo of Eric Schmidt courtesy of Google