Google Chairman Eric Schmidt was touring Minnesota yesterday. He spoke in Minneapolis and according to MPR News, spoke about Google’s plans to keep apps free and focus on revenue from advertising…

Google Executive Chairman Eric Schmidt, speaking in Minneapolis Wednesday, said the company will get the vast majority of its revenue from advertising for years to come.

And he says that means Gmail, YouTube, and other online applications and services from Google will remain free.

“I’m sure it will,” Schmidt said during a forum at the University of Minnesota. “You never say ‘never’ or ‘always.’ But our model of Google apps as a free service for universities and the average consumer is working really well for us.”

Schmidt said advertising revenue makes everything click for Google.

I buy Google ads on behalf of a few clients – a very small drop in a big pond of their revenue – but even I can see that it’s got to be pretty profitable. Because the cost per click is based on a bidding process, I think that it’s likely that costs will go up as more and more people buys ads. I’ve certainly seen costs rise over the years (8-10) that I’ve been working with Pay Per Click ads. As the article points out, it’s a business model that seems to work. From the consumer perspective, it does keep services free – although as we’ve written here before, free often comes at a cost. And right now the costs is privacy.

Schmidt also spoke about copyright legislation. Sounds like he’s for copyright – not so for the current legislation. I suspect the hot point is making it illegal to index copyright material, which he calls a slippery slope. He’s right – it means asking the search engines to start censoring.

You can see his presentation at the Um of M on the U of M website.