Hey Google — stop linking to us
Sam Zell — the so-called “vulture capital” investor whose nickname is “The Grave Dancer” — knows a lot about real estate, but does he know anything about newspapers and/or the Internet? Hard to say. But his first statement about the latter, in a story in the Washington Post, doesn’t exactly fill me with confidence. In fact, I think it shows he has a lot left to learn.
Sam has apparently decided to parrot the line taken by a Belgian copyright agency and by the World Newspaper Association, among others, who argue that Google News is “stealing” content from newspapers such as the Chicago Tribune (which Zell just acquired), and needs to be stopped. This simply isn’t true, as I have argued before, including here and here. On the contrary, newspapers get a tremendous benefit from being indexed by Google News, just as websites get a tremendous benefit from being indexed by Google’s search.
In the Q&A session after a speech, Zell drops this incredible bomb:
“If all of the newspapers in America did not allow Google to steal their content, how profitable would Google be?” Zell said during the question period after his speech. “Not very.”
Either Zell is trying to be deliberately provocative, or he’s a complete ignoramus. Number one, Google makes virtually nothing from Google News — since the search engine doesn’t sell advertising on any of its news content pages — and number two, even if all the newspaper content from all the major newspapers were removed from the search engine, Google would no doubt still be happily making billions of dollars.
Nice to see that Jason Calacanis agrees with me. He has a rant about Zell here.
Note:
In other Google News-related news, Agence-France Press has signed a deal with Google, after suing the search engine for using its content — a deal that sounds very similar to the one Associated Press signed after launching a similar suit.
No doubt newspapers are hoping for a similar type of outcome, in which Google (presumably) pays them for their content. But Danny Sullivan makes an interesting point about the AP and AFP settlements: much of the traffic that newspapers are geting now will likely dry up, since any hits that used to go to wire stories from AP and AFP will now go to the original posted at Google News, rather than the copies at any AP or AFP member newspapers.
Given the amount of wire copy that most newspapers rely on to fill their website and print editions, that could become a serious Achilles heel.
Update:
Lucas Grindley has posted a comment here with a link to his blog, where he argues that Mr. Zell might be right, and that newspapers should a) resign from AP if it doesn’t stop providing their content to Google, and b) charge a fee to Google for indexing stories, and force the search engine to provide only headlines instead of the whole first paragraph.
With all due respect to Lucas, his theory about Google News being some Machiavellian effort to increase remnant inventory on newspaper websites so they are forced to use AdSense is ridiculous. Google indexes newspapers and sends readers to their sites — monetizing that traffic is up to them. If they fail, that is hardly Google’s fault.
And holding back news, or charging fees to Google to index newspaper headlines, is equally ridiculous. Does Sam Zell charge the real estate section of the newspaper to list his properties? No, he pays them. Same principle.
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(On Apr 7th, 2007 at 2:00 pm)
You’re dismissing Mr. Zell much too quickly. At least consider for a moment that he’s right before declaring him stupid. He does make a lot more money than any of us.
I, for one, think he could be right for several reasons explained on my blog.
As a side note, your assertion that Google makes no money from its news product is wrong. Posting the news drives up links to newspaper Web sites, creating a lot of remnant inventory on those sites. Because real local advertisers aren’t interested in one-off page views, then Google convinces these sites to use AdSense to fill the undesirable remnant space. This isn’t coincidence. Google understands the effect of driving up remnant inventory via Google News.
You really think this multi-billion dollar business just runs this site, even featuring it prominently, out of the goodness of their hearts?
At least for a moment, assume everyone is in this to make money. Because they are.
(On Apr 7th, 2007 at 2:10 pm)
Thanks for the comment, Lucas. I read your blog post, and I have considered the possibility that Mr. Zell is right — and dismissed it, for the reasons I mentioned.
As for your point about Google News making money by pushing up the amount of remnant inventory on newspaper websites and then selling them AdSense to fill it, that has to be one of the most convoluted theories I’ve ever come across, if you don’t mind my saying so.
Obviously, Google is interested in increasing the amount of Web traffic so that it can sell advertising, so tools like Google News make sense. But to blame Google for the fact that newspaper websites can’t make money from their own ad inventory is a little ass-backwards, don’t you think?
(On Apr 7th, 2007 at 2:19 pm)
What you call convoluted, I call well thought out.
Perhaps you have some other rationale for why Google provides the Google News service? I say it’s in it for the money from AdSense. You say, what, that it’s just for kicks?
(On Apr 7th, 2007 at 2:33 pm)
Lucas, I agree that Google News is designed to increase Web traffic to sites that might use AdSense — but that’s not what you said. You said that Google News deliberately drives traffic to newspaper sites, knowing that this will increase remnant inventory and therefore those sites will be forced to use AdSense. That’s convoluted.