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.
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.
Lucas Grindley has posted a comment on my media blog 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.
More on Zell’s comments from Rex Hammock, Frank Gruber at Somewhat Frank and Doc Searls, and there’s also an excellent and insightful post (as always) from my friend Tony Hung at Deep Jive Interests. Ad Age magazine also has a good look at the issue here, and makes the point that newspapers aren’t like real estate (although they might once have been). And David Olive has a nice opinion piece at the Toronto Star as well — thanks to Tony for pointing that one out to me.