Zell’s Bluster about the Internet

There’s a good article in the Online Journalism Review critiquing new Tribune owner Sam Zell’s inflammatory remarks about portals and search engines (reported in the LA Times [a Tribune paper]):

Journalists produce the news that search engines such as Yahoo Inc. and Google Inc. seamlessly and freely make available to anyone with a computer, Zell said during a presentation on corporate governance at Stanford University. “If all the newspapers in America did not allow Google to steal their content for nothing, what would Google do, and how profitable would Google be?” the Chicago real estate maverick mused.

His answer: Not very.

The obvious rejoinder to this is that Google (and Yahoo!) don’t really make money off news content. Yahoo! News does have display advertising but Google News has no advertising whatsoever. Google makes 99% of its revenue on paid search ads that appear in search results (which infrequently feature news content) and on third party sites (sometimes newspapers) and contribute revenue to those sites.

Google and Yahoo! also have relationships with newspaper publishers (though not Zell’s Tribune to my knowledge) that arguably are beneficial to those publishers — though there are skeptics who vehemently disagree.

Regardless, the state of the Internet is what it is and making statements such as he did is both ill informed and something like American administrations successively wishing that Cuba would go away because they didn’t like Castro and Communism. Better to acknowledge and accept reality and work with it.

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