Zell doesn’t get the web

Employees at Tribune are now the main owners of Tribune, thanks to Sam Zell’s innovative ways with ESOPs. Their problem is that although they own the company, they don’t control it: Zell does. And so they have to simply cross their fingers and hope that he knows what he’s doing.

Judging by comments reported by the Washington Post on Saturday, however, he doesn’t.

It’s time for newspapers to stop giving away their stories to popular search engines such as Google, according to Samuel Zell, the real estate magnate whose bid for Tribune Co. was accepted this week.

In conversations before and after a speech Zell delivered Thursday night at Stanford Law School in Palo Alto, Calif., the billionaire said newspapers could not economically sustain the practice of allowing their articles, photos and other content to be used free by other Internet news aggregators.

“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.”

Newspapers have allowed Google to use their articles in exchange for a small cut of advertising revenue, but search engines also help to distribute their content to wider online audiences.

This is all pretty much garbage, as Jason Calacanis, among others, has done a very good job in pointing out. For one thing, the Washington Post is simply wrong when it talks about Google giving newspapers “a small cut of advertising revenue” – that’s not possible, since Google News doesn’t have any advertising.

Which also helps to answer Zell’s question. If all of the newspapers in America did not allow Google to steal their content, how profitable would Google be? It would be just as profitable as it is today. And Google doesn’t steal their content any more than it steals anybody else’s content: Google indexes their content, which is something else entirely.

I have a rule of thumb for judging any kind of regularly-updated website which is being run on a for-profit basis. If your business plan looks like this, then it’s doomed:

People who want information will come to my site, where they will search for that information and find it, or otherwise be directed to it.

That’s simply not how people use the internet. There are maybe one or two websites which fit that bill: Wikipedia and IMDB spring to mind. But I suspect that even they get an enormous amount of their traffic from Google, because they have such a high Page Rank. Wikipedia’s traffic really started skyrocketing when Wikipedia started becoming the top search result for hundreds of thousands of Google searches.

If Zell wants to make money online, he has to embrace Google, not fight it.

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