Google isn't the problem

Doubtless Sam Zell knows a lot about real estate. He made most of his billions in that business.

But he clearly doesn’t know much about the Internet – or the newspapers industry he just bought into.

Zell, the Chicago magnate who won the bidding war for the Tribune Co., caused a stir last week when he fired a shot across Google’s bow during a speech 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?" he asked.

“Not very,” was his answer.

That was a welcomed clarion call for frustrated newspaper folk helplessly watching their print ad revenue steadily drop while Google rakes in millions more each month.

The only problem is Zell’s answer was wrong. So was the premise of his question.

As many commentators pointed out, the fountainhead of Google’s ever-growing profits is its ubiquitous search engine. Google doesn’t “steal” content – it finds it and links to it. Newspapers sites are a tiny fraction of what’s to be found on the exponentially growing Web.

As for national and international news, Google and Yahoo already have deals with some major players, including the Associated Press, to provide all the content they need. Google simply has no reason to pay for local news that isn’t of interest to the vast majority of its world-wide users. And it's local news – the core franchise of most newspapers – that's at issue.

Of course, newspaper could start charging for stories any time they want – either through subscriptions or per-story payment. But that's been shown time and time again to be a failure. (The Wall Street Journal serving as the exception that proves the rule.)

One argument offered is that newspapers must unite to demand payment: If all newspapers charged, people would have no choice but to pay up.

OK, let's say that happened – although it likely would take an act of Congress to grant the necessary exemption from antitrust laws.

What then?

Think about it. Wouldn’t there be a slew of Web sites pop up in every city offering local news? Without the cost of printing presses and delivery, the startup costs would be minimal.

And who would be reporting, writing and photographing the news? A bunch of amateurs?

Not necessarily. How about the hundreds of veteran newspaper reporters and photographers laid off or bought out in the last couple years.

How can these small outfits compete with established names such as Zell's newly acquired Chicago Tribune, LA Times, Baltimore Sun and the other papers in the Tribune chain?

How would people learn about these new local news sites? Who can provide an economical way for local businesses to place ads on their pages?

Do you suspect Google might be able to provide some help in those areas?

Welcome to the Internet, Mr. Zell.