Sam Zell Wrongly Blames Google for News’s Troubles

JasonC has a nice catch of a major Google ouch-quote by Sam Zell, who just paid billions for “a bunch of newspapers”:

“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.”

As JasonC points out, this is not only factually incorrect — news doesn’t drive Google revenues — it shows little knowledge of how Google does make money. Doesn’t augur well for the future of the business.

[WashPost via JasonC]

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  2. When Newspapers Attack!
  3. Upping Google Estimates
  4. Cramer on Google, Bottled Milk, & Newspapers
  5. Ballmer Call Google Insane; Schmidt Points to Share Price

Comments

  1. Yeah, I took a crack at that one too: http://tinyurl.com/22knw5

  2. Lucas says:

    Assume for a moment that all multi-billion dollar companies are in every project ultimately for the money, including Google.
    So how does Google make money off its Google News service, which doesn’t have any ads?
    By driving up links to newspaper Web sites, loads of remnant inventory is created on those sites. Since local advertisers have no interest in these one-off page views, then Google convinces these sites to use Google AdSense for filling the remnant space. This isn’t coincidence.
    Google understands the effect of driving up remnant inventory via Google News.
    All multi-billion dollar companies are in it for the money, Google included. They’re not featuring Google News prominently just to be nice. Or it that really what you thought they were doing?
    Before dismissing him, consider for a moment that the billionaire has some experience and insight of value. I actually think Sam Zell has a point, and I’ve explained why on my blog.

  3. C. Maoxian says:

    Zell obviously didn’t read Buffett’s letter to shareholders this year in which he warned:
    “Aspiring press lords should be careful, however: There’s no rule that says a newspaper’s revenues can’t fall below its expenses and that losses can’t mushroom. Fixed costs are high in the newspaper business, and that’s bad news when unit volume heads south.”

  4. Bob M says:

    Hey, Google could stop “stealing” and just link only to blogs that keep the newspapers honest. I would prefer that, for I always go to blog criticism to detox myself after reading a newspaper anyway. I’m half-joking, but I would seriously like it as an option next to News on the Google page.

  5. Percy Walker says:

    Give Zell a break. He’s much smarter than Calcanis makes him out to be. And the quote Calcanis seizes upon is a snippet of what he said in response to a question at the end of a talk about SOX. I think the point is that, given that Google has settled with AP and Agence-France Presse, if enough newspapers refuse to allow their sites to be indexed, their relationships with Google could be changed to their benefit. But who knows? Certainly not Calcanis or the rest of the hyperventilating uber-geek blogging set.

  6. bernie says:

    Who would even find archival stuff on News sites without Google? Newspapers should get on their knees that Google sends them any traffic at all. Content without access is like a vaccine without a needle, it’s useless without a mechanism for delivery.
    Most news sites still have no clue how to monetize their product. The NY Times charges a few bucks for someone to look at archival material. What idiots. Instead of making it available and making money from adsense they keep their content locked in a basement and make bubkis on the few sales to other morons. Clueless idiots.

  7. Sam Zell may want to read my article,
    Newspapers: Industry in Turmoil

    for an overview of the strategic manueverings
    going on, and more importantly, should be going on.
    Regards, Sramana

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  10. worth says:

    I’m with Bernie above (“Instead of making it available and making money from adsense they keep their content locked in a basement…”). I honestly read more news stories from some paper in New Zealand that’s featured in many of Google’s news links that have multiple articles on the same story than I read from “name brand” U.S. newspapers. For that kind of exposure to my articles and ads to millions or billions of eyeballs, I would have assumed they’d be paying Google a ton to have their links featured on Google News, not the other way around. Guess I just don’t understand this crazy new technology, unlike Mr. Zell (DUDE, if I were looking to blow that kind of cash on something, a newspaper company wouldn’t be on my list at all, let alone at the top of it; did Rupert Murdoch, who actually knows a thing or two about making money from paper sources, go looking for more paper, or did he do what he always does and get out ahead of the curve and invest in something that will potentially make more billions for him? The very best Zell can hope for is to not lose his shirt as the world continues its shift away from the model he just bought into).

  11. Lee D says:

    Dealbreaker’s Joe Wiesenthal made a decent point this morning, and I felt compelled to chime in, much along the lines of what Mr. Worth here just said, so I won’t regurgitate it here.

  12. Dan Auito says:

    Anyone know Sam Zells E mail address. Thanks!