Looks like billionaire real estate tycoon Sam Zell has jumped right into the newspapers “alive or dead” meme with his 8 billion dollar purchase of the Tribune media glomerate. There’s a lot of discussion roiling around the blogosphere about things, but I think most of them are missing the Real Issue about newspapers and their relationship with Google.

Its a long train of thought — but bear with me, because I’ll get to the Real Issue in a second.

His most notable quote about his recent purchase, and more importantly, his belief about how newspapers should interact with Google was as follows:

“If all of the newspapers in America did not allow Google to steal their content for nothing, what would Google do?” he asked. “We have a situation today where effectively the content is being paid for by the newspapers and stolen by Google, etcetera. That can last for a short time, but it can’t last forever. I think Google and the boys understand that. We’re going to see new deals and new formulas in the media space that reflect the reality of cost benefit.”

What if Zell Got His Way?

Let’s do a thought experiment for a second, and forget that Google News doesn’t actually make a cent off of advertising (although, yes, it might be making it indirectly).

Let’s further assume that Google *is* cutting into potential revenue, because the Tribune *could* charge for its content, let’s say, for example, through licensing fees and so forth; or perhaps, through “lost” ad revenue, as people who find the Tribune through Google rarely travel to any other page on their site.

And what if Sam Zell had his way, and got Google to stop indexing the Tribune’s media properties, let’s say, through the force of litigation (and it seems like that’s the only way to do it — although I suspect that it would really use the billions of market cap at its disposal to fight it).

You would then get Zell’s perfect scenario: Tribune would then be able to put an offer down on the table, whereby it could extract a few shekels from Google in order for the privilege of Google to index the Tribune’s media properties. Without payment, no listings.

Well, what would happen then?

I suspect that Google would yank the Tribune’s listings while they fought it out in court. It would remain in limbo for a long time.

I think the question remains: if Sam Zell’s objective, is, as he states himself, “to increase revenues and cut costs while supporting quality journalism”, would getting Google to delist Tribune properties, in fact, increase revenues, all other things being equal?

I don’t think so.

And that’s because his perfect scenario hinges on a critical assumption: people would be as comfortable going directly to Tribune media properties directly for news, rather than finding their news elsewhere, through other news “aggregators”.

Like, for example, Google.

Now let’s savour for a minute how hilariously absurd this assumption is.

….

done, yet?

To be fair, there is only a single scenario in which his assumption would apply, and that is for local news. For national and international news? Not a snowball’s chance in hell. If I had the resources, I’d do a “man on the street” video cast polling random people with the open ended question “where do you find information or news on the web?”

Google isn’t the Internet, but for many people, its pretty damn close. And I’m not even talking to you, the people reading this blog, who probably also use it for email.

Why would Zell want this? It would clearly be a losing proposition on behalf of his media properties, because, Yes, I believe, in fact a great deal of traffic from all media properties does come from Search Engines, and that by cutting them off, over all traffic would slow down, with the exception of local traffic. Since newspapers are dependent on online advertising as a revenue model, over all revenues would grind to a halt.

I think the real reason why he doesn’t want Google to list his media properties, and perhaps he’s echoing the sentiments of many owners of newspapers, is that he’s worried about the Real Problem with Google.

The Real Problem With Google

The Real Problem with Google is that it levels the playing field. All newspaper brands are laid out equally and fairly. Everything is judged on name and content alone.

Google, as it refers to newspapers, is the ultimate commoditizing force, allowing users to judge which news they would like to read based on the content (headline and copy) and relevance of said content.

If I was Zell, this scary stuff is the REAL problem that I’d be worried about.

And that is that the vast majority of any news in any topic is the same. Pick a category. Let’s say, “Technology”. Subscribe to a few RSS feeds of your favourite newspapers. At any one time, the biggest stories will not be substantially different from each other. There’s a duty to report on things that are newsworthy, sure, but often times there is nothing more than what is reported at the competing newspaper.

No alternate opinions, no breaking news, no hard-to-get interviews.

Hey, its almost like blogging! ;)

Look, the problem with Google is not that its disintermediating the newspapers (although they are), but that they are commoditizing their content. And I would argue that the latter is the Real Problem.

Imagine waking up one day and knowing that your best selling product was like everyone else’s, and then having that illusion lifted in front of your customer’s eyes. That’s what Google does for News.

Or, if you want to put it in a positive way, it is an evolutionary force which drives news organizations to create better content. If they can’t, then they will necessarily not be selected, because their content is no different than the masses.

Again, it almost makes me think of blogging!

So, Zell’s faced with a real quandry: What would he rather have?

Traffic, which drives ad revenue and helps the bottom line, but at the expense of commoditizing his brand, and in the long run, making it difficult for him to derive revenues for an undifferentiated business.

Or, preservation of his brand at the expense of decreasing his traffic down, and ultimately his bottom line?

Zell’s chosen to fight Google on this one, and it seems like he’s going with the second option, which is reasonable. But he’s contradicting himself if he thinks that he’s hoping to maintain or increase revenues by cutting out search traffic for the sake of his media brands.

Now, if he plans to go “hyper-local” that’s another side of the story, because that’s one thing that media properties can really do well on.

Or, if he plans to put a lot of effort into “quality journalism”, putting funds into creating awesome novel content that online folks want to read — that too would be something else. But, as he stated, he’s looking to cut costs, rather than increase them in the short term.

And hey, perhaps that’s the reason why we’re reading and debating about Zell’s quote in the Washington Post, and not, say, the Chicago Tribune or the LA Times.