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Why Google Will Win

By Sam Singer

Concerning the print industry's uncertain future on the web, Sam Zell, Chicago's newest media mogul, asked this: "If all the newspapers in America did not allow Google to steal their content for nothing, what would Google do? We have a situation today where effectively the content is being paid for by the newspapers and stolen by Google . . . That can last for a short time, but it can't last forever."

That was in 2007, back when Zell was still an infant in the newspaper industry. For a man accustomed to opening his mouth and moving markets, Zell likely was startled, if not a bit humbled, when media insiders dismissed him as unversed and out of his element. Google, they reminded, is instrumental for newspapers in their struggle to survive online. The familiar storylines went on from there: Google doesn't steal content, it aggregates it; Google's retrieval programs don't copy stories, they sort them and compress them into hyperlinked headlines; those hyperlinks provide valuable pass-through traffic for news organizations, which can then turn around and raise advertising rates. Most importantly, Google's aggregating model is not directly profit-driven. Google News does not solicit advertisements, which puts it on cooperative footing with news sites in their efforts to raise their ad profile. In short, Google is the digital hand feeding hundreds of struggling content providers, and here was Zell, three days into the job, biting it.

All of which was accurate at the time. But if nothing else, credit Zell for his prescience, unintentional or otherwise: Last month Google News began running sponsored links alongside search results. Google News will now support itself with ad revenue, placing it in direct competition with content providers. Zell, it turns out, spoke too soon.

Startled by Google's sudden obedience to the bottom line, news outlets once behind the Google model are recoiling. Like Zell, their owners shutter at Google's talent for wringing value from web content, a skill that seems to have eluded our newspapers. Some, reportedly, are considering pulling their content. Others are being encouraged to sue.

Those in favor of the latter approach seem encouraged by two recent copyright suits against Google, both of which ended in settlement. In one, Agence France-Presse (AFP), a global news agency, challenged Google's use of copyrighted photos and wire stories for its news service. The parties settled without disclosing the financial terms of their agreement, except to say that AFP now authorizes Google News's display of headlines and photos to the extent they will help bring customers to news sites displaying AFP content.

Then there was Google's settlement with publishers and authors who brought suit challenging the Book Search project. For those unfamiliar, Google is in the process of building the world's first digital library. The project requires scanning millions of books, many of which are under copyright. As with the AFP agreement, print enthusiasts are emboldened by the Book Search settlement, which obligates Google to share a significant percentage of the project's revenue with authors and publishers - on top of the $125 million the company will pay upfront. Sue now, they implore, while the web giant's wounds are still open.

But newspapers have reason for pause before bringing this matter before a court. Settlement as a litigation strategy is too often mistaken for surrender. You might say I "settled" with the unsightly insect that happened upon my kitchen table last week when, instead of swatting it with the business section, I gently escorted it outside. But you would be foolish to conclude from my decision that I was outmatched. The same is true for Google, which likely had a number of intelligent reasons to mediate its copyright suits out of court, all wholly unrelated to the merits of its legal position.

In fact, Google has a rather sturdy defense for its use of copyrighted content. Google's lawyers maintain the company aggregates news content in accordance with the well established principle of fair use. The fair use doctrine operates as a limitation to the exclusive rights of copyright holders. There are no precise rules for determining when a use is fair, but courts often look to see if the new user has in some way transformed the original work. This might be achieved through parody or through artistic effect, or by reproducing a work for educational, non-commercial purposes. I can't, for instance, take a John Updike title and publish it under my name. But if instead I douse it in barbecue sauce, sprinkle on some glitter and call it contemporary art, I may have sufficiently transformed the original to satisfy fair use requirements.

Likewise for Google and its content retrieval services. Courts have consistently found search engines to have such transformative effects. According to the U.S Court of Appeals for the Ninth Circuit, which tends to chart the path in digital copyright law, when Google displays copyrighted content in its search results, it transforms original images into reference tools. In the Court's words, "Although an image may have been created originally to serve an entertainment, aesthetic, or informative function, a search engine transforms the image into a pointer directing a user to a source of information." Such is the basis for Google's fair use defense. So far the decisions in federal court concerning digital fair use have been limited to cases involving the aggregation of music, videos and photographs. But because courts consider news reporting a fair use in its own right, Google likely will have little trouble defending its aggregation model against a copyright challenge.

A potentially stronger defense is that news outlets have granted Google an implied license to display their content. This defense proved successful in a similar case involving cached web pages. Google's argument is an appeal to intuition: Since news sites can readily shield content from aggregators, it follows that their failure to do so results in an implied license to retrieve and display the content.

Which calls to mind Zell's original question: What would Google do if newspapers stopped giving away their content? It's worth recalling that before Google News began soliciting advertisers, Google seemed content to subsidize the service with other revenue streams. Content providers would be foolish to think they could bully a $150 billion company into submission. They would be even dumber to climb into the ring with Google over a lawsuit. Their best bet, I believe, is to embrace aggregation, to invest in optimization strategies that will ensure their content a more prominent place among the search results. This will require some patience, and probably an MIT student or two. Whatever they do, it is high time they realized they're on the wrong side of the digital revolution.


Previously by Sam Singer:
* Is TARP legal? Court to decide on laugh test.

* Taking Government Out Of The Marriage Business. Separating church and state.

* Chicago's Disorderly Conduct. Dissent allowed even in Daleyland.


Sam Singer is the Beachwood's legal correspondent. You can reach him here.


Posted on April 6, 2009

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BOOKS - All About Poop.


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