retailers sell the item below the suggested retail price, the manufacturer fails to benefit from providing the service while incurring the entire cost. This argument led to the legalization of the practice of letting manufacturers establish minimum prices for their products, even if such restrictions kept prices artificially high and limited competition. We see these arguments employed today in efforts by manufacturers such as book publishers trying to keep Amazon from offering or advertising extremely low prices for their goods.33
So what does Google have to do with any of this? Not as much as some would assume. Our lives are full of goods and services that are built to enhance the value of other goods and services. Other goods we buy are generic replacements for parts of other goods, such as lightbulbs, universal remote controls for televisions, or replacement batteries for automobiles. In many of the cases in which Google has been accused of riding for free on the investment of others, Google is in fact just offering a cheaper and more effective replacement for part of the original service. But because of the state-granted monopoly that we call copyright, the role Google plays in the information world is nowhere as simple as the role that cheap lightbulbs play in the electric appliance economy.
Although no court has taken the argument seriously enough to endanger Google’s core business, a growing number of firms have started voicing complaints that Google rides for free on the creative work and investment of others. This argument seems futile for a number of reasons, not least of which is the fact that Google has strong legal grounds (at least within the United States) to do just about everything it does with online content (but not, as I show later, with stuff that resides in the real world). One landmark U.S. case in search-engine law in 2003 set a good precedent that search engines could—in fact must—make copies of others’ work to ensure that the Web functions well for everyone.34 And the American copyright concept of fair use generally protects anyone who wishes to copy and distribute small portions of copyrighted works as long as the purpose of the distribution fulfills some role that enhances the public good, such as education, informing the public about current events or debates, or creating highly transformative work out of the raw materials of existing expressions. So when Google scans someone else’s site, it can feel confident in its practice of excerpting a small slice of descriptive text from the site to help users decide whether it is relevant to their search.35
The story is quite different in much of Europe. In 2007 a Belgian newspaper trade organization won a suit against Google for incorporating its clients’ content in searches on Google News. Because Europe does not have a flexible fair-use provision in its copyright laws, European courts consider different and much more clearly defined factors when determining whether a party has infringed on the rights of another. Since that time, Google has entered into partnerships with some European news organizations, essentially giving them preferential treatment over American sources that have the crude option of being searchable or not by the major Google services.36
None of these arrangements have stopped media from complaining. The media baron Rupert Murdoch has blustered about Google’s ability to monetize the Web in general and Murdoch’s News Corporation in particular. “Should we be allowing Google to steal all our copyrights?” Murdoch said in April 2009.37 In a speech in June 2009, the Wall Street Journal’s publisher, Les Hinton, proclaimed, “There is a charitable view of the history of Google. [It] didn’t actually begin life in a cave as a digital vampire per se. The charitable view of Google is that the news business itself fed Google’s taste for this kind of blood.” Hinton went on to complain that the news business had made a mistake by offering its content for free over the Web, and thus “gave Google’s fangs a great place to bite. We will never know what might have happened had newspapers taken a different approach.”38 And Robert Thomson, the editor in chief of the Wall Street Journal, went even farther by comparing Google to a tapeworm. “There is a collective consciousness among content creators that they are bearing the costs and that others are reaping some of the revenues—inevitably that profound contradiction will be a catalyst for action and the moment is nigh,” he told an Australian newspaper in April 2009. “There is no doubt that certain websites are best described as parasites or tech tapeworms in the intestines of the Internet.”39
By the autumn of 2009, Murdoch had grown so alarmed at the decline in advertising revenues of his publications and the continued growth of Google’s revenue even during a crippling global recession that he threatened to block Google from scanning stories from his prize properties, the Sun, the Times of London, and the Wall Street Journal, and begin charging for access to all of News Corporation’s online content. By early 2010 he had done none of those things. But his anger and accusations of free riding set the tone for debates over the relationship between Google and news sources.40
Google has some simple rejoinders to the complaints of Murdoch and others in the journalism field. First and foremost, Google drives traffic to quality sites, although the amount of that traffic is a matter of some dispute. The Wall Street Journal is a quality site. Its readers, and Web readers in general, have approved of its content by linking to its articles despite the fact that they have always sat behind a paywall, largely inaccessible to those without a subscription to the paper. Second, the fact that Google makes ad revenue off search results for a subject does not necessarily undermine the value of the site itself on the advertising market. There is no zero-sum game going on here. Although it’s true that Google presents a potentially cheaper and more effective way for firms to purchase advertising space, that is true regardless of whether Google includes news results in its general searches (Google does not place ads on the Google News front page but does so on the first page of search results). In the meantime, Google officials have been working with news organizations to figure out ways to generate new interfaces that would privilege “mainstream” content over the noise generated by blogs and aggregation sites such as Huffington Post.41
It is these secondary sites, not Google News or Google Web Search, that pose the real problem for news organizations, and potentially for Google. Many blogs reuse material from mainstream commercial sites, often copying most or all of the text of a news article in a blog post. And many blogs generate revenue through a different Google advertising placement service, AdSense (which is distinct from AdWords, described above). This service allows bloggers and other Web publishers to earn money from click-through ads placed on their sites by Google. Google takes the context of the content on the site into account when placing ads. So a blogger who has ridden for free on content from the Wall Street Journal could profit from readers who chose to read the story on the blog instead of the Journal’s website and clicked an ad on the blog page.42 If there is any substantial free riding on news content going on in the Google universe, it is through these aggregators and Google AdSense. Still, that seems a trivial problem compared to those that the American and European journalism industries have been facing since the global recession started in 2007.43
If Murdoch has a valid point at all in his complaints about Google, it is a minor one. The process of scanning a news site to pick a story to read exposes readers to advertisements. A particular news story might interest the reader and solicit a click. A particular advertisement might do the same. There is a chance that no stories and no advertisements would warrant a click. But at least if a reader is viewing the official site of a news organization, that organization has a chance to profit from that reader’s attention and curiosity. If we assume that most readers ignore most news stories, then the rare and selective clicks from Google Web Search or Google News to a specific story on a news site are worth something to the reader, but possibly less than the scanning time that the reader spent on Google. Murdoch assumes that if Google did not offer links to news content, then readers hungry for his company’s work would spend more time on official sites, giving those sites a better chance to attract a click on an advertisement. Whether this assumption is correct is an empirical question that no one has fully explored. In the meantime, this battle remains one of bluster and legal technicalities. Murdoch believes the world works one way. Google believes the world works another way. Murdoch is losing money. Google is making money. There is not much chance that under current conditions we will be
