Now Google indexes the full content but only for searching purposes, and it displays only headlines and a brief snippet from the news article in question. I'm with Google here - I personally believe what they do is fair use, and being indexed and searchable on Google brings many people to your site (and to your ads) who wouldn't otherwise go there at all. Sure, Google makes money from ads, but it's not running ads on the Google News pages (see this helpful analysis of how Google's ads and keywords and caching work, in this specific context). And rather than forcing visitors to go to their front page (what's to guarantee they'd click on ads on those pages anyway?), why don't newspapers and other sites run ads on deeper pages which are directly relevant to the content of the page concerned and so would generate more clicks?
I'm very glad Google is appealing the ruling (which apparently was made without Google being told about it, never mind being given a chance to put their own case to the judge). I think this sort of thing could strike at the very heart of the Internet. Search engines are Net users' bread and butter. They have to be able to index content so we can search for it, they have to be able to link to it (yes including deep linking) so we can find what we want. Don't sites want the traffic? Rather than complaining and suing, can't they instead try to make more money by adapting their advertising models to take account of how the Net has evolved, as Google itself has done so successfully - search engines, deep linking, the greater interest visitors have in content-related ads?
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