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Google Gives Ground in War Over Who Pays For News

By Gary Symons

TLL Editor in Chief

US tech giant Google has announced a new policy to pay for some licensed news content in the UK, after coming under intense fire in Europe and Australia for allegedly profiting from news content without compensating the news organizations that produce that content. Google is now faced with new legislation that could force it to pay massive sums to news organizations, in return for posting their content as search results.

While the outcome is uncertain, Google and fellow tech giants like Facebook are fighting hard to prevent governments from forcing them to pay for the news content they are serving up through their respective platforms. In doing so, it appears Google is now giving up some ground, and trying to work with news outlets to find a less damaging revenue sharing model. It’s a critical moment for both the producers and consumers of news, and also for the future of the internet itself.

The announcement came from Ronan Harris, the VP and Managing Director of Google for the UK and Ireland, who revealed the new direction in his own blog on Google.

“Today, we’re announcing that Google News Showcase, our new product experience and licensing program for news, will begin rolling out with local, national and independent publishers in the U.K.,” Harris said. “As part of our licensing agreements with publishers, we’re also launching the ability for readers to access select paywall content. This feature will give readers the opportunity to read more of a publisher’s content than they would otherwise have access to, while enabling publishers to encourage readers to become a subscriber.”

In response to threatened regulation from Australia and the EU, tech giant Google has launched a new service called News Showcase in an attempt to help news organizations earn more revenue.

The move comes as Google has come under direct fire internationally for the negative impact its critics allege it has had on news organizations worldwide. Whether by design or as a natural by-product of Google’s business model, it is undeniable the company’s advertising offering has devastated the business model of newspapers and other news organizations around the world.

In the wake of massive disinformation campaigns over the past five years, and particularly around the United States election in November, national governments have awakened to the negative impact the decline of journalism is having on democracy, and also on how governments can deal with a crisis like the COVID-19 pandemic. The near collapse of news as an industry has given rise to thousands or even millions of blogs, many of them publishing poorly researched articles or even deliberately misleading stories.

The reasons for this near collapse of newspapers in particular—but also to a lesser extent radio and television news—are two-fold. On the one hand, Google doesn’t need to produce its own news to attract readers and viewers. Instead, Google simply offers up access to news articles or videos online through its search algorithm, and when users of the Google search engine look for news, they are also inundated with highly targeted advertisements. Over time, the ability to access news online for free has wreaked havoc on subscription-based newspapers and magazines, many of which have gone out of business altogether.

The second factor is the type of advertising involved. Google’s greatest achievement as a company was to come up with highly effective advertising that is targeted directly to consumers. Google is able to determine the user’s location, interests, and in many cases, what they are currently shopping for. If a shopper is looking for shoes on Monday morning, then Google will be serving them up ads for shoes for the rest of the day, and perhaps for weeks afterward. Google’s ad model is like a sniper rifle: highly targeted and highly accurate.

The model for newspapers, on the other hand, is relatively antiquated. Newspapers typically run banner ads on their pages, and readers may or may not look at those banner ads. Typically these ads are not targeted in any way, and so banner ads in newspapers are typically much less effective than an ad campaign on Google, or for that matter on Facebook and other social media networks.

Ironically, the main way that news organizations have counteracted their shocking decline in ad revenue is to—wait for it—adopt Google’s ad services on their websites, figuratively inviting the wolf into their own homes. To be sure, the news outlets had little choice. The blogs that were replacing them readily adopted Google Ads for their revenue, and so the newspaper industry had little choice but to do the same for their own publications. Alternatively, some publications adopted various ad server services, but Google now makes enough from news alone to be considered arguably the world’s largest news service.

So, how bad is it for news outlets? By 2017 the amount of revenue Google earned from advertising topped $80 billion, which is significant because it equals the revenue from every newspaper, magazine and print publication on Earth. An even scarier figure is that Google and Facebook alone account for about half of all the ad dollars spent on the planet, and are taking in about 83 per cent of all new ad spending. Additionally, the 12 companies behind the Big Five—Yahoo! Microsoft, Linkedin, IAC, Verizon, Amazon, Pandora, Twitter, Yelp, Snapchat, Sina and Sohu—bring in roughly half of what Google brings in annually in ad revenue.

In other words, the tech giants’ share of the advertising pie is growing ever faster, while the media industry that actually produces the content is left fighting over the crumbs.

According to many media industry insiders, Google and other tech giants, such as Facebook, Twitter, and LinkedIn, also earn money directly from the content that news organizations produce. In 2018 a study by the News Media Alliance concluded that Google was then earning $4.7 billion from news content, without paying anything to the content creators.

“Among the major findings of the study is that news is a key source on which Google has increasingly relied to drive consumer engagement with its products,” the News Media Alliance said in a statement. “The amount of news in Google search results ranges from 16 to 40 percent, and the platform received an estimated $4.7 billion in revenue in 2018 from crawling and scraping news publishers’ content—without paying the publishers for that use.”

The organization also argues that the loss of ad revenue to Google is crippling the ability of news organizations to fund quality content, particularly more expensive operations like investigative journalism.

“News publishers need to continue to invest in quality journalism, and they can’t do that if the platforms take what they want without paying for it,” said News Media Alliance President & CEO David Chavern. “Information wants to be free, but reporters need to get paid.”

At the time, Google argued it doesn’t profit directly from news, and it was supported by some experts in the field. Jeff Jarvis, a City University of New York journalism professor, argued the premise of the study is flawed, in part because it relies on “snippets” in search results.

“Snippets in search are NOT content,” Jarvis wrote on Twitter. “They are links TO the publishers. Google does not monetize Google News. When it makes money on news it’s by serving ads on publishers’ sites.”

But news organizations don’t agree, saying Google has far more tools at its disposal than just the snippets you see in a search. The News Media Alliance said that because Google and Facebook dominate online news traffic digital advertising, “publishers are forced to surrender their content and play by their rules on how news and information is displayed, prioritized and monetized,” adding that news organizations “are limited with disaggregated negotiating power against a de facto duopoly that is vacuuming up all but an ever-decreasing segment of advertising revenue.”

In response, some governments have begun to take action, taking the view that protecting the copyright for content produced by news organization is important to maintaining jobs in the industry, but also to the maintenance of democracy itself. The EU, for example, rewrote its copyright laws to force Google and other tech companies to share revenue with news organizations when their content is displayed, but at the moment, all eyes are on Australia which is involved in a knock-down, drag out brawl with Google over news content.

That country has proposed a new law that would force Google to pay news publishers to feature articles on its search platform and news feeds. The law, if passed, would also instruct Google to negotiate licensing agreements with publishers, or be forced into mandatory arbitration—a protection not offered to publishers under the agreement Google has struck in the U.K.

Google fired back, and has threatened to withdraw its Google Search from Australia. Google has called the Australian law “unworkable” and instead pointed to its News Showcase licensing as a solution. Facebook, which will also be affected by the law, has also threatened to stop showing news content on its platform to Australian users. Australian officials, however, appear undaunted. In an interview with Forbes last week, Chair of the Australian Competition and Consumer Commission Rod Sims responded curtly, “We’ve seen this around the world with Google and Facebook: The only time they’ve been moved is when they’ve been forced to.”

If the threat only came from Australia, population 25 million, Google and Facebook could probably afford to simply withdraw their services, but the movement to force a revenue sharing agreement on the tech giants is widening. In January 2021 Google agreed to some licensing agreements in France after the courts intervened. Much more seriously, the European Union has threatened to broaden its actions against Google and Facebook by including some of the Australian measures in two sets of regulations that affect tech companies, the Digital Services Act (DSA) and the Digital Markets Act (DMA). If that happened, simply removing services from those markets wouldn’t be an option, as it would cripple Google’s search engine services globally, leaving the door wide open for a competitor.

All of that explains why Google is now seeking the favor of the UK government and of news media companies through the launch of Google News Showcase.

The search giant first announced that it was developing a “new news experience” over the summer, suggesting that it will pay publishers and media outlets to license content. In an earlier blog post on Oct. 1, Google and Alphabet CEO Sundar Pichai said the company will pay publishers more than $1 billion over a three year period to “create and curate high-quality content” for Google News Showcase. Since then, Google has been hurriedly closing deals with a wide variety of media companies, particularly in Great Britain.

“In the U.K, Google has signed partnerships with publishers such as Archant, DC Thomson, Evening Standard, The Financial Times, Iliffe Media, The Independent, Midland News Association, New Statesman, Newsquest, JPI Media, Reach, The Telegraph and Reuters,” said Google’s Ronan Harris. “In total, more than 120 publications in the U.K. will start curating content for News Showcase, many of them local newspapers who do not have the same resources that many larger, national papers have to invest in their digital transformation.” Harris also notes that, globally, “there are now more than 450 news publications in Google News Showcase in over a dozen countries including Australia, Germany, Brazil, Canada, France, Japan, U.K. and Argentina with discussions underway in a number of other countries.”

In the same blog written by Harris, news media executives are quoted as welcoming the initiative, among them Zach Leonard, CEO of The Independent, one of the UK’s largest national newspapers. “Google News Showcase extends The Independent’s well established partnership with Google, delivering on the brand’s diversified strategy to develop data-rich, engaged customer relationships, licensing revenues and digital subscriptions,” said Leonard. “We’re thrilled to join the platform as it rolls out.”

Whether that ‘thrill’ is going to last depends on whether the Google News Showcase results in meaningful revenues for the news organizations that have joined in so far, and that is far from a sure thing. Many newspapers have given up on paywalls and are entirely dependent on advertising, but with Google highlighting hundreds of news organizations at the same time, it’s unsure whether the initiative will result in a lot of new subscribers for newspapers and magazines. On the modern internet, readers tend to click through multiple stories from multiple news organizations, rather than subscribing to any one publication, so simply being one of hundreds of sources listed on Google may not, in fact, answer the revenue sharing problem.

As well, $1 billion over a three-year period, split between several hundred media outlets, clearly will not make a life-saving dent in the news industry’s bottom line.

For now, however, Google’s response to the issue of content licensing will be bound up in the News Showcase offering. Will it be enough to forestall onerous new regulations in the EU and Australasia? At the moment, it appears very likely that regulators will want to count the dollars changing hands, and if News Showcase fails to ensure the survival of a vibrant news industry, more stringent regulation will almost certainly follow.

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