Publishers, Searching for Profits, Look to Google


imageStarting in Germany and France, and subsequently picked up in several other European countries, there is a lobbying and political initiative to introduce what could be termed a Google tax.

The proponents of the initiative demand that special copyright royalties from search engines – like Google - be paid to newspapers.

A schizophrenic relationship

Many print publishers and broadcasters entertain a somewhat schizophrenic relationship with Google (and, for that matter, with other search engines such as Bing, Yahoo, DuckDuckGo, Blekko, or Yandex) on three counts:

  1. Publishers could easily opt out of all search engines, Google in particular. Or specifically, out of Google News. There are several quite simple ways to do this. Google itself offers a tutorial. And yet most publishers choose to allow search engines in. From where I sit, this is an implicit agreement to the role that Google and others play for the Internet: Sorting information by relevance and rendering it easy to find. It is also a concession to the fact that Google drives a huge proportion of the total traffic to popular media websites, indeed to any website at all.
  2. Publishers could protect their content by putting up paywalls or requiring users to log in. Many do. This is an effective way to lock out search engines and to allow only paying users. However, paywalls and log-ins tend massively to reduce traffic, because occasional or random users will rarely visit any more. This is fine if the publisher has a substantial base of paying subscribers. But if selling online advertising is a relevant source of revenue, audience size matters. This is why the majority of news websites remain freely available.
  3. Some publishers use paywalls that lock out users who come directly or via a social recommendation to their website, but strangely not users that come through Google(*). So a person who thinks, “I know and trust the such-and-such newspaper, so let’s see what they have got on the matter I’m interested in right now” gets frustrated or is cheated into paying for access. But the random one-time user who just happened to search for something that coincidentally appears on the website receives a free pass. This amounts to trying to rip off particularly loyal (or insufficiently web-savvy) people, while still benefiting from the traffic that search engines generate.

It all amounts to the following dilemma: If an online publication wants to sell advertising space and maintain its brand, it requires as much traffic as possible. Traffic comes thanks to Google.

Yet in this way the publication can make only a fraction of the money per visitor that it previously made from each reader of its print edition: Online advertising space is much cheaper than in legacy media, and if the website is free, there is not even the equivalent of a copy price to be made. That, on the other hand, is not Google’s fault.

Unfortunately, a great many legacy media organisations – television and radio broadcasters, print newspapers and magazines, publishers of printed books – seem to have a way of deliberately closing their eyes to what the structural shift from the world of old media to the Internet means.

Instead, they attempt to protect their accustomed business model by putting as many spokes as possible in the Web’s wheels, if perhaps only out of spite.

“Related rights”

The so-called Google tax is just another one of these spokes. Its purported justification lies in the concept of related rights. The debate is protracted and complex, but let me try and illustrate what this means.

A musician who plays music written by a composer uses the composer’s work, but adds an original layer of her own to the piece. The musician would not have been in a position to play that very piece without the composer’s initial input, but her specific interpretation of the work is all hers.

Hence, in the same way that the musician must acknowledge (and, in many cases, pay) the composer, anyone playing a recording of the piece in the musician’s version is in turn obliged to acknowledge both composer and musician.

This is still pretty straightforward. The concept gets murky once it is extended to what are essentially curatorial efforts. The editor of a scientific anthology is protected by related copyright even if he did not write one sentence of the anthology himself. The organiser of a rock concert is protected because he went to the trouble of hiring an artist, renting a venue, selling tickets, and promoting the event. The producer of a music album has the exclusive right to exploit it, basically just because it used to be very expensive to make one, what with the recording, mixing, packaging, cover design, and so on.

All the above is still comprehensible – if only to a certain degree. This form of related copyright is a result of heavy lobbying efforts by the creative and media industries and, as far as I am concerned, of an over-glorification of derivative creativity. After all, while a factory worker certainly deserves payment for her work, hardly anyone would think she acquires rights in the product she helps make.

The Google tax carries the idea of related rights to an absurd extreme. The publishers demand money because Google displays (admittedly on a large scale) the headline and a snippet of a product they have curated. Notably, Google does not re-use the actual product. It merely refers to it in a fashion designed to be meaningful to human users. Google does not even display advertising alongside news.

The only thing users can glean from Google News is that something has happened and is covered in various publications. To actually read an article and take in the information offered in it, users would need to click and visit the publisher’s original site.

This is as if a newsstand had to pay royalties for exhibiting the papers and magazines it has for sale.

One could also plausibly argue that news is in the public domain anyway. Things of interest to the public occur, and reports about them have long been a commodity. No provider actually owns a news item – the best they can do is be the first to report it (what journalists call a scoop) or, failing that, provide the best coverage. News outlets feed off each other’s scoops all the time. Every message that begins with a sentence like “CNN reported today…” demonstrates that the medium is just re-hashing somebody else’s investigation – without any money changing hands in the process.

Worse, a great deal of news coverage is generic to begin with, because all news organisations just buy it from the same handful of newswires such as Reuters, Associated Press, or Deutsche Presseagentur.
Incidentally, this last aspect should indeed alarm news publishers, because the truly detrimental effect of Google News is that it renders immediately obvious the fact that most news reports are redundant, interchangeable churnalism. In terms of most news, paper A is not much better or more exclusive than paper B or broadcaster C. In an act publishers may find defiant, Google even shows in a neat chart how many sources are covering the very same story in a virtually identical fashion.

Digital successes

It is slightly ironic that the very publishing house that most adamantly promotes the Google tax in Germany, Axel Springer AG, recently reported that revenues from digital media already generate more than half its overall turnover – a major step for a traditionally paper-based enterprise that, owns, among others, the hugely successful tabloid Bild. Springer, of all legacy media, appears to have made major inroads into the online economy. The company also announced that it will soon put its broadsheet flagship Die Welt, as well as Bild, behind paywalls. The results are likely to be respectable.

Similarly encouraging news is coming from various German publishers and broadcasters these days. It appears that those who prevail genuinely adopt the online world and offer convenience and added value to their customers. They may focus on analysis rather than news. They may pick up topics underserved in the over-hasty online news cycle, providing well-researched long-form stories. Perhaps they aggregate news in a particularly well-curated and relevant manner.

So it turns out that shrinking print revenues actually can be compensated for via Internet – either by substantially increasing the reach and variety of digital offers, or by making available competitively priced pay services. For instance, the iPad and e-paper issues of the reputable and expensive Frankfurter Allgemeine Zeitung come about one third cheaper than the print copy, which is pretty exactly what the publisher saves on physical distribution. As an extra benefit, you get the electronic version already on the eve of its publication date and anywhere in the world rather than only at home.
The Google tax, on the other hand, is a contrived idea that could only catch on because a majority of the political establishment does not yet understand the economics of the Internet. At the same time, it is way too chummy with publishers and editors-in-chief. The drive for the Google tax is a classic backroom lobbying effort attempting to secure an undeserved windfall profit and to rein in new competition for as long as possible. It is designed to explore the extent to which lawmakers can be coaxed into complying with particular business interest irrespective of whether it makes sense for the public good.

If the initiative is ever signed into law, as a matter of principle Google should not give in and pay. It should exclude the respective publications from its services.

I predict publishers will want to repeal the law as soon as they notice how much traffic they are losing, as they did in a similar case in Belgium.

And Google should finally become a commodity news provider in its own right. It could simply buy rights to the feeds of major newswires and thus skip the dispensable detour via griping third-party news portals in the first place.

(*) For an example, google “How Barroso and OLAF messed up Dalli’s exit“, and you will be referred to the full article on the website of the European Voice. Now click the very same link of that article so it opens in a new browser window. You will be prompted with a message saying that the article is reserved for registered and/or paying subscribers, which is not actually true. More importantly, Google has nothing to do with this – it’s entirely a matter of how the European Voice intentionally configured its website.

Tags: paywall, online advertising, internet search engines, google, electronic commerce, bing,