There seems to be a little misunderstanding of the lessons to be drawn from the mess Spain has made over Google News. That legislative decision that I described as being " an example of purblind incompetence in the making of public policy" in these pages. There's also the fact that Google does indeed produce Google News around the world without taking advertising on it but the fact that it produces it must mean there is some benefit to doing so even in the absence of such a direct revenue stream. Given this shouldn't Google therefore be sharing some of that value with the newspaper publishers, as the Spanish are demanding? The answer is no, almost certainly not and there's an intriguing guide to why not in what happens over at Yahoo News.
First that misunderstanding about the lesson of the Spanish experience:
But it's at least possible that Spain's decision could be a turning point, showing publishers throughout Europe that it's possible to demand that Google pay for content.
Umm, no, it's not. It's entirely possible to get the law changed, as happened variously (and slightly differently) in France, Belgium and Germany, so that it is possible to demand, if you the copyright owner so desire, money from Google for content. It's also possible to get the law changed, as in Spain, so that you the copyright owner must demand money from Google for content. But it's not possible, in that stronger sense, to demand that Google pay for content. Because if you do so demand then Google will simply close down the services and tell you to "get on yer bike". As it has done in Spain. And as it did in the other countries by simply stating that if you wanted payment then you wouldn't be included in the index.
But there's another point being raised now too. Which is that Google must actually be making something or other out of Google News otherwise it wouldn't be doing it. And it's amusing that it's Marissa Mayer, during her time at Google, who gave some indication as to what it is that Google does get of value from it:
On Friday afternoon, I spoke to Angela Mills-Wade, the Executive Director of the European Publishers Council, about Google News's announcement. She called Gingras's assertion that Google News makes no money on the service "astonishing," pointing to a speech that Marissa Mayer, then vice president at Google, gave in 2008, at the Fortune Brainstorm Tech conference, where Mayer said, according to Fortune's write-up, that Google News was worth about $100 million to the company. And that was 6 years ago. Mills-Wade told me that Google News should have been a partner to the news industry, considering the position they've established in the market. "But," she said, "partnerships are built on trust by two willing parties with some common understanding and a balance of bargaining power based on mutual interest. Whereas given their status of de facto gateway to the Internet, they hold all the keys, and offer only a take-it-or-leave-it choice of whether you come in and play their game or not. If you do so, it is on their terms. So there is no trust and no hope of true partnerships or fair and open competition."
Old numbers, yes, and that Fortune piece is here:
Google News is free and has zero ads. So what's it worth to Google? About $100 million.
That's the figure Google vice president Marissa Mayer, who heads search products and user experience, threw out during a Tuesday lunch session at Fortune's Brainstorm Tech conference in Half Moon Bay, Calif. How does she put a value on a product that doesn't directly make money? The online giant figures that Google News funnels readers over to the main Google search engine, where they do searches that do produce ads. And that's a nice business. Think of Google News as a $100 million search referral machine.
That's certainly nice money. But look at what it's actually saying. Google News makes money for Google as a search referral site to other parts of Google. Excellent, that's just fine. But given what is being aggregated in Google News clearly and obviously by far the largest portion of traffic is going to be referrals to those news sites. All of which have their own ads on their own pages and thus they profit from the traffic that Google News sends them.
And we can actually take this a stage further. I have no idea what the relationship between Forbes and any of these services is but I did some work a couple of years back for Seeking Alpha. And that site recently sent me information stating that they were no longer going to submit stories for inclusion in Yahoo News. For that site charges for referral traffic to news stories. Seeking Alpha thought they could do better without such charges and I'm not going to try and gainsay their commercial decisions. However, do note what this means. That at least some news sites think that referral traffic from news aggregation sites is sufficiently valuable to actually cough up real money for it. Traffic that Google News sends them absolutely for free. And people are complaining about Google for this?
Slightly boggles the mind really, doesn't it? Except it doesn't when you consider the reactions of those newspaper publishers in France, Belgium and Germany. Sure, they got the law changed so that it was possible for them to charge Google for use of the content. Google said on yer bike, we'll not pay. If you insist on payment then we'll just not include you. At which point everyone said, well, we'd rather be included than try to charge. Meaning, obviously, that the free referral traffic was worth more to them than the fees they weren't going to get from Google.
At which point we really should have laid bare the ridiculousness of those European policies upon this. Just to repeat this, some news aggregation sites (Yahoo News being the one I know about) charge the recipients of referral traffic for it. Google sends it for free. When offered the choice between free traffic and no traffic publishers have, by their actions, made it very clear that they prefer the traffic. And yet we've still got people running around insisting that Google must in some form pay the publishers when the publishers are already profiting from the current arrangement? To a far larger extent we might assume than Google itself is?
This is just nonsensical, isn't it? Especially when we have that Spanish example, that making it impossible not to charge Google for the traffic simply ensures that there will be no more of that free and profitable traffic?
My latest book is "23 Things We Are Telling You About Capitalism" At Amazon or Amazon UK. A critical (highly critical) re-appraisal of Ha Joon Chang's "23 Things They Don't Tell You About Capitalism".
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