Liu Jie/Xinhua



Climbing the Revenue Mountain: Google, Facebook and the Publishers’ Right

They are rather good at raking in the cash; rather poor at sharing it. Google and Facebook have radiated, strafed, and shriveled hundreds of news outlets across the globe with their information sharing platforms while celebrating choice, advertising revenue, and traffic. The idea of whether such content is news is irrelevant: what is shared, be it news, rumour or supposition, is what matters.

The Australian Competition & Consumer Commission had been tasked with something verging on the impossible: draft a voluntary code of conduct covering the interaction between digital platforms and media outlets. In so doing, the evident asymmetry between the two groups – in terms of market share, competition, and revenue – would be addressed. The digital behemoths would be more generous; media outlets would be rewarded for the reuse of news snippets and summaries. But discussions, and progress, proved slow. On the issue of payment for content, no ground had been given, with, according to the ACCC, “no expectation of any even being made.”

The process might have been given more time but for the depredations of COVID-19. “The Australian media sector,” announced Australian Treasurer Josh Frydenberg and Communications Minister Paul Fletcher, “was already under significant pressure – that has now been exacerbated by a sharp decline in advertising revenue driven by coronavirus.”

Last Friday, Frydenberg laid out his reasons for making such a code mandatory. It was feebleness clothed in confidence. “Let’s tackle this head-on,” he opens, all sporting metaphor, “no less than Australia’s media landscape is at stake.” He referenced a second-hand printing press on the First Fleet that landed on Australian shores in 1788. (No mention of convicts.) But without too much ado, he got into the disruptive role of the digital giants. “For every $100 spent by advertisers in Australia on online advertising, excluding classifieds, $47 goes to Google, $24 to Facebook, and $29 to other participants. In Australia, this market is worth almost $9bn a year and has grown more than eight-fold since 2005.”

Failure to find some voluntary arrangement had necessitated the move towards a mandatory code, armed with powers of compulsion. Frydenberg envisages provisions covering “value exchange and revenue sharing; transparency of ranking algorithms; access to user data; presentation of news content; and the penalties and sanctions for non-compliance.”

For its part, Google has played the role of fiendish nurturer and indispensable promoter. In a statement to TechCrunch, a Google spokesman cited the familiar line that the company had “worked for many years to be a collaborative partner to the news industry, helping them grow their businesses through ads and subscription services and increase audiences by driving valuable traffic.” Consultations had taken place with 25 Australian publishers on a voluntary code; constructive conversations had been held with the ACCC and government.

Attempts to seek payment for content from the tech behemoths have had mixed results. Agence France-Presse sued Google for copyright infringement in 2005 with minimal effect; Belgian publishers targeted the re-run of article snippets in Google News in 2006 in the courts, despite being able to use the opt-out option on Google’s crawler. The three newspapers got more than they bargained for: a legal victory with the court ordering the removal of their articles from Google News and Google Search. After seeing a decline in online traffic caused by the court order, the papers, along with the status quo, were quietly restored. As Mike Masnick of Techdirt quipped, the publishers spent five years battling, and defeating the digital beast, only to “then let Google immediately go back to what it was doing before. Nice work guys.”

The reasons for such erratic, and often ill-fated battles, lies in the wars being waged within the cyber community and legislative chambers over the issue of how content is used on the Internet. Regulators are badged as penny-pinching tyrants; pro-freedom Internet users are coloured as in the pay of tech giants, complicit in impoverishing such content providers as publishers and the Fourth Estate. The true victors in this are always the same: Silicon Valley.

When confronted, the response from Google has been brusque and swift. In Spain, the company closed its Google News service in 2014 because of a legislative effort made to seek revenue for the search engine’s display of news items. As Google explains, “Legislation in Spain requires every Spanish publication to charge services like Google News for showing even the smallest snippet from their publications, whether they want to or not. This approach is not sustainable for Google News.” Just to rub some salt in the wound, Google suggested to Spanish readers that they might want to go to the Mexican edition instead.

The European Union Parliament, in its battle of attrition with Silicon Valley, passed online copyright reforms in March 2019 which proved sufficiently controversial to garner 274 opposing votes. (348 voted in favour.) Central to the measures is Article 15 (originally Article 11) of the European Union Copyright Directive, granting a “Publishers’ Right” that protects content, including “snippets” and summaries, against unauthorised use by digital platforms. “Creatives,” including performers, musicians, script authors, are covered, as are news publishers.

One heavy bone of contention with the Copyright Directive was that it constitutes a jarring blow to Internet freedom, encouraging the pre-filtering of online uploads. The often indignant counter is that such criticism benefits the digital giants who take the freeloading gravy train in monetising copyrighted content without payment.

France has shouldered the burden of making the publishers’ right part of its national law, one that includes extending copyright over news story ledes displayed by aggregators covered by Article 15. As in the case of Spain, Google reiterated its threats and promises, making an announcement last September that it would remove snippets in search results on the French law going into effect. To avoid this, news publishers would have to waive their rights for compensation. As News Media Alliance CEO David Chavern said at the time, “This unilateral decision is in direct conflict with the spirit of the EU Copyright Directive and raises serious questions about Google’s commitment to the future of high-quality journalism.”

The French Competition Authority has ordered Google to come to the table with local media companies on compensation for reusing content. In a statement, the FCA claimed that Google’s practices were “likely to constitute an abuse of a dominant position, and caused serious immediate harm to the press sector.”

Frydenberg does acknowledge the mountain, being under “no illusions as to the difficulty and complexity of implementing a mandatory code” but he does not delve into the consequences of retaliatory action. Should Google and Facebook turn gangster on the point, how will an already ravaged Australian media landscape cope?

A Stanford Business School study from 2017 suggests that overall news consumption dropped in Spain in the order of 20% after the shuttering of Google News. Pageviews on publisher sites other than Google fell by 10%. “Post-shutdown, they read less breaking news, hard news, and news that is not well covered on their favourite publisher.”

An examination by the News Media Alliance suggests a rather different picture. On consulting the work of Spanish and news industry organisations in Europe, including eight Spanish news publisher websites since 2014, an assessment distinctly against the tech giant narrative emerged: that the closure of Google News in response to the Spanish law was “not detrimental to the Spanish news publishing industry as a whole.” The reduction in traffic was “low and temporary.” One of Spain’s largest newspapers, El País, reported 8.5 million unique monthly visitors in October 2014 prior to the shutdown; in December 2015, the number had increased to a very healthy 16.6 million. “The data we reviewed do not indicate that publishers would be significantly harmed if Google ceased to operate Google News in a particular country.”

Even if the mandatory code lacks the necessary bite, the European examples suggest that going it alone, or least without the boosting traffic of Silicon Valley, may not spell catastrophe. The focus, then, will be on Australian news outlets to produce material worthy of reading and viewing – a challenge, in its truest sense.