Google News’ exit from Spain a wake-up call for journalism’s future

DISCLAIMER: All opinions in this column reflect the views of the author(s), not of EURACTIV Media network.

Dr. William F. Baker, PhD.

Dr. William F. Baker, PhD. [The Schwartz Center]

The current impasse between news publishers and Google is in some ways inevitable. But what we need to remember is that news is a special product that deserves special consideration. Without it, the voting publics of our democracies could not stay informed, writes William F. Baker, Ph.D.

William F. Baker is a Distinguished Professor of Management in the Practice of Media & Entertainment at IESE Business School, University of Navarre, and director of the Schwartz Center, Fordham University.

On 16 December, Google will end its Google News service in Spain, to protest a recent law which would require the company to pay news publishers for each headline and article snippet that Google News aggregates. As of this writing, it is unclear whether Spanish news sites will still be indexed in Google’s general search function.
The prevailing story in the press has been one of greedy or clueless old media companies bending Spanish law so they can charge rent to an innovator like Google, at the expense of readers. As with many prevailing narratives in the press, there is more to the story.
At stake is the value of a news snippet and headline to Google, which publishers say they should be compensated for. Google says that it makes no money from Google News because it does not sell ads next to the stories it aggregates, and that it furthermore benefits publishers by driving countless users to external news sites. Yet in 2006, then-Google vice president Marissa Mayer estimated that Google News was worth $100 million. If Google News doesn’t sell ads, how can that be?
Google doesn’t only make money by selling ads next to its content, the way that newspapers do. Google also makes money by leveraging user data that they get from their users’ interaction with its constellation of services, among them Google News, Google search, Google Maps, Gmail, etc. Every Google product, even the free ones, helps the company’s bottom line by acting as a source for valuable user data, which they can then sell to advertisers or monetise in other ways. In the case of news readers, who tend to be well educated and possessed of substantial purchasing power, that adds up to a lot of valuable information.
Let me be clear: there’s nothing wrong with Google’s business model. Monetising user data is one of the engines powering Silicon Valley. What’s important here is that none of Google’s services can be considered profitable or not in isolation. Each of Google’s products serves a greater purpose within the larger constellation of the company’s business model. Since Google derives value from the news content it aggregates, is it really unreasonable or reactionary to ask that some of that value flow back to those who create it, especially in the case of a culturally vital activity like journalism? Without news, there would be no Google News.
Spanish publishers are not alone in asserting this. Similar laws have been passed in Germany, France, and Belgium. In each of those cases, news publishers, spooked by a drop in online readership, eventually opted not to charge Google for the use of their content.
In Brazil, new publishers have taken a different tack. In 2010, they agreed to experiment with a Brazilian version of Google News. Two years later, in 2012, they were convinced that the service was robbing them not only of readers but the potential ad revenue they represented. Ninety percent of Brazil’s news publishers, including giants O Globo and O Estado de Sao Paulo, opted out of Google News entirely and have not returned.
The impasse between news publishers and Google is in some ways inevitable. We are still in the middle of the massive shift in just about every industry brought about by the digital revolution. Though I have faith that it won’t always be so, it is very difficult right now to reward content producers who sell their goods digitally. Those who own or manage distribution systems, like Google and Apple, are doing extremely well. In moments of great innovation like our own, power and capital are concentrated in the hands of innovators, and some legacy players are bound not to survive the transition. It has happened before and it will happen again.
But what we need to remember is that news is a special product that deserves special consideration. Without it, the voting publics of our democracies could not stay informed. In America, even after decades of radio, television, cable television, and the Web, it is still newspapers that pay for the creation of the lion’s share of substantive, original news content. It is worth making sure that the pace of innovation doesn’t deprive us of our newspapers and the experienced reporters and newsrooms they support.
This doesn’t need to be a zero sum game. Google News and the truly excellent service it provides, and newspapers and the vital service that they provide, can and should co-exist. But that can only happen if the unique social value of news is paramount in the public debate over this issue. By demanding a license fee for its content, the Spanish have reminded us all that news is an crucial commodity that needs to be both protected and monetized by its creators.

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