You have likely seen in the news that Google and the Australian Government are in serious disagreement over a new law, soon to be voted on. Basically, the Government wants to force Google to pay news publishers for links to their news articles.
Google has never ever done this for anyone, anywhere, ever – and is prepared to pack up and leave Australia, if forced to do so.
Google has shared revenue with publishers through their News Showcase product – a licensing program that pays news publishers to curate content.
This product was recently launched in Australia and has been used in France where Google have agreed to pay French publishers for news. So what’s different here?
Essentially, the Government and the ACCC want to squeeze Google for a lot more. And there are some very unfavourable terms to Google, such as:
- Google will be required to share IP about its core search algorithm – and give 14 days’ notice for any changes to its algorithm.
- Fees are set in a way that heavily favour news media – governed by the Australian Communications and Media Authority (whom you could reasonably expect to be extremely sympathetic to news corporations).
- Google is exposed to eye-watering fines for violating the agreement. Google estimates it’s total news related revenue is around $10 million per year, yet under the code Google could be fined up to 10% of its total revenue – making the fine around $480 million!
How did this happen?
Well, the simplest way to explain it is:
1. News Publishers are losing money.
2. Internet Companies are making money.
3. The government is trying to force money from one to the other.
However, the fatal flaw in the above, is the assumption big internet companies, namely Facebook & Google, have taken money away from News Publishers.
The fact is they haven’t. The reason why they are losing money is explained best, by a professor of economics, who states:
The media bargaining code is hopelessly flawed. It misunderstands the cause of the decline in media revenues, seeks to extract money from unrelated activities of technology companies like Google and Facebook.Richard Holden – professor of economics at UNSW Business School,
Between 2002 and 2018, newspaper revenue fell from $4.4 billion per year to $3.0 billion. That is indeed a very substantial decline. But the overwhelming majority of this came from the loss of classified advertising, which fell from $1.5 billion in 2002 to just $0.2 billion in 2018. Did this revenue go to the tech companies? No. Almost all this was captured by online “pure-plays” focused on specific market segments like motor vehicle sales, job ads, or real estate listings. This was a dot-com-dot-au effect, not a dot-com effect.
This lone AFR article is one of the only unbiased & well researched contributions on the debate.
The richest source of information on this is Google itself:
Our sister company, Alpha Digital, has written an article addressing the question: Will Google Withdraw Search from Australia?
Whatever happens, Springboard Digital & Alpha Digital will continue to help businesses succeed online, with or without Google. We already have contingency plans ready to action, should Google pull out of Search in Australia, and we will navigate our clients through this change. But… it would be devastating to lose Google this way.
The free press is integral to our democracy and deserving of government protections, however Google & Facebook are not to blame for Newspapers’ declining revenue. There are workable alternatives that will help news publishers and should be understood and seriously considered by our lawmakers, before unworkable policy is forced upon big tech.