Is Google’s agreement with French publishers exportable to the U.S.?
You may have missed the news in early February that Google has established a $60 million Euro (about $80 million) fund to support a group of French publishers in their digital enterprises.
Not only that, Google chairman Eric Schmidt jetted to Paris for a signing ceremony photo op with France's president, Francois Hollande. A few months earlier, the search giant had set up similar but much smaller subsidy for Belgian publishers. Concurrently, the company has been battling, so far successfully, proposed German legislation that would let publishers charge for search engine aggregation of their articles.
So is there a possibility that Google will ease the financial pain of American publishers with a similar agreement? Extrapolating from estimates by French news industry analyst Frederic Filloux, scaling up such a fund in the same proportion to U.S. newspaper industry's advertising revenues would cost Google at least $2.6 billion.
My question is rhetorical. The chance of Google providing that kind of help here is slim to none -- but for some interesting reasons.
- A threat of aggressive government regulation is not even on the table in the United States. Publishers themselves see any government-brokered rescue as a breach of the First Amendment independence of the press.
- Google's lobbyists and lawyers are particularly potent here, but I think that mirrors a cultural difference too. In the U.S., Google is a home-grown hero, the biggest and best of our giant tech businesses. Europeans are suspicious of that kind of domination from our side of the ocean -- an echo of European anti-trust actions against Microsoft in the 2000s.
- Google has royalty agreements with the Associated Press and some other news outlets. American publishers have been using the company's AdSense product for a decade to provide targeting and thus raise the effectiveness and price of digital ads. Plus, as Google executives delight in pointing out, traffic from search and the company's news products significantly boosts the audience coming to the Web and mobile sites of American newspapers.
- All this leaves U.S. publishers -- despite a wave of Google denunciations in 2008 and 2009 from the likes of Rupert Murdoch and William Dean Singleton -- more deferential than combative in practice.
When asking for comment on whether Google's European adventures have any implications in the U.S., I got no response from Newspaper Association of America executives or those at the industry's licensing arm, NewsRight. Google itself said at the time of the French agreement that the fund was not a model for Germany or the United States. Spokesman Ryan Brack declined to amplify on that for me.
At risk of rehashing the obvious, Google's impact on the decline of print news advertising and the pokey growth of digital ad revenues has been, and remains, huge. The old news is that Google gets 90 percent-plus of its $50-billion-a-year revenues from advertising. It dominates search, substantially the biggest category within digital advertising and a great way for local businesses and services to target potential customers.
The newer news, courtesy of my colleagues at the Pew Research Center in the State of the News Media 2013 report, is that Google is prepared to dominate the next growth waves in digital advertising -- mobile, video and data-driven targeted display -- as well.
Google is now the largest U.S. player in display digital advertising, not just in search. Along with Facebook, Twitter and some others, it is a driver in the high inventory/low price dynamic for all forms of digital advertising that makes revenue growth for news companies so difficult.
I am not a Google basher. I do a dozen or two Google searches a day and don't find competitor services much of a substitute. Gmail (free!) fruitfully applies search to the potentially time-eating chore of looking up correspondence and addresses. Plus there are Google maps, Google Docs, movie listings (including trailers) and much more.
Also, Schmidt and other execs at Google come to the table for conversations on the future of news. The company is making modest investments in news transformation. (Poynter will be among organizations welcoming its first Google-funded intern later this spring).
However, there is an underlying question of proportionality, that the French agreement raises anew. Google rightly sees itself as playing a constructive role in disseminating news with substantial benefit to news producers. But it sidesteps the implications of sucking away the lifeblood of old and new advertising revenues streams to the tune of billions.
Google has done more than its share of creative destruction of legacy news media, and its dominance also undermines sustainability for digital-only startups. I don't seem to have much company in this opinion, but I think the company and it philanthropies could afford to do a lot more to ensure that core news reporting does not wither away. The European examples suggest that when the heat is turned up, the company will respond.