‘Quite cynical’: Publishers leery about Google’s $1 billion news licensing pot

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Google will pay $1 billion to publishers over three years as part of its Google News Initiative from Thursday, starting with publishers in Germany and Brazil, according to a blog post by Sundar Pichai, CEO of Google and Alphabet. Since the initial licensing announcement in June — coined a PR move at the time — publishers, analysts and trade bodies have grown more skeptical as the details shake out, due to the companies’ motivations while regulatory probes are ongoing.  

Google is paying publishers to “create and curate” content for its new feature, Google News Showcase, made up of story panels on the Google News app on Android, coming to iOS, Google Discover and Search in the future. Publishers choose which stories to showcase, adding more context through timelines, bullets and related articles. Other features like video, audio and daily briefings will come soon.

The company has been working with publishers over the last few months on the design and features. So far, it’s signed 200 global publishers and 20 German publishers. 

“With News Showcase and the new integration of editorial content of media like Der Spiegel, Google shows that they are serious about supporting quality journalism in Germany,” said Der Spiegel’s head of product Stefan Ottlitz in a statement. “We are happy to be part of it right from the start.” Although, it’s too soon for publishers or Google to share any evidence that News Showcase drives deeper connections or aids subscriber acquisition. 

The rub is that, according to multiple sources, in order to be part of Google’s news licensing initiative, Google can terminate the agreement if the publisher participates in a legal claim or complaint against Google. This rankles some publishers, given the regulatory moves going on in different countries like France and Australia, as well as U.S congressional hearings and U.K. studies that support payment by platforms to publishers. On this point, Google said that contracts are business-sensitive and therefore not divulged but it “won’t stop publishers from talking to people.”

“I imagine [Google] will retain the clause to prevent publishers from participating in collective agreements negotiated under the publisher’s right,” said Angela Mills Wade, executive director of the European Publishers Council, “which is quite extraordinary, given that this is a right under the law. Meanwhile, it is very unclear how this affects publishers that do not participate.”

During a press call, Google’s vp News, Brad Bender, said the $1 billion will be divided on a publisher-by-publisher basis related to each publishers’ commitments. A local publisher may be required to create two-story panels a day and would get less for licensing its content than a larger publisher creating seven daily story panels that contain higher-resolution images, video and audio. For subscription publishers, Google will also pay more for extended metering to provide access to select paywall content for users. Bender added that news does not add materially to its bottom line, but its role is in educating and informing people, as well strengthening democracy.

“Many are quite cynical about Google’s perceived strategy,” said Mills Wade. “By launching a product, it can dictate terms and conditions, undermine legislation designed to create conditions for a fair negotiation, while claiming they are helping to fund news production.” 

Multiple publishers contacted for this story, in the U.K. and Europe, were unable to comment as negotiations with Google are ongoing. 

For struggling news publishers, after a grueling six months of strenuous coronavirus-induced belt-tightening and body blows, $1 billion is a pretty compelling carrot. Against the backdrop of ongoing government antitrust probes and regulators urging platforms to pay, there’s no real upside for publishers to turn Google down or participate in any legal claims.

“No publisher can take on Google, publicly or commercially, that’s the biggest evidence of the antitrust issue,” said Jason Kint, CEO of U.S. publisher trade body Digital Content Next. “Funding local news journalism or digital transformation that will help journalism become more sustainable, that’s a positive — but it comes with hidden, and not so hidden, motivations.” 

Google will expand the initiative to different countries and publishers. In terms of which publishers will be part of the program, Google said it depends on the country’s civic and journalism needs.

“We know that Google has approached a number of U.S. news publishers about this program,” said David Chavern, president and CEO of U.S. publisher trade body News Media Alliance. “The initial indications are that, at least to date, publishers are underwhelmed by the economics and offended by the gag order. Google just doesn’t appear serious.”

Kint, for one, is optimistic that government-led platform regulation is making considerable progress, as well as the general public’s growing awareness of the way platforms make money. 

That backdrop of heightened regulation means that any news-focused product from Google, and other tech companies, would be faced with scrutiny after the recent years of eroded trust. “We have more readers than at any time in our history, by far, and yet the economics are worse than they have ever been,” said Chavern. “That is a designed outcome and not an accident.”

But Google states — and some publishers and analysts agree — that News Showcase is a different type of product coming from the company. Publishers have the choice of what content is featured, (rather than Search algorithms that can be gamed or Accelerated Mobile Pages’ site speed that can be juiced) and the publishers’ brand is front and center. 

Other News Showcase launch publishers are optimistic about the deal with Google, saying that after years of negotiating about license fees, News Showcase is a product of those years of cooperation and understanding. And rather than further politicize the relationship with the duopoly, now’s the time to deepen that dialogue and cooperation.


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