By Stacy M. Brown
A study released by Columbia University’s Institute for Policy Dialogue has made the case that Google owes U.S. publishers a staggering $10-12 billion each year for using news snippets and headlines in its search results.
Through their findings, authors Dr. Patrick Holder (The Brattle Group), Dr. Haaris Mateen (University of Houston), Dr. Anya Schiffrin (Columbia University) and Dr. Haris Tabakovic (The Brattle Group) propose that Google should distribute 17.5% of its search revenue to publishers annually, challenging the tech giant’s current practices.
The research, which delves into cooperative bargaining dynamics, estimates that Facebook parent company Meta owes U.S. publishers just under $2 billion annually, or 6.6% of its ad revenue, according to the same calculations. The bold claims have sparked a heated debate between industry stakeholders, with Google staunchly rejecting the study’s methods and findings.
Google spokesperson Jenn Crider countered the study’s assertions, stating that “less than 2% of all searches are news related.” Crider emphasized Google’s contribution to news publishers, highlighting the platform’s role in sending more than 24 billion visits each month to their sites, which publishers can monetize at no cost.
The digital revolution has forced the traditional newspaper industry to face challenges, resulting in a pronounced decline in revenue and a significant loss of jobs within the news sector.
Google, Facebook, and social media have reshaped how information is consumed, dealing a severe blow to print newspapers. The allure of instant and convenient access to news online has led readers to bypass traditional print media. Simultaneously, advertisers have redirected their focus to digital platforms. This shift has created a financial strain on newspapers as print advertising revenues dwindle compared to the burgeoning digital market.
The changing advertising landscape has been pivotal in the industry’s economic downturn. The effectiveness and precision of digital advertising have supplanted print advertising, which was once the lifeblood of newspapers. Advertisers’ preferences for the flexibility and reach afforded by online platforms have left print media needing help to secure ad revenues, deepening the financial crunch.
Evolving consumer habits, particularly among the younger demographic, further compound newspapers’ challenges. The allure of immediate, interactive, and diverse online news content has led to decreased print circulation. Newspapers grappling with an aging readership have found it challenging to adapt swiftly to the changing demands of their audience, resulting in a significant reduction in readership.
Job losses have become widespread, affecting journalists and essential support roles. Newsrooms, once vibrant centers of journalistic activity, have faced cutbacks, compromising the industry’s ability to cover diverse stories and maintain investigative depth. The ramifications have extended beyond unemployment statistics, signaling a fundamental transformation in how news is produced and disseminated.
Some newspapers have attempted to counter the revenue decline through digital subscriptions. However, convincing readers to pay for content in an era of freely available news remains a formidable challenge.
The white paper uses game theoretical insights to argue for a significant payment from platforms to news publishers, even proposing a fair revenue split of 50%. Based solely on revenue generated from news content, this split would mean that Google should pay 6.6% of Facebook advertising revenues and 17.5% of Google Search advertising revenues to news publishers annually.
The study draws attention to recent developments in Australia, where the government mandated revenue-sharing agreements between tech giants and news publishers through the News Media Bargaining Code. Despite initial resistance from Google and Facebook, the estimated annual payout to Australian publishers has been around AU$200 million (approximately US$140 million), creating hundreds of new journalism jobs.
Canada followed suit with its Online News Act, passed in June 2023, prompting Meta to block Canadian news from Facebook.
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