At a time when most news media are finding it hard to make enough revenue to remain in business, Google seems to be minting money with their news service. According to a study conducted by the News Media Alliance (NMA), Google earned close to US$4.7 billion in 2018 from its news service without paying anything to publishers.
According to The New York Times, the U.S. news industry made US$5.1 billion in 2018. Media outlets have to pay for journalists and photographers while covering a host of other costs to publish news. Only then do they start making money. In contrast, Google simply has to display the links of such news to end up earning billions of dollars. This has made several media outlets angry. Some of them are demanding that Google be made to pay a fair share of its revenues to the publishers of the news.
“The study blatantly illustrates what we all know so clearly and so painfully… The current dynamics in the relationships between the platforms and our industry are devastating,” Terrance CZ Egger, Chief Executive of Philadelphia Inquirer PBC, said in a statement (Qrius). Considering that almost 40 percent of clicks on Google’s trending queries are for news, publishers feel that they are being cheated out of a major source of revenue. Media groups are planning to approach Congress over the issue.
Recently, the EU passed a copyright law that might force Google and other content aggregator platforms to share revenues from news links with publishers. The law was passed after much lobbying by media groups in the region. In the U.S., a similar law was proposed last year when politician David Cicilline introduced the Journalism Competition and Preservation Act, which would allow publishers to negotiate revenue sharing with platforms like Google. He believes that allowing companies like Google to entirely pocket revenues from content created by news outlets will be disastrous for the media industry, as several newspapers might shut down and lay off their employees.
Google has lashed out against the study done by the News Media Alliance, disputing that the calculations it presents are not trustworthy. “These back of the envelope calculations are inaccurate as a number of experts are pointing out… The overwhelming number of news queries do not show ads. The study ignores the value Google provides. Every month, Google News and Google Search drive over 10 billion clicks to publishers’ websites, which drive subscriptions and significant ad revenue,” a Google spokesperson said in a statement (Yahoo News).
To compete in the online news distribution niche, Microsoft launched a new app last year that featured stories from MSN.com. The app syncs a user’s news preferences on all devices and is available on both Android and iOS platforms. The company partnered with over 1,000 publishers across the world to source the news. Over 100,000 articles were said to be filtered by the company’s AI before presenting to the users.
Because of Microsoft’s revenue-sharing deals with publishers, its news service hasn’t been criticized. In 2018, Microsoft claimed to have distributed more than US$600 million to news publishers in the previous four years. However, Microsoft’s news service is far less popular than Google’s and is estimated to generate less revenue as a result. This is why publishers are focused on bringing Google under a revenue-sharing agreement.