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ET Explains: Making internet majors pay for news content they make money from

Australia has issued a draft on this critical process. ET explains

Agencies
THE PROBLEM?
Two US Internet giants — Google, and Facebook — are major distributors for news publishers. They ferry more than 80% of external traffic to various sites, according to Parse.ly, web analytics for online publishers. Earlier, media companies controlled how their publications reached the public and collected all the ad income they generated.

News content has been lucrative for big online platforms. Some 40% of the clicks on the platform’s trending queries are for news. Google made $4.7 billion in 2018 from content produced by the news industry, according to a study. Google disputes the figure.


AUSTRALIA LEADS THE WAY
On Friday, the Australia Competition and Consumer Commission (ACCC) released a draft news media bargaining code, which would force Google and Facebook to pay for news content in the country.

Australia’s move also comes at a time when the publishing industry is going through sustained disruption, owing to the Covid pandemic, and resulting in a substantial decline in advertising revenue, their main source of income. Reacting to the code, The Guardian quoted Google Australia as saying that it was “deeply disappointed by the code” while “calling it a heavy-handed intervention which will impede the digital economy.”

THE EU-FRANCE MODEL
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In April, France’s competition watchdog ordered Google to negotiate in good faith with local media firms to pay for reusing their content. The move followed a national law last year to transpose a pan-EU copyright reform that intended to extend publisher rights to news snippets.

However, instead of paying French publishers for reusing their content, Google stopped displaying content that’s covered by the law in local search and Google News. Before the new EU rules, Google had worked around attempts by countries like Spain and Germany to force it to compensate publishers. In Spain, it responded by shutting down its Google News site.

THE US TAKES NOTE…
The US has proposed several legislative solutions to help news publishers get paid for their content. A bipartisan bill was introduced in Congress last year to give news publishers temporary exemptions from antitrust laws to negotiate collectively with tech giants.

On Wednesday, when the CEOs of Google and Facebook — Sundar Pichai and Mark Zuckerberg respectively — testified at a hearing of the House Antitrust Subcommittee, Rep Jerrold Nadler singled out the companies, saying, “These publishers produce valuable content. It is increasingly Google and Facebook that profit off their content.”
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THE GIANTS REACT
Google has announced several moves to mollify publishers this year. In April, it announced a cut in fees for its ad manager service (used by publishers) for the next five months. It also launched a “Journalism Emergency Relief Fund” for small and mid-sized publishers.

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Last month, Google announced that it would pay some select, “high-quality” news publishers to license their content for a service expected to launch later this year, CNBC reported.

In Oct 2019, Facebook announced that it would pay a select set of publishers as a way to “encourage better quality content” on the platform in a specialised tab called Facebook News, according to a WIRED report.
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