Google will pay US$1 billion for news – but whether Australian publishers see any of it depends on the ACCC


Google says it will pay publishers $US1 billion ($1.4 billion) over the next three years to licence content across the globe, but the tech giant has warned the new product’s launch in Australia will depend on an Australian government plan to force it to pay for journalism on its platform.

Sundar Pichai, chief executive of Google and its parent company Alphabet, announced the News Showcase investing in a blog post on Thursday night (AEST) and the search and display advertising giant facing increasing scrutiny from governments and regulators across the world about paying for content.

“I’m proud to announce Google is building on our long-term support with an initial $US1 billion investment in partnerships with news publishers and the future of news,” Mr Pichai wrote.

“This financial commitment–our biggest to date–will pay publishers to create and curate high-quality content for a different kind of online news experience.”

Mr Pichai said the News Showcase product builds upon a number of licencing deals it has already signed with nearly 200 publishers, including in Australia, UK, German, Brazil, Canada and Argentina.

Sustainable news

Google Australia managing director Mel Silva announced Google’s licencing program with Australian publishers, including Crikey and The Saturday Paper, in June. However, the plans were put on hold after the Australian Competition and Consumer Commission announced its draft code of conduct, aimed at forcing Google and Facebook to pay for the value of journalism on their platforms.

“Australia was one of the first countries in the world where we signed agreements with publishers to participate in News Showcase and we were in discussions with many more,” Ms Silva said in a statement.

“As we’ve previously said, as we work to understand the impacts of the news media bargaining code on partnerships and products, we have put this project on pause for now.

“Although our concerns about the code are serious, we hope they can be resolved so we can bring News Showcase to Australia soon, as we believe the program will help publishers grow their audience and contribute towards the overall sustainability of our Australian news partners.”

Nine, owner of The Australian Financial Review, has stated it believes Google and Facebook combined should pay about 10 per cent of locally earned revenues to Australian news organisations, roughly $600 million on 2018 revenue. News Corp said that number should be closer to $1 billion.

While Google has not commented publicly on the matter, multiple sources indicated the US tech giant has been privately briefing that it is considering removing its search product from Australia if the code goes through in its current form.

Google has aggressively campaigned against the minimum standards aspects of the draft code, which include 28 days notice for major changes to algorithms that would affect news publishers, as well as the proposed arbitration model.

The value of news

Ms Silva said the final offer arbitration model is stacked against Google, and the numbers being proposed by the likes of Nine and News Corp are too much.

The draft news media bargaining code, proposed by the ACCC in July gives Google and Facebook three months to make deals with Australian publishers for payment for the value of having their journalism on the digital plaftorms. If no agreement is reached, the issue will go to final decision arbitration where each side puts forward an offer and a panel of independent experts decide which offer to take up.

As the draft code stands, in its decision an independent arbitrator must consider the direct value of news content (how much money is directly made from ads around news content); the indirect value (the value to the platforms of actually having the content there – a much harder prospect to measure); the cost of producing news; and whether the payment amount would place an undue burden on Facebook or Google.

Australian Competition and Consumer Commission chairman Rod Sims said in September the ACCC was continuing to work with Facebook, Google and Australian media organisations, and the draft legislation will change. However, the core elements – final decision arbitration and non-discrimination – will remain.

“We’ve got a lot of comment, so we’re sifting our way through that. There will be changes, but the core of the code can’t change. You need an arbitration mechanism, you need a non-discrimination clause. They are … the glue that holds the code together that makes it workable.”

Mr Pichai said its News Showcare product and financial investment will extend beyond the initial three year period.

“The business model for newspapers–based on ads and subscription revenue–has been evolving for more than a century as audiences have turned to other sources for news, including radio, television and later, the proliferation of cable television and satellite radio,” Mr Pichai wrote.

“The internet has been the latest shift, and it certainly won’t be the last. Alongside other companies, governments and civic societies, we want to play our part by helping journalism in the 21st century not just survive, but thrive.”

This article was originally published by the Australian Financial Review. Read the original here.

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