Sharpening The Blades
French publishers and Google are heading for a legal and political showdown around the EU copyright law. A lack of reliable data from both sides won’t help to settle the issue.
French publishers and Google have two weeks left to settle a dispute about payment for snippets, which is at the core of the new EU’s copyright law (see our recent Briefing). Little progress has been made since Google’s September 25 announcement that it would not compensate publishers for the insertion of snippets below headlines in the result pages of its search engine. Unless publishers explicitly allow Google to continue displaying snippets for free, the search engine will simply show a list of dry headlines (on the right, below) that are unlikely to send much referral traffic back to the news sites.
What is at stake
Publishers depend heavily on Google traffic. For a general news site, it accounts up to 40 percent of referral traffic coming from Google Search (mostly) and Google News. Media brace for a 30 to 40 percent drop in pages views if snippets are removed. The pain won’t be evenly distributed as some media will balk and quickly allow the snippets feature. Even worse, one or two large outlets might even be tempted to negotiate directly with Google, shattering the hope of a united front.
Google won’t budge on the snippet compensation. First, it has been a position of principle maintained over five or seven years. Two, Google doesn’t want to create a precedent that could cost the company hundreds of millions of dollars. French publishers estimate the loss of advertising attributable to Google and Facebook at €250 million-320 million a year. This evaluation, based on Ernst & Young’s research, constitutes a basis for negotiation. However, none of the people I talked to was able to provide me with anything close to a serious method of calculation.
Even if French publishers settle for “only” a hundred million euros in compensation, the case might lead to a jurisprudence: applied to all EU countries, the cost for Google could reach a billion euros. Blown up at a global scale—Europe accounts for 16 percent of the entire internet population — it would be unbearable, even for Google.
In this confrontation, figures are extremely hard to compute. French publishers have yet to commission serious research to buttress their claim of the value “hijacked”, as they say, by the platforms.
At the risk of weakening further their position, publishers mix oranges and apples. For instance, they are quick to point out the de facto obligation — imposed by the ad ecosystem (brands, marketers) — to rely on Google tools for ad serving, media buying, and analytics. A closer look shows there was nothing but a herd mentality that forced them to switch to Google’s toolbox, killing some French vendors in the process (OK, most of them were truly subpar). “But it ends up costing us a lot”, a publisher told me. “When everything is taken into account, we give back to Google more than we get from them”.
Google’s restricted communication doesn’t help to get a clear picture. The search giant claims that last year, it funneled back $14.5 billion to publishers. But it declines to provide any breakdown, geographical or otherwise. This doctrine of stonewalling communication is nothing new and goes to the highest level in Mountain View. Google’s management doesn’t realize that the vagueness of its communication on the value transferred back to the media sector undermines its position in Europe.
Possible exit scenarios
First and foremost, publishers are preparing for a legal battle. Google has chosen to preempt the application of the French bill by giving publishers two options: accepting a massive loss in traffic or preserving the stream of clicks sent by the search engine in exchange for nothing. In doing so, according to lawyers, it put itself in a blatant case of abuse of its dominant position. Therefore it is likely it will have to give something.
The problem is that Google already gave a lot. Through the Digital News Initiative and its successor the Global News Initiative, it poured €100 to €150 million into the French news ecosystem under various aids. A windfall that many publishers have considered as yet another window of subsidies.
As for the amount of value transferred to publishers, Google relies on a Deloitte paper (PDF here), which estimates at €228 million the value of referral traffic sent back to French publishers:
Unfortunately, this study is by no means an academic paper. And a disclaimer featured on the second page of the document candidly destroys the credibility of the research, by suggesting that the dataset its team relied upon was limited in terms of scope, depth, and period covered.
As it turns out, none of the parties are able to provide anything other than approximations and fuzzy analysis. Maybe a first step should be to commission a solid study to a European university or research institute, under the supervision of a joint board appointed by the stakeholders. My guess is that paranoia and ideologies won’t let that happen, leaving an open field for a battle of lobbies and politics.
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