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European Newspapers Seeking a Piece of Google Ad Revenue A Clash Across Europe Over the Value of a Click
(about 3 hours later)
PARIS — Google got rich by selling a simple proposition: The links it provides to other Web sites are worth a lot of money, so much that millions of advertisers are willing to pay the company billions of dollars for them.PARIS — Google got rich by selling a simple proposition: The links it provides to other Web sites are worth a lot of money, so much that millions of advertisers are willing to pay the company billions of dollars for them.
Now some European newspaper and magazine publishers, frustrated by their inability to make more of their own money from the Web, want to reverse the equation. Google, they say, should pay them for links, because they provide the material on which the Web giant is generating all that revenue.Now some European newspaper and magazine publishers, frustrated by their inability to make more of their own money from the Web, want to reverse the equation. Google, they say, should pay them for links, because they provide the material on which the Web giant is generating all that revenue.
In several of the biggest European countries, they are close to getting their way.In several of the biggest European countries, they are close to getting their way.
A bill working its way through the German Parliament would enable publishers to collect a fee from Google and other search engines and news “aggregators” when they display excerpts from news articles alongside links to newspaper and magazine Web sites.A bill working its way through the German Parliament would enable publishers to collect a fee from Google and other search engines and news “aggregators” when they display excerpts from news articles alongside links to newspaper and magazine Web sites.
This week, President François Hollande of France threatened Google with similar legislation unless it came up with a way to compensate news sites by the end of the year. Last week, publishers in Italy said they would also lobby for such a law.This week, President François Hollande of France threatened Google with similar legislation unless it came up with a way to compensate news sites by the end of the year. Last week, publishers in Italy said they would also lobby for such a law.
But Google so far is standing its ground. Already facing possible sanctions from European antitrust and privacy regulators, Google says that having to pay for links could threaten its “very existence.”But Google so far is standing its ground. Already facing possible sanctions from European antitrust and privacy regulators, Google says that having to pay for links could threaten its “very existence.”
And it warned that the demand for money could backfire. If Google had to pay up, it “would consequently be forced to stop indexing the French sites,” Google wrote in a “position paper” it sent to the French government. Because 30 percent to 40 percent of the traffic on French news sites comes from Google’s links, the company’s threat is not an idle one.And it warned that the demand for money could backfire. If Google had to pay up, it “would consequently be forced to stop indexing the French sites,” Google wrote in a “position paper” it sent to the French government. Because 30 percent to 40 percent of the traffic on French news sites comes from Google’s links, the company’s threat is not an idle one.
Google said such laws would undermine its commitment to an open Internet and the free flow of information. It would also invert the company’s main business model. A majority of the company’s $38 billion in annual revenue comes from the sale of “sponsored links,” which appear alongside free search results. Google also sells advertisements on behalf of outside partners, including news sites, and shares revenue with them.Google said such laws would undermine its commitment to an open Internet and the free flow of information. It would also invert the company’s main business model. A majority of the company’s $38 billion in annual revenue comes from the sale of “sponsored links,” which appear alongside free search results. Google also sells advertisements on behalf of outside partners, including news sites, and shares revenue with them.
European publishers say their existence is even more precarious, unless they can start to generate more money from their Web sites and other digital products, like mobile applications. While advertising revenue continues to rise at Google, it has flattened out or is even falling at many European online publications.European publishers say their existence is even more precarious, unless they can start to generate more money from their Web sites and other digital products, like mobile applications. While advertising revenue continues to rise at Google, it has flattened out or is even falling at many European online publications.
“We effectively feed the search engine and the algorithm, constantly giving them fresh content, content that you can rely on, because it’s checked and it’s accurate,” said Nathalie Collin, the head of the I.P.G., an organization of French newspaper and magazine publishers. “This is why they can sell advertising.”“We effectively feed the search engine and the algorithm, constantly giving them fresh content, content that you can rely on, because it’s checked and it’s accurate,” said Nathalie Collin, the head of the I.P.G., an organization of French newspaper and magazine publishers. “This is why they can sell advertising.”
Mr. Hollande appears to agree with them. In a meeting with Eric E. Schmidt, the executive chairman of Google, at the Élysée Palace this week, the president “expressed his desire that negotiations between Google and news publishers begin rapidly and conclude by the end of the year,” his office said in a statement.Mr. Hollande appears to agree with them. In a meeting with Eric E. Schmidt, the executive chairman of Google, at the Élysée Palace this week, the president “expressed his desire that negotiations between Google and news publishers begin rapidly and conclude by the end of the year,” his office said in a statement.
Mr. Hollande “stressed that dialogue and negotiation between partners appeared to him to be the better option, but that if necessary, a law could be implemented on this question, following the example of Germany.”Mr. Hollande “stressed that dialogue and negotiation between partners appeared to him to be the better option, but that if necessary, a law could be implemented on this question, following the example of Germany.”
In a statement, Google played down talk of an ultimatum, saying Mr. Schmidt had “been to France many times to meet government officials and discuss how the Internet can help create jobs as well as export French culture globally.”In a statement, Google played down talk of an ultimatum, saying Mr. Schmidt had “been to France many times to meet government officials and discuss how the Internet can help create jobs as well as export French culture globally.”
The German proposal cited by Mr. Hollande would create a so-called ancillary copyright, protecting online news content and regulating secondary uses of it, including the snippets that search engines and aggregators like Google News display to detail links to other sites.The German proposal cited by Mr. Hollande would create a so-called ancillary copyright, protecting online news content and regulating secondary uses of it, including the snippets that search engines and aggregators like Google News display to detail links to other sites.
Business users, like Google, would have to pay royalties in order to display news publishers’ material, even short excerpts. A collecting society, like the agencies that gather royalties on behalf of musicians, would collect the payments and distribute the money owed to publishers.Business users, like Google, would have to pay royalties in order to display news publishers’ material, even short excerpts. A collecting society, like the agencies that gather royalties on behalf of musicians, would collect the payments and distribute the money owed to publishers.
The government of Chancellor Angela Merkel introduced the legislation last winter. The Bundesrat, or upper house of Parliament, has approved the measure, and debate is set to begin in the lower house, the Bundestag, in November.The government of Chancellor Angela Merkel introduced the legislation last winter. The Bundesrat, or upper house of Parliament, has approved the measure, and debate is set to begin in the lower house, the Bundestag, in November.
In Italy, discussions are at an earlier stage, but the main trade association for news publishers pledged last week to work with their French and German counterparts and to lobby the government for relief. Media owners in Austria, Switzerland and other European countries are also studying the issue.In Italy, discussions are at an earlier stage, but the main trade association for news publishers pledged last week to work with their French and German counterparts and to lobby the government for relief. Media owners in Austria, Switzerland and other European countries are also studying the issue.
The push for stricter copyright protection on the Continent runs counter to the trend toward greater liberalization elsewhere, as other countries update their intellectual property laws for the free-flowing digital era.The push for stricter copyright protection on the Continent runs counter to the trend toward greater liberalization elsewhere, as other countries update their intellectual property laws for the free-flowing digital era.
In Britain, for example, a government-sponsored panel recently recommended loosening copyright restrictions that outlaw even private copying of protected material. In the United States, the “fair use” provision of copyright law permits short citations of protected material.In Britain, for example, a government-sponsored panel recently recommended loosening copyright restrictions that outlaw even private copying of protected material. In the United States, the “fair use” provision of copyright law permits short citations of protected material.
“Countries around the world are moving fast to enact forward-looking, 21st-century copyright rules that encourage innovation, creativity and economic growth,” said Simon Morrison, public policy manager at Google. “We hope to work with publishers in France and Germany to achieve the same goal.”“Countries around the world are moving fast to enact forward-looking, 21st-century copyright rules that encourage innovation, creativity and economic growth,” said Simon Morrison, public policy manager at Google. “We hope to work with publishers in France and Germany to achieve the same goal.”
While copyright rules have traditionally been more restrictive in Continental Europe than in the United States, publishers say there is another important difference making new protection — and funding — necessary. The Internet has given the biggest English-language publishers a global presence, in some cases providing them with tens of millions of new readers. This improves their chances of using Google’s systems to raise advertising revenue, though many English-language papers are struggling online, too.While copyright rules have traditionally been more restrictive in Continental Europe than in the United States, publishers say there is another important difference making new protection — and funding — necessary. The Internet has given the biggest English-language publishers a global presence, in some cases providing them with tens of millions of new readers. This improves their chances of using Google’s systems to raise advertising revenue, though many English-language papers are struggling online, too.
In countries like Germany, France and Italy, where news sites’ online audiences are more limited by language and nationality, online ad revenue has been further restricted. Total Internet ad sales at French newspaper and magazine sites is about €150 million, or $194 million, a year, Ms. Collin said.In countries like Germany, France and Italy, where news sites’ online audiences are more limited by language and nationality, online ad revenue has been further restricted. Total Internet ad sales at French newspaper and magazine sites is about €150 million, or $194 million, a year, Ms. Collin said.
While Google does not break down its revenue country by country, media buyers say it generates around €1.5 billion in France. At current growth rates, the company would soon overtake the country’s leading television network, TF1, as the biggest advertising-supported medium in France.While Google does not break down its revenue country by country, media buyers say it generates around €1.5 billion in France. At current growth rates, the company would soon overtake the country’s leading television network, TF1, as the biggest advertising-supported medium in France.
In a related complaint, the French government is upset that Google pays virtually no tax on its French ad sales, because the bookings are channeled to the company’s subsidiary in Ireland, where corporate tax rates are lower. This system is legal under E.U. law, but Mr. Hollande warned Mr. Schmidt that it was being reviewed.In a related complaint, the French government is upset that Google pays virtually no tax on its French ad sales, because the bookings are channeled to the company’s subsidiary in Ireland, where corporate tax rates are lower. This system is legal under E.U. law, but Mr. Hollande warned Mr. Schmidt that it was being reviewed.
In the statement on their meeting, Mr. Hollande’s office said the president had called for an “adaptation of taxation in order to take account of value added and the financing of content creation in different territories.”In the statement on their meeting, Mr. Hollande’s office said the president had called for an “adaptation of taxation in order to take account of value added and the financing of content creation in different territories.”
The copyright proposal in Germany has drawn opposition from a wide range of groups, including lobbyists for nonpublishing businesses, who see it adding costs, because they might have to pay more for online information. The Green party and libertarian groups have denounced it as a restraint on free speech. Bloggers have mocked it as backward-looking and cumbersome to enforce.The copyright proposal in Germany has drawn opposition from a wide range of groups, including lobbyists for nonpublishing businesses, who see it adding costs, because they might have to pay more for online information. The Green party and libertarian groups have denounced it as a restraint on free speech. Bloggers have mocked it as backward-looking and cumbersome to enforce.
“In the end, what underlies the term ‘ancillary copyright’ is nothing more than an attempt to subsidize German newspapers at the expense of other sectors,” wrote Justus Haucap, president of an independent commission that advises the German government on competition matters, in the newspaper Der Tagesspiegel. “There is no objective justification for it. Such a subsidy merely slows down structural change and hinders the development of innovative business models.”“In the end, what underlies the term ‘ancillary copyright’ is nothing more than an attempt to subsidize German newspapers at the expense of other sectors,” wrote Justus Haucap, president of an independent commission that advises the German government on competition matters, in the newspaper Der Tagesspiegel. “There is no objective justification for it. Such a subsidy merely slows down structural change and hinders the development of innovative business models.”
Google argues that its links are responsible for four billion visits to French news sites each month, and that they would be foolish to risk losing this traffic. But publishers say they doubt that Google would actually follow through on its threat to stop indexing their content, saying this would undermine the company’s stated commitment to free speech.Google argues that its links are responsible for four billion visits to French news sites each month, and that they would be foolish to risk losing this traffic. But publishers say they doubt that Google would actually follow through on its threat to stop indexing their content, saying this would undermine the company’s stated commitment to free speech.
In Brazil, more than 150 newspapers recently decided to collectively pull out of Google News, which displays headlines and the first few lines of news articles — enough, publishers say, that many readers do not bother linking to the article. A similar battle has been going on for years in Belgium, where publishers won a copyright lawsuit requiring Google to stop including their content in Google News but to keep it in the search engine.In Brazil, more than 150 newspapers recently decided to collectively pull out of Google News, which displays headlines and the first few lines of news articles — enough, publishers say, that many readers do not bother linking to the article. A similar battle has been going on for years in Belgium, where publishers won a copyright lawsuit requiring Google to stop including their content in Google News but to keep it in the search engine.
Rather than free speech, many publishers say, what is really at stake is money. How much revenue would be raised by such a system remains unclear, because the proposals do not specify the fees that would be charged.Rather than free speech, many publishers say, what is really at stake is money. How much revenue would be raised by such a system remains unclear, because the proposals do not specify the fees that would be charged.
Christoph Keese, head of public affairs at Axel Springer, publisher of the German newspapers Bild and Die Welt, said rates would “not be prohibitive.”Christoph Keese, head of public affairs at Axel Springer, publisher of the German newspapers Bild and Die Welt, said rates would “not be prohibitive.”
“Publishers don’t want to hinder aggregation; they want to foster it,” he said. “The only thing we want to stop is aggregation at the price of zero.”“Publishers don’t want to hinder aggregation; they want to foster it,” he said. “The only thing we want to stop is aggregation at the price of zero.”