Google makes as much as 40% of its revenue from media content for its search business in Switzerland, according to new research.
“The value of news is far higher than policymakers or publishers think it is, at least on Google Search, which accounts for the majority of Google’s $280bn annual revenue,” Courtney Radsch, director of the Center for Journalism & Liberty and a fellow at the Institute for Technology, Law & Policy at the University of California, Los Angeles, writes in Tech Policy Press.
Radsch was quoting figures from a new study commissioned by the Swiss Media Publishers’ Association that assessed the value of journalism content used by Google’s search engine in Switzerland.
The study, conducted by FehrAdvice & Partners, says Google searches that use media content give it an estimated revenue of $440m a year.
Google’s in-house money printer
“It suggests that if Google did not have a dominant monopoly position in web search and faced serious competition, fair compensation for the value that media content provides to Google Search would amount to about 40% of total revenue, or about $176m per year in Switzerland alone,” Radsch says.
Most people begin looking for information with a search engine. When they find what they are looking for, they don’t go to the media company’s website, the source of the information, the FehrAdvice study found, quoting further research.
The role of “aggregators” such as Google and Bing is to connect users with the information they seek by bringing together the search and the answer. Though publishers and media businesses make their content available, the real benefit accrues to advertising providers thanks to “the increased visibility and attention of users on these platforms”.
Essentially, the content providers create the news and “answers” but don’t see the financial rewards. “Journalistic content increases the attractiveness of Google and increases the willingness of users to pay for Google,” the study found, with its own emphasis. “Conversely, the probability of using Google decreases if journalistic content is removed from the search results completely.”
Google charges advertisers to be on its search platform and uses content from media businesses, which do not benefit from it financially.
For two decades Google has told media publishers that the increased visibility would be beneficial to their publications. And for years it was, until the search engine optimisation (SEO) era arrived, which allowed anyone to buy Google keywords and direct traffic to their own websites.
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But, as the FehrAdvice study shows, this free content increased Google’s “attractiveness” and the “willingness of users to pay” the search engine. It says the information ecosystem, consisting of search engines, content creators and users, is a “central building block of an enlightened and democratic society”.
However, to ensure the “wide variety of benefits for society” it enables, it is “essential that stakeholders are paid fairly and on an equal basis”. (Again, the study’s emphasis.)
Content creators must be fairly remunerated so that they continue “creating high-quality” news, it stresses.
FehrAdvice says it is “important to ensure a market-oriented distribution of the proceeds within the ecosystem in the future”. It goes into specifics of how to calculate this and discusses the framework of ancillary copyright protection in Switzerland.
“If Google were not in a dominant monopoly position in web search, and instead had serious competition online, as in other functioning advertising markets, 40% of this revenue would be a market-standard remuneration of the media’s value contribution,” FehrAdvice says.
“This puts the ‘fair share’ that Google owes to the media at around CHF154m ($176 million) per year.”
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Nobody has done similar calculations for the South African media industry and how much Google makes from it. But after this groundbreaking research, expect the same type of analysis in South Africa. Radsch says this study “confirms the crucial role of news content in the Google search engine, as users prioritise quality, completeness, trust, and up-to-dateness when seeking information”.
She adds: “As Google and Meta face off with governments around the world, they have said they will cut off access to news in Canada rather than comply with that country’s recently passed new Online News Act, and threatened to do the same in California and the broader US if similar efforts pass there.”
The platforms may claim that “news comprises a very small portion of content and that people aren’t really that interested in news. But this study underscores how this view is myopic and disingenuous.”
As she points out: “The value of news content to Google is way more than you think.”
- This article first appeared in the Financial Mail.