Digital Publishing Platforms
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“Bad for small publishers”: Google battles the link tax

The proposed EU Copyright Directive would allow publishers to charge online news aggregators, like Google, for displaying links and snippets from their sites.

Writing in a recent post, Richard Gingras, Google’s VP of News, called the directive, “bad for small publishers, European consumers, and online services.” He added that it will limit innovation in journalism.

Snippet tax: Paid teasers

While Gingras is supportive of the directive’s ultimate goal of protecting the rights of content producers, he believes that Article 11 also referred to as the “link tax” will cause more damage than good.

It requires online platforms and aggregators to take permission from, and perhaps even pay, copyright holders for using their content. Even if those are just snippets and previews. Essentially, if the directive becomes a law, Google would be forced to strike licensing agreements with publishers to display their content.

Google has been carrying out a sustained campaign through its senior executives to influence MEPs and commissioners, as well as mold public opinion to dilute the reforms. Earlier this month, YouTube CEO, Susan Wojcicki, wrote an editorial in the Financial Times that was similar in spirit to Gingras’ post. She stated that the EU Directive will, “create unintended consequences that will have a profound impact on the livelihoods of hundreds of thousands of people.”

What worries us isn’t the money, which would probably be negligible, but the precedent this would set. Imagine if we had to strike a licensing deal with everyone who uploads a recipe.

A Senior Google Executive

“No justification” for charging news aggregators

Google insists that Google News is essentially a public service which it could shut down if forced to pay for the content. That may not be an empty threat as the company did that in Spain in response to a legislation that required websites to pay copyright owners for re-publishing headlines, or snippets of news.

Google had emphasized at that time that Google News displayed no advertising and the company did not make any revenue from the service, consequently, the new law made Google News service unsustainable in Spain.

The Spanish Association of Publishers of Periodicals later commisioned a study to assess how the law affected traffic. It was found that large publishers saw traffic fall by more than 6% on average and smaller ones suffered an average drop of 14% in the first few months after the introduction of the law. The study concluded that there was “no theoretical or empirical justification for the introduction of a fee paid by news aggregators to publishers for linking to their content.”

Gingras writes in his post, that if the reforms were enacted in its current form then, “Online services, some of which generate no revenue (like Google News) would have to make choices about which publishers they’d do deals with. Presently, more than 80,000 news publishers around the world can show up in Google News, but Article 11 would sharply reduce that number.”

Gingras also mentions that Google sends its users to news sites over 10 billion times a month thus driving economic value to publishers. And the reforms, in their present form, would mostly benefit large publishers. It would limit the reach of small publishers, “hurt diversity of voices”, and reduce choice for European consumers.

This sentiment is echoed by some publishers and is reflected in an “open declaration” put up by the European Innovative Media publishers. The declaration mentions, “The introduction of a neighboring right in Germany and Spain makes it harder for us to grow online, reach new audiences and develop new markets. They create new barriers to entry for publishers to develop online.”

A matter of copyright or economics?

Publishers supporting the reforms said that these concerns are overblown and what was really at stake was how content producers could assert their rights in a digital world. They also contend that although Google doesn’t display ads in Google News, it benefits from their content which keeps users engaged in the Google ecosystem.

The right is about more than getting money out of it. It is about giving publishers the legal recognition as a rights holder.

Wout van Wijk, Executive Director, News Media Europe

In any case, Google is clear on one thing, which is, publishers should not expect much in terms of revenue. Gingras said, “We will license content, and do so where we think appropriate and where rates and fees are appropriate. But we deal with a very large corpus of publishers. For publishers insisting on a fee, it will be up to us to decide what kind of an appropriate license we should strike.”

Google would stop displaying results from those publishers with whom it does not enter into an agreement. However, such publishers could choose to have it displayed for free.

Tilted in favor of the big guys?

According to Matt Rogerson, Head of Public Policy at the Guardian, news aggregators are actually heavily promoting news publishers. The services make news websites more visible on the web and stimulate their growth.

Gingras, in his post, referred to analysis from German tech news website It found that in Germany alone small publishers received less than 1% of the revenue generated by a so-called “ancillary copyright”, whereas the largest publishing group received 64%.

The question is, if Google shuts down its news service in Europe, or only displays news from sources it chooses to strike deals with, where would that leave the others? The big publishers may continue to get sufficient traffic directly on their websites and Google would presumably team up with them. If we have learnt anything from what happened in Spain, there are no clear winners if the link tax becomes law. Would a pyrrhic victory that reduces reach and stymies growth, especially for small publishers, actually be worth it?

Download WNIP’s new Media Moments 2018 report, which dives deeper into this year’s developments in publishing, and looks at what opportunities 2019 could usher in. The report is free and can be downloaded here.