Monthly:May 2020

A fact-based discussion about news online

As I said earlier this month, the Internet has dramatically transformed the media environment and how we all access information. We know that for news media companies, particularly smaller and regional companies, the transition to digital has increased competition, increased unbundling, and reduced classified and circulation revenue streams. We all care about the importance of a vigorous news industry as it makes progress in transitioning to a digital environment.

At Google, we are actively working on solutions that we believe can help publishers derive more revenue from their content. We’ve heard the feedback from the Government, regulators, and industry and are in discussions to license and pay to display or provide full access to news content beyond simple snippets and links.

But as we move forward, it’s important that we have a discussion based on facts. There’s been some recent talk about the profitability of online news in Australia, including the suggestion that online platforms should be forced to pay publishers AU$600 million or more every year. This is based on an assertion that news accounts for 10 percent of queries and generates about 10 percent of our gross revenues in Australia.

We all agree that high-quality news has great social value, but we need to understand the economics as well. We would like to provide some facts and figures to address inaccurate claims about the economics of links to news content on Google Search, as well as highlight our ongoing commitment to work with media companies to increase the value they get from their news content.

First, the direct economic value Google gets from News content in Search is very small. We don’t run ads on Google News or the news results tab on Google Search. And looking at our overall business, Google last year generated approximately AU$10 million in revenue—not profit—from clicks on ads against possible news-related queries in Australia. The bulk of our revenue comes not from news queries, but from queries with commercial intent, as when someone searches for ‘running shoes’ and then clicks on an ad. 

Second, the indirect economic value Google gets from News in Google Search is also very small. Users come to Google for many things, whether it’s ‘how to’ videos, recipes, sport, weather, outfit ideas, or home insurance. News is a very small part of this content, and represents only a tiny number of queries — in the last year, news-related queries accounted for just over 1 percent of total queries on Google Search in Australia. The ‘indirect value’ argument also overestimates the relevance of a small fraction of hard-to-monetise queries and fails to consider that ‘indirect value’ cuts both ways — Google Search encourages lots of traffic to news publishers from users who weren’t originally looking for news content at all. As an example, a search for ‘Melbourne’ would return results like tourism links, maps, local government information, news headlines, and more. 

Third, there is already a substantial two-way value exchange. As the ACCC Concepts Paper acknowledges, you need to look at both sides of the value equation. To put it plainly, a lot of people (Australians and beyond) click from Google through to Australian news websites, which gives publishers the chance to make money by showing them ads or turning them into paying subscribers. In 2018 Google Search accounted for 3.44 billion visits to large and small Australian news publishers for free. A study by Deloitte in Europe valued each visit between €0.04-0.06 or around AU$0.063—which equates to approximately AU$218 million in value going to Australian publishers each year from Google traffic alone. In summary, news media businesses are likely to derive far more cross-content benefit than they generate. 

Fourth, news content is important to ensure access to quality information. The value of news to Google isn’t about economics, it is about its role in educating and informing Australians, as well as its importance in strengthening democracy. Publishers directly control how they participate in Google Search – whether through a long or short snippet, a photo, or not at all. We are always looking for new ways to support journalism–not because we make money from it, but because we believe that everyone benefits from its contributions to society and its critical role in fighting misinformation. We have for years partnered with news organisations and paid to host content where we show it in full (for example, when we show weather feeds or licensed sports scores on a search results page). 

We recognise the importance of news and are committed to finding new ways to support publishers. The mandatory code will have important consequences for Australians, including how and which types of news they can search and discover through Google. As we work with the ACCC and Government, as well as with media companies to build out new solutions to derive additional revenue, it’s important to base decisions on facts, not inaccurate numbers and unfounded assertions. 

Posted by Mel Silva, Managing Director and VP, Google Australia