Google has vowed to pay publishers around $1bn for news over the next three years – a step that could help it win over publishers such as News Corp and Axel Springer, and satisfy vocal industry critics that demand it pays for the content it distributes to web users. Chief executive Sundar Pichai committed the sum in a blog post on Thursday.
What is Google promising publishers?
The $1bn commitment marks a sharp reversal from Google‘s past policies on paying publishers for content.
Explaining his change of heart, Pichai wrote: “I have always valued quality journalism and believed that a vibrant news industry is critical to a functioning democratic society.“
Google has faced mounting pressure from publishers such as News Corp and Axel Springer to pay for royalties.
In response Pichai has committed to a new mobile product called Google News Showcase, for which Google will pay publishers to create and curate content.
Launching initially in Brazil and Germany, early partners include Der Spiegel and Die Zeit as well as Folha de S Paulo.
Pichai continued: “The business model for newspapers — based on ads and subscription revenue — has been evolving for more than a century as audiences have turned to other sources.“
“The internet has been the latest shift, and it certainly won’t be the last. We want to play our part by helping journalism in the 21st century.”
Welcoming the precedent set News Corp chief executive Robert Thomson responded: “We applaud Google’s recognition of a premium for premium journalism and the understanding that the editorial eco-system has been dysfunctional, verging on dystopian.”
Thomson added: “There are complex negotiations ahead but the principle and the precedent are now established.”
Why it matters
Google’s olive branch comes following attempts by national regulators to intervene on the issue, with the Australia Competition and Consumer Commission authoring a mandatory code obliging tech giants to pay for the use of news content in a matter of months, if approved.
The level of compensation remains in dispute, with Australian publishers looking for as much as $600m per year, a figure flat-out rejected by Google.
This shifting regulatory landscape will also impact Facebook, which is facing calls of its own to reimburse publishers.
The European Publishers Council, whose members include News UK, Pearson and The New York Times, has already criticised the plan, warning that by launching its own product Google would be able to call the shots.
EPC executive director Angela Mills Wade warned: ”By launching a product, they (Google) can dictate terms and conditions, undermine legislation designed to create conditions for a fair negotiation, while claiming they are helping to fund news production.”