Why Google and Meta ‘owe $12bn’ to news publishers
Meta and Google would owe billions to news publishers if they were fairly valuing the benefit of news content to their platforms.
That is the key takeaway from a recent study from Columbia University’s Initiative for Policy Dialogue.
The study estimated the payment that Facebook and Google Search would owe to news publishers for the use of news content assuming a draft bill was instituted in the US that forced the likes of Meta and Google to pay to support news.
Revenue earned from news content
It found that “existing deals made between these platforms and news publishers do not capture the full value generated by news content on the platforms” and that they are “vastly below” its estimates of fair payment.
Indeed, using a “conservative assumption,” researchers found that Meta’s Facebook owes $1.9bn and Google owes between $10-12bn to US news publishers annually.
They arrived at those figures by estimating the revenues Google Search and Facebook earned from news content that they would not have earned should such content have not existed, referred to by the study as “additional value” jointly created by the platforms and news publishers. They then divided the total revenue in the “fair split” of a 50-50 share.
The researchers estimated that 6.6% and 17.5% of Facebook and Google Search’s respective total ad revenues should be paid to news publishers annually.
However, the study notes that “even large changes to our underlying assumptions — such as the exact fair revenue split between platforms and news publishers — provide robust support for the conclusion that the actual payments being made by platforms to media outlets are vastly less than a fair payment would be.”
A spokesperson for Google issued a strong refutation of the findings. “This white paper is based on inaccurate assumptions, debunked data, and basic errors, in support of a biased conclusion,” they said. “In reality, less than 2% of all Searches are news related and we don’t run ads or make money on the vast majority of them. What the white paper fails to recognize is that we do however drive tremendous value to news publishers by sending more than 24 billion visits each month to their sites – at no cost to them – which they can monetise.”
Platforms ‘contributing next to nothing back’
Meta declined to comment on the study. The company has, however, previously cited research by NERA Economic Consulting which it says refutes claims that “Facebook benefits unfairly at [news publishers’] expense.”
Meta has used NERA’s research as example that the “current market bargain is fair” given that it says news content from traditional publishers is “of low value to Meta and declining” while publishers benefit from traffic from social media apps and sites.
That has not stopped News Media Association (NMA) CEO Owen Meredith from decrying how Meta is “choking trusted news”.
Meredith told The Media Leader: “This new study is yet more evidence of the enormous value that the tech platforms extract from news media publishers’ content, while contributing next to nothing back into the industry.”
Over the past year, Meta has deprecated news on its platform, which it said was part of an “ongoing effort to better align our investments to our products and services people value the most.” Meta has argued that since the News tab makes up less than 3% of what people around the world see in their Facebook feed, “news discovery is a small part of the Facebook experience for the vast majority of people.”
‘Usher in a new pro-competition regime’
Nine in 10 UK newsbrand editors were recently surveyed as believing Google and Meta pose an “existential threat” to journalism given their alleged anticompetitive business practices.
Publishers have been pressing the Government to intervene through the Digital Markets Competition and Consumer Bill, which is currently working its way through Parliament.
“Under the current unregulated conditions, publishers are not receiving any payment for their content and the associated value it brings to platforms such as Google and Facebook,” PPA CEO Sajeeda Merali told The Media Leader. “It is paramount that the UK Government follows through in delivering the Digital Markets Competition and Consumer Bill and does not water it down. The PPA is currently campaigning to ensure legislation equips the Competition and Markets Authority with the necessary tools to establish competitive business conditions for our members.”
Meredith echoed Merali, adding that he expects the Bill to “usher in a new pro-competition regime for the digital markets which will correct this imbalance and see content creators fairly rewarded for their investment.”
In the meantime, newsbrands have been actively trying to reduce their exposure to traffic from search and social, instead favouring attempts at brand building to drive more traffic directly to the homepage.
On an episode of The Media Leader Podcast, Ozone CEO Damon Reeve described that publishers have been “investing more in direct traffic sources and trying to build up their subscriber base, their registered users, and investing in building their own brand amongst readers.”