News Corp’s deal with Google for payment for its journalism means Australia’s three biggest media groups have now secured ground-breaking deals.
They give us the first look at what Google’s other deals for content might look like elsewhere.
Google has struck deals with:
News Corp for its Australian, U.K., and U.S. properties.
Nine Entertainment Co., Australia’s biggest TV network and publisher of The Sydney Morning Herald and The Australian Financial Review.
Seven West Media, the second-biggest TV network and publisher of The West Australian.
“This is an historic moment. A world first,” Australian Treasurer Josh Frydenberg said on Wednesday at a media conference after Seven and Nine deals were revealed. He might now want to add it’s an even more historic moment given News Corp’s deal is global.
“None of these deals would be happening if we didn’t have the legislation before the parliament,” Frydenberg said. “This world-leading mandatory code is bringing the parties to the table.”
Well, at least one party.
Google has found a way through just as Facebook announced it has not. Shortly after the News Corp/Google announcement, Facebook said it would no longer carry any news content in Australia because of that same new bargaining code. It immediately stripped all news content from Australia in a dramatic escalation of its campaign.
Yet all of Google’s new deals sit outside the ground-breaking Australian media code.
And all have been signed because of it.
Even before the code passes into law, its impact on media companies and journalism is felt. The code’s final details are summarised here.
Australia’s law was primarily designed as a threat to the platforms: “Reach commercial deals with media companies to pay for using their journalism or you’ll face super tough penalties under the code,” is what the government effectively has been saying.
The Australian government wants the code to force fairer, commercial negotiations between media and platforms, to redress what the market regulator says is a major power imbalance between the parties.
The government is confident the results that are now flowing from Google’s deals will be more generous for media companies than the alternative route of toughening copyright laws.
And if Google can strike all its deals outside the mandatory provisions of the code, the platform will completely avoid the law’s forced arbitration (that it has strongly objected to) and will stay in control of how its payments are allocated.
It appears that Google has won. And so have the publishers.
What we know about the deals
All three big Australia payment deals have three things in common:
They are based on the new Google News Showcase product.
They contain a mix of payments for the use of other Google products and services.
All avoid Google having to pay for links within Search.
Let’s dissect what we know about each deal, and later we will compare them with what we know about the deals Google has done in France.
News Corp has signed a three-year deal across its news media properties in Australia but also in the United Kingdom and the United States by leveraging the power of the Australian code. Its deal encompasses The Wall Street Journal and The New York Post in the United States, The Times of London and The Sun in the United Kingdom, and its Australian publications including The Australian, Sky News TV, and its vast network metropolitan daily brands.
The deal covers payments for written content in News Showcase, payments and revenue sharing for premium audio and video content on YouTube, payment for the use of Google’s subscription platform, as well as technology and marketing deals.
Its global chief executive, Robert Thomson, said in a statement the deal would have “a positive impact on journalism around the globe as we have firmly established that there should be a premium for premium journalism.”
Seven West Media was the first big deal in Australia announced this week. It is reported to be worth about US$25 million annually in a three- to five-year deal. Google is constructing bottom-up allocations for its offers. In this case, it is understood about two-thirds of this amount is allocated against content that will appear as premium video on YouTube. The rest of the value is a lump sum attributed to News Showcase plus a smaller part allocated to Subscribe With Google — for the publisher to be paid for using the tool for The West Australian print/online brand. The deal’s headline figure also includes guaranteed media spend that Google will buy with Seven West.
The price tag is large enough to make a difference to Seven West Media’s bottom line. The justification is specific enough for Google to argue it doesn’t pay for links or snippets or any platform-wide licencing.
The Nine Entertainment Co. deal is a similar deal but is differently derived. It is reported in Nine’s own mastheads to be worth about the same amount — US$25 million a year for five years — but observers have told this writer it is likely to prove to be much larger than Seven’s deal.
Yet the Nine deal does not include any premium video on YouTube. Its deal is dominated by News Showcase, and it also includes a mix of Subscribe With Google fees, marketing spend, and other value attributed to Google’s technology services. Again, this sum proved big enough to prompt the Nine Entertainment Co. to agree to a deal and quickly put behind its very public disagreements with the tech giant.
Where News Showcase fits
Above all, Google has wanted to avoid signing any contract that included network-wide licencing of any content.
Network-wide licencing would have involved the tech giant paying for anything that appeared in Google News and, most critically, anything in links within Google Search. It regards search payments as off-limits in the interest of maintaining the free and open Web. Payment for links, in particular, would have created a global precedent for nearly every other industry.
Instead, Google has created News Showcase as its payment trojan horse. Showcase, which is the common denominator in all of the platform’s deals so far, is a news product that is being offered to a select number of publishers worldwide. In Australia, because of the code, it will be offered to every publisher regardless of size.
Interestingly, some of the articles that will appear in Showcase would otherwise be locked articles available only to subscribers. In this instance, Google will compensate the publisher for unlocking the item.
Showcase has launched so far in more than 12 countries. The invited publishers are paid a fee for submitting a set number of articles every day in a curated feed. It does not cover all of a publisher’s stories.
Nevertheless, when the offer of total dollars to Australian publishers to appear in Showcase grew large enough, the publishers were won over.
What about France?
The three big deals emanating in Australia are substantially higher than those struck by comparably sized companies signing with Google in France. A reporter with Reuters has seen those contracts in Paris.
A collective deal was recently signed by Google and a consortium of 121 French news publishers — most of the country’s news media industry — and is reportedly worth US$76 million over three years.
Those payments, too, are complex, and Showcase, too, is the common thread.
They reportedly involve a number of components and are different for each publisher, including an amount for Google News Showcase, an amount for the use of Subscribe With Google, and intriguingly, an amount paid to some of the media companies as part of a settlement for agreeing not to sue Google over copyright.
Legal intervention is the key
Critically, Google’s deals in Australia and France have only been struck after the intervention of regulators and only after respective parliaments prepared to pass or passed laws. In the case of France, the agreements were reached only after a superior appeals court ruling forced Google back to the table.
So why the big discrepancy in value between the two countries?
The Australian deals have been struck in the context of a media code designed to redress market power imbalance. It can be viewed as a type of anti-trust settlement, which results in an ongoing payment.
The French deals, by contrast, have been struck in the context of the new European Union copyright laws, which seek to bolster the intellectual property rights of media companies.
Google’s French deals appear to be worth about US$27 million a year in total to the news industry. The Australian deals already appear to be worth more than US$100 million per year. So far.
Google has rapidly closed a slew of negotiations, but it needs to strike deals in Australia with all publishers to avoid the government naming Google as a “designated party” in the media code.
If it were to be named, it would face all of the code’s most punitive measures. Google appears to have now avoided that fate and instead created a positive precedent for sustaining journalism.
The tech giant is now expected to offer new standard offers to all small publishers. And it almost certainly will have to negotiate with a large bloc of rural and regional news publishers as well, as collective bargaining is now permitted.
Several other deals have just been signed with other mid-sized Australian publishers, including digital news pure-plays, and more are imminent.
We will attempt to dissect those deals as details emerge from the shadows of confidentiality or through stock exchange disclosure.
Meanwhile, the same regulatory and legal pressure which has forced Google to the negotiation table prompted Facebook to make good on its threat to remove all news content from its products in Australia. For how long?