“€610 mil­li­on – really?”

Face­book and Goog­le are to pay for the use of press con­tent. The Collec­ti­ve Manage­ment Orga­ni­sa­ti­on Corint Media is deman­ding a total of €610 mil­li­on from Goog­le and Face­book in 2022. €610 mil­li­on in 2022. Chee­ky? No, very solid. And perhaps even too low.

Con­tri­bu­ti­on
Ber­lin, 2022-01-12
Oliver Schmidt Corint Media
Oli­ver Schmidt, Head of Con­tent Stra­te­gy at Corint Media:“An essen­ti­al part of this trust­worthy offer that Goog­le pres­ents is press con­tent. They are — for the most part — bey­ond doubt of influ­ence. By taking place in search engi­nes, press publis­hers also trans­fer their trust bonus to the search engi­ne. For the engi­ne, this makes them pri­celess. Pre­cise­ly for this rea­son, they should be fair­ly remu­ne­ra­ted.”

If Goog­le is to be belie­ved, we at Corint Media are the mas­ters of excess. We deman­ded 420 mil­li­on euros for the com­pa­ny to enhan­ce its offer with pre­view texts, pic­tures and other ele­ments from press publis­hers. The ans­wer fol­lo­wed prompt­ly: A Goog­le spo­kes­per­son exp­lai­ned that they were adhe­ring to the law and were “gui­ded by facts, not baseless deman­ds”. A sound that has also been heard from others when they have infor­med Goog­le in Aus­tra­lia, Fran­ce or Cana­da that they should now com­ply with the law.

Face­book reac­ted almost reser­ve­d­ly to the 190 mil­li­on euros char­ged by Corint Media for the use of its press con­tent. A spo­kes­wo­man exp­lai­ned that they do not com­ment publicly on busi­ness talks. Of cour­se, neit­her of them is wil­ling to pay (yet). After all, we are tal­king about a total of 610 mil­li­on euros. Is that jus­ti­fia­ble in any way? Legal­ly? Eco­no­mi­c­al­ly? Moral­ly? Are they serious? Yes. And the amount is pro­bab­ly too low.

You media, be gra­te­ful for once!

When press publis­hers make deman­ds of Goog­le, the knee-jerk reac­tion is that the publis­hers should actual­ly be gra­te­ful to Goog­le for pas­sing on traf­fic worth bil­li­ons to them. And Goog­le hard­ly gene­ra­tes any inco­me from press con­tent at all: Goog­le News is free of adver­ti­sing and most of the sear­ches for which press con­tent is dis­play­ed do not gene­ra­te any mone­ti­sa­ti­on for Goog­le. But why does Goog­le “sup­port” the press via the Goog­le News Initia­ti­ve and other pro­gram­mes if it has vir­tual­ly no signi­fi­can­ce for its own pro­duct? Has a share­hol­der-dri­ven mul­ti-bil­li­on-dol­lar com­pa­ny sud­den­ly dis­co­ve­r­ed its good (or bad) con­sci­ence and is doing good indiscri­mi­na­te­ly? Or is the sto­ry that press con­tent is just by-catch for Goog­le in the trawl net of infor­ma­ti­on fishing perhaps a bit of a fib?

To argue that the press has no eco­no­mic signi­fi­can­ce for Goog­le, the search engi­ne group likes to cite a stu­dy by the soft­ware com­pa­ny Sis­trix, which spe­cia­li­ses in search engi­ne opti­mi­sa­ti­on, among other things. For its stu­dy, Sis­trix defi­ned 1278 domains as press domains. The com­pa­ny then coun­ted how often a Goog­le search is “jour­na­listi­cal­ly influ­en­ced”. For this, Sis­trix set the hurd­le that at least five of the ten links in the Goog­le search results list come from one of the defi­ned press domains. The stu­dy show­ed that only 7.89 per cent of the sear­ches were jour­na­listic. And that only 0.25% of com­mer­cial search terms jour­na­listic in natu­re were also com­bi­ned with ads in the envi­ron­ment.

Press is important — for Goog­le!

This would sup­port the assump­ti­on that the press is only of secon­da­ry impor­t­ance for Goog­le. Howe­ver, it is doubt­ful whe­ther the approach of set­ting at least half of the ten search results dis­play­ed as the thres­hold for clas­si­fy­ing a search as jour­na­listic is cor­rect. In Ger­ma­ny alo­ne, the­re are 16 mil­li­on .de domains com­pe­ting with the­se 1278 offers. But what the stu­dy main­ly igno­res is what hap­pens after the search. Whe­re does the “gol­den click” go, with which Goog­le earns so much money?

Goog­le is a black box of which not even the con­tours can be dis­cer­ned. The algo­rithm and the most important per­for­mance data are secret. Only some­ti­mes a brief glim­mer of light falls into the box — or some darkness seeps out of it, depen­ding on which side you look at it from. The post on Google’s blog “The Key­word” on 18 Novem­ber 2021, in which Phil­ipp Jus­tus announ­ced the agree­ment with some Ger­man publis­hers on the licen­sing of ancil­la­ry copy­rights, was one of the­se illu­mi­na­ting moments. Jus­tus poin­ted out once again how important Goog­le is for publis­hers. He said that Goog­le for­wards 8 bil­li­on clicks per mon­th to publis­hers in Euro­pe alo­ne. This figu­re is based on a state­ment by Richard Gin­gras, Vice Pre­si­dent News at Goog­le, who also wro­te in a blog post in 2020 that Goog­le for­wards 24 bil­li­on clicks per mon­th to publis­hers world­wi­de. The­se figu­res must make you won­der. It’s true that Goog­le is used to gigan­tic figu­res. But 24 bil­li­on clicks? Per mon­th? How does that fit in with the claim of the mar­gi­nal impor­t­ance of press pro­ducts for Goog­le? Are 24 bil­li­on clicks just a sedi­ment in the world’s big­gest search engi­ne?

Let’s esti­ma­te the traf­fic …

Approa­ching the ans­wer to this ques­ti­on requi­res con­text. Esti­ma­tes of how many sear­ches Goog­le per­forms each mon­th sug­gest a value of around 180 bil­li­on by 2020. That’s how often peop­le type in a search term and let the robot do its work. If you com­bi­ne this 180 bil­li­on with the 24 bil­li­on clicks that Goog­le says it sends to press offe­rings, about one in seven Goog­le sear­ches would end with a click on a press pro­duct.

Howe­ver, the­se two figu­res can­not sim­ply be put into a ratio. One figu­re refers to a num­ber of clicks, i.e. user inter­ac­tions, that come out of the Goog­le offer. The other num­ber is much more abs­tract, as it only says some­thing about what users put into the search engi­ne and almost not­hing about what they get out of the machi­ne. That is why both num­bers have to be made com­pa­ra­ble with auxi­li­a­ry varia­bles. First of all, not every search trig­gers a click on a search result. This phe­no­me­non is descri­bed by the so-cal­led “zero-click search” rate, i.e. the pro­por­ti­on of sear­ches that are not fol­lo­wed by a click or only a click that remains in the Goog­le uni­ver­se — in the case of a You­Tube video, a click on “news”, a click on an image, or a click on a search result. on “News”, an image search, or a search on Goog­le Maps. This rate was around 65 per cent in 2020. So pret­ty much exact­ly two-thirds of search que­ries are not for­war­ded to an exter­nal offer. For pret­ty much ever­yo­ne — except Goog­le — this figu­re is a dis­as­ter. Goog­le is then no lon­ger a mar­ket domi­na­tor, Goog­le is the mar­ket — and the pro­duct that is tra­ded on the mar­ket. Goog­le has built a fence around its users and at every point whe­re a hole is pro­vi­ded in the fence, the cor­po­ra­ti­on can make money. To under­stand this, you have to under­stand what Goog­le actual­ly does to make money. Exp­lai­ned brief­ly and super­fi­cial­ly: adver­ti­sers offer money in auc­tions for their pages to be dis­play­ed par­ti­cu­lar­ly high up in the search results. When a user clicks on one of the­se paid links, the adver­ti­ser pays Goog­le for it. Depen­ding on how gre­at the com­pe­ti­ti­on is bet­ween tho­se wil­ling to pay for the respec­ti­ve search term and how pro­mi­sing the pro­duct offe­red is, such a click can bring Goog­le up to 50 euros. The decisi­ve fac­tor is that users click.

After deduc­ting zero-click sear­ches, Goog­le would have a mon­th­ly for­war­ded traf­fic of around 60 bil­li­on sear­ches. Users click 60 bil­li­on times on a search result that leads them from Goog­le to the page whe­re they find an ans­wer. And accord­ing to Richard Gin­gras, Goog­le for­wards 24 bil­li­on clicks per mon­th to press pro­ducts. This pro­bab­ly inclu­des traf­fic com­ing from Goog­le News or Dis­co­ver. A lar­ge part of the traf­fic that Goog­le for­wards to publis­hers comes from Goog­le Dis­co­ver. But for Goog­le, it does­n’t mat­ter whe­ther peop­le click on publis­her con­tent from Search or Dis­co­ver. Every click rai­ses the pro­fi­le. Every inter­ac­tion makes the user a litt­le more trans­pa­rent and thus easier to mar­ket. Dis­co­ver its­elf as a fea­ture on Android smart­pho­nes in turn makes Google’s ope­ra­ting sys­tem more attrac­ti­ve and binds cus­to­mers to the Android brand. Ever­ything is con­nec­ted to ever­ything else, so that even with a generous inter­pre­ta­ti­on of the 24 bil­li­on clicks, it can be con­clu­ded that press con­tent is respon­si­ble for around 20 per cent of the inter­ac­tions of users on Google’s pro­ducts Search, News and Dis­co­ver. This the­sis is also sup­por­ted by a stu­dy by the US publis­hers’ asso­cia­ti­on News Media Alli­an­ce, which esti­ma­ted the share of press con­tent in Goog­le search results at 20 to 40 per cent in 2019.

Goog­le and the order of the web

So much for the quan­ti­ta­ti­ve impor­t­ance of the press for Goog­le. Let’s talk about qua­li­ty. The core of Google’s suc­cess may be its code. The craw­ler, the algo­rithm, the uni­que hit accu­ra­cy that seems to really lead users to the ans­wers to their ques­ti­ons. But that’s not why peop­le use Goog­le. Peop­le use Goog­le becau­se Goog­le is the door to the inter­net. Peop­le use Goog­le becau­se they belie­ve they can find an order to the who­le thing the­re. For this, order is important — i.e. the code — but abo­ve all the who­le, i.e. the tota­li­ty of the visi­ble inter­net. If users had the fee­ling that Goog­le was with­hol­ding some­thing important from them, they would use a competitor’s pro­duct. So how important is press con­tent for the com­ple­teness of the web?

The inter­net — or the part of the inter­net that Goog­le makes visi­ble — rough­ly spea­king con­sists of three parts: First, the part whe­re peop­le net­work with each other, i.e. forums, social net­works, etc.. The second lar­ge part is infor­ma­ti­on or con­tent offe­rings — data­ba­ses, sci­en­ti­fic publi­ca­ti­ons, ency­clo­pa­edi­as, vide­os, music and even press publi­ca­ti­ons. The third part con­sists of com­mer­cial offers, i.e. web­sites on which com­pa­nies try to sell some­thing to cus­to­mers. While the first two parts are gro­wing, the third is explo­ding. The sum of all eCom­mer­ce sales accoun­ted for 4 tril­li­on dol­lars world­wi­de in 2020. Add to that online adver­ti­sing, mar­ke­ting, and B2B busi­ness con­duc­ted online. The net is a gigan­tic shop­ping mall of pro­ducts, pasti­mes and views of the world — and thus a 1:1 repli­ca of the off­line world. For about four hund­red years, jour­na­lists have been hel­ping to make this world com­pre­hen­si­ble to ever­yo­ne. Publi­shing offers ori­en­ta­ti­on becau­se its pro­duct is the orde­ring of infor­ma­ti­on. If the order is bad or the infor­ma­ti­on is wrong, the pro­duct dies. That is why publis­hers have the inner moti­va­ti­on to keep their pro­duct clean. They do not want to and must not allow them­sel­ves to be drag­ged out of the sec­tor of infor­ma­ti­on offe­rings into the sec­tor of the com­mer­cial net­work. Press offers are inde­ed part of the shop­ping mall, but only as a map at the ent­ran­ce.

Press crea­tes trust

In this image of the net, Goog­le mana­ges to posi­ti­on its­elf as an honest bro­ker that con­nects peop­le and infor­ma­ti­on see­min­gly without self-inte­rest. And it does so with an air of incor­rup­ti­bi­li­ty that makes the blind Jus­ti­tia look like a sinis­ter mem­ber of the Mafia. The pri­celess asset of the search engi­ne is not its code, its algo­rithm, but the trust its users place in the search results list. Tho­se who do not trust the results of a search will chan­ge the chan­nel. Google’s stra­te­gy can only be to mani­pu­la­te the user only mini­mal­ly. The search results should only ever be tailo­red to the “pro­fi­led” user to such an extent that he or she does not suspect that they are being influ­en­ced. An essen­ti­al part of this trust­worthy offer that Goog­le pres­ents is press con­tent. They are — for the most part — bey­ond doubt of influ­ence. By taking place in search engi­nes, press publis­hers also trans­fer their trust bonus to the search engi­ne. For the engi­ne, this makes them pri­celess. Pre­cise­ly for this rea­son, they should be fair­ly remu­ne­ra­ted.

Is 610 mil­li­on fair? Yes!

In con­clu­si­on, the ques­ti­on remains whe­ther 610 mil­li­on euros is a fair sum for part of the Ger­man press. For­tu­n­a­te­ly, the Copy­right Act (UrhG) and its deca­des of app­li­ca­ti­on defi­ne what is fair. The bench­mark for cal­cu­la­ting fair remu­ne­ra­ti­on is to levy per­cen­ta­ges on the rele­vant sales of the explo­i­ter. The idea behind this: The tur­no­ver from the use of other people’s con­tent must go to tho­se who pro­vi­de the con­tent, who make that con­tent avail­ab­le. The usu­al rate for licen­sing explo­i­ters such as search engi­nes is 11 per cent of the tur­no­ver. This was also con­fir­med by the Arbi­tra­ti­on Board of the Ger­man Patent and Trade­mark Office (DPMA) in its decisi­on of 2015. It spo­ke of “a tariff rate of ele­ven per cent, which in its­elf would be appro­pria­te for a total reper­toire” — mea­ning: as long as all press publi­ca­ti­ons in Ger­ma­ny are cove­r­ed, 11 per cent is appro­pria­te.

Once again the cross-check: At least 20 per cent of inter­ac­tions from Goog­le Search, News and Dis­co­ver end up with press relea­ses and press con­tent is an enor­mous­ly important con­tent for Goog­le in terms of qua­li­ty. Perhaps, under the­se cir­cum­s­tan­ces, the licen­sing expe­ri­en­ces of other explo­i­ters should be recon­si­de­red. A licence rate of just tho­se 20 per cent that actual­ly make up the traf­fic at least does not seem uto­pian. In any case, the licence sum remains lin­ked to the tur­no­ver. And this is whe­re new pro­blems begin.

Accord­ing to offi­cial figu­res, Goog­le Ger­ma­ny GmbH, with its head­quar­ters in Ham­burg, last year gene­ra­ted reve­nues of 715 mil­li­on euros. Howe­ver, this is only for ser­vices such as boo­king ads. Ans­we­ring the ques­ti­on of how much money Goog­le really ear­ned in Ger­ma­ny is like a cir­cum­stan­ti­al evi­dence tri­al. Exhi­bit A: The mar­ket for search engi­ne adver­ti­sing in Ger­ma­ny alo­ne amoun­ted to about five bil­li­on euros in 2020. Goog­le has a mar­ket share of over 90 per cent here. This money must have gone some­whe­re. In addi­ti­on — Exhi­bit B — Goog­le is still acti­ve in dis­play adver­ti­sing via AdSen­se. And inco­me from You­Tube adver­ti­sing and other adver­ti­sing reve­nues fur­ther infla­te Google’s tur­no­ver in Ger­ma­ny bey­ond the pure search engi­ne mar­ket. Accord­ing to cal­cu­la­ti­ons by Corint Media, based on Exhi­bit C — Google’s Euro­pean tur­no­ver of around 50 bil­li­on euros — Ger­ma­ny accoun­ted for around 9 bil­li­on euros in 2020. And thus around 8 bil­li­on more than Goog­le Ger­ma­ny repor­ted — and taxed through pro­fit. If you add it all up, the licence rate, the tur­no­ver, the size of our rights port­fo­lio, the rough­ly 250 digi­tal publi­shing offe­rings that have con­tri­bu­t­ed their rights to Corint Media — inclu­ding the tit­les of Axel Sprin­ger and several regio­nal publis­hers — must recei­ve a reve­nue share of 420 mil­li­on euros in 2022. Accord­ing to the same cal­cu­la­ti­on, Face­book will recei­ve around 190 mil­li­on euros. Ele­ven per cent of a hell of a lot still remains qui­te a lot.

€610 mil­li­on are legal­ly — via copy­right law and its app­li­ca­ti­on — as well as eco­no­mi­c­al­ly by means of the rule of three very well jus­ti­fia­ble. The ques­ti­on remains as to the moral jus­ti­fi­ca­ti­on. For around 600 mil­li­on euros, one can pay for an exten­si­on to the Chancellor’s Office, take over Ger­man deve­lo­p­ment aid to Chi­na for a year or build 10 per cent of an air­port in the Ber­lin area. Does the press deser­ve as much as it is sup­po­sed to get here? Perhaps one must ask dif­fer­ent­ly: What would it mean for the press land­s­cape if it got what it deserves?What would hap­pen if one third of the­se 610 mil­li­on euros went to the jour­na­lists them­sel­ves – as pro­vi­ded by the law? May­be that would final­ly impro­ve the shame­ful­ly low pay of free­lan­ce jour­na­lists. Perhaps this remu­ne­ra­ti­on of jour­na­lists would also final­ly make the job of fact­fin­der more attrac­ti­ve again. May­be it would be a small com­pen­sa­ti­on for being spat on at Coro­na demos or per­so­nal­ly threa­tened on Twit­ter. Or may­be press publis­hers could use the extra money to soon deve­lop the digi­tal pro­ducts that can com­pe­te with the mas­ses of paid con­tent. May­be that would help socie­ty bet­ter dis­tin­guish fact from fic­tion again. Perhaps a sus­tainab­le press would be able to form a stron­ger coun­ter­weight to pro­pa­gan­da, fake news and opi­ni­on mon­ge­ring on social plat­forms. What is cer­tain, howe­ver, is that neit­her Goog­le nor Face­book will adopt any of the­se mea­su­res. On the con­tra­ry: they earn well from kee­ping ever­ything exact­ly as it is.

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