Newspapers used to living off government funds want even more money for nothing
For better or for worse, Google has come to symbolize the web to politicians and out-of-touch companies, none of them too fond of what the web has done to their business. While in the US it's the entertainment corporations that are calling all the shots, in Europe, old guard newspapers have powerful lobbying groups.The same newspapers that have been bleeding money for years. The competition created by online publishing isn't helping either.
Used to getting by on government subsidies, the independent press can't quite make it on those alone anymore and is now looking for other cash cows, since actually making money is out of the question.
What better cash cow than Google, which is making billions in ad money each year?
Newspaper industry groups in several European countries have aggressively argued that they should be getting some of Google's money since Google sometimes includes a link to some of their articles in search results.
This while every other company pays Google to get their link on the same page as search results, i.e. search ads.
But the newspapers don't want those links removed, mind you, it would kill the little traffic they still get, instead, they would like Google to pay.
That in itself isn't much of a problem, newspapers are free to dream at streams of money flowing their way without them lifting a finger.
The problem is that it's starting to happen. Already, Google has struck a deal with Belgian newspapers, providing them with some money in exchange for, well, basically nothing, hush money as it were. It's pocket change for Google, which probably just wanted to get it all over with.
But it opened Pandora's Box. The German and later French press were asking for handouts before the Belgian deal went through, now they're even more vocal.
Unfortunately, Google seems to be caving. Tired of all the scandals and accusations, it's prepared to throw some money at the newspapers if they would only shut up. No chump change either, Google was willing to pay French newspapers €50 million, USD $66.6 million.
For comparison, the digital revenues of all of the newspapers and magazines part of the IPG industry group were about €70 million, $93.4 million in 2012. Essentially, Google was willing to double their revenue.
And they declined, newspapers weren't happy with just doubling their revenues, they wanted more, €70 million to €100 million, $133.4 million. Google might have caved too, but newspapers didn't like the way they would get that money either.
Google had a deal similar to the one in Belgium in mind, where the company buys ad space at online publishers, offers free ads to those same publishers and offers free consultation on how to improve their web presence.
But newspapers don't want help, they want money. No advertising campaign is going to get more people to read them and ad revenue depends on traffic, which they're not getting.
That's the current state of the negotiations and the two sides are at a stand-off. But both sides have a lot more to lose if they don't work out a deal soon.
That's because the French government is watching. The same government that isn't happy, to say the least, with Google funneling billions out of the country while only paying a few million euro in taxes each year. The same government that provides newspapers with subsidies worth some €1.5 billion, $2 billion.
Already, there are plans to get Google to pay at least some taxes in the country. At the same time, the government forcing Google to pay newspapers will also enable it to cut subsidies. This while German newspapers are waiting for their chance to pounce.