A Primer on The Value Exchange Between News Publishers and Search Engines

Abstract

News Publishers advocate that Google should split the proportion of the search engine’s advertising revenue that is driven by News Publishers’ content between them, under the implicit assumption that Google would not be able to make that money were it not for the content News Publishers provide. News Publishers further claim that that proportion is substantially based on the recent, and repeatedly quoted, report by FehrAdvice & Partners (the “FehrAdvice Report"). We explain here that search engines are not eroding the production of content they index. They provide a service that connects users looking for high-quality content with content producers – including News Publishers. And they provide that service free of charge. Content providers, including News Publishers, choose to contribute to that service because they benefit from it. Search engines make it possible and cheap for content providers to find an audience and monetise them.

Unfortunately for incumbent News Publishers, that service is freely available to all content providers, including their competitors, which are now numerous. Many incumbent News Publishers face lower revenues, but that is a sign that competition to produce content that consumers value works, not the result of free-riding by search engines. Search engines and News Publishers mutually benefit from helping each other, and judging from their continuous relationship, not based on dependency, they must be incentivising each other just fine.

Keywords: Copyrights, FehrAdvice Report, Free-riding, Newspapers, Search engines

JEL Classification: K20, K21, L40