Hari Shankar
Apr 14, 2021

Ending the duopoly's free lunch

Should tech giants pay to use publisher content? Seasoned digital media and adtech professional Hari Shankar explains how we got here—and possible ways forward.

(Shutterstock)
(Shutterstock)

For years, the tech giants, especially Google, having built an intimidating arsenal of adtech and platform capabilities, have been squeezing as much moolah as they can out of the publisher industry—be it in the guise of being the monetization messiah or the traffic daddy.

Publishers have for years depended on the Adsense program, which allows Google to bring swathes of low-CPM demand via both its ad network platform, better known as Google Display Network (aka GDN), and during recent years, via AdX, which is the programmatic elder sibling of GDN. It took a few years for realisation to dawn on publishers that there was an unsettling degree of dependency on the monthly paycheque from Google—a realization that came a tad too late.

On the traffic-driving front, the lay of the land has been no better for publishers. The monstrosity called Google Search had already claimed its territory by deep-crawling billions of webpages containing valuable journalism—the output of millions (if not billions) of hours of work by thousands of hard-working individuals employed by the publisher industry. Google became the gateway for information to the world, via searches that have a significant news skew, augmented by the news aggregation service known as Google News. The argument for free content usage was the traffic driven to publisher websites, which in turn would get transformed into advertising dollars to keep the industry alive (well…not exactly, since a good part of the dollars pass via the Google advertising eco-system).

In short, two things happend. The old, accepted way of selling media, using insertion orders, gave way to the ‘programmatic’ world, thus reducing the share of publisher revenue from 100% to something like 45%. And insult got added to injury as Google modified the behaviour of global online audiences from the erstwhile ‘portal mentality’ to Google Search mentality (or for that matter, chance consumption via Facebook or other sources of discovery). 

The backlash

A 2019 NMA study in the US determined that Google made $4.7 billion in revenue via news content in 2018, while the news industry as a whole generated $5.1 billion in that year. This was a wakeup call, coming from the alliance that represented over 2,000 publishers. It also threw light on the fact that about 40% of the clicks on Google search results occur on news-related content: content that is the sole property of publishers, that is.

This study kickstarted the antitrust movement, which branched out into various areas of the Google business where it was seen to be etching agreements that were designed to stymie competition in an injurious fashion. The culmination of the pushback by publishers resulted in the move by US lawmakers towards allowing news publishers to negotiate with the duopoly collectively; this is being contested by Google as we speak.  

Closer to home in Australia, the row assumed alarming proportions, with Google threatening to pull out of Australia and Facebook banning news content posts on its platform. This was based on an argument that the country's proposals for compensating news publishers ignored the realities of the relationship between the platform and publishers. The unrest is still bubbling even though Australia has moved ahead with the draft news code that will enable publishers to negotiate with the tech giants for original news content that appears on their platforms, with hefty penalties for breaches.

Not entirely surprisingly, damage control came in the form of Google launching a global website that seeks to paint a benign picture of how Google is the biggest financial supporter of journalism, owing to the ad revenue it generates and the content licensing fee it provides to media (the $1 billion that Sunder Pichai has recently committed to over the next three years). Worth mention is the statement made by Google to support its big daddy role: 24 billion times per month, Google Search sends a user to a publisher site. This of course neglects to mentions that before Google came along, there was a much more democratic worldwide web, where these 24 billion readers would have made a beeline directly to their favourite news portal destinations, instead of Google suddenly acting as the traffic controller.

In fact, if we think a bit further, we could argue that there might be another 24 billion direct visits to publisher sites that are now being simply eliminated because Google already provides the gist of the news within its Google News and search-results pages.

The road ahead

The hubbub that had humble beginnings in Germany and reached a near-calamitous proportion in Australia evidently has very good grounds. Equilibrium has to be restored in the media-tech ecosystem in order to see good journalism stay alive, and the good old original content creator industry reinvigorated. Not to be understated, it's also reality that if the governing system of a country is threatened by the clout held by a couple of tech companies, it might be a signal that time has arrived for the country to define how those companies will do business on its soil. Australia is clearly leading the way here through the draft news code. And the rest of the world is not only watching the proceedings with keen interest but also inching towards legislation that takes cue from the rules put forth Down Under.

In my opinion, there are two ways this could go down in a tidier fashion:

  • The duopoly parts with more dollars than it is making off the content of the publishers. A good place to start would be to rationalize the cuts taken from publishers as SSP fees, via AdX/GAM.
  • The duopoly could pay licensing fees against the usage of content pulled from publishers. Any form of display of premium content outside of the publisher website would attract a licencing fee that would compensate for the potentially lost visit (saleable inventory) to the publisher site.

In the end, tech giants such as Google and Facebook exist not to become a threat to the ecosystem, but to better the fortunes of those in the ecosystem that made them. And that calls for a handsome payback as well.

After all, there is no such thing as free lunch in this place we call home.


Hari Shankar is chief revenue officer at IVS (Intelligent Video Solutions). 

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