Google Australia managing director Mel Silva has hit back at “inaccurate” claims from Nine and News Corp, which suggested Google and Facebook should pay between $600 million and $1 billion a year for news content.
In a statement released this morning, Silva [feature image] called for a “fact-based” discussion around the economics of online news.
“There’s been some recent talk about the profitability of online news in Australia, including the suggestion that online platforms should be forced to pay publishers AU$600 million or more every year,” she said, referencing claims made by Nine chairman Peter Costello earlier this month.
“This is based on an assertion that news accounts for 10 per cent of queries and generates about 10 per cent of our gross revenues in Australia.
“We all agree that high-quality news has great social value, but we need to understand the economics as well.”
According to Silva, Google made approximately $10 million in revenue last year from people clicking on ads related to news content.
The majority of Google’s revenue comes from “queries with commercial intent”, said Silva.
Much of the debate over just how much Google and Facebook should be paying media outlets under the government’s mandatory code will revolve around the concept of “indirect value”
Media outlets and the ACCC will argue that while Google and Facebook might not directly profit from news content, these platforms have been able to build their userbase on the back of such content.
However, Silva again suggested that early estimates of indirect value have been overstated.
“The indirect economic value Google gets from News in Google Search is also very small,” Silva said.
“Users come to Google for many things, whether it’s ‘how to’ videos, recipes, sport, weather, outfit ideas, or home insurance.
“News is a very small part of this content, and represents only a tiny number of queries — in the last year, news-related queries accounted for just over 1 per cent of total queries on Google Search in Australia.
“The ‘indirect value’ argument also overestimates the relevance of a small fraction of hard-to-monetise queries and fails to consider that ‘indirect value’ cuts both ways — Google Search encourages lots of traffic to news publishers from users who weren’t originally looking for news content at all.”
Silva also pointed to the “substantial two-way value exchange” which sees news publishers generate traffic (and advertising revenue) on the back of Google traffic.
The government is set to release a draft code of conduct on the mandatory code by the end of next month.
“As we work with the ACCC and Government, as well as with media companies to build out new solutions to derive additional revenue, it’s important to base decisions on facts, not inaccurate numbers and unfounded assertions.
