The two biggest tech giants are in headlines for the deal they’re trying to make with news organisations as an attempt to stay in line with the new copyright laws. Amidst claims of Google and Facebook destroying the USD 108 Billion news industry, it is trying not just to get in line with the new copyright laws but also attempting to improve their infamous image in the eyes of media by paying news organisations for their content, which as of now wasn’t a deal.
This move came in light after the regulatory investigations in the U.S., Europe and other big countries posed their prospect to break these tech giants for their not so fair money making policies. As a matter of fact, this roots from Google and Facebook generating their most income through the sale of advertising space alongside content they get for free, as opposed to the common belief of search or social networking generated income. As a result, the only revenue directed towards the publishers of these news and media houses is the share of income generated by user clicking on the story or some times by the philanthropic funding directed towards news organisation to cover specific stories- none of which is sufficient enough to sustain a well functioning, active news media house.
You must have noticed so many online media houses leaving a note at the end of their article for donations, subscriptions or funds- given they’re running out of business because of not generating enough revenue- thanks to the giants’ policies of directing only a little piece of the huge pie towards the news organisations.
Huge publishing giants receive a flat fee of a few million dollars from Facebook and Google, constituting to the very little 1-2% of their total revenue, even though about half of their reader traffic from these 2 apps, due to the companies’ stringent policies. Reports published by experts suggest that if a similar pattern is continued, the news industry’s net worth would drop from USD 108 billion to USD 83 billion by 2024.
Reports from various sources suggest that Facebook, by the end of first month of 2021, would expand its currently US present news tab to the United Kingdom, an effort to increase market share. The names of the news tabs are believed to be on the lines of The Economist, The Guardian and The Independent- all three of them serving different purposes explanatory from their names.
Alongside, Google is also looking to expand its new, Google News Showcase, to some big revenue countries like The United Kingdom, France, Australia and Belgium. The Google News Showcase feature, which is already live in Germany, aims at featuring editorial curation of award-winning newsroom to give more insight into the stories that matter, and has already shook hands with 20 publications in Germany including the Frankfurter Allgemeine Zeitung, Der Spiegel and Die Zeit- some remarkably famous German news sources.
What’s special in these 2 moves is the fact that Google and Facebook would be paying publishers and news media houses for their services on these new features. Google has so claimed to make the largest financial investment of USD 1 Billion in long-term partnership with news publishers and future of news. It claims that the aim of this partnership is to benefit both publishers and readers. On similar lines, the news tab by Facebook aims at revamping local news, however with news publications that are not so local in terms of scale of operations and audience size. Facebook, in its deal of its offering- The News Tab, claimed to be paying participating publishers.
The platforms are to pay extra for news stories in these new products, as opposed to the news that appears at story on the apps. Despite everything, news organisations and publishers are hoping to now be on the end of recurring and sustainably sufficient income.
The hopes of media houses and publishers are weak because of the history these organisations have with these tech giants- especially Facebook, which encouraged them to invest time and money to cultivate audience through the app, just to later make it impossible t reach the same audience and seeking money for promotions. The scepticism thus, is completely justified.
However, to build trust and appease friendship with news organisations and publishers, Google and Facebook entered into a 3 year contract to guarantee revenue. This is a considerably long time in terms of technology lives. Even though organisations are happy about this extended hand from the tech giants, they still feel the need to ensure these contracts and building of significant subscriber base over the said period of time. I believe the fact that Google and Facebook, as much as they claim to be doing this for publishers and readers, have the motive of earning back reputation amongst the audience and media, that went through mud for their upturned payment models. Not just that, this would help them waive off the new regulations countries are adopting for these tech giants to share a bigger piece with publishers and news organisations.
As important as the co-existence of these tech giants is with thriving news organisations for sustainable economic growth, it would also add substantially in creating an improved news environment. It is also believed to improve the quality of news media websites and sources that have been boundlessly spreading misinformation and blasphemously sensitive information.
Credible mews sources and thriving media environment is essential for a country’s economy and efficient democracy- provided it is a win for both the tech giants in terms of business and quality, and news organisation in terms of revenue and consistency.