The response time of a Google search result is less than a tenth of a second.
For some reason, that’s the first measurement I thought of when I read the recent study of what Google and Facebook might owe U.S. publishers for their content.
Using that near-instantaneous micro-metric of a search response, the total tab for the two tech giants comes out to somewhere between $37.73 and $44.07 every tenth of a second.
Or, as the study’s more-rounded estimate puts it, between $11.9 billion and $13.9 billion a year.
“Existing deals made between these platforms and news publishers do not capture the full value generated by news content on the platforms,” the study says. “Using game theoretical insights into cooperative bargaining in cases where there is jointly-created value, we find a compelling case for a large payment from platforms to news publishers.”
The paper, entitled “Paying For News: What Google and Meta Owe US Publishers,” is the work of authors from The Brattle Group, the University of Houston, and Columbia University, estimating a payment for news content should usage legislation like the Journalism Competition & Preservation Act come to pass.
“By quantifying the news bill Google and Facebook would owe if the playing field were level,” The Seattle Times’ Brier Dudley writes, “ the study also helps explain why they are using aggressive lobbying, threats and outright blockages of news to kill or weaken media-bargaining policies wherever they’re proposed.”
(Source: Initiative for Policy Dialogue)
Current payments, be them through private platform-publisher agreements or through grants, are “vastly below our estimates of a fair payment,” the study says, estimating that a fair revenue split would give publishers 50% of news-related revenue earned by the two companies. But even that split, the study says, applies to revenue generated only from news content and not to the total revenue generated.
“As a percentage of total advertising revenue, we estimate that 6.6 percent of Facebook advertising revenues and 17.5 percent of Google Search advertising revenues should be paid to news publishers on an annual basis,” the study says.
Earlier this year, a report that Meta commissioned claimed that news links made up less than 3% of what was seen in Facebook Feeds. And in response to this study, a Google spokesperson told Press Gazette that “less than 2% of all searches are news related and we don’t run ads or make money on the vast majority of them.” Both Meta’s report and Google’s statement point to the benefits and value that news publishers get through traffic and expose.
But as two of the study’s authors pointed out in a Poynter opinion piece, big tech isn’t always the most forthcoming about traffic and impression numbers. “Unsurprisingly,” they write, “by keeping the cost of goods sold (news) down, Google and Meta have grown rich off the advertising revenue they reap from attracting the world’s eyeballs to their sites.”
Were traffic and search data made public, the study says, economists could more accurately assess what’s owed to publishers, helping to better refine what they’re calling their “conservative” 11-digit compensation estimate.
“The political economy implications of the underfunding of news by digital platforms are tremendous,” the study says, “and we have proposed global principles for platform remuneration to publishers elsewhere. “The decades of underpayment from platforms to news publishers have helped boost profits for Google and Facebook and increase their respective market (and monopoly) power.”
*Banner image made within Canva Magic Studio