News can survive without advertising, but not Google

Gautam Mishra is the founder and CEO of Inkl

For publishers, Google has long been viewed a bit like the erratic boss they really want to please, but can never get a full read on. At the mercy of Google’s hot and cold moods, publishers can’t be too sure whether complaining to HR will result in the changes they want to see, or make their lives more difficult.

It’s also an incredibly complex relationship. On the one hand the tech behemoth has managed to disrupt the advertising market that media conglomerates once hoped would replace their “rivers of gold” (newsprint classified revenue). But on the other, Google’s search engine has also delivered huge torrents of traffic to news websites. And for its part, Google has benefited from this exchange as well. While the company argues that news-related queries are just a small fraction of the searches performed, it would be highly disingenuous to posit that a search engine could function with any credibility if it didn’t have access to news-related search results.

To its credit, Google clearly understands this value exchange. It has a number of initiatives in the market, and in the works, to try and help publishers. But little is yet to materialise that signals any real impact or change for publishers.

That is why the issue has now been reported to HR in the form of the Australian government. A draft news media bargaining code sets out a path for Google to pay publishers so they can recoup some of their lost advertising dollars. The code ostensibly seeks to address the massive difference in bargaining position of a ubiquitous global platform versus a group of fractious, fragmented publishers. It’s not clear that this is going to work. Already, Google News has responded by saying that it may remove its news offering in Australia altogether.

Google would be well within its rights to do that. And it has. A similar response in Spain left readers greeting a note that said: “Legislation in Spain requires every Spanish publication to charge services like Google News for showing even the smallest snippet from their publications, whether they want to or not. This approach is not sustainable for Google News.”

Once publishers realised they had lost a major distribution channel in Google, they quickly tried to backtrack, but the damage had been done.

The bigger issue for Australia is that the Government is asking Google to compensate publishers for something that they used to do well (advertising), but that Google does infinitely better. But, this is how disruption works. What the government is doing now is tantamount to penalising disruption. And that is a fraught path to say the least.

The biggest problem for publishers is that the current proposed legislation makes a claim over something that can no longer support the news industry into the future, and which has been under threat for some time.

Instead, what publishers should be doing right now is doubling down on the one thing they do better than anyone else – in the start-up sector we call this “product-market fit” – and in the context of news that fit means creating quality content. This is something Google doesn’t have any interest in doing.

People are increasingly willing to pay for this content. As the pandemic has swept across the world, the need for verified information from trusted sources has increased, along with the willingness to pay for that assurance. At inkl alone, where we bundle news subscriptions from 100+ publishers, we’ve seen exponential growth since the start of the pandemic with no sign of things slowing down.

Paid content through subscriptions offers a far more sustainable option for publishers and the future of news, than fighting a battle over advertising that is long lost. Diverting publishers’ focus away from fixing their core business, is a massive mistake that will not serve readers or publishers in the end. Quite the opposite, building out paid content models would return value to Google distributing publisher’s content via search, to the benefit of both.

It seems a slim chance that the ACCC’s draft code will result in a $600 million payday for news businesses, as Nine’s chair proposed in May. It’s time news providers stop fighting the inevitable and move away from relying on advertising.

Meanwhile, if the government is genuinely concerned about the future of news and the impact that Google has had on its sustainability, it might do better to ask for Google’s tax dollars, and distribute that back to directly fund journalism.

Gautam Mishra is CEO of inkl, a bundled news subscription platform. Inkl allows consumers to access news from more than 100 publishers on its platform for a subscription fee of $15/month, including The New York Times, Foreign Affairs, The Telegraph, The Independent, The Economist, Financial Times and Bloomberg.