[This two-part post has been authored by Soham Chakraborty, a third year student at NALSAR University of Law, Hyderabad. Part II can be found here.]
Nowadays, people are likelier to get their daily doses of information online than by reading a newspaper as in decades past. Even when online, research shows that people are more likely to consume their news from social media or by visiting news aggregators like Yahoo News, Google News etc. which include links to news articles from a variety of publishers.
Over the past few years, many news publishers have demanded that search engines and news aggregators pay them for displaying their content in their sites. The issue has come into the spotlight after the Australian Government recently proposed The Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill, 2020, which proposes that online search engines and news aggregators should pay news publishers for displaying their content as part of the search results.
Through this two-part post, the author aims to examine first, the perspectives of news publishers and online aggregators on the issue; and second, the arrangement by Australian landmark bill. For this purpose, the present post will explore the history of agreements between news publishers and search engines, in a bid to establish the background in which the proposed Australian Bill is to be enacted.
To pay or not to pay – the reasons for the debate
News publishers with an online presence have two major modes of revenue generation – advertisements and subscription fees. Many news publishers have a dedicated number of readers who regularly visit their sites and consume news, often by paying a subscription fee. However, there is another class of non-dedicated readers who prefer visiting news aggregators to surf the headlines rather than delving into specific platforms. The problems for publishers begin at this stage, since visitors to news aggregators do not count towards traffic on the news publisher’s website as they never actually visit the platform. This tendency is borne out by a survey conducted by the European Commission, which found that around 47% Europeans using news aggregators do not click on links to original articles which results in lower traffic and subsequently, lower advertisement revenues.
On the other hand, aggregators claim that they drive casual readers to the websites of the publishers which bolsters the traffic to the publisher’s website. This is evident from the aftermath of the shutdown of Google News in Spain. According to researchers who surveyed over fifty Spanish news outlets, after the shutdown, news outlets experienced a drop of around 8% to 14% of daily visits to their sites.
Paying the Publisher: Experiences from the Past
This section of the article looks at the various laws, making provisions for news aggregators to pay news publishers for displaying their content, which have been implemented or considered for implementation in different jurisdictions.
In 2013, Germany passed a law, dubbed the “Google tax”, which made provisions for news aggregators to pay news publishers for displaying their content. Neighboring rights in copyright law, which were previously to only to performers, producers of phonograms and broadcasters were now extended to news publishers for their press publications. According to this law, while news aggregators will not be held liable for displaying headlines, links and snippets, they may be held liable for anything going beyond these strict criteria. Following the passage of this law, VG Media, a consortium of German publishers, decided to further restrict Google News, by narrowing the scope to such an extent that aggregators could display only the headlines of the articles. Google News acceded to these directions and displayed only the headlines of the articles, unless the news publisher expressly allowed them to display more. However, this resulted in a fall in the number of daily visits to the news publishers’ websites resulting in many publishers backtracking to their old arrangement with Google News without asking for any remuneration.
Following the German experiment, Spain experimented with its own law wherein it made it compulsory for news aggregators to pay news publishers for displaying their content. The inalienable nature of the rights extended to news publishers meant that even if publishers wanted their content to be displayed without any requirement for remuneration from the news aggregators, they would not be permitted to do so. This law applied only to news aggregators and did not prevent readers from reading snippets of the same news through online search results. Subsequently, even before the law came into force in January, 2015, Google closed down Google News in Spain saying that the law had created an unviable situation for Google News.
Following the adoption by the European Union of the Directive on Copyright in the Digital Single Market (hereinafter “the EU Copyright directive”) in March, 2019, France became one of the first countries to adopt the directive to its own law in October, 2019. Article 15 of the EU Copyright directive contains provisions for news aggregators to compensate publishers of press publication for displaying their content. It extends reproduction rights under Article 2 and rights of communication to the public under Article 3(2) of the Directive 2001/29/EC of the European Parliament and of the Council to the publishers of press publications. However, while Article 15 of the EU Directive states that the law will not apply “in respect of the use of individual words or very short extracts of a press publication”, the French law goes one step further and provides that the particular exception does not affect the rights of the news publishers as provided under the law, especially when short extracts can act as substitutes for the entire news article, allowing users to dispense with reading the entire article.
Subsequent to this law, Google News displayed only the headlines and the URLs of the news articles and removed all snippets. The matter reached the French Competition Authority which held that Google’s actions are an abuse of its dominant position in the market of search engines and ordered Google to enter into good faith negotiations with publishers. Subsequently Google entered into an agreement with publishers in France. This agreement included creating content to be showcased on Google News Showcase – a new initiative launched by the company. Under this initiative, Google would negotiate individual licenses with news publishers based on measurable and specific metrics. Through the scheme, Google plans to invest around $1 billion over three years to pay publishers to show limited pay walled content to users for which Google will pay the publishers. The users will be able to register with the news organizations of their choice and through the use of news panels the user can receive daily updates on national and local curated by the news organizations for the users.
From the above discussion it becomes clear that countries have had limited success in forcing news aggregators to pay publishers for displaying their content online. The Australian Code has been drafted with similar aims and objectives – to get news aggregators to pay news publishers for displaying their content online. The substantive content of the law – and the responses it has elicited from internet giants – will be explored in the second part.