Google Australia managing director Mel Silva has countered claims by local media execs that digital platforms makes upwards of $600 million in revenue from news content, saying the figure is closer to $10 million.
Last month Nine chairman Peter Costello said Google and Facebook should pay 10%, or $600 million, of their $6 billion in local advertising revenue because that’s how much he estimates the tech companies benefit from news content and searches.
News Corp Australasia executive chair Michael Miller backed Costello, saying the figure could be as high as $1 billion.
Now, Silva has labelled these comments on the profitability of online news in Australia as “inaccurate”, saying the direct economic value Google gets from news content in search is “very small”.
“We don’t run ads on Google News or the news results tab on Google Search. And looking at our overall business, Google last year generated approximately AU$10 million in revenue -- not profit -- from clicks on ads against possible news-related queries in Australia,” Silva says.
“The bulk of our revenue comes not from news queries, but from queries with commercial intent, as when someone searches for 'running shoes' and then clicks on an ad.”
Silva says the “indirect” economic value, something ACCC chair Rod Sims highlighted when presenting the concept papers for the mandatory news media bargaining codes last month, is also very small.
In the last year news-related queries have accounted for just over 1% 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 says.
“As an example, a search for 'Melbourne' would return results like tourism links, maps, local government information, news headlines, and more.”
The mandatory news media bargaining codes are being designed to provide guidelines for how revenue generated by Facebook and Google from news content by Australian media companies is shared with them.
Previous attempts by governments around the world to force Google to pay for news have resulted in the platform reducing or removing news content displayed, such as in Spain where it shut down Google News.
Silva says Australians can expect changes to news content that's made available on the platform as a result of the codes.
"The mandatory code will have important consequences for Australians, including how and which types of news they can search and discover through Google," she says.
“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."
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