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Google keeps news industry hanging on with new concessions

The tech giant has found bones to throw. Could it be the start of a better relationship?

Google and Facebook will probably mop up half the digital advertising market this year. Photograph: Paul McErlane/Bloomberg via Getty Images

News media groups and Google have one of those torturously unequal relationships, where one half of the couple thinks constantly about the other half, but this other, more powerful half not only barely thinks about them, it doesn’t really recognise that they’re in a relationship in the first place.

Google is busy. When it’s not appealing a €2.4 billion EU competition fine for abusing its search monopoly, or buying up the part of electronics manufacturer HTC that makes its Pixel phones, it’s fending off accusations that it isn’t doing enough to tackle online extremism and thinking big thoughts about the future of artificial intelligence.

And while it’s off doing this, the news industry is curled up on the couch, clinging to a battered cushion and rattling off statistics such as those from eMarketer, which estimates Google will pull in about $73 billion in advertising revenue in 2017 – more than twice the cash that will end up in the coffers of the second-largest player, Facebook – and that together the two Silicon Valley giants will probably mop up half the digital advertising market this year.

The news media has been going round in circles on this – or, alternatively, it’s been led a merry dance. It’s tried living without Google, it’s tried jumping about to get Google’s attention, it’s tried taking the little sweeteners that Google occasionally offers and it’s tried complaining about its behaviour and very existence to various governments, in the vain hope that they might one day “fix” Google.

But now there are signs of a breakthrough. The Financial Times reported last week that Google was in talks with three news publishers – News Corp, the New York Times and the Financial Times itself – about how it might develop artificial intelligence tools that would make it easier for publishers to market and sell subscriptions online.

This “subscription apparatus” will use the search company’s immense data power to recognise (hunt down) potential subscribers and tailor subscription offers accordingly, with the ultimate promise being that publishers who avail of it will be able to better monetise their content.

First click free

This comes on top of Google’s decision to end its “first click free” scheme, which allowed internet users to “beat” news paywalls three times a day and was described by German publisher Axel Springer as “toxic”. Ominously, when the Wall Street Journal opted out and blocked all of its content earlier this year, it found it was suddenly disadvantaged in Google’s search results.

The News Corp-owned title is among those who have argued that it is unfair for Google’s search algorithm to rank paywalled articles less favourably than free content: in effect, subscription-chasing publishers have been penalised for their business model by the very company that made such a model an imperative.

By building the digital subscription businesses that lessened their dependence on Google-dominated online advertising, news groups were, after all, trying to be smart and get their own thing going. If Google drowns out their existence by promoting free content instead, it creates a lose-lose for journalism.

Now, in what looks like a tentative thawing of relations, large news publishers are learning to use Google to its advantage, pushing for it to help create improved payment systems that will increase subscription revenue simply by making it easier for people to pay.

When martyrdom fails

So far it’s fair to say that giving away all the goods and then acting like a martyr about not making any money hasn’t worked as a strategy for the news media. On the other hand, the time-honoured negotiation tactic of walking out of the room has, at least for the big publishers, won the odd compromise.

When, for example, the likes of the New York Times and the Wall Street Journal started turning their noses up at the deal Facebook was offering on Instant Articles, it wasn’t long before Mark Zuckerberg was posting that Facebook would soon begin testing a subscription tool within Instant Articles and that, crucially, it wouldn’t take a cut from the sums raised.

These shifts in attitude will be welcomed by news groups with digital subscription revenue streams to worry about. It may even result in more outlets following that path. But not every media organisation has the luxury of scale like News Corp or the Financial Times. Not every media organisation can either manufacture a viable paywall business overnight or hang around in hope of a less hostile market.

So while the New York Times can afford to say it is “encouraged by Google’s willingness to explore new solutions for subscription publishers”, over at UK trade site Press Gazette, a different tone has been struck. Totting up the number of local title closures, it has launched an anti-duopoly campaign with the blunt message “stop Google and Facebook destroying journalism”.

For some, the time for concessions is running out.