The Google News tax, and how it’s failed elsewhere in Europe

So the Government’s new copyright law plans to allow news creators to charge news aggregators to use their stories. As part of the media buildup, the Government points to France or Germany, both of which have introduced similar laws recently.

As I said yesterday, the new law is nonsense, pure pandering to elderly newspaper editors who don’t understand the Internet for short term political gain, and will stifle innovation whilst not touching the vast Internet giants in the least.

Let’s have a look at how France and Germany (and Belgium, actually) are doing with the new laws.

Germany has a very restrictive intellectual property law. In 2012 Merkel approved a law similar to the proposed Spanish one which would force search engines to obtain a commercial license from news sites before linking to their content. (Bloggers, individuals or once-off use by organisation were exempt from this).

Never worked. Google (and Yahoo! and Msn and the rest) just threatened to close down their German news organisations. Within weeks the major news agencies caved in and signed contracts giving them free use to link to their sites. The traffic being sent to the newspapers (and the resulting ad revenue) was far more important than the usage of extracts.

France was the first to approve this type of law. Here it was slightly more complicated, as the law went further, threatening a direct tax, and Google makes more money from France than Germany (billions, basically) but in essence, Google sat down with the main papers and hashed out a deal in which they didn’t get a penny, Google got the rights to link, and Google put a once off payment of 60 million euros into a trust fund for innovation in digital news medium. 60 million euros? Given they pay bugger all corporate tax, it’s nothing. MSN, I understand, withdrew their news aggregator from France.

Belgium was slightly different, as the issue came from a court order ruling that Google couldn’t reproduce news, images or stories from the main newspapers of the country, after they joined forces and sued Google. The legal action started in around 2007, but a final ruling only came out in 2011. But by the end of 2012 the newspapers caved in and gave Google rights to use their contents for free. In exchange, Google offered training courses to show the papers how to optimise their content for advertising revenue.

So…. in all three cases, the big Internet companies came out ahead. National companies that are trapped there? Stuffed, and burdened with legislation that stifles their growth, preventing them from ever competing.

You see, the big net companies are just too big. Google must pay the big newspapers millions in shared advertising revenue – it sends them the traffic, then serves the ads and shares the profits. It favours nobody to break that relationship, whilst the oligopoly continues.

The big content creators know this, it’s why they erect their paywalls for subscribers but still send the excerpts to Google News and the like. They need the eyeballs coming in, and it’s a great way to advertise their wares for free.

Google must be rubbing its greedy little hands in anticipation of this new Spanish law… When the homemade Spanish sites are shut down (as says it will be forced to do) the market is theirs, without a single shot being fired.

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