Newsletter
It’s no secret that ad revenues for media organizations have decreased in recent years, as people move to digital platforms. Big online platforms, like Google and Meta, now have ad revenue-sharing models with U.S. news organizations. However, a new study from the Brattle Group finds that this ad revenue-sharing model doesn’t pay news organizations fairly, as reported by Deseret News. It’s hard to gauge just how much revenue Google and Meta earn from content from news organizations.
The Brattle Group created a formula that would split the revenue 50-50 between publishers and online platform hosts. If tech giants like Google and Meta employed it, U.S. news outlets would be owed $14 billion each year, the formula estimates.
News organizations and big online platforms have a mutualistic relationship. Publishers need search engines and social media platforms to disseminate their content. Similarly, online platforms need publishers’ content to stir conversation and come up in search results. Often, when search engines respond to use queries, they excerpt content from news articles. These excerpts and conversation starters drive up ad revenue for Google and Meta, among others. If U.S. news organizations were fairly compensated for their content, the Brattle Group’s formula estimates Google would pay out $10-12 billion and Meta would pay out $1.9 billion annually.
The report argues that current ad revenue-sharing arrangements do not reflect the true value of news content. “As a percentage of total advertising revenue, we estimate that 6.6% of Facebook advertising revenues and 17.5% of Google Search advertising revenues should be paid to news publishers on an annual basis,” the Brattle Group wrote. Additionally, the 50-50 revenue split hypothesized by the Brattle Group would only apply to revenue related to news content. As such, revenue earned by Google and Meta unrelated to news content would not be shared.
Could a new revenue split come from Google or Meta?
A revamped revenue split may be unlikely. That’s because news organizations need platforms like Google and Facebook, and might not be able to risk their relationships. However, news organizations are becoming increasingly frustrated with their content being used without fair compensation. For example, the New York Times updated its Terms of Service this summer to bar artificial intelligence scrapers from using its content to train AI models. The move came after Google revealed it would use web content to train its AI chatbot, called Google Bard.
So, while news publishers might not take action against online platforms for unfair compensation, they might try and restrict content scraping. However, once something is online, there’s not much you can do to prevent misuse. If news publishers successfully contain AI scraping and secure their content, fair compensation from online platforms might be an unintended result.