Google’s olive branch to news publishers comes at a cost

By Aarthi Rayapura October 25, 2017

Excerpts from an article by Madhumita Murgia on FT.com

The relationship between media groups and Google has long been strained, with the tech group’s power over consumers sparking mistrust about the gradual closing of access and siphoning of revenues from the industry.

When Google announced earlier this month it would drop its chokehold on paywalled sites, helping publishers gain new subscribers using its own data and algorithms, media executives openly rejoiced. Some said millions of dollars would be ploughed back into journalism; others envisioned a double-digit spike in subscription conversions.

Now, Richard Gingras, Google’s head of news, has revealed a twist: in an interview with the FT, he said the group planned to take a finder’s fee for each new subscriber it brings to publishers. This would be significantly less than 30 per cent and so more generous than 70-30 split for its AdSense model.

“We want to have a healthy ecosystem where we’ll benefit both as a society and with our business,” he said. “We are still working it out, we’re not experts in the subscription business, but the rev shares will be very, very generous.”

The question for publishers is whether this is simply Google trying to insert itself between the customer and the media business, drawing out new revenue streams for itself. Or whether its innovations in data use and artificial intelligence could still help revive the economics of the online news industry increasingly moving to paywall-based models.

Read the full article on FT.com

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