In the eyes of journalists and media executives, tech companies like Meta and others look like the biggest and most profitable parasites, feeding off of the hard, much less profitable work of the news industry. These companies are sending a large number of readers to media outlets, but do not pay for the journalism or content that draws those readers in the first place.
In the last few years, two companies, Facebook and Google, dominated the digital advertising market. Cut to 2022, Google, Amazon and Meta are ruling the advertising landscape – the 'big three platforms' are on track to absorb more than 50 per cent of all ad money.
How much do they make?
Two years ago, News Media Alliance came up with a report stating that Google generates revenue of about $4.7 billion a year from news content. News Media Alliance is a trade association or a lobbying group representing many newspapers in the US and Canada.
The CEO of News Media Alliance, David Chavern, even cited it in front of the US senate committee as a valid number. But, this study had some fundamental flaws. Eventually, it received massive backlash from both Google as well as journalists.
Several industry analysts and experts pointed out the flaws in the 'report,' but one of the crucial things they ignored was that Google doesn't show any ads on news-related searches. Also, there are no apps or paid promotions within the Google News app, so estimating revenue from these streams is zero.
Google, on its website, also states that it doesn't make money from news.
"We don't show ads — or make money — on the vast majority of searches. And we don't run ads on Google News or the news results tab on Google Search." – Google.
But, a few analysts estimate that Google generates about $1 billion in advertising revenue a year worldwide from 'news' driven search results.
On the other hand, Apple displays ads on its Apple News and Stock apps, along with Apple Store. As per Bernstein analyst Toni Sacconghi, 2021, Apple generated ad revenue of about $4 billion in 2021, up from an estimated $300 million in 2017. The revenue generated from ads is well under 2 per cent of the company's overall revenue – i.e. $365.8 billion.
Should big tech pay news outlets?
Governments and media houses across the globe have accused tech firms of abusing their dominant position, using the content made by news outlets to generate ad revenue, and not compensating the publishers. Recently, India, too, has caught up with the dialogue.
A few weeks ago, the Minister of State for Information Technology and Electronics, Rajeev Chandrasekhar, in a media interaction, said that news publishers have no negotiating leverage whatsoever and that this issue needs to be resolved with law. He further assured that the Indian government would ensure that news outlets do not face such disadvantages in the future.
Read: Big Tech vs Journalism War Soon in India
IN MY OPINION:
As news publishers ourselves, we know just how important platforms like Google and Meta are for us. Not only do they provide a large amount of traffic, but they also create an ecosystem in which we can grow.
Think of why SEO is such a large industry. It's because Google is the number one source of traffic for most websites. The same can be said for news publishers. So there is always 2 side to the debate, one being that news publishers should be grateful to Google and Meta. While the other argues that these platforms should do more to support them. I believe that both sides have valid points.
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