Note: This is something I originally wrote for the New Gatekeepers blog at the Columbia Journalism Review, where I’m the chief digital writer
A New York Times story published on Sunday contains an eye-opening allegation: it says that Google “made $4.7 billion from the news industry in 2018,” according to a new report. The lede of the story quotes the figure again, with all of the zeroes, and mentions that this number is “more than the combined ticket sales of the last two Avengers movies,” and is more than what most professional sports teams are worth (the writer of the story usually covers college sports, according to his Times bio). As it turns out, the report was published by the News Media Alliance, a media-industry lobby group formerly known as the Newspaper Association of America, and the figure quoted by the Times—without any critical assessment whatsoever—appears to be based almost entirely on questionable mathematical extrapolation from a comment made by a former Google executive more than a decade ago.
After quoting the head of the News Media Alliance, David Chavern, as saying newspapers deserve a cut of that $4.7 billion, and that the NMA believes this estimate is actually “conservative,” the Times story notes the number is based in part on a study done by a consulting firm called Keystone Strategy. That study in turn relies on a public comment by then-Google executive Marissa Mayer at a public event in 2008, when she estimated that Google News brought in $100 million in revenue. The News Media Alliance appears to have come up with the current figure in part by extrapolating from this comment, assuming that Google News revenue would make up the same proportion of the company’s revenue as $100 million was in 2008, and also that news consumption via Google’s main search is 6 times larger than via Google News (the report says this is based on referral traffic to newspaper websites).
A number of prominent journalists and media-industry observers have publicly scoffed at both the number and the report itself, and also questioned the desire of the Times to publicize such a thinly-sourced study without more skepticism (the Times didn’t respond to multiple requests for comment from CJR). Aron Pilhofer, former head of digital at The Guardian in the UK, and now the Chair of Journalism Innovation at Temple University, called the report’s conclusions “nonsense,” while Dan Gillmor, who runs the News Co/Lab at Arizona State University, said the Times embarrassed itself by running the story. Damon Kiesow, a journalism professor at Missouri University, said the NMA report was “a recap of all the complaints publishers have spouted at Google in the past decade,” and that it contained “no rational economic argument aside from the specious math the NYT reported.”
Several observers noted the story was timed in such a way as to provide maximum publicity for a bill that the New Media Alliance has been promoting to Congress, called the Journalism Competition and Preservation Act. The proposed legislation would exempt newspaper companies from competition laws, which prevent industry-leading entities from colluding to set prices. The NMA argues this would allow publishers to lobby Google and other platforms for better financial compensation together instead of individually. Congress is holding hearings this week looking into whether Google and Facebook’s market dominance requires anti-trust action.
The main reason the NMA study had to jump through the kind of hoops it did in order to come up with a number for its report is that Google News doesn’t carry any advertising, and doesn’t generate any direct revenue from the headlines and excerpts of news content it provides. One of the most glaring omissions from the report, mentioned by a number of media-industry observers is that the headline-grabbing number doesn’t take into account any of the ad revenue newspapers have generated from the page views they get via links on Google News and Google’s main search page. The search company says publishers get more than 10 billion clicks every month (the value of which differs depending on the publisher). The NMA told CJR the purpose of the report was to look at how much Google benefits from news, not the opposite.
Emily Bell, director of the Tow Center for Digital Journalism at Columbia, said the NMA report’s framing was not a helpful way of looking at the kind of digital disruption the news media has gone through since the arrival of the internet. “Framing Google/FB and the effect on the ‘news industry’ in terms of $ amounts is not very helpful,” Bell said on Twitter. “Framing it as the concentration of money and data in the advertising market is better.” Elizabeth Hansen, a researcher working on local news business models at Harvard’s Shorenstein Center, pointed out that “Internet platform economics were going to swamp the majority of publishers no matter what—there is (almost) no market for their products any more; not because they couldn’t make one, but because that’s not how internet economics work.”
In other words, the premise of the NMA’s report—and the argument behind the legislation it is promoting—is based on a misunderstanding of how the marketplace for information has evolved. While it’s true that revenue for newspapers has declined sharply over the past two decades, and revenue for Google and Facebook has increased just as dramatically, it’s not accurate to say that one caused the other. The ad market changed for a number of reasons—many having to do with an expansion of choice—and Google and Facebook took advantage of that. Newspaper publishers did not, again for a variety of reasons. So asking Google or Facebook to pay back something they theoretically took from the industry is mistaking cause for effect, and so is thinking that bargaining collectively with the platforms will somehow produce revenue that will save the media industry from the change occurring all around it.