There was a lot of major news last week, but for the media business nothing was more important than Google's settlement with book publishers of law suits challenging the right to digitize copyrighted books for search and distribution without paying for them. Google will pay $125 million to the plaintiffs, publishers, and authors, and will cover legal fees for what was a protracted haggle. A structure will be established to continue the scanning of millions of books and making them available for online access with a pricing protocol that can be monitored via sales or, for libraries, subscriptions. There is even a split for any advertising revenue generated by the book pages. The agreement itself is 141 pages plus attachments, and there will now be months of sorting out the details before final court approval and a launch sometime in 2009.
Having plowed through the agreement myself and read whatever analysis I could find, there are still a myriad of vexing issues to be resolved, such as whether a book available only in digital form can be considered "in print"; how to accommodate access online for single use versus the right to print or forward the material; setting a reasonable royalty split between authors and publishers for e-books; whether the library subscription model has any further commercial applications, and so forth. This deal is very much a work in progress, and while congratulations are in order to the negotiators, care with nuance is going to be crucial.
But the major point is that Google has now conceded, with a very large payment, that information is not free. This leads to an obvious, critical question: Why aren't newspapers and news magazines demanding payment for use of their stories on Google and other search engines? Why are they not getting a significant slice of the advertising revenues generated by use of their stories via Google?
There is a running and increasingly urgent dialogue under way about new business models for newsgathering in which the brutal realities of lost advertising and circulation are balanced against the still paltry revenues generated by the online newspapers and news magazines. Audiences for news from traditional providers are stratospheric. (On September 29, the day the first Bush bailout proposal was voted down by the House and the Dow Jones went down almost 800 points, the New York Times Web site had 10 million visitors and 42.7 million page views.) And yet the news proprietors have chosen or been unable to do what the pokey old book publisher and authors did: take on Google for what is an absolutely core issue of fairness and increasingly of survival.
Google makes a fortune. The leading Internet service providers and telecommunications giants like Verizon are doing fine also (Verizon's profits were up 31 percent in the third quarter of 2008). But key providers of the news that flows through their digital services are being asphyxiated to an extent that is a massive threat to our information culture, a pillar of our democracy. It's that serious.
Meanwhile, the Associated Press, which is owned by the newspapers which are in such trouble, and news agencies in France, Britain, and Canada have licensing agreements with Google that, in concept at least, are similar to the deal just reached with the book publishers. Material displayed comes at a price. For months now, I have been asking news executives why there is no move to demand payment for use and a split of advertising that results. The answer seems to be that the newspaper companies never could find common ground on an approach, and probably underestimated the problem until Google and the others had enshrined the linguistic myth that news was meant to be free. The AP, on the other hand, was authorized years ago by these very same newspaper companies to license itself "aggressively," as an executive there explained to me. Without advertising to count on, the AP clearly had to develop revenues streams to grow and did. Incredibly, the newspapers seem to be accepting the uncompensated use of their goods as a fait accompli.
As the situation for newspapers, especially those in the major metropolitan areas, becomes increasingly dire, any momentum for a concerted push for payment is undone by what seems a collapse in morale. "The fight has gone out of them," said one industry leader. Even Eric Schmidt, the CEO of Google, acknowledges that the Web would become a "cesspool" of useless information without the best of journalism, according to a speech he gave at the American Magazine Conference, quoted in the New York Times. Well, Mr. Schmidt, there is something you could do to help forestall that outcome.
This is a complicated subject, as the hefty book publishers' accord makes plain. But the issue itself is very clear: the collection of quality news is expensive, and it is seriously threatened. Google drives a very hard bargain in pursuing its business interests, but can be brought around by persistence and grit. There is a vast amount of money changing hands for news these days. A way has to be found-and fast-for those now making money from the distribution of news to pay for it.
Peter Osnos is Senior Fellow for Media at The Century Foundation