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Digging in the TechDirt January 22, 2010

Posted by Bill Rosenblatt in Europe, Law, Publishing.
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The German news publishing industry is asking for an antitrust investigation into Google’s search advertising practices, which mirrors concerns about what news publishers all over the world have raised for years over what they call “free riding.”

This story wouldn’t have gotten that much attention on this side of the Atlantic Ocean — other than the New York Times story referenced above — but for a post about it by Mike Masnick on Techdirt this past Tuesday.  (No, I won’t help Techdirt’s search engine rankings by including a link.)  In the post, Masnick accuses German news publishers of being “Apparently Very Confused [a]bout How [t]he Internet Works.”

If there’s anyone here who’s confused about how the Internet works, it’s Mike Masnick.  Techdirt is not alone among the dressed-up blogs that attract lots of traffic with their stories about the tech industry that often betray smugness and ignorance, but this one — as they might say on the other side of the pond — takes the biscuit.  It scales new heights of wrongheadedness and irresponsibility among widely-read publications.

Masnick should use his favorite search engine and look up “free riding” or “contextual advertising” to find out what he’s missing.  He should also look up “Google book settlement” to find that what the German news industry is doing is far from original — although the antitrust approach is somewhat novel.  Finally, he should understand the difference between Google News and plain old Google search results (a difference that the Times article admittedly glosses over).

Masnick adds insult to injury by suggesting that the blinkered, hopelessly out-of-it German news publishers have no right to launch a legal action against Google because they have failed to monetize the Internet thus far.  Uh, says who?  Oh, right… says Mike Masnick.

(And by the way, this isn’t the first time.  Mike Masnick has a history of writings about copyright-related issues that betray less knowledge of the subject matter than he believes himself to possess.  This is why I don’t normally read Techdirt.)

Normally I’d post a comment to the Techdirt story itself.  But after the 50 or so comments posted over the past two days, my comment would be utterly lost after all the other comments about Hitler, World War II, Iraq, and other issues highly relevant to the long-running, unsettled disputes between search engines and publishers over contextual advertising and the right to display copyrighted works in search results.

Comments»

1. Matthias Spielkamp - January 22, 2010

Bill, the TechDirt post was well received by the German Twitter crowd who loves to hate publishers right now because they’re asking for a neighboring right – and either have no clue whatsoever what it should look like or are not telling anyone. Problem is: the coalition government nevertheless says in their coalition agreement that they want to introduce such a right. So every publisher bashing comment, especially when it comes from oh-so-well-informed sites as TechDirt is very welcome here. Now I completely agree with you that this post was shallow at best (I said so in reply to someone who apparently liked it a lot: http://twitter.com/spielkamp/status/7990441626). But your post is not more than a rant, either. And I’d love to read about your reasons why you think Masnick is wrong. Because although I think he’s just talking rubbish I don’t agree with the publishers’ arguments either.

Bill Rosenblatt - January 23, 2010

Matthias,

Let’s focus on the two most obvious points. First, advertising. Masnick is focusing on Google News and ignoring plain old fashioned contextual advertising, which I suspect is much bigger in user volume than Google News. Google displays ads that its technology chooses based on the text of search results. Publishers believe that since they are supplying the content, they should be entitled to some of that ad revenue.

Second, the search results themselves. Publishers — especially news publishers — believe that they should be able to limit the rights of search engines to display their content in search results. Not only for reasons of copyright but also journalistic reasons: wire services like DPA and AP push news out as quickly as they can and often replace stories with new ones that correct errors, add details, etc. Search engine indexing doesn’t reflect this. As I have written on numerous occasions, news publishers are currently trying to solve this problem through a technical standard (ACAP) that allows them to specify rules about how content can be indexed and shown in search results.

There is also the issue that both Google search results and Google News (according to publishers) leech revenue from publishers by showing the content for free so that users don’t bother going to the publishers’ own sites — thereby depriving the publishers of ad revenue. This problem is about to get a whole lot worse as more newspapers begin putting up pay walls on their sites. Google News has taken steps to limit how much content from a given publication users can see before being forced to click over to the publishers’ sites. This is admittedly a fraught, complex issue, as the debate over driving traffic vs. leeching revenue could go on forever.

From reading Masnick’s post, I get the feeling that he understands none of this. Furthermore, he appears to be unaware that these issues have been brewing for quite a long time and (with all due respect) not at all confined to Germany.

2. Matthias Spielkamp - January 24, 2010

Bill,

thank you very much for the detailed answer. I have to admit that I don’t think the error-correction argument is for real… And whether ACAP will ever work is doubtful, as you have said yourself on many occasions. But of course you make clear that the details are much more complex that Masnick is willing to accept. But that’s what makes platforms like techcrunch successful. Reminds me of what Springer and Murdoch are doing in their newspapers. Now isn’t that ironic? ;-)

Cheers,
Matthias

Bill Rosenblatt - January 24, 2010

Matthias,

The “error-correction argument” is definitely for real, as I know from having consulted to the Associated Press. “Replaces” and “Corrects” flags on stories are part of everyday life for wire services. Among other things, bear in mind that journalistic concerns include risk of libel, defamation, etc.

Finally, as far as Masnick is concerned, the way he wrote his story, it did not seem like a matter of what he was “willing to accept.” It looked like he neither knew anything about this issue — which (as I said) has been much discussed, if he were paying any attention — nor did any homework. He just shot from the hip. And in the past he has accused New York Times journalists of being incorrect and not doing their homework — and been proven wrong by actual experts. I can understand it when actual journalists get things wrong because they don’t have time to delve into what we both know to be arcane and complex subject matter. What I can’t abide is this smugness, arrogance, and hypocrisy.

3. Mike Masnick - January 24, 2010

Odd. I am reading through all of this, and no one has pointed out a single thing that I actually got wrong.

Bill Rosenblatt - January 24, 2010

Hi Mike,

Thanks for joining the conversation.

I’d be happy to clarify:

“Google says it brings us traffic, but the problem is that Google earns billions, and we earn nothing,” Mr. Fuhrmann said.
Okay. Let’s pick apart this apples and oranges comparison.

Furhmann’s statement, as worded there, does ostensibly imply an apples-to-oranges comparison. But it really assumes an implicit relationship between traffic and revenue — a relationship that, while difficult to quantify precisely, is well known to news publishing people all over the world who have been following this issue for years. I would argue that the implicit relationship is so well known that Fuhrmann need not state it explicitly.

First off, Google earns 1.2 billion euros from search advertising which has almost nothing to do with news.”

The Times article on which you base your post says: “publishers … want the company to pay for using article snippets in its Web news service and search results. [emphasis added]” Google displays ads next to search results based on the text of the search results – contextual ads. Publishers’ arguments are primarily based on the claim that Google derives revenue from contextual ads that are triggered by their news content. Google News is a concern to publishers, but I believe it’s secondary to general Google search in terms of traffic volume. Thus taken in the correct context, the money that Google earns from search advertising does indeed have something to do with news.

that still doesn’t excuse Fuhrmann’s claims — which basically amount to him admitting that Google figured out how to make money and the companies he represents did not.

Yes, it sure is true that Google makes a lot more money than newspapers (in Germany and elsewhere). But that has nothing to do with publishers’ argument — which, again, has been kicking around news organizations in the US and in many other places for years — that some of the revenue Google makes off publishers’ content ought to be rightfully theirs. Here the proper way to view this is through the lens of copyright law, which (generally speaking, factoring out differences between US and EU treatments of this subject) looks at the monetary effect of content use in determining whether a use is infringing or not. Publishers’ legal actions against Google are based on this copyright principle (which is why I said that the use of antitrust is admittedly novel).

If you want some background on this, check out Google’s settlement with book publishers, which is all about these principles. Read the material about ACAP, which is the news industry’s attempt — which I believe will not succeed — at defining a technical standard to control how Google and other search engines can index content and display it in search results.

Again, reasonable people could differ (and probably will, for the rest of Eternity) on the quantitative relationship between traffic and revenue. And I agree that newspapers haven’t monetized traffic very well at all. But it’s wrong to suggest, as you do, that their lack of ability to monetize traffic means they have no basis for suing Google. Legal authorities will decide whether publishers’ arguments have merit.

4. Tweets that mention Digging in the TechDirt « Copyright and Technology -- Topsy.com - January 25, 2010

[...] This post was mentioned on Twitter by Matthias Spielkamp and Doerte, Barry Sookman. Barry Sookman said: Digging in the TechDirt http://bit.ly/8A4VzH [...]

5. Mike Masnick - February 1, 2010

Sorry. I’ve been traveling.

Furhmann’s statement, as worded there, does ostensibly imply an apples-to-oranges comparison. But it really assumes an implicit relationship between traffic and revenue — a relationship that, while difficult to quantify precisely, is well known to news publishing people all over the world who have been following this issue for years. I would argue that the implicit relationship is so well known that Fuhrmann need not state it explicitly.

I’m not sure I understand your point here. Fuhrmann did suggest a clear comparison between Google earning billions and the newspapers earning nothing — and suggested that it was because of Google somehow free riding off of newspaper content. But that’s wrong. Google makes its money not from people searching for news, but for things like cameras and cars and mortgages. I don’t know how familiar you are with what makes money in online ads for Google, but it’s NOT news. Not by a long shot.

The Times article on which you base your post says: “publishers … want the company to pay for using article snippets in its Web news service and search results. [emphasis added]” Google displays ads next to search results based on the text of the search results – contextual ads

Again, the amount of money made here is tiny. Barely worth mentioning. And, given that the snippets shown on Google search results as opposed to Google News results are even *less*, it’s difficult to see how that’s taking any money away from the publishers at all. Furthermore, it’s difficult to see how this would hurt the publishers at all anyway, because the only way that Google makes money in these situations is if someone is *selling* something that people want to buy here (because Google doesn’t make any money unless people click on the ad), in which case they’re not looking for the news story anyway.

Finally, even *if* you are right and Google is making some tiny amount of money from people searching for news, they’re not making it because they’re freeriding on the news, they’re making it because of the service of helping people find the news.

The argument put forth by Fuhrmann suggests a fundamental misunderstanding of the internet and Google.

Yes, it sure is true that Google makes a lot more money than newspapers (in Germany and elsewhere). But that has nothing to do with publishers’ argument

I quote Furhmann: “Google says it brings us traffic, but the problem is that Google earns billions, and we earn nothing,”

It seems that the publishers are making that argument very much.

that some of the revenue Google makes off publishers’ content ought to be rightfully theirs.

You wrote a blog post about Techdirt, and it helps promote your business. I now feel that I rightfully deserve a cut of your income.

Pay up.

That is the equivalent of what the German publishers are saying. Do you agree with them, but not me?

Here the proper way to view this is through the lens of copyright law, which (generally speaking, factoring out differences between US and EU treatments of this subject) looks at the monetary effect of content use in determining whether a use is infringing or not. Publishers’ legal actions against Google are based on this copyright principle (which is why I said that the use of antitrust is admittedly novel).

Sure. View it through whatever law you want. It doesn’t change the fact that it makes no sense. Honestly, I’d argue that the antitrust argument has marginally more accuracy than the copyright argument — which has no legitimacy at all. Google is pointing more traffic to them. If they can’t monetize than opt out of Google or go out of business. Google is not making money off of their content, it’s making money off the service of providing people what they’re looking for — something that these newspapers failed to do.

If you want some background on this, check out Google’s settlement with book publishers, which is all about these principles. Read the material about ACAP, which is the news industry’s attempt — which I believe will not succeed — at defining a technical standard to control how Google and other search engines can index content and display it in search results.

I’m familiar with both and have written about both extensively.

Again, reasonable people could differ (and probably will, for the rest of Eternity) on the quantitative relationship between traffic and revenue. And I agree that newspapers haven’t monetized traffic very well at all. But it’s wrong to suggest, as you do, that their lack of ability to monetize traffic means they have no basis for suing Google. Legal authorities will decide whether publishers’ arguments have merit.

You have yet to show that they have a reasonable basis for suing Google, and if they do, then honestly, there’s a serious problem with the law. Also, I never said that the newspapers’ failure to make money was the reason there was no legal basis for their argument. You seem to have made that up wholly.

You still haven’t explained what I wrote that was incorrect. Instead, you made up something I didn’t say and then claimed that was incorrect — even though I do think it’s true that the publishers have no legal leg to stand on, but that wasn’t what I wrote about.

Also, I should note that I find it rather amusing that you seem to think that a NY Times article would have received no attention if I hadn’t written about it. I’m flattered that you think Techdirt gets more traffic/has more influence than the NY Times, but I’m sure it will make you happy to know that is not the case.

Bill Rosenblatt - February 1, 2010

Mike,

I’m not sure I understand your point here. Fuhrmann did suggest a clear comparison between Google earning billions and the newspapers earning nothing — and suggested that it was because of Google somehow free riding off of newspaper content.

My point, which I admittedly worded somewhat obliquely in the interest of politeness, is that you reacted to Furhmann’s quote in the NY Times article rather than to the actual position that news publishers are taking. You read one quote in a Times article and appeared to base your entire argument on that. Since you do show familiarity with this debate, I will retreat to Matthias Spielkamp’s wording: the details are much more complex tha[n] [you are] willing to accept.

Google makes its money not from people searching for news, but for things like cameras and cars and mortgages. I don’t know how familiar you are with what makes money in online ads for Google, but it’s NOT news. Not by a long shot.

OK, let’s look at the top “hot searches” from last Friday from Google Trends:

  • 1. groundhog day
  • 2. black history month 2010
  • 3. grammy winners 2010 list
  • 4. leon russell
  • 5. 2011 budget
  • 6. dan seals [running for congress]
  • 7. greensboro four
  • 8. plane lands on nj turnpike
  • 9. pink grammy performance
  • 10. imelda may

Or how about the top 10 “Hot Topics” :

  • 1. obama budget
  • 2. i pad
  • 3. toyota recall update
  • 4. ipad apple
  • 5. i-pad
  • 6. beyonce grammy
  • 7. groundhog
  • 8. exxon mobil
  • 9. rangers
  • 10. pro bowl

Hmmm… don’t see too many cars or mortgages there. What I do see are lots of topics that news publishers cover. Yes, maybe there is some secret knowledge about Google search terms that I do not possess.

Sure. View it through whatever law you want. It doesn’t change the fact that it makes no sense. Honestly, I’d argue that the antitrust argument has marginally more accuracy than the copyright argument — which has no legitimacy at all.

It makes no sense to you. It does make sense to news publishers. I don’t believe you actually understand either legal argument (antitrust or copyright). I will admit to not understanding the antitrust angle, especially under German law. To be clear, I am not taking a position here. You could well argue that the law makes no sense — and admittedly I am not a big fan of the fair use principle as it (fails to) apply in the digital age.

You have yet to show that they have a reasonable basis for suing Google, and if they do, then honestly, there’s a serious problem with the law.

On the contrary, I did show that they have a reasonable basis for suing Google. Whether there’s a serious problem with the law is a different matter; I won’t really disagree with that, in fact.

Also, I never said that the newspapers’ failure to make money was the reason there was no legal basis for their argument.

That’s not what I said. I said that the tone of your article was that because the news publishers haven’t made money from the Internet that they have “no right” to sue. That is different from having a flawed legal argument. For better or worse, anyone has a right to sue anyone.

6. JP - February 18, 2010

Maybe if Mr. Masnick, read this links, can be more responsible, and understand about the interest in antitrust around newspapers and search engines like google.

From Today:

http://www.justice.gov/atr/public/press_releases/2010/255377.htm

And:

http://www.justice.gov/atr/public/testimony/245063.htm

JP.

7. JP - February 25, 2010

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