Google Settles Linking Dispute With French Publishers, Implications Abound

Google’s settlement with French publishers over the use of links and snippets in Google News is not getting rave reviews from the press or politicians.  The announcement came last Friday that Google agreed to set up a fund of about $82 million for the benefit of French publishers.  Executive Chairman Eric Schmidt described it this way on the Official Google Blog:

Today I announced with President Hollande of France two new initiatives to help stimulate innovation and increase revenues for French publishers. First, Google has agreed to create a €60 million Digital Publishing Innovation Fund to help support transformative digital publishing initiatives for French readers. Second, Google will deepen our partnership with French publishers to help increase their online revenues using our advertising technology.

France was considering changes to its copyright law that would require royalties for links.  I can’t say whether France was serious about this beyond a negotiations ploy, but that is off the table with the new agreement.  Commentators say that while this may benefit Google in the short run it may set a precedent for how publishers deal with other aggregators.  $82 million is lunch money for Google.  That it couched the agreement as an advertising partnership means it will recapture some of that cash through its ad network.  

Google settled with Belgian publishers not long ago with a similar deal, though that was the result of copyright litigation in that country.  German performance rights society GEMA is in a royalties dispute with YouTube over musical content licensed by GEMA.  YouTube has blocked the videos with a message suggesting that GEMA is not licensing the content.  GEMA is upset with this as it is willing to license the content, though at a higher rate than Google will accept.  German publishers are interested in pushing Google for money based on the French and Belgian precedents.  They, however, want some type of agreement that would bind all aggregators such as Bing, Yahoo, and others. 

Linking is the new frontier for publishers desperate for money in a declining industry.  Google may be the biggest target with the deepest pockets but the web is much more than Google.  Social networks users, for example, have a habit of casual linking to news.  It’s only a matter of time before publishers complain that Facebook et al. are not paying their fair share on behalf of their customers.  Google’s business arrangements in France, Belgium, and likely Germany, can force a new worldwide model on unwilling participants.  What may be a political dispute will become the cost of doing business.  I’ll be following these developments over time.

One commentary in particular that enforces that idea comes from the Guardian UK.  The perspective there is that Google pulled a fast one on the French as there is no binding contract holding Google to a set of actions.  Any conflicts under the deal are not subject to arbitration.  Google does not have to reveal its search algorithms which are something that may be an issue in the European Union’s antitrust investigation into search ranking.  It’s available here.  [MG]