AP’s Google Deal May Be a Table-Setter
Important Details: It’s been a long-simmering dispute between news publishers and search aggregators. What’s fair and what’s legal, as the search aggregators index headlines and story leads from open news Web sites? Ask the aggregators, and they’ll tell you it’s not only legal, but that it provides great distribution to publishers’ own Web sites. Ask publishers, and they’ll tell you with today’s insanely busy lifestyles, readers often are just going to the aggregator Web sites, browsing, skimming, and too seldom clicking through. They’ll tell you that Google, Yahoo!, MSN and a host of other indexers are doing their own skimming of great value, all derived from the expensive work of gathering and publishing the news.
Fair use? Foul play?
Agence France Presse broke the bubble of conjecture last year, suing Google for $17.5 million, saying the Google News product infringed copyrights by pulling those headlines and leads. Publishers and aggregators have been asking themselves when the next shoe might drop.
It dropped Wednesday. No, not another lawsuit, but a new partnership, which we can easily construe as a partial, pre-emptive settlement of the issue. Google and The Associated Press both released statements about their recent agreement. What kind of deal? Well, publicly, it’s about the vaguest partnership Silicon Valley has heard of in a while.
Publicly, Google is paying a license fee to AP for use of its full-text stories and photos. In and of itself, that wouldn’t be big news in one sense. AP has long licensed its own staff-produced news and photos widely on the Web (as compared to content produced by its member newspapers), literally doing more than a hundred deals on large portals and niche sites near and far. But it hadn’t done a deal with Google, which after all has touted itself as the gateway to all human knowledge, not a home housing the knowledge. So the deal of a full-text license prompts some head-scratching. Is Google now on the path to becoming a Yahoo!-like destination, all the better to monetize the ad-clicking fingertips? All Google would say is that the AP content would be the foundation of an as-yet unannounced new product, separate from Google News, which hosts no content, but points to a lot of it.
Well, maybe. Or maybe it’s a subtle way to raise a flag of truce between Google and publishers. Clearly, Google is paying AP a new, good sum of money. The betting here is that the money helps compensate AP for the use of all those headlines appearing on Google News that never get clicked on, but still generate part of Google’s booming billion-dollar ad business.
Both AP and Google are tight-lipped about that implication. Let publishers do what they are best at – produce content. Like aggregators do what they are best at – slice, dice, and deliver it in ways today’s readers want it. Says Jane Seagrave, VP, New Media Markets for AP, "the real key is to come up with a business model that marries the two."
AP has already figured out a technical solution that lets aggregators like Google better read AP feeds, remove bothersome duplication, and link to local papers’ stories. That program is already in place with Topix, and it would be a natural fit with the new Google deal, as the smoke of the deal clears.
In Outsell’s Opinion: If the money is big enough, look for this deal to set a precedent. The deal after all required the approval of the AP board, peopled by the CEOs of most of the big newspaper chains. They assented, and that confirms that we may soon see similar deals between Google and newspaper companies directly for vertical – and maybe local – content. We’ve already taken note of the talks between Yahoo! and six major newspaper companies, covering this content/distribution marriage, in both news and classifieds. So, expect that just as the deal may set a precedent for news publishers, it also points the way for other aggregators, Yahoo!, MSN, AOL and others, to find ways to compensate news publishers for value creation found in aggregation of headlines themselves.
The lesson here is clear: by using their combined strength, an industry may have won a better deal with Google, Yahoo!, and MSN. In fact, the deal could reverberate in industries outside newspapers. Though few associations are as potentially powerful as AP, others like ABM in business-to-business and MPA in consumer magazines can take note of the move and work it into their own strategizing.
It’s clear that deals like this one help draw the new map. That map shows how irretrievably broken is the traditional connection between publishing and distribution. The Internet has all but severed that connection, forcing publishers to make better and smarter deals to gain value from their content as it moves freely (but not free) into reading devices everywhere. The day after Google announced the AP deal, it announced a new partnership with XM radio, another signal of how distribution is the name of the game. Outsell believes that deals like the AP/Google one – if built to scale and to grow publisher revenues from both news content and news company-sold advertising – are a positive sign for an industry badly needing to find major new revenues.