Google traffic worth less than £75m per year to UK publishers says NMA In 2023

Google has been accused of lying about how much money it brings in for publishers in the United Kingdom.

A new report by Professor Annabelle Gawer, director of the Surrey Centre for Digital Economy at the University of Surrey, has been published by the News Media Association. According to Professor Gawer’s calculations, Google returns less than £75m in revenue to publishers annually in terms of the traffic it provides (out of an estimated Google UK ad revenue of more than £10bn).

She referred to a 2019 Deloitte analysis published by Google that estimated the value of all web traffic to UK publishers in 2018 at £500m, with referral traffic accounting for an additional £370m.

However, she stated Google’s use of the study was “misleading and provides an exaggerated estimate” of Google’s contribution to news organizations.

Meta, a company owned by Google and Facebook, has previously denied making $1 billion per year from publishing UK news articles and other similar accusations, arguing that the company adds more value to publishers than it takes from them.

Google’s vice president and managing director for The UK and Ireland, Ronan Harris, said last year, “When people use Google Search to hunt for information about what’s happening in the world around them, they want links to trustworthy news sources. Similarly, publications seek to inform as many people as possible and contextualize recent events. There are tangible benefits for publishers from this. According to a survey by Deloitte, the value of web traffic to UK news publishers is more than £500 million each year.

Google was accused of being ‘disingenuous’ in estimates.

Google was accused of being 'disingenuous' in estimates.
Google was accused of being ‘disingenuous’ in estimates.

Gawer argued that it was “disingenuous to assert that the Deloitte study provides a way to estimate the value created by Google (or other platforms) for news publishers” because the study did not estimate the potential change to news traffic if the search engine no longer referred users to any news sites. This means that the study failed to examine how much referral traffic was because of Google versus how much would come through another route regardless.

She calculated her estimate and found that the earnings of news publishers in the UK had decreased by a fifth between 2018 and 2022. As a result, she dropped her assessment of the revenue from web visitors from £500 million to £400 million.

After determining that traffic generated by Google accounts for a cautious 35% of the overall online traffic of UK news publishers measured in visits, she concluded that the revenue associated with publisher traffic from Google in 2022 could not “be more than £140m.” This figure represents 35% of the total income of £400m. She indicated that the number would be “much less” if page views were used as the metric.

“If Google stopped displaying news and generating traffic to news publishers’ sites, at least some users, and likely many more, would find other ways to reach news websites; as a result, the traffic lost by publishers would most likely be lower than Google’s current share of traffic,” Gawer stated. “If Google stopped displaying news and generating traffic to news publishers’ sites.” “Further, readers arriving from the search may spend less time on the site and generate less revenue for the news publisher than readers who go to the publisher’s site directly.”

She continued by saying that the Deloitte study considers direct and indirect web traffic similar to publishers, even though direct users often earn more income because they stay longer and read more articles.

Assigning a direct visit a relative value that is three times higher than that of a referral visit and expecting Google’s share of referral traffic to be 35% of total traffic and 61% of referral traffic led Gawer to arrive at an estimate for the maximum value of Google traffic in the UK in 2022 of £75 million. This estimate was based on the assumption that direct visits have a relative value that is three times higher than that of referral visits.

However, she stated that “Google’s contribution to joint value is likely much smaller than even £75m in 2022” because she could not assess the replacement effect regarding the number of people who would find another method to access publishers’ websites if Google was not available.

Since 2007, when the UK newspaper and magazine sector accounted for 40% of the £7 billion spent on advertising in the UK, the share of advertising revenue finished with news publishers has significantly decreased.

In the UK, local, national, and magazine news companies made a total of £2 billion from advertising the previous year. In comparison, more than £10 billion went to just one technology platform: Google.

“Professor Gawer’s paper reminds us again of why the need for digital regulation in the UK is so urgent,” said Owen Meredith, chief executive of the NMA. Publishers have been put in the position of operating in entirely unjust circumstances for several years, during which they have been obliged to accept unfair and unequal payment terms from various technology platforms. It is high time that this was put to an end.

“With the publication of the Digital Markets, Competition, and Consumers Bill, we can correct the scales and deliver fair rewards for news publishers, paving the way for a sustainable future for high-quality journalism.”

Google says publishers gain real value from search.
Google says publishers gain real value from search.

However, Google and Facebook will not agree with Gawer and the NMA’s findings. Google has previously argued that the research incorrectly suggests that news content accounts for half of its ads. In reality, news-related queries accounted for less than 2% of total questions on Google Search in the UK in 2020. This was in response to the NMA’s previous claim that platforms generate £1 billion in revenue from news content.

Google has also highlighted the use of its Ad Manager by news firms. According to Google, this allows the publishers to keep over 95% of the ensuing digital advertising revenue, resulting in payouts of £245 million to the top five news publishers in the United Kingdom between 2018 and 2020.

The Institute of Economic Affairs published a report not too long ago in which it stated that publishers “appear to derive significant value from free traffic to their websites” and that the “benefits they receive may well be greater than any reasonable valuation of the news snippets they provide to those platforms.” This statement was made in response to the UK’s Digital Markets Unit, which looks set to force publishers and platforms to negotiate. The report also stated that this “risks stifling investment and innovation.”

The IEA analysis stated that the £1 billion estimate “greatly overstates the importance of news to digital platforms.” This was accomplished by incorrectly extrapolating an Ofcom finding that British internet users spend 6% of their time online on the news to declare that they spend 6% on Facebook with news material. In addition, it highlighted that advertisements do not target many news-related search engine results and social posts and, as a result, do not generate revenue.

In the past, Meta has asserted that it sent 180 billion global clicks to publications included in its News Page Index in 2020, with an estimated value of $9 billion (£7.4 billion). In a second analysis, James Forder, head of academic and research activities at the IEA, stated that “there seems to be no convincing case that platforms benefit disproportionately” from their relationship with publishers.

This Thursday, a representative from Google issued the following statement: “The presence of links to news sources on Google Search provides real value to both publishers and readers.” Google is pleased to be one of journalism’s most prominent financial sponsors. It does so in various ways, including paying 285 news outlets in the United Kingdom for the right to display their articles on Google News Showcase.

“The Google News Initiative has also backed projects that help bring readers directly to the sites of publishers, recognizing, as this research does, that it can be the most valuable traffic for publishers. These efforts help send readers directly to the sites of publishers. We will collaborate with the government, publishers, journalists, and readers to continue supporting the news industry’s ecology.

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