News Corp is telling us what Google should really pay for linking to its sites. It’s telling us in code – HTML code. And the answer is … $0.00.
What is an Internet link worth? For most of the Internet’s life, this question has been pointless. On the Internet, links have been free, unless they were paid ads displayed by agreement between the linker and the target site.
Now that has changed. Australia has passed a “news media bargaining code”, which throws this links-are-free philosophy out the window (summary here). And other nations seem set to follow: at the end of January 2022, the UK government was reportedly considering legislation explicitly modelled on Australia’s.
Australia’s competition regulator, the ACCC, dreamed up the Australian code. It requires effective agreement about the price of a link that goes from a digital firm like Google or Facebook to a news site like those of News Corp or Nine/Fairfax (“eligible news businesses” listed here). And if the parties don’t agree, an arbitrator has to decide between their two offers.
(In June 2021, Reuters reported ACCC chief Rod Simms as saying that the code’s negotiating system was actually proposed by News Corp. They don’t quote him, though, so it’s not entirely clear what he actually said.)
News Corp and other media companies are saying or implying that if only the digital giants were not so powerful, those giants would pay the media companies for links. The ACCC is pretty much saying this outright; it’s the justification underlying the entire code.
But in fact News Corp seems to have already declared that it really believes Google is right, and the correct price is $0.00.
News Corp is saying it in code.
Literally. “Code” is not a metaphor here. News Corp is disclosing its intent right there in its HTML code, the publicly-visible code in which web pages are published. If you know where to look, you can see it immediately.
So here’s where to look, and why.
The strangeness of pay-for-links
I want first to spell out what’s actually going on in Google’s online news pages, because many people seem to misunderstand it. Google isn’t “stealing” from News Corp, any more than it steals from any other sites it links to. It doesn’t even run ads on the pages where it links to news stories. Despite what journalists keep writing, Google isn’t “paying for content” or “running news” on its site. It’s just linking to news stories, like this: Betting agency Sportsbet has opened markets for Dan Andrews’ much anticipated press conference to reveal whether the snap lockdown will …
As plenty of people have already found, it’s actually very tough to make money producing list of links like this to other people’ news. Google makes the vast majority of its profits from areas that News Corp never played in to start with. Heck, Google doesn’t even run classified-ad sites of any note: Realestate, Carsales, eBay and a bunch of smaller players took that set of markets. And in an economic sense, this destruction of the classified oligopolies is what has destroyed newspapers’ revenue streams, moreso than even the destruction of their news oligopolies.
All Google’s really guilty of in this space is offering links to a wider variety of news stories than News Corp would like. As the analyst Benedict Evans has put it: “Google didn’t take their money, any more than Boeing took money from the ocean liners. The internet destroyed the model.” If Google had never existed, the classified-ad market – newspapers’ “rivers of gold” – would still be worth far less today than 20 years ago.
But Google does exist, and it makes a lot of money from advertising. And media companies such as News Corp reckon they should have some of that money. Or, probably more accurately, they reckon the ACCC and the Australian government might be gullible enough to give them some of that money. Sadly, that reckoning seems correct.
Robots.txt and HTML suggests what News Corp really believes about links
Maybe you think that by posting links to News Corp news stories, Google is actually intruding on News Corp sites. And maybe you think that News Corp is powerless to stop that.
In fact, the exact opposite is true. We know this because companies like News Corp can bar Google from their sites in an instant if they so choose, using nothing more complex that a two-line text file called “robots.txt”. Here’s an example of such a coded instruction to Google not to look at a specific folder on a web server:
User-agent: Googlebot Disallow: /example-subfolder/
Not too complicated, right?
Yet News Corp and its colleagues never do use robots.txt in this way. They never do bar Google. That’s because they want the money that comes with Google traffic.
Now, maybe you know this, but you still think the text in the digital giants’ links to news stories gives away too much for free.
Again, we can check whether this is true by looking at what people do. One obvious place to look is the meta tag attribute values at news.com.au, which are publicly available right there in the site’s easily-read HTML code.
Meta tags are essentially labels which News Corp posts for the likes of Google and Facebook to read. Here News Corp gets to dictate just how Facebook, in particular, describes each news story. (I’ll use Facebook as the example here only because Google uses a slightly more complicated mix of sources, but the principle is basically the same for both companies.)
You can click “view source” on any web page and see these tags for yourself.
So what does News Corp do when it has the chance to completely control how links are displayed, via meta tags?
Sure enough, News is positively verbose about how it populates these values. Google usually describes a link in about 20 words, often stopping mid-sentence. In the first story I pulled up, News itself asks Facebook to use a full sentence of 39 words. On top of that, it specifies an image to be used with the link. (For those who can read HTML, I’m referring to the og:description and og:image values.)
It’s hard to escape the conclusion that News Corp on the one hand said to the previous federal government “digital giants should pay for descriptive links”, while out of Josh Frydenberg’s earshot it whispered to Google and Facebook themselves (in literal code): “We really, really want you to describe these links with as much detail as possible”.
What a fair market solution would look like: $0 or less
The logic of the ACCC’s utterances has been that the government had to act to repair the “power imbalance” in digital media. For instance, it suggested that Google didn’t pay News Corp for ads because of the market power imbalance between Google and Murdoch.
OK, stop sniggering about that last sentence, and ask yourself: how can we tell the true nature of that power imbalance?
It turns out that the existing media landscape presents a way to solve that puzzle too. The question to ask here is: are there any places where News Corp and its fellow media firms would not be at such a market disadvantage?
Well, how about the situation between News Corp and, say, Yahoo? When I ran the numbers on this, Yahoo parent company Altaba had a $US10 billion market capitalisation, a little lower than News Corp’s $US13.7 billion.
So how much does Yahoo pay to link to News Corp stories?
Honestly, I don’t know for absolute sure. But I think the amount is $US0 ($A0). And I suspect it’s the same for the news pages at Microsoft Bing, and DuckDuckGo, and so on. (Yahoo and Duck may use Google News technology, but I don’t think that changes the underlying case.)
And I do know what the current rate is when Club Troppo links to News Ltd stories with 20-word descriptions. Here’s one: Betting agency Sportsbet has opened markets for Dan Andrews’ much anticipated press conference to reveal whether the snap lockdown will …
We pay exactly nothing for this.
Prediction: no lawyer’s letter for Club Troppo
Maybe News Corp will write Club Troppo a lawyer’s letter tomorrow asking us to take down that link above. But I don’t think so.
And I don’t think it’s just because we’re too small to worry about. I think it’s because News Corp – and other traditional media companies – know exactly which way value runs. They just pretend something different when they talk to the Australian government. The ACCC and the government just haven’t noticed.
In its 2020 bargaining code concepts paper last year, the ACCC even went so far last year as to invite suggestions on market benchmarks that would indicate an appropriate price for links “in circumstances where there is no bargaining imbalance”. The ACCC said it “recognises that such benchmarks may be difficult to identify”. Please let me know in the comments if I’m ignoring something here, but the prices paid by Yahoo, DuckDuckGo and Club Troppo – again, $0.00 – seem to me like they’re saying something.
It seems to me we can tell that the media companies’ stated beliefs about link prices are not quite true. Their audible words say one thing, but their quiet, computer readable speech says something else. They’re speaking it in code.
Update: Australian economist Joshua Gans, a competition expert now at Rotman, expected the news media bargaining code to simply entrench the big players:
“It will end up with the large digital platforms doing deals with the largest news outlets. Those deals will be multi-year lump-sum payments which enable everyone to go about their business.
“There will be no new digital platforms, no new content providers, no more competition. The shareholders of the large digital platforms will be a few million dollars poorer and the shareholders of large Australian news outlets a few million dollars richer.
“There will be no improvement in any competitive outcome whatsoever. As often happens in Australia, oligarchies will consolidate, and consumers will get nothing.”