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June 10, 2019, 4:32 p.m.

That “$4.7 billion” number for how much money Google makes off the news industry? It’s imaginary

It’s based on math reasoning that would be embarrassing from a bright middle schooler.

Journalists are typically happy to bemoan the role that Google has played in reducing their profession to revenue smithereens. (Get a couple beers in one and try it out!) But if there’s one thing they’re even more happy to do, it’s to complain about sloppy work.

That’s what much of Media Twitter has been doing today after a not-particularly-searching New York Times story last night headlined: Google Made $4.7 Billion From the News Industry in 2018, Study Says.

The Study doing the Saying is from the News Media Alliance, the industry trade group formerly known as the Newspaper Association of America. Here’s a bit from NMA’s press release:

The News Media Alliance today published findings from a new study that analyzes how Google uses and benefits from news. Among the major findings of the study is that news is a key source on which Google has increasingly relied to drive consumer engagement with its products. The amount of news in Google search results ranges from 16 to 40 percent, and the platform received an estimated $4.7 billion in revenue in 2018 from crawling and scraping news publishers’ content — without paying the publishers for that use.

The study, containing analysis conducted by experts at strategy and economics consulting firm Keystone Strategy and written by the News Media Alliance, includes a qualitative overview of Google’s usage of news content, an analysis of the amount of news content on Google Search and Google News, and an estimate of revenue Google receives from news.

$4.7 billion is a nice chunk of change, and newspapers think Google should hand some of it over. But immediately, people began to poke at that number — in particular, the frankly absurd input on which the whole megillah is based: one stray number mentioned at a lunch in 2008. It’s amazing, honestly.

Here’s the section from the “study,” which you can read in full here (p. 23). Google doesn’t have a line item on its quarterly earnings reports for “Pillaging of Legacy News Industry Revenue,” so they needed a way to come up with a number:

Content on Google Search that does not directly result in revenue still provides Google significant benefit, as users who come to Google for free content are the same users clicking on ads. While it is difficult to measure the monetary value of this content, Google has provided a benchmark. Specifically, Google estimated that Google News, a product without ads, brought in an estimated $100 million in yearly revenue in 2008. Although Google has provided no more recent estimates of the value of news content, the $100 million quoted by Google for Google News (which has no ads) can be extrapolated in a straightforward way to suggest an estimated $4.7 billion of revenue in 2018 to Google from news content on Google Search and Google News.

Whoa whoa whoa whoa whoa. Did you catch that? Google mentioned a number in 2008, $100 million. From that one number, you can “extrapolate in a straightforward way” to $4.7 billion today.

Let me begin to list some of the issues here.

  • While Einstein’s work on special relativity does hold that space and time are, in fact, parts of a unitary continuum capable of theoretical folding into traversable wormholes, you can’t just say 2008 × a multiplier = 2019.

    If you ran with this concept — that we live today in a straightforwardly extrapolatable 2008, except the kids use TikTok now — you would calculate that the United States will elect 1.08 black presidents this year. After all, it elected 1 black president in 2008, when the nation had 304 million residents; with population growth to a robust 329 million today, you could just extrapolate it out. Straightforwardly.

    You’d also deduce that every year is now the International Year of the Potato, Suzanne Pleshette would just keep dying, and Stuff White People Like would continue to loom large in the culture.

    According to a bathroom scale this morning, my son has gained exactly 39.7 pounds from the moment of his conception to his four-year-old self. Obviously, he’ll weigh 645 pounds at his retirement party.

  • Google News in 2008 did not “bring in” $100 million in the way you’re thinking. Google News has no ads, so it generates no direct revenue, but — like all of Google’s products — it serves as one more thing to attract people to the search engine, where the real money is.

    Our only historical record, as far as I can tell, of that fateful 2008 discussion is this Fortune article by Jon Fortt:

    Google News is free and has zero ads. So what’s it worth to Google? About $100 million.

    That’s the figure Google vice president Marissa Mayer, who heads search products and user experience, threw out during a Tuesday lunch session at Fortune’s Brainstorm Tech conference in Half Moon Bay, Calif.

    How does she put a value on a product that doesn’t directly make money? The online giant figures that Google News funnels readers over to the main Google search engine, where they do searches that do produce ads. And that’s a nice business. Think of Google News as a $100 million search referral machine.

    So this is a bank-shot estimate of how much Google News users are then influenced to use Google search. (I’m sure there are lots of hardcore Google News users who’d just never heard this scrappy startup also had a search engine — lead generation!). It’s a number “thrown out” by a Google VP — not some memorable prime number, just a nice round hundred mil, the sort of number you might pull out of nowhere when you’ve been asked a question over dry conference chicken.

    That — and that alone — is the basis for a Google Made $4.7 Billion From the News Industry in 2018, Study Says headline 11 years later.

  • There’s nothing in this line of reasoning that’s specific to the news industry. The argument here is that Google is screwing over publishers by making all this money and not giving some of it to newspapers. Or as NMA puts it: “crawling and scraping news publishers’ content — without paying the publishers for that use.”

    “Crawling and scraping” can sound kinda gross if you say it funny, but saying something is “crawling and scraping” is another way of saying it’s a search engine. You cannot have a search engine without someone going to all the websites on the Internet and seeing what’s on them first. Bing does it! Baidu does it! AltaVista did it! It’s just definitionally part of the job.

    If you think being a search engine is somehow unacceptable without giving money to the, er, crawled and scraped, then the news industry might have an argument. But so would the other 1.5 billion websites on the Internet. You’re essentially saying that it’s not just $4.7 billion of Google’s gains that are definitionally ill-gotten — it’s all of their search engine revenue, all of which is generated through the exact same process.

    I know it may be tempting at times to say YES GOOGLE IS 100 PERCENT BAD KILL IT KILL IT. But the news industry’s argument here only makes sense if you think search engines should be banned altogether, and that’s dumb.

Those fundamental flaws don’t even get into the other issues of reasoning here. Like: The main thing Google News does is…direct traffic to news sites! Gazillions of links being clicked, each and every day. Presumably, news organizations monetized those visits, somehow? Perhaps by putting ads on their sites? Does that mean all ad revenue that comes out of visits driven by Google is ill-gotten too? “News Industry Made $9 Gazillion From Google in 2018, Study Says.”

Here’s the reality: Google absolutely does make money that — in an alternate universe where the web had never existed, no one had ever thought to create a search engine, or the idea of using search requests to personalize ads had never popped into anyone’s mind — would be going to newspapers. But that’s not because Google is using fancy accounting to deviously withhold its quarterly crawl-and-scrape payments. It’s because:

  • Google created consumer products and services — like Google Search — that people find valuable enough to give their attention in very large quantities, all day and night.
  • Google created a much better, much more effective digital ad product than newspapers did or, in their legacy form, ever could.
  • Newspapers used to benefit from people having very few other options for news, information, entertainment, and distraction. People now have a functionally infinite number of options, and they’re not picking newspapers.

And now we know they can do math better than newspapers can, too.

POSTED     June 10, 2019, 4:32 p.m.
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