05 October 2022

German publishers fail against Google

29th Sep / netzpolitik.org


Leistungsschutzrecht | Actually, Google and other tech companies should pay the media in Europe money for the use of their content. But while the press elsewhere collects millions in licence fees, little arrives in this country. Journalists in particular are losing out.

By Ingo Dachwitz, Alexander Fanta

The German government is jubilant. The Bundestag has passed the new copyright law. Germany will be "fit for the digital age", says Christine Lambrecht. It is the summer of 2021. After the copyright reform was bitterly fought over at the EU level, the German implementation passes almost silently. The law creates a "fair balance between the interests of all parties involved", promises the then Federal Minister of Justice. So much for the political announcement. But the reality is more complicated.

The copyright reform also introduces the controversial ancillary copyright. Once again, such a law was passed in Germany in 2013 and failed. This time it is to be different: In future, Google and other internet corporations will have to pay money to press publishers across Europe if they display preview texts of news media in search results. The industry lobbied hard for millions of euros to be paid into the pockets of the media. This is compensation for the fact that they get so little of the advertising pie on the internet, which the Silicon Valley giants divide up among themselves.

At the same time, the publishers are negotiating a further compensation into the law: in future, they are to participate again in the copyright revenues of their authors from the copy royalties, which had previously been overturned by the Federal Court of Justice. In return, journalists will receive an "appropriate" share of the new ancillary copyright, at least one third. This is what the law says: Google pays, the publishers collect and the journalists also profit.

But journalists in Germany cannot hope that they will receive a lot of money. The implementation of the ancillary copyright is stalling. Some publishers are still arguing with Google about the amount of appropriate remuneration. Other big publishers are now making lucrative side deals with Google, but are being fobbed off with relatively small sums for the ancillary copyright. Such individual deals could cost the industry dearly. Google's divide-and-rule shakes the promise of a "fair balance" between all parties.

Small windfall from the black box

According to Google, 400 media in Germany have already signed licence agreements with the company and are receiving money from the ancillary copyright. Among them are big names like Der Spiegel, Die Zeit, Frankfurter Allgemeine Zeitung, SZ, but also regional publishers like Funke Mediengruppe and Madsack or smaller media like Celebrity News. But while in France, which was the first to implement the EU Copyright Directive, millions are paid out to individual media, in Germany even large publishing houses do not get more than a few hundred thousand euros a year. This is what publishing managers who do not want to talk about the issue publicly tell us. Neither Google nor the publishers disclose the exact amounts.

Google's instrument for settling the ancillary copyright is called "Extended News Previews". When asked, the company emphasises that these are "voluntary" licensing agreements "for existing previews of press content", "although the new ancillary copyright law may not even require this for these very short text extracts". In fact, EU copyright law exempts pure links and, under a snippet exception, "very short" extracts from the obligation to pay, without defining what exactly that means.

With "Extended News Preview", publishers agree with Google on an amount for which the company may continue to display teasers about their content in its search. Whereby the word "agree" gives the wrong impression: "I don't know that any German publisher would have been successful in trying to negotiate more here," the managing director of one of Germany's biggest online media tells us.

According to media managers, Google refers to a "payout tool" that calculates the claims of the individual media. Only Google knows exactly how this works. They only know that there are factors, managers tell us: First, how much reach does a website get via Google? Secondly, how many articles on the website appear in a search environment that is relevant to advertising, i.e. where ads are actually placed and sales are generated? And thirdly, a base amount depending on the size of the medium. The publishers cannot check the calculation.

Google emphasises on request that its calculations are based on "uniform criteria". These include "how often a news website is displayed and how much advertising revenue is generated on pages that also show previews of news content". The group does not want to explain it in more detail.

A dispute that has lasted for years

Fighting with Google over money is part of the political identity of some publishers. As early as 2009, the congress of the Federal Association of German Newspaper Publishers (BDZV) called for a fight for ancillary copyright. Angela Merkel's government supported the publishers in this - against the warnings of voices from the industry and civil society. The criticism: the ancillary copyright would harm the free flow of information on the net because it would also subject links to copyright with the article previews and thus endanger one of the basic principles of the open net. In addition, the industry giants in particular would ultimately profit from it, which would at the same time become more dependent on Google's money.

The EU and the German government promised to take the criticism into account in the new version of the ancillary copyright. But there is not much evidence of this, says Till Kreutzer, copyright expert at iRights.Law. The ancillary copyright brings "a lot of legal uncertainty" because central terms remain undefined. For example, the question of how long and what exactly preview texts are, which internet services are allowed to display even without a fee. Such uncertainties and the associated court cases could be well tolerated by large corporations, but for smaller services and start-ups, which could enliven the market with competition, it was a "killer".

"People always pretend that the law only affects the market leader Google.

but it does not only apply to search engines, but also to the very diverse market of news aggregators, for example," criticises the lawyer. Looking now at the implementation and effects of the new copyright law is therefore particularly important, says Kreutzer. "The ancillary copyright has come to stay. We now have to live with that."

That it came was anything but a foregone conclusion. After the first introduction in 2013, the publishers buckled within a few weeks . Google had threatened to simply kick their websites out of Google News if they insisted on payment for their content.

In the following years, Google launched a 150 million euro charm offensive with European publishers. With cash gifts in the form of project funding, the corporation wanted to avert new attempts at a performance protection right or "Google taxes". But the chequebook diplomacy of the "Google News Initiative" did not help much - in 2019, the EU passed its Copyright Directive, which, under pressure from the publishing industry, also included a Europe-wide ancillary copyright. This time, Google should actually be forced to cede part of its advertising revenue to the media.

This succeeded in France. There, Google agreed to payments to about 120 publishing houses in June this year. The company, which had initially refused, thus escaped a competition fine of 500 million euros. The exact amount of the now agreed payments to the publishers is not known. But individual contracts suggest that French publishers will receive considerably more compensation from the ancillary copyright than German ones. For example, the Le Monde group will receive around 1.5 million euros from Google for 2022. This is shown by the contract, which we publish in full text.

Legal dispute preprogrammed

While in Germany individual publishers are unlikely to receive millions from the ancillary copyright, a group of press houses led by the Axel Springer publishing house is making hefty demands. The collecting society Corint Media is demanding eleven per cent of the group's total advertising revenues in Germany - 1.2 billion euros - on behalf of the industry. Since Corint represents about a third of the publishers, that would be about 420 million euros for these houses alone. According to Corint's estimates, on the other hand, Google offers all German publishers a total of around 10 million euros. That is a huge gap, a long legal battle is pre-programmed.

Who is to receive any remuneration at all under the ancillary copyright is extremely vaguely defined in law. Practically every news site that calls itself a journalistic medium and regularly publishes articles falls under it. Google itself complains at a lobby meeting with the EU Commission that there is a lack of a clear definition of who is a "press publication" ("publisher") in the sense of the law - therefore it would be "sometimes difficult to find out who are potential beneficiaries". This sentence is made public by interview notes of the Commission , which the NGO Global Witness had requested. The Commission replies that it is up to the industry to set its own standards.

Google says it invites eligible media to sign contracts for "extended news previews". The company does not disclose who it has invited to do so. There is speculation in the industry that basically all sources represented on Google News will receive an offer. However, this means that right-wing portals such as Achse des Guten and Tichys Einblick may also have access to remuneration. Google did not answer our question whether media that regularly spread misinformation also receive money from the ancillary copyright.

Google pays millions, but not for ancillary copyright

The fact that many German publishers accept the measly payments under the ancillary copyright could also be due to the fact that Google already provides them with money in other ways. In addition to sponsoring industry events and projects within the framework of the Digital News Initiative - the company distributed more than 20 million euros in Germany within three years - millions also flow into the Google News Showcase.

Here, large media receive monthly payments in the six-figure range for a separate presentation of articles in Google's News app, smaller media in the five-figure range. Google launched the worldwide programme in Germany first, probably in the hope that it would be able to fend off any claims under the ancillary copyright law.

Because of trouble with the Federal Cartel Office, the company has deleted a corresponding clause in the contract, and publishing managers are expressing doubts as to whether the windfall will last for long.

For some media, however, there is apparently another important source of income: advertisements from Google. In May, the industry magazine KressPro reported, citing a study by the market research company Nielsen, that the company "makes the big publishing houses disproportionately happy with advertising expenditure". Many large German media, which have agreed to a performance protection right deal with the US corporation, would have received millions of euros for advertisements from Google. In the years 2019 to 2021 alone, the Holtzbrinck publishing house, to which Die Zeit belongs, is said to have received eight million euros, the Spiegel Group more than five million and the FAZ about three million.

This sometimes takes on curious forms: In recent years, large media such as Die Zeit or Süddeutsche have occasionally included a magazine produced by Google called "Aufbruch". In the style of an advertorial, the company presents its view on topics such as privacy and "digital opportunities" in the same way as real journalism. Together with the SZ, Google even presented an Aufbruch award for "digital trailblazers", among others to the racing driver and investor Nico Rosberg.

"Google is definitely one of our biggest advertising customers," the manager of a large media explained to us on request. However, this does not have any influence on decisions, he says, because the good reputation and independence of the medium would not be put at risk for such a thing, and the advertising amounts would not be large enough for that. But he could imagine Google trying to strategically distribute advertising spending. Kress-Pro editor-in-chief Markus Wiegand also states: "There is no demonstrable connection, but it is noticeable that Axel Springer, of all people, as a holdout in Showcase and ENP, is only weakly fed with advertising money."

Isolation instead of joint negotiations

Whether one suspects dark motives or not, the fact is that the publishers do not have to give their authors a direct share of the income from advertising and News Showcase. The fact that their employers are now doing so badly on the ancillary copyright of all things hits the journalists particularly hard.

It could help the German publishers if they did not allow themselves to be isolated by Google, but negotiated together. In France, the media have joined forces and got a good deal with the support of the state. In Australia, a law has been forcing Google and Facebook to negotiate with publishers' associations for a year. In the country of 40 million inhabitants, the corporations have since paid the media more than 200 million dollars, about 130 million euros, according to plausible estimates.

As in Europe, there were fears in Australia that the money would end up mainly with the big players. In Australia, that would be the group of media mogul Rupert Murdoch, who owns many newspapers and online media. But the fears have not been realised so far, says journalism researcher Anya Schiffrin. Even if Murdoch profited, the same is true for hundreds of organisations. The Guardian alone has hired 50 new journalists in its Australian branch, says Schiffrin.

In Germany, however, the industry is divided. The collecting society, which has gathered at least a third of the industry behind it, is viewed critically by others: Corint Media is regarded by many in the industry as a "Springer-Verein", and a dubious one at that, they say behind closed doors. They are also in favour of Google paying more, a publishing manager tells us. But the basis of calculation for Corint's billion-dollar demand is "absurd" and is not even applied consistently within Springer: while Corint wants to force Google to use the entire turnover as a basis for calculation, the Springer subsidiary Upday refuses to do exactly that and wants to pay royalties to the publishers only on the turnover generated in "relevant" environments.

Facebook simply pays nothing

In fact, Springer only holds 15 per cent of the company shares in Corint. Nevertheless, there has recently been criticism within the collecting society, even publicly, that its goals are too strongly oriented towards the interests of the high-reach Springer media. The Madsack publishing group announced its withdrawal from Corint last year. There was a kind of "mismanagement" there, complained publishing boss Thomas Düffert. This is because a large part of the exploitation revenues should be distributed according to clicks and visits. Instead, the "slider should be moved a little away from reach and more towards the journalism that is important for us as a democracy", said Düffert. After Corint presented a new revenue distribution plan, Madsack partially withdrew the exit threat.

Corint's 420 million claim against Google is now before the Arbitration Board of the German Patent and Trademark Office (DPMA). However, a decision there may still take some time. However, the fact that the industry is not pulling together is not only likely to harm an agreement with Google: Unlike in France, Facebook completely refuses to pay money under the ancillary copyright in this country. Instead, the social media company is pushing news sites to cede their rights for free . Even Bing, the next largest search engine after Google and owned by Microsoft, has so far only paid a few media outlets something for the ancillary copyright .

As an alternative to Corint Media, VG Wort has come into play. The collecting society has a dual role. It protects the copyrights of (text) journalists and enforces their claims. Recently, however, it has also offered to negotiate ancillary copyright for press publishers. So far, however, none of the media companies in Germany has done so.

Many journalists do not care how their employers achieve better negotiation results with the tech companies, as long as they end up with a considerable amount of money.

The publishers remain silent

In the case of the publishers, who have already reached an agreement with Google, the distribution of the money should not be unnecessarily delayed, says Monique Hofmann, executive director of the dju-Verdi trade union. "After all, the publishers themselves have repeatedly demanded this willingness to pay from Google. Now it's their turn."

But it will be a long time before money actually flows to journalists. They can only claim their share of the ancillary copyright through a collecting society, of which there is only one for the writing guild in Germany: VG Wort. According to managing director Robert Staats, the society is preparing to collect its share from publishers. But the mills of the VG Wort grind slowly. Its members are both publishers and journalists, and the committees must first agree on the conditions and the amount of the share. Resolutions to this effect are expected in December at the earliest. Only then can the VG Wort collect money from the media houses and distribute it to the journalists.

Zeit Online and Der Spiegel confirmed on request that they are already in talks with VG Wort and that they are setting aside a share of their revenues from the ancillary copyright for the authors. Media such as the FAZ, the Süddeutsche Zeitung, the Rheinische Post and Germany's largest regional publisher Madsack do not wish to comment.

Waiting for a fair balance of interests

However, there is also pressure against Google. The company is leaving it up to legal disputes about the amount of compensation for the ancillary copyright - thus Google is unnecessarily putting on the brakes, says Hendrik Zörner of the German Journalists' Association. "It is to be feared that because of Google's attitude of refusal, this could still take years until the courts have decided." The DJV calls on Google and the print publishers to create transparency about contracts with the search engine company.

But there is no such transparency. In fact, it was not possible for netzpolitik.org to find even a single media outlet for this research that speaks publicly about the terms of the contract. As with the Google funding from the Digital News Initiative before, publishers and tech corporations remain silent about their deals. This silence highlights how difficult it is to enforce the ancillary copyright law. The law is vaguely formulated, the positions in the negotiations hardened - the new copyright law threatens to get stuck in the toils of the layers. The promised "fair balance" of interests is still a long time coming.