Written Evidence from Google (FLM 54)
Background: Google's business model
1.Google's mission is to organise the world's information and make it universally accessible and useful. The internet is the richest source of information the world has ever seen, and we believe that everyone should be able to access that information. We provide a number of technology services and tools to do this - from Google Search to Google Maps to Streetview - that help hundreds of millions of internet users across the world find what they're looking for among the billions of internet pages available.
2.Most of our products are funded through advertising. When a user types a search term into the Search box, Google will return a page of useful and relevant results. The main part of the page is made of 'natural' search results which are not paid for but there are sometimes also a number of 'sponsored links' - text ads that appear adjacent to the natural search results. These are relevant ads that an advertiser pays for, but only if a user clicks on the ad. Our goal is to give an internet searcher the best information possible, whether that information can be found through a search result or an ad.
3.Google offers advertisers a revolutionary service. Instead of targeting customers likely to be interested in their services, Google enables advertisers to target people at the moment they are actively searching for the particular product or service they offer. In addition, advertisers only pay when a user actually clicks on their 'sponsored link'. All of our advertisers are treated equally - we don't let businesses buy their way to the top of the 'sponsored links' and so small businesses are given the chance to compete with multinational companies. Companies are therefore given great value for money from advertising on our services.
4.The revenue that Google generates from this advertising funds more than 150 different internet technology applications. The common theme uniting all these innovations is that they are there to help users access and organise the vast wealth of information available online.
5.We are not a media company - we do not author or editorialise the content on the internet. Our users trust our services - especially our Search service - precisely because we have no vested interest in promoting one point of view or one website over another. We are independent signposters whose value comes purely from delivering a great user experience. Our expertise in the matter of local and regional media is therefore not from the perspective of the news gatherer or journalist. But we do understand a huge amount about how consumers and advertisers use the internet. As news organisations evolve their own practices to fulfill the tremendous promise of journalism in the digital era, Google is committed to helping them find innovative ways to attract bigger audiences, better engage those audiences and generate more revenue online.
The future for the news media on the internet
6.Traditional business models for local and regional media are clearly facing long-term structural challenges. As a recent OFCOM report pointed out, circulation figures for local newspapers have gradually and consistently fallen over 30 years. Market challenges such as the growth in competition for consumer attention coming from the proliferation of television, radio and magazines (including local council owned publications) and the fall in above the line advertising budgets - alongside the global recession - mean traditional local media businesses are operating in a more competitive market than ever before. These pressures have led to some contraction within the industry. The Local Media Alliance suggests the total number of employees in the industry fell by around 14% between 2007 and 2009 with job losses concentrated on management, sales, administration and production.
7.Given the increased access to local and regional news and information for users, and the increased advertising offerings for local businesses, Google supports the need to allow for a 21st century media merger regime. As we said in our evidence to the recent OFT review on the local and regional media merger regime, we believe that local and regional news services should be allowed to merge and consolidate in order to create scalable and competitive news offerings, in line with general principles of UK competition law.
8.The growth of the internet, as the means by which more and more citizens are choosing to get their information, poses a different challenge altogether. Most people still choose to get their local news through traditional, non-internet media - 24% of people use newspapers as their main source of local news whereas only 4% use the internet Instead, the internet is creating a whole new marketplace, where old business models and old ways of distributing news media just do not work. News media used to be produced by a few expert journalists in a single country - in the online world, news is produced by thousands of citizen and professional journalists from across the world. News used to be distributed by a handful of powerful executives who controlled the process through printing papers or broadcasting TV channels on a daily or weekly basis. In the online world, the expectation of users is that news should be updated by the hour or even by the minute and made available to them wherever they are and on whatever device they're using.
9.We believe that this offers amazing opportunities and possibilities for the distribution and consumption of news. It creates enormous, global audiences for serious news journalism. It enables editors to innovate with formats as they learn to present information in the most effective ways on the internet and as mobile technology creates a plethora of ways to absorb information. And a big new pool of citizen journalists and bloggers are adding to the wealth of global debate and discussion - which has to be better for society as a whole.
10.These opportunities are as real for local news as they are for national. The growth in citizen run hyperlocal news sites in the UK is one of the most optimistic and promising part of the news media market. The simplicity with which people can publish using modern web 2.0 platforms is bringing news that reflects local interests and priorities to communities, sometimes for the first time. Across the UK sites run mainly by unpaid citizens are providing mature, serious, high quality news and commentary about local areas. This ranges from tiny villages (http://parwich.org) where the site has over 400 views a day in a village of 500 inhabitants, to highly professional offerings in small towns and cities (http://thelichfieldblog.co.uk/) to campaigns and news in gritty urban areas (www.kingscrossenvironment.com) to cities with huge democratic challenges such as Stoke-on-Trent (www.pitsnpots.co.uk) where the site has had over 30,000 comments in one year and over 1,600 unique visitors a day. Even in their early days, these sites are reaching a substantial scale and appear to be playing an important role in local news plurality.
11. This is an emerging market where the business model is still being established. In USA there are large numbers of commercial hyperlocal start ups. In the UK the main growth in hyperlocal sites is in not for profits. The 4IP, Screen West Midlands and Advantage West Midlands funded "Talk About Local" project (www.talkaboutlocal.org) aims to create community owned sites in over 150 places. We believe that hyperlocal sites can be a great complement to professional journalism - rather than a substitute - and that professional news organisations should take courage from their success. These sites illustrate the continuing - possibly even growing - enthusiasm for community news and information, giving confidence to local news organisations that their core offer, of high quality local information, will remain relevant in the digital era.
12. But we recognise that the internet poses challenges for media companies - namely, how to create new business models that don't just cope with the new distribution mechanisms but flourish with them. There are journalists, editors and producers in the UK who are investing significant brain power in doing this. This is not Google's role. But Google does have a vested interested in ensuring that our users find the highest quality information possible, and journalism is one important source. An internet of spam, badly researched blogs and questionable sources is not useful to either Google or, more importantly, society at large. So we want to help news media organisations harness the power of the technology to enable them to invest in producing high-quality news and sharing it with the maximum number of people possible.
Google's partnerships with news publishers
13.The next few years will be a time of transition, where media companies search for new business models fit for purpose in an internet age. We do not believe there is a 'right' answer: there are many different ways that website editors might increase traffic and monetise their sites. We believe that a combination of advertising, subscription and micropayments can deliver new revenue streams for high-quality content.
14.There are a number of Google tools that benefit news publishers. This is not an exhaustive list but rather an attempt to show how working in partnership, enthusiastically embracing technology rather than rejecting it, can create exciting new models. Now is a time for innovation, and we anticipate Google continuing to experiment in partnership with news organisations.
15.We're optimistic for the future of journalism. Quality content is as popular as ever. If we can help readers find stories, then help publishers better monetise their content, then our publishing partners are happy, our users are happy, and the internet is the better for it.
Helping internet users find news publishers online
16.Internet users can find thousands of pieces of information online, Google helps them find news publishers websites through Google Search and Google News. Unlike traditional distribution models for news - where news publishers pay newsagents per copy sold in their shops - this is free. In total, Google Search and Google News send news publishers globally over 100,000 clicks a minute. Each of those visits is a business opportunity for the publishers to show ads, win loyal readers and sell subscriptions.
17.Google News was launched in 2002, after a Google engineer tried to access news coverage of September 11th and realised how hard it was to find and compare articles about the same story from the thousands of different news sources across the world. Google News seeks to get internet users to the news they are looking for - quickly and accurately. It achieves this by collecting relevant news information, creating an index with that information, and serving it to Internet users via a simple web search page. As with Google Web Search, our goal with Google News is to give internet users the most relevant, objective results. We believe this service is really helpful to users in organising the world's information - it sends internet users to over 25,000 news sources in 30 languages and 60 countries worldwide, from the BBC to the New Zealand Herald to the Malaysian Star. To see what Google News looks like, go to Annex A.
18.British local and regional news sources are amongst the news sources that Google News signposts, providing global promotion for local sites. It links to newspaper sites, blogs and news clips so users are able to see a wide range of news coverage from across the internet, whether it be written or broadcast news from websites such as the BBC. As well as bringing range, Google News brings a capacity to sort the media. Internet users are offered a simple yet powerful search tool on the Google News site where they can search for any topic or town they are interested in reading about. For example, a recent query specifying 'South Shields' on Google News returned stories from 5 different news sources including 2 local newspapers and 3 national news or specialist services.
19.We do not host articles from news publishers on the Google News site. Some people giving evidence to this Committee have suggested that 'it is copyrighted content that is being taken'. This is simply not true. We show just enough of an article for users to identify the stories they're interested in - a headline, short snippet and a link to the publisher's site - and we direct users straight to those newspapers' sites to read the stories. Our approach follows international copyright law and is well-established on the internet as beneficial for both users and publishers. Our goal is to get users the key information they are looking for and send them on their way as quickly as possible. If at any point a web publisher decides they no longer want to be included in Google News, they're able to do so quickly and effectively by simply asking us to remove them as a source.
Helping publishers make money online
20.Many years ago (before Google was well established) newspapers decided that free web editions, supported by advertising, was the best way to monetise their internet sites. Google has since developed a free service called AdSense through which we offer websites the opportunity to host Google-enabled adverts on their own sites. Once a website owner signs up for AdSense, they have complete control over where they want the adverts to appear on their site and what kinds of adverts they will (or will not) accept. Google and the website owners then share the revenue generated, with the majority of the revenue going to the website owners.
21.The Google News service has also worked with publishers - such as the FT and Wall Street Journal - to identify ways for those that charge for access to provide a free sample for potential subscribers. To implement "First Click Free," publishers agree to allow users who find a web page through Google Search or Google News to see the full article without requiring them to register or subscribe. The user's first click to the publishers' site is free. When users click on additional links on publishers' sites, the publishers then can show a payment or registration request. It's a simple system that lets readers test-drive a news source before deciding whether to pay, and it helps publishers promote their content to new users. More detailed description of ways to show paid content can be found here: http://www.google.com/support/news_pub/bin/answer.py?hl=en&answer=40543
Helping publishers' websites work better
22.In order to generate returns to advertisers or benefits to users who take up subscriptions, website publishers need to engage users and keep them on their site. Improving the useability of sites is part of the solution.
23.One problem with reading news online today is that browsing can be really slow. A media-rich page loads dozens of files and can take as much as 10 seconds to load over broadband. Google Fast Flip (currently available in Google Labs with U.S. publications) is a new reading experience that combines the best elements of print and online articles. Like a print magazine, Fast Flip lets you browse sequentially through bundles of recent news, headlines and popular topics, as well as feeds from individual top publishers. At the same time, we provide aggregation and search functionality across many top newspapers and magazines, and the ability to share content with friends and community. Fast Flip also personalizes the experience, by taking cues from selections you make to show you more content from sources, topics and journalists that you seem to like. In short, you get fast browsing, natural magazine-style navigation, recommendations from friends and other members of the community and a selection of content that is serendipitous and personalized
24.To build Google Fast Flip, we partnered with over three dozen publishers, including the New York Times, the Washington Post and Newsweek, and we're planning to add content from other partners soon. These partners will share the revenue earned from contextually relevant ads. This gives publishers an opportunity to introduce new readers to their content. It also tests our theory that being able to read articles faster means people will read more of them, driving more ad revenue to publishers.
25.Another way to keep users on websites is through integrating media - video, audio and text. While now we display text, video and audio next to each other there might be a future where the stories are told in a new medium that emerges out of a deep convergence of these three. Indeed, the development of integrated formats might change journalism fundamentally in terms of how to set out the line of a story, what to begin with and where to end, or how to provide additional information. We offer many free services that publishers can use to engage their readers, such as Google Maps, Google Earth and YouTube videos. YouTube recently introduced a program called YouTube Direct that allows publishers to tap into the wealth of user-created video and include it on their news sites. More information about this innovation can be found at: http://youtube-global.blogspot.com/2009/11/connecting-citizens-and- journalists.html.
26.In short, Google believes that internet technology offers web publishers a myriad of different ways to distribute, promote and display high-quality news. Working with the technology, rather than shying away from it, is the best way to reap the benefits of this new technology. Google believes that some of the innovations we have been working on are amongst the first, but by no means the only, models for the future. We are committed to helping news providers harness the opportunities that new technology offers.
Annex A: Google News
17-11-09 OFCOM Report to the Secretary of State on the Media Ownership Rules