UNCORRECTED TRANSCRIPT OF ORAL EVIDENCE To be published as HC 43-iiHouse of COMMONSMINUTES OF EVIDENCETAKEN BEFORECULTURE, MEDIA AND SPORT COMMITTEE
THE FUTURE FOR LOCAL AND REGIONAL MEDIA
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This is an uncorrected transcript of evidence taken in public and reported to the House. The transcript has been placed on the internet on the authority of the Committee, and copies have been made available by the Vote Office for the use of Members and others.
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Transcribed by the Official Shorthand Writers to the Houses of Parliament: W B Gurney & Sons LLP, Hope House, Telephone Number: 020 7233 1935
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Oral Evidence
Taken before the Culture, Media and Sport Committee
on
Members present
Mr John Whittingdale, in the Chair
Mr Peter Ainsworth
Paul Farrelly
Alan Keen
Mr Adrian Sanders
Mr Tom Watson
________________
Memorandum submitted by Google
Examination of Witness
Witness: Mr Matt Brittin, Managing Director,
Google
Chairman: Good morning. This is a further session of the Committee's
inquiry into the Future for Local and Regional Media, and I would like to
welcome Matt Brittin, the Managing Director of Google
Q465 Mr Sanders: How do you think the recession has affected Google in that most of your revenue comes from advertising?
Mr Brittin: Thank you for having me this morning. The recession has definitely affected Google, as it has any other business in advertising. It is a very steep economic downturn, as we all know. It has certainly impacted us in most categories in markets around the world.
Q466 Mr Sanders: Can you give an idea of what sort of percentage drop you have seen in the last 12, 18 months?
Mr Brittin: In the
Q467 Mr Sanders: In the UK.
Mr Brittin: Last year in the UK revenues for us were growing in the region of 20% to 30%, depending on which quarter of the year, as a growth medium where people are moving online, we are having new people coming online and also advertisers are using online more and more. During the course of this year growth rates have slowed to zero in the early part of this year, picking up again now.
Q468 Mr Sanders: How do you think your use of targeted advertising affects local newspapers?
Mr Brittin: It is a broad question. I used to work in local newspapers and so I
have some experience there. I think
local newspapers are going through a very difficult transition at the moment
and it is one that has been going on for some time. Can I just talk a little bit about my view on
that and I will come to Google's role in that if I may? The readership of local press has been in
decline for some years, actually pre-dating the internet, with media
fragmentation in terms of local radio stations and local magazines and other
forms of local publishing, but I think what the internet has done is it has given
more choice of information than ever before to users of the internet or the
readers of local newspapers and it has also brought new forms of advertising to
local businesses and national businesses, both of whom make up the bedrock of
the advertising revenue of local newspapers. I think what you have seen since the advent of
the internet and the internet becoming a really mass market phenomenon is that
people are spending up to 30% of their leisure time online, which is a big
change in people's habits of consumption, and advertisers have got more choice
than ever before. The key categories of
advertising for local newspapers are those classified categories of jobs, homes
and property. What you see there is very
successful online businesses for the first time challenging that local
advertising revenue. In the case of
cars, Auto Trader is incredibly
successful in the
Q469 Mr Sanders: You insist that, "It is not us, mate; it is other people". The people you used to work for, Trinity Mirror, in their evidence to us said, "Google use a targeted advertising model to poach large and small advertisers from regional newspapers across all of the advertising categories", so there the industry sees you, not the other players, as being the body that is taking advertising revenue away from them.
Mr Brittin: Well, yes. There are a couple of things there. You quoted the word "poach" which suggests some feeling that there is an ownership of advertisers.
Q470 Mr Sanders: That is Trinity Mirror's word.
Mr Brittin: I am just raising the point
that that implies a feeling of ownership of advertising which perhaps is not
the way that the advertiser would see it.
I think what the internet has done is that it has definitely brought new
and targeted forms of advertising.
Google does that too. Previously,
if you were in
Q471 Mr Sanders: So you see it as a natural evolution?
Mr Brittin: It is more than an evolution because the pace of change is really rapid, and that is what makes it, as I said at the beginning, a very difficult transition for local newspapers. It has not happened slowly; it is something that has happened very fast, and also the current economic slowdown has further accelerated some of those changes because advertising revenues have fallen away more rapidly which has required them to respond more rapidly. It is not an evolution. There are some big changes going on here that present challenges for all companies, including Google, and the main changes are rapid changes in consumer and business behaviour in response to more choice and challenging economic times.
Q472 Alan Keen: Could I ask you to help us with what the situation is now? What has happened is moving very quickly and we do not want to ask you to predict too far ahead but what will be the situation with regard to local newspapers and the internet in three years' time and ten years' time? Will they be printed?
Mr Brittin: Funnily enough, in my job people do ask me to make predictions from time to time and I find it incredibly difficult to do. The main reason is that it is very hard to understand how consumers and businesses will adopt technology. If you look at things like the advent of SMS on phones, the use of the short message service, which was developed as an engineering way of communicating between telecoms engineers and has taken off into being a huge phenomenon, it is very hard to predict how things will happen. I think there is a sustainable and successful future for local media over the medium to long term. They are going through a very difficult transition at the moment but why do I have such confidence? First, the newspaper is a format that I think will continue to exist. It beats online in a number of respects. You can flip through things, you can find things easily, it is a mass assortment of stories and content, including advertising, that is relevant to you if you buy a newspaper that suits your needs. I think that format will persist. The economics will change but I also think that it will not just be about newspapers. One of the great opportunities for local media is the internet because it changes the costs of distribution completely. You can distribute your content worldwide for free, so it will allow you to reach completely new audiences that you could not reach before. It changes the economics of production. You can capture high quality video content for virtually nothing. If you have got a phone with a video camera in it, it effectively costs you nothing and you can upload that to the internet and you can engage with communities. In the written evidence that we submitted we showed a number of examples of really good local community websites that have a lot of interaction with their communities and provide a lot of value to those communities, and I think there are some really exciting opportunities that the internet brings for these companies. The economics are going to be different from a time when the only place to advertise was in your local paper. That is going to be a different set of economics but I think there is an exciting future there.
Q473 Alan Keen: It is interesting when you use the words about advertising that traditional newspapers think that they own the advertising somehow or other and it should not be taken away from them; they resent it. They are entitled to resent losing their business - well, not resent it but they have to understand that. I came on the tube this morning. You cannot see anything for free newspapers scattered all over the place. Do you think the need for a greener world will deter free newspapers as well? Will it stop people from giving the free newspapers and wasting a tremendous amount of resources? Is that a strong argument?
Mr Brittin: I think the newspaper and newsprint industry would argue that they do an awful lot to recycle and I am not an expert in that area. I do not think that the primary concern of the consumer is the environmental footprint of newspapers but I may be wrong. What you allude to underneath this is a whole debate about free content and one of the interesting things at the heart of this debate is that newspapers themselves have made their content available, in some cases even more content than is in the newspaper, on their website and they have chosen to do this and they have done this for over a decade in many cases, certainly pre-dating Google and certainly pre-dating Google coming to any prominence. What is going on here is that news publishers have wanted to benefit from this explosion of choice for users and the opportunity to have their content reach new audiences, and people have got used to having news content for free and, obviously, they can get content for free as well from the BBC, which is another issue for the regional and local newspaper industry. They have also got used to having free content - the London Evening Standard, the Metro; these are quite good newspapers that are providing their content for free and I think there is a real debate raging in journalism and you can read in their own newspapers about to how to deal with that. My view is that online everybody needs to experiment. As I mentioned earlier, the pace of change is so rapid in both what consumers and businesses are doing that if you are not experimenting and figuring out new ways of doing things then you are going to struggle, and I think some of the things we have seen recently with announcements about testing paid content are very interesting. I met recently with John Fry, who runs Johnston Press. Just this week they have announced that a number of their very local titles are going to test a paid subscription basis online. That is a good thing to be doing, testing that and finding out whether there are some types of content that people are prepared to pay for and, if so, at what price. That is a good thing to be doing. You have got ten years of consumers being used to this stuff being free. Now people are starting to say, "Hang on a minute. How sustainable is this? Are there types of content that we can fund through subscription and payment as well as funding some through advertising?".
Q474 Alan Keen: Obviously, in a way you are competing with the BBC. Everybody competes with the BBC because it produces such a wide range of services. I did suggest to local newspaper owners a few weeks ago why did they not approach the BBC to see whether they could put their newspapers on the BBC website so that when the readers access their newspapers they can put adverts on there. The BBC would not have anything to do with the advertising on the site.
Mr Brittin: It is not for me to comment on the BBC and what it will or will not do. What I would say is, what does Google do in respect of local newspapers? A couple of things I think are really helpful. First, we help people find content online, so you go to Google or Google News, and perhaps we will talk about Google News a bit later, to find stories; not to read stories but to find stories and find news content, and so we deliver something like 4 billion clicks a month worldwide to news publishing organisations of all types. A huge audience finds content online through us and goes to those sites. Once those clicks go through to those sites those are people reading stories and engaging in advertising who can then be enticed into reading other parts of the newspaper and potentially become somebody who goes direct to the newspaper and so on, so one thing we do is help people find great content. Another thing that we do is help newspapers make money. Because we have a large number of advertisers around the world and we have technology that can allow advertising to be very targeted, we have a service which you may have seen in some news websites where you see "Ads by Google" and there are a number of text-based or sometimes image ads showing on parts of newspaper websites. What they have done there is that they have said, "We would like Google to try to help us make money for this part of our website", and the majority of the revenue goes to the news publisher, not to us, and that is a way in which we are helping them to make money from their website. Our role in this is not as a content provider in the traditional sense. We have technology that can help publishers deal with some of this transition. We are not going to solve all the economic challenges here but we do think that some of our technology can help this transition to a world which is going to include both newspapers and online content.
Q475 Mr Ainsworth: Sticking with Google News, we have had evidence from the newspaper industry that they do not look upon you as some sort of great benefactor operating in a benign and generous-hearted way but rather more like a parasite. We have had evidence from Sly Bailey, who referred to the "super-dominant position" of Google and Google News, and made this observation: "[Google] do not spend a penny on any kind of journalism at all but they are making money out of our journalism". How do you react to comments like that, and of course they are not isolated, these comments; they are quite widely held?
Mr Brittin: As I say, the industry, and all media industries with a strong advertising revenue line are going through a difficult transition so I accept and understand the pain of these organisations and I talk to many of the people and we work with most of those companies on a regular basis. Trinity Mirror, Guardian Media, Johnston Press - these are companies that use the technology that I have just mentioned themselves and are partners with Google in that way. I have read in newspapers, oddly enough, some of the comments that have been made about parasites so I want to make one thing incredibly clear. We do not steal content. If you look at Google Search and Google News what you will find is what we call snippets - a little line and a link that will take you through to the originator's website. That is accepted as being in line with copyright law worldwide. It is seen in the same way as a newspaper article quoting lines from a book in a book review. That is the kind of use of copyright content that we make, so we absolutely fiercely defend copyright owners' rights and it is wrong to paint us as stealing content. We are, if you like, a virtual newsagent. You come to Google News, you find quickly the stories that you are interested in and you go through to the website. The amount of traffic that comes from us is equivalent to about 100,000 clicks a minute to these publishers' websites. There is a lot of volume there, so we do not steal content.
Q476 Mr Ainsworth: But do you pay for it?
Mr Brittin: No.
Q477 Mr Ainsworth: You do not pay for it?
Mr Brittin: No, we do not, but if you think about the virtual -----
Q478 Mr Ainsworth: You take it for nothing?
Mr Brittin: No, we do not take it. We provide links, we provide
distribution. If you think for a minute
about the virtual newsagent analogy, in a physical newsagent's shop newspapers
will pay the newsagent to have their newspapers in the shop. We do not charge anybody for this service;
this is a free service, so we do not - and I absolutely want to be clear on
this; I am sorry to be so firm - steal content.
Secondly, it has been alleged that we make an awful lot of money off the
back of this content. If you look at
Google News, we do not serve advertising on Google News; there are no adverts
on Google News. Google Search - again,
on news topics you will rarely find adverts on Google Search. If you think about it for a minute, if you
are doing a search for a hotel in
Q479 Mr Ainsworth: It all sounds terribly plausible but it does not really explain the resentment which we have witnessed on this issue and the sense that your aggregation processes are contributing to the problems which you have already mentioned of regional newspapers in particular.
Mr Brittin: As I said, I can really understand the emotion that goes with this. I have worked in local newspapers and I have many friends and former colleagues who are still in that business. What they are facing is a tremendous pace of change the like of which has not been seen before. It is easy to see the internet, which brings both competition for reader attention and competition for advertiser spend, as being the root of that change and it is easy to see Google as a gateway to a lot of that as being very strongly associated with it, but what I have tried to lay out for you in my answers are the facts about how we operate, because beneath the headlines, when you get into a little bit of detail, there is much more control in the hands of the publishers.
Q480 Mr Ainsworth: So you do not think that you are contributing to the woes of the traditional press industry?
Mr Brittin: We are a technology company that innovates at a fast pace, so we are part of that internet phenomenon, if you like, and in the sense that the internet and the way that people and advertisers are spending their time online, it is facilitated by Google. I guess we are part of that macro trend, but what we do is work closely with a lot of these companies in the ways that we can help them. I mentioned meetings just in the last week with a number of the MDs of these regional newspaper groups. I was about three weeks ago at the Society of Editors talking to some of the top editors in the country, about 90 or 100 top editors, about the opportunities and challenges for journalism in this world. We work with the Newspaper Society to try to make tools and technologies available to their members who are the regional and local newspaper companies, so we try to collaborate in the areas where we think we can bring some value.
Q481 Mr Ainsworth: Are you at all worried that if this trend continues, the downward trend, in regional media in particular, you will end up with no product because newspapers fold, journalists stop working for them, the stories do not get written and there is nothing to search for, if you follow the process to its logical conclusion?
Mr Brittin: There are two things there. People search for all kinds of content, not just news content, so I think people will continue to use the internet even if that disaster scenario occurs, but I do absolutely care about there being great quality journalism, not just on the internet but continuing, because obviously it plays an important role in society. The reason we are here is to consider some of those concerns. The accountability that local organisations and local government are held to through the local press is incredibly important. They are also able to bind together communities and, as I have said, I believe there is a successful long term future for the local media. I think they are in a difficult and sudden transition exacerbated by the steep economic downturn but if you look at some of the innovative things that they have been doing, many of them by companies like Johnston Press or Trinity Mirror with a range of hyper-local newspaper sites, they are starting to use the technology in new and different ways that are not just based on their 20th century business model but are looking to the 21st century. We want to play a strong part in that. We continue to listen to the industry and try to develop our technologies to help them do the kinds of things they want to do.
Q482 Chairman: Can I just press you because what you have just told us is slightly different from what Carolyn McCall said? She told us, "At the moment they send traffic to us when someone clicks on Google and asks for something. Google will say, perfectly rationally, 'You get traffic; we get revenue', because they sell ads at the point of distribution. They make money on our content by selling ads around that point of consumption." You have just suggested to us that you do not sell ads at that point of consumption.
Mr Brittin: Carolyn is right to say that Google makes money from targeted advertising adjacent to search results; that is how we make money. In respect of queries to do with news content, which was what I was talking about, there are a couple of points to make clear. On Google News we do not serve advertising, and that is an important part of the way we operate.
Q483 Chairman: It is the aggregation that you carry out.
Mr Brittin: "Aggregation" is not the word
I would use. Basically, we put links to
news stories together in Google News.
There is no advertising content carried on on Google News. We have occasionally experimented with
advertising formats but if you go there you will find there is no advertising
on that. If you go to a general web
search then we do show advertising in Websearch but, as I mentioned with my
analogy of the hotel in
Q484 Chairman: Their other criticism, of course, is that even if you do help them persuade their customers to click through to their site, actually they are not really getting any money out of it because the advertising revenue of their sites is minimal compared to the amount that you are taking.
Mr Brittin: As I say, the traffic that is coming through those clicks we are typically not taking any money on at all. The only way we make money is if somebody clicks on an ad rather than on a news link.
Q485 Chairman: I think it is just Google's dominance in terms of the proportion of online advertising which you take.
Mr Brittin: That is a different point. If I can just talk a little bit about the online advertising market, this is still a very early stage. We are ten years into the internet and far fewer years into it being a really mass market phenomenon. It is absolutely true to say that publishers can make less money showing an ad to an online reader than they can to a traditional print reader. Partly I think that is a legacy of the days when in print was the only place to advertise and one of the reasons that we supported a relaxation in the merger regime in respect of local newspapers is because we believe, as Sly and Caroline, who you quoted, mentioned very clearly, that it is a much more competitive market for advertising, so I think it is right that we look again at the regulatory regimes there. Online we are at the beginning of advertising and figuring out how to provide value to readers through advertising and how to make money through advertising on the internet, and we and other people have technology that will help them to do that and The Guardian and many local newspaper groups use that technology, so there is a difference in the amount of advertising you can make per reader on and off line. Partly that is the historical legacy and partly that is because it is an early stage market that needs to develop further. You also mentioned the point about our success at Google in getting a share of the online ad market. We would say that we have reached the stage that we have through investing in technology and innovation, and indeed I notice that John Fingleton talked to MPs about this recently and said there is no evidence that this is -----
Q486 Chairman: It was my question on it.
Mr Brittin: It was a very good question, Mr Whittingdale. Thank you for asking it. He said there is no evidence that this is bad for consumers. "Where a company has reached its position through superior innovation, foresight and better targeting of customers we are wary of intervening. There is no evidence that there has been any harm to customers or related companies. We see a lot of customers benefit from what is happening in this market place from high innovation. It is good for the British economy". Those were his words, not mine.
Chairman: I remember them extremely well.
Q487 Mr Watson: Many of us agreed with those words as well. We have been deeply interested in the changes that were announced in Google News, I think, yesterday or the day before, to allow publishers more flexibility in the way that Google News operates so they can restrict page click-throughs. Can you talk a little bit about your thinking behind that and whether that is a response to the pressure you have been put under by some of the publishers?
Mr Brittin: Certainly. Maybe I can start with the basics of how Google News operates and I will then try to explain the changes because it is a little bit involved. As I mentioned, Google News is a service for publishers and users and publishers can choose to have their content in Google News very simply. They have control over whether they want to be in there or not. Actually, we allow them more granular control than that. They can decide, "Do I show a headline, a headline and some text or an image?", and so they have some control over what happens. For some time we have supported publishers not just with all their content available for free but publishers who have content that is available only to subscribers, so the Financial Times and the Wall Street Journal are two examples of such publishers. We think that if you have paid content that you want people to subscribe to you want it to be findable, and so do the Financial Times and the Wall Street Journal and many other publishers. What they would say is that they would like people to be able to find their content on Google News, come through to their website, read a bit of it and then be offered the chance to subscribe to read more, and that is how they operate and that is a great thing. We think that is a good thing and we want to encourage that. One of the issues with that model was that it was possible for somebody to go to Google News and then go to the publisher's website and read a story and then see, "If you want another story you need to subscribe". We had a system called "First click free" that allowed users to do that. What we have done in the last few days is that we have announced an enhancement to that system. The issue with that system for a publisher with paid content was that we were able to index all of their content and show the snippets in Google News, so somebody could come from Google News with a first click, read a story and go back to Google News and with another first click read another story, and they were aware of this but it was a limitation of the system. What we have now done is that we have provided more control for those kinds of publishers so that they can allow people to come through from Google News up to five times before they are shown the pay wall but they can no longer exploit that loophole of keeping on moving around. What it does mean, and I want to be very clear about this, is that for those publishers who make their content available for free there is no change. They can still have all those stories accessed in Google News. There is just this additional level of control for publishers who currently have or want to experiment with a paid service. In my view, in the long term we will see more paid news services being available, subscription content where the content is scarce or of a particularly targeted or niche quality. I think there is a good case for there being subscription models there, and many exist profitably today, but I think we will continue to see a lot of free or ad-funded news content on the web as well. It is great to see companies from Johnston Press through to some of the larger ones experimenting with this now. I think what that demonstrates is that at Google we are trying to listen to what publishers want to do and develop technologies that help them to do that.
Q488 Mr Watson: Has Rupert Murdoch indicated whether he is happy with the changes you have made?
Mr Brittin: I have no idea.
Q489 Mr Watson: Okay. Just in terms of who this applies to, anyone that registers as a news provider can go through the criteria to get on to Google News?
Mr Brittin: Correct.
Q490 Mr Watson: And so that would apply to all local papers as well, is that right?
Mr Brittin: Yes.
Q491 Mr Watson: Have they been asking you for this or are you just spotting where the market needs a bit of -----
Mr Brittin: A bit of both. As I say, despite the headlines, we have very good collaborative relationships with most of these news organisations and our people talk to them about the technology and how it can be improved. We start from the point can we improve the experience for the user, and, secondly, can we help the publisher to have a viable long-term business product online, and so it has come out of those collaborations.
Q492 Mr Watson: Can I ask you a slightly left field question to do with that? Some people have said that in the Digital Economy Bill there is a proposal to give a power to the Secretary of State to amend the Copyright Patents Act 1988, and some people have said that a future secretary of state could deem that the snippet of news that you provide as an aggregator is a copyright infringement. Are you concerned about that part of the Bill or have you made representations to Government on that?
Mr Brittin: As a matter of fact we have. I start from the point of view that we are broadly supportive of the Digital Economy Bill and we are clearly very supportive of the right of content originators to have their rights protected and to be able to make money from that content, and I can talk about examples that show you why we put that into practice. There is a clause in the Digital Economy Bill, clause 17, which gives us concern. We, along with Yahoo, e-Bay and Facebook, have written a letter expressing our concerns about this. The reason we are concerned, without going into too much detail, is that the clause is very broad and it will enable the Secretary of State to extend his or her powers to enforce copyright without future legislation. Our concern about that is that it is an attempt to try to future-proof the framework against all kinds of things that none of us can foresee and we think it could have two main negative impacts, the first being that it could be a drag on innovation. If people are experimenting and trying to come up with new ideas and they feel there is an extra risk that copyright protection might be extended in some unforeseen way, they are less likely to invest in that innovation. Secondly, there is a concern around privacy because enforcing copyright protection requires evidence of breaches which therefore requires user data to be accessed. Giving Government such a broad power that could threaten those two areas is a concern and that is why we have expressed those concerns.
Q493 Chairman: Can I just come back to you on what you were saying about your support for the rights of creators in terms of their content? Google in the past has not been terribly co-operative when asked to remove links to sites which are distributing content illegally, ones like the one set in Russia, All for MP3, I think was one of them, and certainly I can remember people saying, "Oh, well, we cannot know whether whatever thing is illegal. It is not for us to judge".
Mr Brittin: I am afraid I am not familiar with the case that you mentioned. To talk about how we operate in a bit more context, there are over a trillion websites and pieces of information on the internet and it is impossible to police whether or not everything is legal. Any time that something comes to our attention as being illegal content we will remove it from our index.
Q494 Chairman: The music industry have told us in the past that when they have come and said, "This site is distributing music either for nothing or at 5p a track rather than 90p a track, and they have acquired that illegally", you have not immediately leapt to take it down.
Mr Brittin: Again, I am not familiar with the particular case, but generally speaking the remedy tends to be for the complainant to go to the site owner or publisher and ask them to desist from any illegal behaviour, but also, if we are made aware of something being illegal, we take it out of the index. There is perhaps another example I can give you that illustrates some of the issues around copyright more clearly, if I may. YouTube is a site that we own and operate, and on YouTube we are now in a situation where 22 hours of video content are uploaded every minute. There is a huge amount of content that goes onto YouTube. In fact, just this morning we announced that Channel 5 are going to be putting some of their content onto YouTube, television shows and catch-up content, as Channel 4 did recently, so it is now becoming a more established environment for people to watch video, which is great for consumers and also good for those companies who can make money from showing their shows to a new audience through advertising. But imagine you are a movie studio and you are concerned that copies of your content have been illegally uploaded onto YouTube. What do you do? This, I think, is a great example of where sensible protection for copyright, along with technology, can provide not just a way of addressing copyright concerns but actually the potential for a new business model, so a movie studio can upload a copy of their content to us at YouTube and say, "I would like to find all copies of this content across the site", and we have built a technology in conjunction with these kinds of players called Content ID. What Content ID does is that it allows you to find copies of that content, not just pristine DVD copies that have been uploaded, but if somebody has taken a shaky camcorder view of your movie in their local cinema and uploaded that, the technology is pretty good; it can identify those copies, so the studio can find copies of this content all across this vast YouTube universe of videos, and then they can choose to do a number of things. They can take it all down immediately. If they do that any user uploading a copy of that content will be told, "Do you realise you are in violation of copyright laws and you cannot upload this content?", so that is a really important thing to be able to do, educating people. 90% of the organisations that identify and claim their content in this way through Content ID leave their content up on YouTube. Why would they do that? They leave it up because they are then in a position where they can monetise that through advertising or through directing people to buy a copy of that content in a store, buy the Monty Python DVD in Amazon, for example, and it also allows them to see where people in the world are interested in their content. If you are a band and you put a video up there and you see that you have got huge interest in Canada and in Australia, that might present a commercial opportunity for you to undertake marketing activity, so you can see, hopefully, how a combination of technology and sensible rights protection cannot just provide control to the copyright owner but also provide business opportunities. That is one of the exciting areas, I think, that illustrates how we feel about copyright.
Q495 Chairman: I commend what you are doing with YouTube, which I read about and I think is absolutely right. I am more concerned about websites which are flagged up by your search engine which are operating essentially in criminal activities. I will give you another example which has concerned this Committee in the past: the plethora of sites claiming to have tickets for bands like U2, the V Festival, any number of websites, www.U2boxoffice.com, and huge numbers of people have sent off large amounts of money for tickets and have never heard anything again. Those sites are flagged up by your search engine. They are quite plainly criminal sites based usually in Northern Cyprus or somewhere in Russia. Why are you not removing those?
Mr Brittin: As I said, because I do not have the facts about the specific examples you mention I cannot address those specifically today, but in general if there is a site that is operating illegally and it is brought to our attention, we will address it and remove it from our web search results if, indeed, it contravenes law. We have to comply with local law and also we try to comply with local customs in all the markets in which we operate. I make a strong point here: we are not a policeman and neither would you nor consumers want Google to be a policeman. We rely on the legal system and local or international laws to point to content which should not be available to consumers rather than doing that ourselves through some judgment.
Q496 Chairman: I understand that. I only make the observation that failing to act can be helping evil as much as doing evil.
Mr Brittin: I understand your comment. Without the facts of a particular case I cannot answer that case, but in general we work very hard to ensure we comply with law and provide the protections you allude to without becoming a policeman who editorialises on what may or may not be shown on the internet.
Q497 Mr Ainsworth: I appreciate we are straying rather far from local media, but I am interested in that last point. How often is your attention drawn to supposed illegal sites and by whom? Is it a regular event or does it happen only rarely?
Mr Brittin: Do you know, I could not tell you the answer to that. It is not something that comes across my desk on a regular basis. I do not think it is a huge issue, but there are established channels for dealing efficiently with that within Google. I am sorry I cannot tell you the answer.
Q498 Chairman: Indeed, it is a long way from what we were going to talk about this morning, so I expect you probably did not expect to be asked about it. I think that is probably all we have. Thank you.
Mr Brittin: Thank you very much.
Witness: Mr
Paul Bradshaw, Lecturer in Journalism,
Q499 Chairman: Good morning.
Mr Bradshaw: Good morning.
Q500 Chairman: For the second session could I welcome Paul Bradshaw, a lecturer at Birmingham City University. You have been listening to Google and I am sure you have seen also the submissions the Committee has had at previous sessions from local and regional newspapers. Could you start off by giving us your view of how serious the crisis affecting local newspapers is and to what extent it is of their own making and that the solution lies in their own hands?
Mr Bradshaw: Undoubtedly they are in enormous crisis. I think we need to separate that from the idea of local publishing generally because the key problem for local newspapers is for specific businesses and the legacies that they have, particularly around debt and expectation of profit margins but to service those debts and shortfalls, so we are undoubtedly in a problem. Advertising across the board has pretty much dropped off the cliff and their attempts to address that by making new profits in new markets online have not succeeded particularly well. They have not done very well online for various reasons, partly because they have not necessarily invested an enormous amount in that and partly because they are hampered by those legacy systems. They are based on enormous cost bases from a print market whereas the people who are being successful online are able to come to that from a fresh canvas and look at it afresh with completely fresh business models.
Q501 Chairman: What do you think is the future for local newspapers?
Mr Bradshaw: I think we are going to see some newspapers fold. I think we will also see more newspapers spring up in their place that do not have those legacies hampering them effectively and you will see an enormous amount of broader communication in publishing in local environments which is already happening. Already you are getting a very significant, what you might call, "hyperlocal movement" of publishers who are passionate about their local area and particularly frustrated by the lack of coverage that they do get in the local press because the local press has got such an enormous patch to cover and, if you like, a commodified approach to news, but they are trying to plug the gaps they see local newspapers leaving behind them as they cut costs.
Q502 Chairman: Local newspapers are now failing to fill the gaps partially because of the economic pressures. We have been concerned in the past about the core local journalistic activity covering things like local magistrates' courts and district council meetings which are no longer being covered. I am not sure that the solution you are suggesting is going to cover that either. Do you think there is a problem around the sustenance of local democracy which is being suggested?
Mr Bradshaw: To some extent. I think the issue with local democracy is that the commercial pressure has never been particularly to report those things. The idea of reporting council meetings, and that is what is often described as the "bread and butter material", is not particularly attractive editorially, it is quite expensive to do, and that decline, if you like, predates the internet by quite some distance. In terms of whether or not that will be covered by the people who are springing up to fill the gaps, the signs are quite encouraging. The sort of hyperlocal operations, blogging operations, at the moment - I think there will be print operations as well - are explicitly seeking to cover those activities. I think the biggest thing that is holding them back at the moment is the fact that effectively the market they are operating in is so small to begin with that it will take a few years before they gain the base to be able to do that particularly effectively and gaining access as well, which is often a problem, dealing with difficult public authorities and also the fact that, in fact, they are competing with local newspapers. It may be if a particular local newspaper dies, a hyperlocal operator in that area will then have more freedom to do the kind of bread and butter council coverage.
Q503 Chairman: Is there a danger, though? With local newspapers they are employing professionally trained journalists subscribing to things like the code of the Press Complaints Commission and they will endeavour to be accurate and impartial. None of those things applies necessarily to alternative online bloggers, et cetera.
Mr Bradshaw: The funny thing is they do. Most of these new entrants, if you like, are operated by former journalists or people who have worked in the media. On the idea of what is quality, if you like, and the idea of impartiality and things like that, there is a lot of overlap between the ideas of quality that hyperlocal bloggers and journalists have in mainstream publishing. There are key differences, I think. For example, for the hyperlocal publishers, bloggers, one key element of quality is transparency. If you report on a council meeting, then you link to the full minutes, you put all of that in its full form. It is interesting because I have been looking at a lot of council coverage in local newspapers and it is very much second and third-hand, you are getting very small quotes and it is not clear if that is from a press release, directly from a phone call or the meeting. A blogger would link to as much as possible and would link to the full transcript. The other, if you like, quality mark is right of reply. One of the cultures of blogging is around providing an opportunity for people to put their points of view across, correct things and update things whereas in print once a deadline has passed, that is it, you forget about it. There is no real quality control in terms of post-publication, everything is around the production process. The quality idea of impartiality is from a world where the numbers of people who are able to publish and contribute is very limited. I think that quality becomes less important in a situation where you do not necessarily have to get all points of view and try to paint yourselves as completely objective and uninvolved, but as long as you have a platform there that people can put those points of view across, then that is a key element and very much a part of blogging culture. I would argue that bloggers, if you like, as a shorthand term for the new entrants and new start-ups, some of whom might be operating in print, and established print operations have a lot of overlap in ideas of quality. They differ particularly around pre-production and post-production, I think that is the main difference. The other thing is your key value online as a blogger is your reputation and the interesting thing about Google is effectively Google measures that by the number of people linking to you and the quality of the people linking to you. If you damage that reputation in any way through bad journalism or through being particularly unfair, for example, then that would become quite literally visible in terms of how you are ranked on Google and the kind of conversation that surrounds you. The important thing when looking at blogs online is not to see them in isolation, the same as you would see a newspaper, but part of a wider network and ecosystem and that is how people encounter them.
Chairman: Could I turn to my blogging colleague, Mr Watson.
Q504 Mr Watson: It is a great pleasure to meet you in the flesh. I follow your blog a great deal and the models you are proposing are interesting. Could I talk to you about hyperlocal news. I think you have proposed that there could be a pro-am partnership with news outlets like the BBC. Could you elaborate on that a little bit?
Mr Bradshaw: Certainly the experience in the last ten years really when you look at what is often called "citizen journalism", blogging and other kinds of forms of journalism online where it seems to be particularly successful, is where you mix the experience, the contacts, the power of established media with the passion, the expertise, the engagement and communication of individuals, bloggers and so on. For example, blogs are particularly effective in engaging people with issues. There is a difference between reporting council minutes in print in what is often quite a dry form and doing so in a more conversational and engaged manner on a blog. If you want people to engage with local democracy and national democracy, I think by far the most effective media at doing that are bloggers, but if you want to have effective recourse and access, then mainstream media have a lot of those advantages. Playing to the strengths of both seems to be the most successful in terms of experiences.
Q505 Mr Watson: In the work you do, have you found any robust economic models of hyperlocal news that are financially sustainable?
Mr Bradshaw: There is a number of models really that seems to be emerging. One of those is a franchise model, strangely. There is an organisation called "AboutMyArea" which effectively sells the ability to report on a particular postcode and that is their business model. I am not sure how long-term sustainable that is, but that is one model. Another model is consultancy effectively and that seems to be the model of Talk About Local, a network of hyperlocal blogs that Will Perrin is involved in. The blog itself might not make any money, but the people who are operating those sell their services elsewhere and effectively that blog demonstrates their abilities. Then the third model is the traditional advertising model and the key thing here is, as Ed Roussel himself from The Telegraph put it very succinctly a couple of weeks ago when I was down: "Print publishing and broadcast publishing have high costs of entry and high margins; online publishing has low costs of entry and quite often low margins", unless you are someone like Google. For those bloggers the margins they can get are fine, they are sustainable and they can live on advertising, for example. There is a system called "Ad apply" which Rick Waghart(?) has been selling to a number of hyperlocal bloggers and all sorts of regional publishers for that matter which allows local businesses to buy advertising on local blogs. Those margins are fine for local bloggers. The problem is that it cannot sustain necessarily all of the legacy print operations which existing publications have, but I can see very easily that in time that would not only sustain the blog but then that blog could do a print version and sustain that off the back of advertising sales.
Q506 Mr Watson: When we have been collecting evidence for this inquiry we have heard quite compelling evidence that local newspapers are the only medium by which local democracy is held to account. I would not necessarily call it "a democratic deficit", but people have warned us that level of accountability is under threat with the crisis in local media. I think you have been involved in things like Help Me Investigate, which is essentially crowd-sourced investigative journalism. Do you think in the future that will replace investigative journalism or complement it?
Mr Bradshaw: If you look at the history of investigative journalism, it has always been an exception to the rule, it is almost defined by its exceptional quality; otherwise you would just call it "journalism". The way it has developed in the last few years, partly because of the way the internet allows people to collaborate more effectively, has been more and more investigative journalism has been done by freelancers and kind of activist organisations like Greenpeace, Human Rights Watch, Liberty and so on. That pattern is there anyway and that is regardless of whether it is being done on blogs or not. If you want to charge for content, for example, if you want to make content valuable and stand out, it has to be unique, so the kind of processing model that a lot of newspapers have adopted in terms of replicating something that is everywhere else but because it was in your local paper they had a monopoly on that market potentially. My optimistic side hopes that maybe newspapers will say, "They can get that from Reuters and the BBC. What we will do is focus all our resources on local investigative journalism", or the stuff that is not covered on the BBC or the Guardian or whatever. I think it will take a lot of pain and hopefully one successful experiment for newspapers to do that really and make that leap because it is very hard for them to get out of the habit of cheap content from press releases, filling pages and selling an object which is a newspaper.
Q507 Mr Watson: I think you are from Birmingham, are you not? You are a lecturer in Birmingham. Birmingham is a classic example where a large newspaper group, in this case Trinity Mirror, demanded innovation of their editorial leadership. They got it in their online offer, the ad revenues did not make up for the shortfall and they have been hung out to dry; The Birmingham Post turned into a weekly newspaper. You said you have got an optimistic side. Are you the only optimist left in the West Midlands?
Mr Bradshaw: It is a very strained optimism.
The big problem for me, and I talk a lot with editors in a number of
publications, is not an editorial one, it is an advertising one. The ad sales departments of pretty much all
newspapers are trained to sell print advertising and they devalued online
advertising themselves. In terms of
making online pay, they are really hampered by that and there is a lack of
creative fault around monetising the eyeballs they are getting online or they
are trying to replicate the print model online by selling an advert on a page.
The reason Google have been so enormously successful is because they did not do
that, they said, "We are going to sell against resource and behaviour". It still astonishes me that if someone is
searching for cars on their newspaper search engine, they do not get lots of
adverts for cars, but that is exactly what Google have been doing for
years. There are all sorts of
particularly innovative things that they could be doing. Increasingly, advertisers are becoming
content producers themselves, so they are cutting out the middleman, they are
not buying advertising at all, they are setting up their own websites, for
example, creating videos and so on.
There is an enormous opportunity, which I know some newspapers are
starting to do, particularly in
Q508 Mr Watson: Is not the ultimate answer that essentially Rupert Murdoch has got to bribe the system so that more people do pay for news content?
Mr Bradshaw: I think a lot of people are waiting to see what happens with that. I am extremely glad it is happening because we can stop hearing people talking about it, but I am quite sceptical about its success. If you look at previous experiments with paywalls, typically traffic to a website will drop between 60 and 90%, so you lose an enormous proportion of your readers. Whether or not you can make that up, you are going to be able sell advertising for more per reader because you know more about those readers because they are more loyal readers and so on, so they are more valuable to advertise to, but if there is enough of them to make up for that and if they paying enough to make up for that - again the evidence suggests that people are not particularly willing to pay for them - then I do not think it is going to work unless they look at the package they are selling. This focus on content seems to ignore the fact that people never bought news, they bought a newspaper which was a package which had certain functions: it was portable, it was high resolution, it was serendipitous. Online they are not selling any kind of package that I can see and if you look again at successful business models online, it is about selling packages. I have spent £16 for a book on my iPod because it has audio and video and it is a packaged experience. I would pay for an application on my iPod that allows me to read news in a certain way because I am getting a service as part of that. I think newspapers need to look at it in the same way that they look at a newspaper, as a package, what value are we giving. The model that is more likely to be successful is the kind of model that is being looked at by the Guardian and The Times itself, The Times +. They are looking at communities and events and selling those kinds of packages, so you get deals and loyalty card-type things. For me that looks a lot more likely as being what emerges as a possible model. Particularly mobile, it is easier to sell packages on mobile but the market is not there yet, not enough people are using smart phones for it to be a big enough market.
Q509 Mr Watson: In respect of bloggers, the new Chairman of the PCC came out with a rather extraordinary statement that bloggers should perhaps be regulated by the PCC. Have you done any work in that field?
Mr Bradshaw: The funny thing is about a
month before she said that I contacted the PCC and asked if a blog could join
because I had a group of masters' students running a hyperlocal blog in
Q510 Chairman: How much did they say you would have to pay?
Mr Bradshaw: It is based on circulations. This is one of the problems, because it is not a print product and does not have a circulation, it has an online readership, but I can imagine there being all kinds of bureaucratic issues in terms of working out how much they should pay. Ultimately, there is very little benefit. We can simply say, "We adhere to this code anyway", and we can say, "We adhere to the NUJ code of conduct", or various other codes. It may be that more and more bloggers start to do that and have their own codes and how we investigate, which you mentioned, has a clear code of conduct on the site in terms of where we stand ethically, what you should do if you have a complaint and so on. I think as things get more serious, I can see more and more bloggers doing that.
Q511 Mr Watson: I do not think I have had a conversation with a journalist in the last two years where at some point they have not complained about bloggers ripping off their content and yet whenever I read a political diary column it always seems to have been lifted off the legendary Paul Staines' Guido Fawkes website. Have you got any evidence about a professional journalist stealing content off blogs?
Mr Bradshaw: Yes. Plagiarism from blogs is very widespread really. That is partly a cultural issue because a lot of journalists see blogs a bit like a pub conversation or a public document, they do not have to attribute it. It also comes from a wider cultural history in journalism of ripping off content from each other and not attributing it anyway.
Q512 Mr Watson: Do you think the PCC should take an interest in that and the very least they should do is credit bloggers when they rip off their stories?
Mr Bradshaw: I think the PCC should take an interest in a lot of things but, yes, the cynicism is I imagine most bloggers would imagine it is not worth their effort going through that process because there will be some bureaucratic reason why it will not be carried or the result will be so insignificant as to be unimportant. It is a big difference between online where if you do not link to your sources, if you do not link to where you have got it from, that is seen as a very bad thing indeed, it is a terrible crime, whereas in print it is kind of par for the course that you do not show your working out really.
Q513 Alan Keen: One of the things that we are concerned about is the fear that local democracy will be hit if it is the local council producing their own newspaper and they will produce it in the best light that they can. Do you think the Government should outline and list specific information that, for instance, local authorities should have to produce so that with a search engine you can find exactly what you want? Would that not be one way of ensuring that local people, on a national basis as well, can find out where things are going wrong by making comparisons with other local authorities, so the whole thing should be published? We have had the FoI particularly with us. If the Government said, "Local authorities, local councils have to produce these statistics under certain headings" then everything can come out and you do not then need to go to council meetings any more.
Mr Bradshaw: Regardless of whether the
media exists or not, I think there is an enormous need for that requirement on
local councils to publish as much information as possible about what meetings
are taking place, who is attending them, what time they are on, what they are
concerned with, educational achievements, health statistics, everything that
goes on, making that publicly available and making it findable, which is a key
issue. It is very difficult to find a
lot of this material. Also, it being
published in a standardised format that makes it very easy for journalists,
professional and civic, and bloggers to interpret that information and present
it. There was a fantastic project in
Q514 Mr Watson: The interesting thing is you talk about the transparency movement, but are there regulatory things Government could do to help with that? I am thinking technology costs of broadcasting audio from council meetings are now so cheap you can stream them onto the net. Have you come across any areas in local authorities where they are facilitating a greater texture in local accountability?
Mr Bradshaw: It is not particularly my area, so it is not something I would have a huge amount of knowledge about. Someone like Nick Booth would know a lot more than me. I know, for example, Brighton & Hove Council are in the process of appointing someone who will oversee social media strategy and that involves getting other people to use that as part of what they do. I think it was Leicestershire that had a series of forums which they used to discuss local issues. That is probably about as far as I can think. Talking about Birmingham specifically, I know Rhubarb Radio in Birmingham are keen to stream council meetings themselves, so it would not necessarily be the council doing it, although they seem to have hit a bit of a wall of non-cooperation on this.
Chairman: I think that is all we have. Thank you very much.