Google plans to share revenues with publishers which benefit from the company's new digital subscription tools, in a scheme comparable to its successful advertising revenue model.
The search giant will use its trove of personal user data, combined with machine learning algorithms, to help news publishers identify potential new subscribers and target their current subscribers for renewals.
In return, it would consider taking a cut of any sales it had brokered, said Richard Gingras, Google’s head of news.
"It will obviously come down to what we think that business relationship should be but, bottom line, I think [revenue shares] will be exceedingly generous [to news publishers]," Mr Gingras told the Financial Times. "In our ad environment, the rev shares are 70 per cent-plus. The rev shares [for publishers] will be significantly more generous than that."
For publishers working with Google, revenue sharing is less of a concern than the need to maintain a direct relationship with the customer – they do not want tech platforms to become gatekeepers to subscribers, one media executive said.
Access
“It’s very interesting, because this would be the first time [revenue share] has ever happened,” said Nic Newman, from the Reuters Institute for the Study of Journalism. “What publishers really want is to have access to Google’s wealth of data, so it’s a step in the right direction for both parties.”
The potential revenue-share agreements with publishers will be similar to Google’s AdSense business, which allows web publishers to place ads on their site. When a user clicks on an ad, the publisher and Google split the revenues from advertisers in a roughly 70-30 ratio.
Google's body of data on millions of people's propensity to buy allows it to target ads to relevant individuals; this has resulted in Google's dominance in digital advertising, where it accounts for 75 per cent of all new online ad spending together with Facebook, according to Mary Meeker of US venture capital fund Kleiner Perkins Caufield and Byers.
Mr Gingras, however, insisted that Google was not trying to create a new revenue stream for itself; publishers would still hold the power in the relationship.
“Unlike other participants in the environment, we’re not trying to own the publisher. If there are cases where we do cause the subscription to happen, we don’t want to own the customer,” he said, referring to its rival Facebook, which he described as a “walled garden”. “None of this changes the marketplace economics, people will pay for what they value.”
New measures
Earlier this month, Google unveiled new measures to help subscription-driven publishers acquire and retain more customers, saying that “advertising alone can no longer pay for high-quality journalism”.
Google's efforts to work with news publishers, including News Corp, the New York Times and the Financial Times, have been hastened by vocal criticism by media companies, particularly of Google's "first click free" model, which required publishers with paywalls to provide a minimum of three stories a day for free access via Google search.
Publishers such as News Corp claimed that sites opting out of it, including the Wall Street Journal, were penalised heavily for their non-participation. The Journal, for instance, saw a 94 per cent plunge in referrals from Google News in the first five months of 2017.
“If you don’t sign up for ‘first click free’, you virtually disappear from a search. And given the power of that Google platform, that is disadvantaging premium content of great provenance,” Robert Thomson, chief executive of News Corp, said at an event in New York in September.
Copyright The Financial Times Limited 2017
