Toward a better media partnershipGoogle and France reached a landmark deal to avoid the so-called “Google Tax” with the Internet search giant agreeing to set up a 60 million euro ($80.9 million) fund to finance French news organizations in digital publishing and help them raise advertising revenue.
Google has been engaged in intense disputes with the governments of France, Germany and Italy after European publishers demanded Google pay for its use of their material.
French President Francois Hollande said the deal was “a model for effective partnership and is a pointer to the future in the global digital economy.” His comment may be an overstatement, but the deal nevertheless is a desirable compromise.
French publishers pressured their government to make Google pay for its use of their news content. The Internet giant threatened to exclude French media from its search results. During the dispute, the French government investigated Google’s tax compliance and pursued new tax legislation, pushing the Internet giant into a corner.
Google struck a similar deal with Belgian news organizations and will likely sign additional ones as Germany and Italy are also mulling proposals similar to those discussed in France.
The Wall Street Journal, Associated Press and other U.S. news organizations have also been criticizing the arbitrary use of their articles and material in cyberspace. Newspaper publishers in Brazil notified Google that they will cease their news-sharing partnerships.
The essence of the conflict is that portal sites have so far not appreciated the value of content. They display the news for free at dirt cheap prices and raise massive advertising revenue. Their profits have been ever-growing while news and content providers are losing money and clients. At this rate, there will be few profit-making news organizations in the near future, a situation sure to undermine news quality.
The local industry is in a similar situation. President-elect Park Geun-hye vowed to revitalize content producers. No promotions will help, however, if media organizations are not appreciated for their work in the first place. The new government must work out a win-win arrangement for news providers and online portal sites. We expect local search engines and portal sites to take note of Google’s move and take initiative.