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August 2, 2006

Does Google Pay Content Providers?

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A recent Mercury News article caused quite a stir in the blogosphere Monday when it sort of, but not outright, accused search engines of paying newspaper sites for the right to index and link to their content. The article turned the popular notion that the search engines “steal” revenue away from newspapers upside down and showed the newspapers actually being financially rewarded by the engines.

Taken from the article:

“Recently completed deals, which include arrangements in which media organizations such as the Associated Press will be compensated on a pay-per-click basis, could herald a major shift in the relationship between the old media and new Internet gatekeepers.

“The people who own the content did a lot of work to generate the content,” Google Chief Executive Eric Schmidt said in an interview with the Mercury News. “We want them to get the majority of the revenue from advertising.”

It’s unclear what exactly Eric Schmidt meant by that last statement, but it was enough to make bloggers stand up and take notice. Do the search engines pay content providers to use their articles? If so, how does this affect smaller newspaper sites and blogs who are also fighting for spots in Google News? I think the bigger question at hand was if Bob’s Blog pays Google $x, can he too land himself in Google News?

Historically, content providers were never offered payment for “allowing” the search engines to link to their content, at least not in cash. When Yahoo! or AOL made a deal with a newspaper, the site’s commission was in traffic, not direct deposit. AOL would provide a snippet of a New York Times article, and then link back to the original article on the NYT site. If the user wanted to read more, they had to follow the link back to the NYT. AOL got to use the story and the NYT got the traffic.

But the Mercury News article seemed to be painting a different picture, one that showed Google paying syndication fees. Google responded yesterday saying:

“Google has always believed that content providers and publishers should be fairly compensated for their work so they can continue producing high quality information. We are always working on new ways to help users find the information they are looking for, and our business agreement with the Associated Press is one example of that.”

I still don’t know what that means. Is Google working on a deal similar to the one Yahoo News has? Or is that an admission that Google currently runs a pay per click partnership with the AP for allowing them to crawl their content? It’s still unclear, but the statement does indicate some sort of official business model regarding this is on its way, or at least being debated. I’d also like to know what “fairly compensated” means and just what kind of money we’re talking about (pennies or billions?).

It seems important and I think users have a right to know if Google (and the other engines) has a deal with certain content providers. If companies can pay to have their content appear in Google News it could lead to a potential bias of what stories get covered and how, and I think it’s only fair for users to know that ahead of time.





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