Why the snippet tax in the EU Copyright Directive is unnecessary and doomed to failure

from chasing-declining-revenues department

The EU Copyright Directive in the Digital Single Market contains two spectacularly bad ideas. One is the Article 17 upload filter, which will wreak havoc not only on creativity in the EU, but also on freedom of expression, as algorithms block perfectly legal material. The other concerns the “snippet tax” of Article 15, more formally called incidental copyright.

Just as the impetus for the download filter came from the music and film industries, the lobbying for Section 15 came from newspaper publishers. The logic behind their request, as it stood, seemed to be that Google was making money from advertisements on its pages that had links to newspaper sites. This ignored two inconvenient facts. First, Google’s dedicated news site, Google News, had precisely no advertising on its pages. And second, the pages of the main Google search engine that contained advertisements had many other search results alongside links to newspapers. And those links to newspaper sites send a huge flow of traffic, which publishers have repeatedly shown they are desperate to get.

For example, in 2014, German industry group VG Media demanded 11% of its gross worldwide revenue on any search results containing one of its excerpts. Google responded by removing the snippets from its search results (but leaving the title and link). The publishers’ bluff was called and they granted Google a “free license” to use snippets. If publishers had really cared about Google’s use of snippets, they could have easily blocked the search engine’s crawler using the robots.txt file, which is designed for just this kind of situation.

The fact that newspaper sites don’t consistently use the robots.txt file confirms that it’s just a matter of money and the belief that Google is somehow responsible for the drop in ad revenue that newspapers receive these days. However, a fascinating analysis by Benedict Evans shows that the situation is much more complex than that:

About five years ago, a revenue line buried in the back of Amazon’s accounts started to grow quite large. “Other revenue” was over $4 billion at the end of 2017, and if you looked at the ratings in the ratings, you’d find it was “primarily” advertising. By 2019, that amount had grown to $14 billion, and I’ve covered that here, pointing out that Amazon isn’t just about e-commerce and AWS anymore. [Amazon Web Services, its cloud computing offering], and had grown into a collection of many different companies, many of which were probably as profitable as AWS. However, we still didn’t know exactly what “primarily” meant. In late 2021, that changed: Amazon started allocating ad revenue directly, telling us it’s now a $31 billion business.

Evans puts this into context by noting:

$31 billion is about the same size as Google Display, YouTube or the entire advertising business of the global newspaper industry.

In other words, the newspaper industry’s obsession with Google misses the most important point about a whole new type of advertising appearing on sites like Amazon. Evans rightly sees a huge move towards “merchant media” – advertising on e-commerce sites that have no traditional journalistic content. This means that it will not be possible to impose another snippet tax on these sites, as there are no snippets. While newspapers celebrate their “victory” pushing gullible EU politicians to pass Article 15 targeted at Google and Facebook, the bulk of revenue from mainstream media sites goes elsewhere.

Originally posted on WalledCulture.

Filed Under: advertising, ancillary copyright, classifieds, copyright directive, eu, link tax, newspapers

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