One Company Is Making Money From News and It Rhymes With ‘Shmoogle’

Google CEO Sundar Pichai at the Google I/O 2019 keynote session. Photo: JOSH EDELSON/AFP/Getty Images

In 2018, the news industry in the United States made an estimated $5.1 billion from digital advertising, a sum spread out across scores of companies, where newsrooms hemorrhage jobs and small-town papers shutter at an alarming rate. But one relatively recent arrival in the business had a banner year: According to a report from the News Media Alliance, Google almost matched the industry’s total digital-ad revenue with $4.7 billion brought in through search and Google News.

That number has shot up since 2008, when a Google executive announced that its news function earned the company around $100 million that year. The News Media Alliance, which represents over 2,000 papers and websites in the country, states that its estimation is a conservative one, as it does not include the value of personal data that Alphabet, Google’s parent company, gathers when users click on news articles.

The study also shows the importance of news to Google’s revenue stream: a reported 40 percent of clicks within trending queries are news-based. It’s content that Google does not make, pulling an enormous sum of money from an industry that has been devastated by the erosion of ad space as readers shift their habits from print to digital to mobile consumption. As companies like Alphabet and Facebook control the distribution of news — the New York Times reports that over 80 percent of external traffic is routed through the two giants — the News Media Alliance is demanding a cut of the revenue for which it is providing the content. “They make money off this arrangement, and there needs to be a better outcome for news publishers,” News Media Alliance president David Chavern told the New York Times.

In a statement, a Google spokesperson described the estimation by the News Media Alliance as a “back of the envelope” calculation which “ignores the value Google provides,” noting that every month, its News and Search functions “drive over 10 billion clicks to publishers’ websites.” Elsewhere, the New York Times is receiving flak for publishing the report prior to its official publication. “We have no way to assess how accurate this estimate is as there’s no methodology or transparency offered,” said Nick Diakopoulos, a professor computational journalism at Northwestern University. “This isn’t zero sum,” noted Wall Street Journal media reporter Ben Mullin. “How much did news organizations make from search referrals?”

Though the last decade has been a dark one for the news industry, not all companies are flailing. The Washington Post had a profitable 2016 and 2017, and the New York Times posted an impressive $709 million in digital ad revenue in 2018. But those are the titans of the industry, with the resources to handle short-term cash-flow problems and the international reach to deliver for audiences of a sustainable size. The local level is where the damage is felt for every lost subscription and ad dollar. Since 2004, one in five local papers has closed, and from 2008 to 2017, newsroom employment tanked by 23 percent, representing some 27,000 jobs.

To help ensure the survival of journalism beyond just the big-city papers, News Media Alliance president David Chavern is lobbying for the passage of the Journalism Competition and Preservation Act. First introduced in the House by Democrat David Cicilline in 2018, the bill would provide online publishers the opportunity to “collectively negotiate with dominant online platforms regarding the terms on which their content may be distributed.” Despite repeat attacks on the press by the president, the bill has bipartisan support in the Senate and House.

This post has been updated with a statement from a Google spokesperson, and to reflect criticism that the New York Times has received for the initial story on the report.

Somewhere the News Makes Money. It Rhymes With ‘Shmoogle.’