Google has agreed to pay Nine Entertainment Co in Australia more than NZ$32 million in cash annually for the use of its news content, in a major breakthrough for the search giant ahead of Australia’s introduction of new media bargaining laws.
Industry sources familiar with the talks, who spoke anonymously because of non-disclosure agreements, said Nine had signed a letter of intent with Google overnight for a deal worth more than $32 million in cash annually for five years. A final commercial agreement could be struck in the next fortnight and is expected to be substantially larger than the deal struck by rival network Seven with Google earlier this week.
Nine is the owner of The Sydney Morning Herald and The Age.
The sources said the five-year deal is for use of news articles on a variety of different products such as Google News Showcase and Subscribe with Google, a product that helps news outlets engage with subscribers, but a revenue sharing deal for use of content on YouTube is not part of Nine’s arrangement.
The agreement is significant because it covers content from Nine’s major newspapers, television, radio and digital assets, and will provide enough funding to support the newsrooms for the company. It will also mean Google will not be forced into a risky arbitration process with Nine under the government’s new media bargaining code, which will be debated in the Australian Parliament today.
Google had previously threatened to turn off its search engine in Australia if the government did not revise aspects of the code.
Nine is the largest domestic media company to date to sign a letter of intent with the $1.8 trillion (NZ$1.94t) search engine giant. Kerry Stokes’ Seven West Media announced at its financial results it has signed a letter of understanding with the tech giant for use of its content, a deal which Seven sources say is valued at more than $32 million. The terms of the arrangement were not disclosed, but industry sources have indicated a proportion of the money is in advertising credits and a revenue sharing agreement for use of content on YouTube.
Nine chief publishing and digital officer Chris Janz said at a Senate Hearing the deals on the table were not material. Google has since been able to put enough money on the table for an agreement.
The deals that Google will strike with companies such as Nine and Seven are not for use of content in search. However, organisations have been willing to accept them in principle because the amount of money on the table is worth the same, or a similar amount, to what a company would have received for appearance of content in Google search.
Industry sources said on Monday that letters of intent between Guardian Australia, Nine and the ABC were imminent. Guardian Australia and the ABC could both sign deals for their content as early as today. Talks with other outlets such as Daily Mail Australia and News Corp Australia are ongoing. News Corp, which owns a string of papers in Australia as well as The Wall Street Journal and The Times of London, is expected to sign a global deal for its content.
Any agreements struck by Google are crucial for the tech giant as it waits on the Federal Parliament to debate the media bargaining code legislation this week, which would force it and Facebook into mandatory arbitration with news outlets for payment for value they obtain from having news content in newsfeeds and search results.
If the letters signed by Nine and Seven turn into commercial agreements, they will allow Google to avoid a risky arbitration process, but media executives still believe the legislation is crucial to ensure tech companies pay for news content and contribute to funding public-interest journalism. It will also prevent Google from backing out of the arrangements.
“We continue to have constructive discussions with the digital platforms and when we have anything to announce we will do so to the ASX as is appropriate,” a Nine spokesperson said.
Google was approached for comment.
Australian Treasurer Josh Frydenberg confirmed the federal government had agreed to make some technical amendments to the bill on Monday following discussions with Facebook chief Mark Zuckerberg and Google boss Sundar Pichai last weekend.
He has also said he is waiting for deals to be signed before deciding whether to make the code applicable to Google’s search engine and Facebook’s main newsfeed, or through news licensing products Google News Showcase and Facebook News.
News Showcase is a newly launched product available through Google’s news app. Google pays publishers for certain behind-the-paywall articles that then appear on the platform. The deals with Nine and Seven are in addition to already struck commercial deals with local publishers for its Showcase product, including Crikey, The Saturday Paper and Australian Community Media, publisher of The Canberra Times.
Google’s ability to agree to terms with Seven and Nine will shift the focus to Facebook, which is yet to sign an agreement for the value it gains for news content on its platform. Scrolling through Facebook’s main newsfeed and looking up articles on Google search are the main ways people find news content online.