Google royalty-free content: fair use, or foul play?
Google CEO Eric Schmidt extolled the virtues of “financial sharing” in content partnerships during the company’s Q2 investor conference call last month. I present excerpts in “Google CEO on content partnerships: owners to get majority of ad revenues”:
Is it a content partner? Is it a distribution partner? Is it an ad partner? Do they bring in users? What is the economic structure of their industry? But all of them have some form of financial sharing — although maybe not revenue, there may be other ways of doing it — that gets them to where they need to be with respect to their economics, and gets our goals aligned.
Conflicting reports surfaced this week involving the terms of a Google and Associated Press content deal and “Google Speak” on the matter does not provide clarity. CNET quotes Google representative Sonya Boralv in “Google reveals payment deal with AP”:
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.
The license in this agreement provides for new uses of original AP content for features and products we will introduce in the future.
CNET indicates, however:
Financial terms were not disclosed. Consequently, it's unclear whether the deal involves a flat fee or paying AP according to traffic statistics.
On the surface, paying the Associated Press seems to conflict with the stance Google has traditionally taken regarding its Google News service. Because Google News is an aggregator, the company has argued, Google is not obliged to reimburse news outlets for linking to their content. But Wednesday's announcement said the AP content will be the foundation for a new product that will merely complement Google News. Thus Google maintains that the deal supports its original stance on fair use.
In “Judge: Google News lawsuit can proceed,” CNET reports on the ongoing lawsuit against Google brought by Agence France-Presse that alleges Google News violates copyright laws:
Agence France Presse, the world's oldest news agency and the third-largest behind the Associated Press and Reuters, claims Google News unlawfully incorporated AFP photographs, headlines and excerpts from the beginning of articles. Also, AFP argues, Google News removed photo credits and copyright notices in violation of federal law.
For its part, Google claims AFP's headlines are not ‘original and creative’ enough to be protected under copyright law. ‘Typical AFP headlines are factual, simple and contain only one idea–unprotectable as a matter of law,’ Google says.
Agence France Presse is suing Google for $17.5 million.
I indicate in “Google Verticals vs. Google.com: What is Google's end-game?”:
For Google, however, it is merely fulfilling its vaunted mission to ‘organize the world’s information and make it more accessible.’ If pressed for a legal rationale, Google is happy to talk about ‘fair use’ and ‘opt-out.’
Google’s unprecedented profit margins are due, in large part, to its ability, to date, to sell ads against content which it does not pay for.
As the search landscape will undoubtedly evolve in the not too distant future, it is unlikely that content owners will continue to accept dilution of their ownership interests in exchange for “linking” promises.
In “YouTube, Digg, Wikipedia: Can Web 2.0 play hardball? “ I present YouTube copyright controversies:
Fritz Grobe and Stephen Voltz, the not-quite-amateur creators of the video clip viral sensation “Diet Coke and Mentos,” have posted a message at their Website: 'Please do not post our videos on sites like YouTube and Google.'…
zefrank also has posted 'please DO NOT upload these movies to YouTube or any other VID hosting site' and in his July 27 'show'…references the possible 'death of YouTube.'
If under monetized YouTube is the target of “do not post to YouTube” campaigns by content producers, $113 billion market cap Google will undoubtedly not remain immune to serious legal and financial threats.
Google Agrees to Pay for Associated Press Content
Google and the Associated Press have sealed a deal whereby the search giant will pay AP for news stories and photographs to be included in a new product for Google News.
AP had reportedly been uncomfortable with Google's practice of aggregating and displaying the news wire's content on its Web site with no payment to the newswire services firm.
In a move the builds another link in the bridge between new and traditional media, Google (Nasdaq: GOOG) 
"The license in this agreement provides for new uses of original AP content for features and products we will introduce in the future," said Google spokesperson Sonya Boralv. Financial terms of the deal were not disclosed.
AP had reportedly been uncomfortable with Google's practice of aggregating and displaying the news wire's content on its Web site with no payment to AP. Now, Google appears to be willing to pay for the content as part of a new product planned for Google News.
Google's Copyright Woes
At the same time, Google is not admitting it has done anything wrong. The company has long held that it does not owe anything to anyone for pointing out news stories and photographs posted on other Web sites. Google attorneys claim "fair use" protections under copyright law.
The Associated Press did not agree. Neither did Paris-based news agency Agence-France Press (AFP). While Google's agreement with the 160-year old news wire closes the door on its copyright dispute between the AP, the company still faces a lawsuit from AFP.
The AFP suit against the Internet search giant alleges that Google News is infringing its copyrights. The AFP is seeking US$17.5 million in damages. Google's deal with the AP could bode well for the French news agency if courts view it as a subtle admission of guilt.
"If the AFP wins its suit, everyone would have to follow suit and settle. But it's going to take years. You'd have appeals. It's an issue that could open up a Pandora's box of news agencies saying you can't point out content on other sites," Marc Pado, an analyst with Cantor Fitzgerald, told TechNewsWorld. "I don't see that happening."
Google Pays the Piper
Google has not moved to settle with the AFP, but Boralv expressed Google's view 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," she said.
Boralv made it clear that the AP deal is not the first where Google has paid media for content. The company has revenue-sharing agreements in place with broadcasters and book publishers to resell copyrighted material on the site as well.
David and Goliath
Google and the AP did not specify whether the search company is paying the news wire a flat fee or a commission based on traffic. Either way, Google is now playing by the same rules the AP has set in place for Yahoo (Nasdaq: YHOO) 
From the AP's perspective, Google can afford to ante up. The AP, a not-for-profit organization owned by U.S. news companies, posted revenues of $654 million last year. By contrast, the publicly-traded search company reported $6.1 billion in revenue in 2005 and expects to exceed $9 billion in 2006.
