Thursday, July 22, 2010

FTC Staff Discussion Draft and Google's response

Yesterday Google responded to the Federal Trade Commission Staff Discussion Draft with highlight potential policy recommendations that would effect newspapers, news aggression and the like. The full report can be found here.

The FTC Staff Discussion discusses two proposals that Google responds to:

1) Allow news organizations to agree jointly to erect pay walls so that consumers must pay for access to online content.

2) Allow news organizations to agree jointly on a mechanism to require news aggregators and others to pay for the use of online content, perhaps through the use of copyright licenses.

Google's response can be found here.

Concerning paywalls, Google is not a fan of the concept.

"Forcing consumers to buy certain content, however – an end result sought by some of the policy proposals recounted in the Discussion Draft – is not only bad policy but it is also bad for the industry itself because it creates a very short-term prospect of additional revenue that has no promise of durability."

Google, in fact, goes after the basic quality of today's newspaper when it writes "In the case of advertising revenues, therefore, the challenge for the industry is to provide a product (online advertising space and audience share) that is of sufficient value to the consumer (the advertiser) that the advertiser is willing to pay for it."

Later: "The large profit margins newspapers enjoyed in the past were built on an artificial scarcity: Limited choice for advertisers as well as readers. With the Internet, that scarcity has been taken away and replaced by abundance. No policy proposal will be able to restore newspaper revenues to what they were before the emergence of online news. It is not a question of analog dollars versus digital dimes, but rather a realistic assessment of how to make money in a world of abundant competitors and consumer choice."