AI deals being offered to UK publishers by Google were described to Press Gazette by one well-placed industry source as a case of the “prisoner’s dilemma”.
At industry events publishers fume about the broken bargain with Google, which historically scraped and copied their entire websites at no charge in exchange for sending them substantial amounts of traffic.
Now that referral traffic is drying up as Google takes all that content, rewrites it and turns it into a directly substitutional products (AI Overviews and AI Mode). At events most agree that publishers must unite to strike a new collective bargain with Google based on a universally applied fair payment for content model.
But privately many are signing secret deals with Google that provide them with cash and (a little) referral traffic in the short-term, but ultimately help the world’s biggest media company strengthen its hold on the UK market.
In April, Google platforms attracted 36 billion page views in the UK (up 31% year on year) – that’s more than the next 24 biggest website publishers combined. Last year, Google’s share of UK adspend grew 7.5% to £21.5bn (according to Press Gazette analysis) while the proportion going to newsbrands and magazine publishers shrank around 5% to £1.1bn.
Game theory
The prisoner’s dilemma is a branch of game theory exemplified by two accused conspirators independently being offered reduced-sentence deals.
If both remain silent they might serve one year in prison. If both betray the other by giving evidence they each serve two years. If one testifies and the other remains silent, the traitor goes free and the other faces a three-year sentence.
Google is offering most major UK news publishers confidential deals that include allowing access to their content for AI training, grounding and AI Mode.
It’s a strategy also described by one well-placed industry source who advises major publishers on AI strategy as “divide and rule”.
The source said: “If your competitor has a deal and you are opting out, they get the small amount of traffic and the cash. There is no upside to saying no.
“It is the prisoner’s dilemma because your competitors have already caved.”
They added: “In two years’ time Google could have completely won the consumer AI market – as soon as that happens it doesn’t have to pay publishers anything.”
Google says it is paying publishers for “extended display rights and content delivery methods like APIs”.
But another source with close knowledge of Google said the arrangements are more accurately described as “no-sue deals” and added: “These deals don’t have product value, they are renting peace and that means the deals will go away.”
In June, the UK Competition and Markets Authority issued a landmark ruling stating that publishers should be allowed to opt out of their content being used to train Google’s generative AI products without harming their rankings in conventional search.
Google’s secret AI deals could make that ruling largely irrelevant if most UK publishers sign these hard-fought rights away.
Google News Showcase
In 2020 Google launched a product called News Showcase and said it would pay global publishers $1bn over the next three years to appear in it.
Showcase is seen by many as a product that was invented largely as a way of dispensing cash to publishers in order to buy goodwill and stave off statutory regulation. Google News Showcase payments for publishers were most generous in Australia, a market where it faced the toughest time from legislators.
Most major UK publishers signed up to Showcase, with national publishers and bigger regional groups getting £1m plus per year for being indexed in an obscure corner of Google News (something everyone previously gladly gave away for free).
Now Google has gone from offering publishers money for nothing to seeking access to everything they produce for AI training as the price of continuing financial support.
Jason Kint is the CEO of US trade body for online publishers Digital Content Next.
He said the new AI deals, which are being offered to all the News Showcase partners in the UK, are “the same playbook”.
Showcase payments were a response by Google to threat of being forced to pay for news in Australia and the EU, he said. The AI deals are an attempt to “buy some friends” as Google is accused by regulators in the UK and elsewhere of abusing its monopoly power to secure access to content to feed its AI models.
“I think what they were trying to do then, and they’re probably trying to do now, is to get what they need without putting a direct monetary value to the content licensing…
“They’re trying to bundle rights into larger deals because if they had to pay everybody for licensing their content, then that affects their margins in a material way.”
Asked what his advice is for publishers offered a Google AI deal, Kint said: “The results of a handful of publishers doing deals is still going to leave us with what Google is doing right now, which is abusing its market power and destroying the broader open web in the process by not creating real incentives for the content companies that it’s built much of its business off of over the last two decades.”
But Kint accepted Google’s deal will be hard to say no to for many publishers.
“You’ve got that Showcase deal built into your annual plan, and if it goes away because you’re not willing to do this new deal, which might be even a little bit more revenue, then you’re probably doing layoffs of your newsroom…
“If you go the other route and you say I’m going to instead sue Google for trying to exert force on me to do this, then you’re dealing with hundreds of millions of legal costs… Very few are going to want to do anything except sign the deal with Google.”
Press Gazette understands the Google AI deals run for two years. The Guardian and FT are among the major UK brands to have already signed up, earning single figure millions in revenue a year as a result. Both are brands that depend largely on reader revenue, rather than advertising and high traffic.
Kint said that the wider online publishing market is facing an existential threat over the next two years “given the decline in traffic that’s happening” without “proper incentives to pay for original journalism”.
Press Gazette understands that Google’s AI deals are presented to publishers in take-it-or-leave-it terms.
The deals are secret but Press Gazette understands they include non-disclosure agreements and no-sue clauses.
One major publisher told Press Gazette they were viewing the deal in pragmatic terms, balancing traffic loss from AI Overviews against revenue gained. They said they planned to sign but noted also that they could get out of the arrangement with 90 days’ notice.
Another publisher noted that at least Google was speaking to them and attempting to establish a legal basis for AI scraping. Other AI giants simply help themselves to publisher content.
While OpenAI typically signs one AI licensing deal with a major publisher in each country, Anthropic has not signed any licensing deals.
The era of traffic is over
Madhav Chinnappa spent 13 years helping to manage publisher partnerships at Google and has recently finished a visiting fellowship at the Reuters Institute for the Study of Journalism exploring the relationship between the AI tech companies and the news ecosystem.
He believes publishers have not woken up to the fact that the era of traffic, when there was a clear value exchange with Google, is over.
Publishers need to be working together to build products and businesses based around this new era of AI content discovery which is driven, he said, by the superior customer experience LLMs offer.
He said: “If you are optimising for the short term, doing a deal might be viable. If you are optimising for a sustainable pluralistic media ecosystem in the long term, these deals are not good for that.
“The news industry has to realise that we are in the era of Gen AI and build products which create a sustainable, pluralistic ecosytem. It should build for the future it wants rather than accept the future it fears.”
UK-based publishers’ coalition SPUR is focused around creating a framework for publisher negotiations with AI companies. While Chinnappa is sceptical about SPUR’s plan to persuade AI companies to share usage data, he said the scheme has good potential.
He said: “The industry needs to base its model around access, and not copyright. It needs to get together, block crawlers and then license access via an API and a subscription fee.
“Publishers together will control access via the API, and they will be getting information back about usage without need for co-operation from any of the foundational models. It moves the conversation to a product level.”
He added: “Doing an individual deal and doing a collective access deal are not mutually exclusive.”
Google’s response
Press Gazette asked Google if it was correct to say that its Showcase deals were now being replaced with AI deals and if it could share any details about how the new deals work, the amount of money involved and how publishers qualify for inclusion.
We also asked if Google could share any other details about the total level of funding it now pays to publishers via Showcase, AI deals and its Google News Initiative.
A Google spokesperson said: “As people’s news preferences change, we’ve been expanding our partnerships through our News AI pilot program, working with a wide range of publishers to explore how AI can help people cut through information overload, easily decide where to click out, and connect with news. We continue to partner with publishers through Google News Showcase and renew Showcase agreements – this program today has 2,800 participating publications in 33 countries.”
They said News AI is a commercial partnership programme that pays for enhanced content rights, specialised delivery and enables experimental AI features. More than 200 publications globally have signed up so far.
Google has also developed a research tool for journalists called Pinpoint and since 2018 Google says it has supported 7,000 new partners in more than 120 countries through funding programmes, tools and resources.
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