Ancillary Copyright Law Battle: German Publishers vs. Google Over Unpaid Fees

Not only book authors are facing challenges with the digital transformation and the associated copyright violations, but newspaper publishers also find themselves confronted with new challenges in the internet age. One of the problems, according to the rights holders, is the infringement of copyright or a lack of fair compensation. However, the culprit this time is not the book pirates, but from a completely different quarter. If various press publishers have their way, Google should pay a fee for the excerpts of articles displayed in Google News.

The legal foundation was sealed in 2013 when the ancillary copyright law was passed in the German Bundestag. It finally came into effect on August 1, 2013. However, Google has not paid anything so far because the search engine provider had originally secured an agreement with the publishers to continue displaying their content in Google News – free of charge, of course. If anyone disagrees, they simply won’t be listed in Google’s news service anymore. Unsurprisingly, even the strongest proponents of the law have agreed to the terms. Dropping out of Google News can mean a significant loss of visitors even for larger websites.

VG Media to Enforce Ancillary Copyright Law

Original message March 2, 2014: But that was not the end of the story, as twelve press publishers recently joined the collecting society VG Media. The Federal Cartel Office gave the new alliance the green light a few days ago. The new partners are:

• Aschendorff Medien GmbH & Co. KG
• Axel Springer SE
• Burda GmbH
• Evangelischer Presseverband Norddeutschland GmbH
• FUNKE MEDIENGRUPPE GmbH & Co. KGaA
• Mediengruppe M. DuMont Schauberg GmbH & Co. KG
• Münchener Zeitungs-Verlag GmbH & Co. KG
• Presse-Druck und Verlags-GmbH
• Rheinisch-Bergische Verlagsgesellschaft mbH
• sh:z Schleswig-Holsteinische Zeitungsverlag GmbH & Co. KG
• Verlagsgesellschaft Madsack GmbH & Co. KG
• ZGO Zeitungsgruppe Ostfriesland GmbH

The goal: Google should pay for the text snippets. However, this is not going to happen quickly because in an interview the head of Google Germany has reiterated that they have no interest in reaching such an agreement: “For us, it remains clear that we will not pay for snippets – whether they come from a publisher or a collecting society. Our position on this has not changed.”

Therefore, it is assumed that a lengthy legal dispute awaits the press publishers or the collecting society, the outcome of which is uncertain. By the time the legal dispute is resolved, the market will have changed again. Currently, it seems Google is one step closer to reaching a settlement with the EU Commission in its competition proceedings. Google News is also affected by changes. In the future, publishers will be able to completely opt-out of Google News, have their news displayed only temporarily, or exclude text snippets altogether.

Whether the press publishers will ever see a cent from Google under these conditions remains entirely open.

Backfire

Update October 9, 2014: Does anyone remember the ancillary copyright law? The law came into effect on August 1, 2013, and was supposed to ensure that press publishers receive fair compensation for their work. Specifically, it was about (short) text snippets displayed by news aggregators and search engines (read: Google) to inform the user upfront about what to expect when visiting the site.

From the very beginning, however, Google had made it clear that they wouldn’t pay. At that time, the search engine giant even launched a campaign in Germany to inform users about the pending legislation and to urge them to intervene or sign against it.

Even though the law has been valid for more than a year now, no payments have been made yet. Google had timely secured the agreement from the publishers to continue displaying their content in Google News – free of charge, of course. If anyone disagrees, they simply won’t be listed in Google’s news service anymore. Unsurprisingly, even the strongest proponents of the law have agreed to the terms. For the time being at least. In June 2014, a lawsuit was filed by VG Media.

Strong Growth

In March 2014, several publishers joined VG Media, bringing the total to 25 partners:

• ANTENNE BAYERN GmbH & Co. KG
• Antenne Niedersachsen GmbH & Co.
• ANTENNE THÜRINGEN GmbH & Co. KG
• Aschendorff Medien GmbH & Co. KG
• Axel Springer SE
• bigFM in Baden-Württemberg GmbH & Co. KG
• Burda GmbH
• Evangelischer Presseverband Norddeutschland GmbH
• Funk & Fernsehen Nordwestdeutschland Marketing- und Vertriebs GmbH & Co. KG
• FUNKE MEDIENGRUPPE GmbH & Co. KGaA
• Mediengruppe M. DuMont Schauberg GmbH & Co. KG
• Münchener Zeitungs-Verlag GmbH & Co. KG
• N24 Gesellschaft für Nachrichten und Zeitgeschehen mbH
• Presse-Druck und Verlags-GmbH
• ProSiebenSat.1 Media AG
• RADIO/TELE FFH GmbH & Co. Betriebs-KG
• Radio Regenbogen Hörfunk in Baden GmbH & Co. KG
• REGIOCAST GmbH & Co. Kommanditgesellschaft
• Rheinisch-Bergische Verlagsgesellschaft mbH
• Rheinland-Pfälzische Rundfunk GmbH & Co. KG
• sh:z Schleswig-Holsteinische Zeitungsverlag GmbH & Co. KG
• TOP Radiovermarktung GmbH & Co. KG
• Verlagsgesellschaft Madsack GmbH & Co. KG
• VMG Verlags- und Medien GmbH & Co. Kommanditgesellschaft
• ZGO Zeitungsgruppe Ostfriesland GmbH

The collaboration represents 219 digital publishing offers according to the company itself.

Demands Going Unmet

Despite VG Media’s growth and lawsuit, nothing has changed in Google’s position, and now it is becoming increasingly apparent that the publishers’ move seems to be backfiring. Recently, various search engines (GMX, Telekom …) have removed some pages from the index altogether, as a precaution. They don’t want to risk a legal dispute, as several companies have stated. Given the relatively small market share of these search engines, the impact on the affected publishers should be manageable.

The situation looks different with the step Google has announced. The search engine operator will not completely expel VG Media publishers, but rather degrade their display quality. This is not out of malice but rather to comply with the law. As a result, text snippets and preview images of some media will no longer be displayed, so only titles and links will be visible. This aligns with the requirements of the ancillary copyright law.

VG Media’s reaction did not take long. Google is accused of blackmail, a bold claim considering their own demands. After all, they want to compel the search engine giant not only to maintain all listings as usual but also demand to be compensated for it.

Undoubtedly, Google has a significant market power, and discussions often arise regarding the Knowledge Graph about whether extracting information from various websites to directly answer search queries is legal. In the specific case of displaying short text snippets in regular search results (and Google News), VG Media’s demand seems overblown to many users.

So, it will be interesting to see how the dispute over the fee will continue. An initial statement from the Federal Cartel Office has already made clear that it will not intervene as long as Google does not completely delist the affected publishers. The currently announced approach is therefore consistent with the company’s market power and not an abuse of its market position.

Press Publishers Bow to Google – For Now

Update October 23, 2014: About two weeks ago, we reported (see above) how the ancillary copyright law had seemingly become a boomerang for press publishers represented by VG Media. At that time, Google had announced it would curb the search results of those publishers demanding payment for displaying preview images and short text snippets. Starting today, instead of the usual result display, only the headline would be shown.

Yesterday, just one day before the implementation was supposed to go live, VG Media published a press release, clarifying that the majority of the publishers wanted to prevent this step. Therefore, they have granted Google a revocable license to continue using the previous ads free of charge.

In the further course of the press release, VG Media criticizes Google for not agreeing to a truce. It’s somewhat amusing. They sue someone (and accuse them of blackmail) to make them pay for something (which obviously also benefits the plaintiff significantly) and then complain when the other party has no interest in reciprocating.

Forced Payment?

They’re demanding money from Google because the search engine provider profits from others’ content but doesn’t pay the publishers adequately. The fact that Google only reproduces a few lines of text anyway and directs the search engine user to the homepage of the respective offering, thus actively contributing to monetization, apparently doesn’t count or seems insufficient. Yet, according to the press release, some press publishers fear revenue losses and even insolvencies (!) if their search results are shortened.

In plain terms, they want to force Google to buy their products and want to be paid for this coercion. From a layman’s perspective, I’d frankly be surprised if this demand could be legally enforced because it would mean you could force large companies with sufficient market power to buy all sorts of things.

In an initial statement, the Federal Cartel Office has already made it clear that the announced approach (i.e., the restriction of results) would be (at first glance) acceptable. A final decision is expected by mid-November at Google’s request. So, the last word has not yet been spoken.