THREAT: The online companies are a threat not only to retail units but even to mega super markets like the CMM in Merces mega store.

By Saubhik Chakrabarti

Companies like Amazon and Flipkart have destroyed the life of the petty traders and retail outlets. The margins or commission that use to sustain the retail trade are being offered directly to the consumer through discounts which the traditional trade cannot match……

A study by News Media Alliance, an American organisation that represents 2,000 newspapers in that country, estimates that Google made almost as much money ($4.7 billion) from the US news business as the US news business made from digital advertising ($5.1billion).
Simply put, this means, Google, which doesn’t employ any journalist or pay for any news content generation, made nearly the same amount of money from American news operations as news organisations that fund those operations did.
This bit of news should ring alarm bells for India’s new government. Why? A reader or, indeed, a minister may ask. GoI has any number of policy calls to take. Why should the US news industry’s financial health be a top priority?

The Daily Noose

The answer is simple: what’s happening there is beginning to happen here, too. And the world’s largest democracy can no more afford a steady destruction of the business model that supports independent journalism than the world’s most powerful democracy can.
Next question: what is happening exactly? If I read ET’s news content via a google search, I am still reading ET’s content. So what’s the problem? The answer is, again, simple: when you read ET’s news content via a Google search, you are being taken there by Google’s news aggregation service, Google News, and that service makes most of the money from digital advertising targeted at news consumers.
Incidentally, the other internet global giant, Facebook, does exactly the same damage to the news business via its platforms. In an earlier commentary (bit.do/eUKBW), I had explained both Google’s and Facebook’s threats to the news business.
The print news business in India is still in robust health, as recent studies showed, with fairly good growth potential in a country that offers huge untapped readership. And the print medium remains a highly credible platform for advertisers. Alongside, there’s huge growth potential for online news as well.
But the point is not whether news is delivered via print or online, or a mix of both. The point is that creating credible, unbiased news content means spending substantial money, and if internet behemoths like Google keep raking in the biggest chunk of revenue from digital news readership, the news business faces an irreversible threat.
This answers a third question that’s often asked by those who value credible news but are confused about how the digital model works: if online will eventually be the dominant platform in India, then surely all that news organisations need to do is to transit to that platform?
The answer is that Google’s, and Facebook’s, threat to the news business becomes more dangerous as online dominance of news production and consumption increases. America’s news business is precisely in that dangerous zone. India, therefore, has an advantage.
We can see how the future will look, and we can take preventive steps from now. But that can only happen if India’s government recognises the clear threat to financially viable independent journalism.
If India’s government does pay this extremely serious issue the attention it deserves, it will have another advantage — it can study and learn from various attempts being made around the democratic part of the world to make the news business more viable.

Google’s Doodle

In the US, there’s a proposed law, the Journalism Preservation and Competition Act, which will allow news organisations a four-year period during which they can collectively bargain for fairer revenue-sharing arrangements with online giants like Google and Facebook. In normal course, all firms in any industry coming together to bargain will be deemed anti-competitive, and will attract regulatory action. But these are not normal times for the news business in the West.
That explains why the EU has gone even further. The EU is considering rules that allow news publishers to ask for more money from internet giants, for example, by requiring Google and Facebook to pay publishers for displaying news snippets.
Britain has had a major study done — The Cairncross Review (bit.do/eUKGw) — on the impact of online platforms on the news business, and
Australia has initiated a Competition Enquiry into Google’s and Facebook’s dominance.
Unsurprisingly, online giants’ responses have not been friendly. Google, for example, has said that EU rules will severely reduce web traffic to news sites. It is also contesting the revenue numbers of the US study on the news business. Google and Facebook also face possible antitrust (the American term for anti-competitive) action in the US. And they will be fiercely contesting that, too.
Of course, it’s no one’s case that there’s one silver bullet for this problem, or that even a basket of solutions will be found easily. But major democracies have woken up to the threat to independent journalism. So must India, which, as we mentioned, has more time to respond.
India’s government is no stranger to crafting strong policy responses to internet giants’ dangerous dominance. It ensured net neutrality, and it has asked for data localisation and more digital privacy. Laws on both are in the works.
Time for another intelligent regulatory response.

Courtesy:www.economicstimes.indiantimes.in