The agreement comes as Google faces the possibility of being forced to pay publishers for journalism in Australia, where News Corp. dominates the newspaper industry. Australian media organization Seven West Media this week also announced a deal with Google to pay for journalism, while Nine Entertainment and the state-owned Australian Broadcasting Corp. are in talks for a similar arrangement.
Those publications will be grouped into Google's News Showcase, which the company started in November to provide a central hub for content. Since then, Google has reached payment agreements with more than 450 publications worldwide.
News Corp. and Google didn't disclose the terms of the deal, leaving analysts to speculate on how much the search giant is willing to pay for news. Seven West Media may earn the Australian equivalent of $31 million to $54 million a year from its content deal with Google, investment bank JPMorgan estimated, based on its analysis of similar agreements in France, the Associated Press reported.
The agreements indicate that Google is bowing to pressure from Australian lawmakers after taking a more adversarial approach that included a threat to leave the country. The search company is opposed to the country's proposed News Media Bargaining Code, which would create an arbitration panel to set a price that big technology companies -- namely, Google and Facebook -- would pay for news if they couldn't reach deals with media companies.
The Australian law may become a model for other countries to follow, though the United States has been more hands-off with tech companies such as Facebook and Google. However, states are becoming more proactive about regulating the companies or taxing their growing ad revenue.
Maryland this week became the first state to approve a tax on digital advertising, a levy that advertisers and local media outlets like The Baltimore Sun opposed. The tax is mostly aimed at digital media companies will billions of global ad revenue, a group that includes Google, Facebook and Amazon. The tax will almost certainly face legal challenges in court.
I was skeptical about whether Google needed news publishers as much as they needed its search engine to generate web traffic. However, the News Media Alliance, a trade group that represents news organizations in the U.S., last year published a white paper with convincing evidence that Google discourages people from visiting news sites and harms publishers.
I also thought Google's threat to leave Australia was an empty gesture that would antagonize Australians and cost the company years of investment as rivals like Microsoft's Bing moved in to fill the void -- a once-in-a-lifetime opportunity to boost market share overnight.
While News Corp. and Australian media companies are winning concessions from Google, they also need to be mindful about becoming overly dependent on the search company for revenue. Australia's law would provide legal recourse if they can't reach an agreement with Google or Facebook on future revenue-sharing plans, but those protections are lacking in other countries.