Absurd demands by the German collecting society for the press publishers  12/11/2021 by Till Kreutzer

The collecting society Corint Media (formerly VG Media) is claiming 420 million euros from Google Germany for the year 2022. It is demanding 11% of the total revenues generated by the search engine provider in Germany. These revenues are to be used to remunerate press publishers for the use of their content under the ancillary copyright. Corint ignores the fact that the Copyright Arbitration Board had already clearly rejected a similarly calculated demand in 2015.

Dreaming of Big Money

The new ancillary copyright for press publishers came into force in June 2021. It is based on Art. 15 of the so-called DSM Directive of the EU. Contrary to all criticism, the EU had given in to the press publishers' demands and thus repeated what had already failed miserably in Germany and Spain in 2013/2014.

Now Corint Media, the collecting society which, according to its own information, currently represents about 200 "digital press publications in the German market", is demanding a licence fee of 420 million euros from Google "for the use of press content such as headlines, short article excerpts and thumbnails in the search engine (...) for the year 2022". This corresponds to a share of 11 % of Google Germany's total turnover which would amount to "an estimated 9 billion euros". Deductions were made from the sum because not all German press publishers are represented by Corint Media (hence the claim is "only" 420 and not 990 million euros). 

Justifying this sum, Corint Media states: 

"It is calculated from a usual remuneration rate on the relevant turnover of the exploiting company in the respective market - in this case Google in Germany. (...). For Google, the revenues generated from the operation of the search engine in Germany are estimated at around 9 billion euros for the year 2020."

Unrealistic Demand

In its press release, Corint Media further claims: "the Arbitration Board at the German Patent and Trade Mark Office (DPMA) - responsible for assessing tariff and remuneration issues - had already assessed a royalty rate of up to 11 % on the relevant sales for the entire repertoire as fundamentally appropriate."

This assertion obviously stems from an alternate reality. In fact, the Arbitration Board had clearly rejected the collecting society's claim at the time in its 2015 decision. It stated the following (see page 22 ff. of the decision, the emphasis is added by us):

"The tariff for press publishers according to the main motion is applicable under the conditions set out below, but it is not appropriate because it ultimately combines the use of the ancillary copyright according to the tariff, i.e. making the online press snippets publicly available, and monetary benefits of the respondent in a non-causal manner by taking the entire turnover generated in Germany as a basis. Furthermore, the combination of such a broad basis of assessment with a tariff rate of up to 11 % is unreasonable. Due to the inability to establish causality, appropriateness cannot be established by a limited interpretation of the tariff either."

Put simply, the Arbitration Board explicitly declared the 11 % rate to be inappropriate. A calculation based on total turnover was not adequate per se. Rather, the remuneration could only cover those "monetary benefits" that were demonstrably causally based on the use of the ancillary copyright. Among other things, it must be taken into account that "individual words" and "the smallest text excerpts" are not subject to remuneration (this exception is also contained in the new press publishers right, except that "very short excerpts" are excluded). Also, search result advertisements are (of course) only relevant for remuneration if they refer to press products at all and only to the extent that they are published by members of Corint Media (then VG Media).

Taking a Taxi to the Cinema

One more time for the record: Although Google only generates a fraction of its advertising revenue by displaying (small extracts from!) press products, Corint Media demands shares in the company's total revenue.

The absurdity of this calculation becomes apparent in a comparison: Suppose taxi drivers had to pay cinemas when they take people there (argument: because they also profit from it). According to Corint Media's logic, they would have to pay 11 % of their total turnover (not: their total profit) to cinemas because they also sometimes drive people to a cinema. Not 11% of the turnover (or even profit) they make from trips to cinemas, but from all their tours. Leaving aside the question of whether such a payment obligation (similar to the press publishers right) could be justified at all: Would it be appropriate?

Who is Profiting from Whom?

But that's not all. Corint Media's calculation method does not take into account many other factors that are relevant for the amount of remuneration. Let me remind you once again: On the one hand, such remuneration is intended to compensate the "pecuniary advantages" that the user derives from the use. On the other hand, the disadvantages that a rights holder (here: press publisher) suffers because someone uses its content are to be compensated. Of course, the advantages for the rights holder from the use (here: the traffic generated by search engines, which has a considerable economic value for the publishers) must be taken into account here.

Based on these parameters, an appropriate remuneration (back then and today) would presumably be zero.

Press Publishers Benefit from Platforms and Search Services

On the one hand: Press publishers profit considerably from being listed in search engines and news aggregators or from small components of their press products being shared on platforms. Because this significantly increases their reach and thus advertising revenue, they systematically use optimisation techniques (keyword: SEO). This is intended to increase visibility - and thus the intensity of use in search engines.

Press publishers therefore do not suffer any harm from being displayed in search engines and on platforms. Rather, they derive immense benefit from it. If this were not the case, they could - like any other website provider - exclude the discoverability, display and sharing of their contributions by a few simple commands in the HTML code. In addition to these advantages, the press publishers also benefit from multi-billion dollar support programmes of the online services, such as the "Google News Initiative", "Showcase" or "Facebook News".

The display of smallest text previews, such as on Google, is also not comparable with remuneration rates that may be customary with regard to other copyright exploitation processes. The value chains are fundamentally different: if, for example, a piece of music is played on the radio or a novel is sold in retail stores, the (complete) work is used. If, on the other hand, small previews of the linked websites are displayed in the context of a search engine, this does not substitute for its consumption but, on the contrary, encourages its use; the press publisher earns money with advertising when users click on the search results.

No Significant Advantages for Online Services

On the other hand: Google does not achieve any noteworthy advantages by displaying short excerpts of news articles. According to a study by Sistrix, only about 0.25 % of all economically relevant search queries on Google are related to such content. According to the search engine operator's own information, search queries related to news are usually not even monetised (because no advertising is displayed in their context). In the case of the aggregator "Google News", no advertising is displayed at all - and only the headline of the linked article.

Conclusion It is predominantly the press publishers who profit from the display in search engine results. The fact that they also want to be paid for this added value and that the legislator has complied with this outrageous demand shows the cynicism of the press publishers right more than clearly. The fact that online providers - and not just Google or Facebook - are now expected to share their total revenues with press publishers caps it all off. It shows that press publishers are not interested in compensating for disadvantages or paying for relevant (trivial) uses. They want to be subsidised by Google, Facebook and other players in the internet economy. Period.

The press publishers organised in Corint Media are once again showing astonishing chutzpah in pushing through their brazen and unsubstantiated demands. However, since this time it will not be the politicians, who are massively influenced by them, but the courts that will decide, their fairytale dreams will remain unfulfilled. And in the end, after decades of legal disputes, it will once again be a case of " nothing but expenses".

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