Google News to shut down in Spain, tip of very large iceberg

Spain is introducing a new intellectual property law that allows Spanish publications to charge aggregators for using their content. If a newspaper publishes a story, they can place a price on it. An aggregator, like Google News, can decide whether to carry the story.

Google’s response to this new law is to shut down Google News in Spain. This is the ultimate chilling effect a law can have on a market. Ideally, the law would create a market for news. Aggregators can shop around for stories, carry all the free content, plus some budgeted “paywall” content for balance. As the market matures, publishers will learn what prices bring them revenue without pricing them out of the market.

Given the uncertainty of an emerging market, Google took their ball and went home. This is an understandable position.

Here’s the Google blog post announcing the closure.

This is an experiment with big implications. The news business is slipping from one side of the curve (high integrity, low revenue) to the other (page-view driven, revenue required). If the content producers and the aggregators can find some middle ground where the content creators can bring in enough money to keep the lights on, we might still be able to salvage the news-driven (as opposed to page-view driven) news business.

The paywall version (served up by ft.com and wsj.com, for example) asks the consumers to pay for their news. The aggregator tax (Spain’s experiment) spreads the payment for news across aggregators, who will either absorb the cost (perhaps offset by advertising) or pass it along to consumers in the same way. An interesting experiment, but one that will play out without one of the biggest aggregators in the business, Google News.