Haaris Mateen: "What big tech should pay the media is such a spectacular figure that it scared us"

BarcelonaBig tech companies reap large profits, thanks in large part to content produced by the media, yet the latter receive little compensation from the former. Haaris Mateem is an economist, Assistant Professor of Finance at the University of Houston, and a specialist in media economics. ARA interviewed him because he has recently been studying the compensation big tech companies should pay news companies to rationally balance an unbalanced equation.

You have recently participated in a panel discussion titled “How Much Should Big Tech Companies pay for the Content they Distribute?” However, before we start talking numbers, why should they pay anything?

— We have a platform that is disseminating information to other users, and there is a provider of this information which mostly comes from the media. In economic terms, we would be talking about ancillary services. You work doing one thing and I do another and when both come together they create something called added value. Hence, since these companies have benefited immensely from the availability of high quality, diverse, and up-to-date content in many languages, economic logic says they must remunerate the provider for all the value this content has generated

Big tech says that news outlets already make a profit from their circulation.

— When they say this they’re not admitting that by using media content they’re also benefitting, and benefitting enormously. Take Google Search. If I use it, it’s because when I type something in it gives me a result, and there’s a high probability that this is information I can trust. But a lot of this material, especially the most recent information comes from the media. If this isn’t paid for, it creates an imbalance which, moreover, is about to get worse.

Why?

— Because with artificial intelligence people receive information but there’s no inducement to go to the original source, or to the media outlet that produced it.

If this is the case, how much should big tech pay?

— When we started trying to quantify, we focused on Google Search and Facebook because AI wasn’t so developed back then. And we tried to answer the following question: if there was no information coming from news, what would Google’s value be? There’s an example I often give. I’ve contracted a TV package in Houston with many channels. But I subscribed to it because one of those channels is LaLiga and I follow Barça and also some other matches. I sometimes watch other channels and if LaLiga took away the football, I’d unsubscribe. With Google, we estimate that 70% of search engine use is for information, and 50% is specifically for news. This means that 35% of the Google ecosystem is news.

Without news, would 35% of people stop using Google?

— Exactly, though it’s a very crude way of putting it, but 35% of users would stop using Google Search if there were no news. I don’t mean by this that 35% of the revenue should go to news publishers because the tech companies are doing a brilliant job. But yes, we do believe that, in accordance with economic theory, the cake should be shared 50-50.

From theory to practice …

— Okay, let’s say they reject 50-50 and say it has to be 70-30 at most. Grab it! Or even 80-20 because, as long as it’s a reasonable percentage, it’s a huge amount of money since we’re talking about a megamillion-dollar product.

Have you been able to transfer this approach to the internet giants?

— Many times. And we’ve often presented our conclusions to governments around the world, as well as in the United States, and frequently someone from Google is there. We don’t necessarily speak every time but we do often discuss the situation. Google tends to say that news is residual for them: about two or three percent. But that doesn’t make sense. So, people mainly use the search engine to buy socks? It’s true that the commercial part is big, but so is the news part. The other thing they tell you is that they’ve done experiments, leaving a group of users without news, and they didn’t notice any significant effects. But experiments like this should be confirmed by academics because everyone accepts some discomfort if it’s just for a short period of time.

Once you applied these arguments, you estimated in a scientific article coauthored with Patrick Holder, Anya Schiffrin, and Haris Tabacovic that Meta should pay news publishers 1.9 billion dollars and Google should pay between 10 and 12 billion. And that’s just in the United States.

— That’s right. What big tech should pay the media is such a spectacular figure that it scared us. We thought, “Wow, that’s huge! Did we get the sums right?” And we repeated and repeated the numbers, and sent the results to be checked by some well-known economists. The figure’s so big that even if it’s only 10% of what we say, it’s still a billion dollars.

Google is already doing deals with some companies.

— Yes, and they’re doing so with confidentiality agreements so it’s difficult to know what kind of numbers they’re working with. But we do know from off-the-record conversations we’re having with people in the sector that the money that arrives is a very small fraction of we consider to be balanced.

How would the outlook for the media in the USA change if they now got ten billion dollars?

— That’s a key question. We want the money to get to the newsrooms because there’s a risk that any recompense will end up in the hands of investment funds. In the United States, we’ve seen now many local newspapers have been bought by speculator investors that immediately cut costs to the maximum so they can sell them as fast as they can. That’s why we’re calling for good legislation to govern money so there can be more journalists and more vibrant newsrooms that can promote investigative journalism, which often involves an investment of 33% in time and money. It would also help to change the media business model.

We’ve been hearing for quite a while that the media is in crisis. Would this money be enough to change things?

— Anya Schiffrin and I have been working on this and we agree that, by itself, this won’t save journalism, even if we include all the money that should come in from AI. It’s journalism that will save journalism. Anyway, what they can do with that money is to buy enough time for the newsrooms to rethink the new landscape and adapt to it.

Australia passed a law on this compensation in 2021 and two years later Canada followed suit. How did that go?

— A substantial amount of money got to the newsrooms in Australia and it’s had a positive effect. And here’s an important point. Google hasn’t left the country. If the laws are good, the tech companies stay on because they’re still doing good business. The Canadian case is also interesting. The tech companies agreed to give money to the media, although it’s less than we expected. It’s still too early to assess the impact there, but we see that the Canadian government has introduced some good measures to make sure that the money goes to the newsrooms. More value is given to the number of journalists than to circulation figures, for example. Nevertheless, with Canada, we find a situation of retaliation. Facebook has announced that it won’t post news of Canada on its social network and this has begun to cause a spike in the circulation of fake news. Then again, there are people who share legitimate news with screenshots because, that way, they’re not detected by algorithms.

In Spain, Google News was discontinued in 2008 in response to an attempt to legislate recompense.

— They shut down the service but didn’t remove news from the search results. In the end, Google News doesn’t generate direct turnover but the search engine does.

In any case it was restored in 2022 and we journalists are happy. If this interview is picked up by Google Discover, its audience will be six or seven times bigger. It’s difficult to turn your back on this kind of soothing when metrics are the measure of performance.

— That’s why the order in which action is taken is important. The first priority is to achieve legislation that, among other things, will prevent retaliation. Google shutting down Google News is clearly a punishment, and we don’t accept such punitive attitudes in many other areas. Logic says that the economic incentive is so strong that the Google search engine won’t ditch news because it needs news if it’s going to have an attractive offer. The second step is to be able to come to mutual agreement. The sector needs to understand that they’re competitors in the market but now they’re joined in a common cause. Some kind of coalition needs to be created.

How should the sector react?

— No one would think of creating AI content with Disney characters like Aladdin because they know Disney would sue them. The same goes for musical hits. The big record labels would sue. But the problem with the media is that by its very nature—we don’t want monopolies on information—the domain is very fragmented—and, therefore, they don’t negotiate as a bloc. It’s the typical divide and rule situation.

We’ve been talking about search engines and social networks but AI represents a greater challenge because it gives answers and you can’t trace where the information comes from. And it might have come from the media.

— That’s right. It’s more difficult to find a link where you can go and fish for information because the answer already gives you quite a complete summary of the question. The challenge is greater, so there should be legislation on the matter and also negotiations between the technology and media companies. But I also see this as an opportunity because AI companies are competing hard with each other to have reliable data that don’t include what’s known as hallucinations. This opens up an opportunity for the media to negotiate. Before you couldn’t say, “If Google doesn’t help, I’ll go to Bing”, because Bing was very small. But in the generative AI market there’s a lot of competition, so you can see which gives the best result and go with that, offering them your information with a seal of trust.

And should they pay?

— Yes, if it can be proven that they’re using content that you produce, they should pay for using it. OpenAI, the ChatGPT company, has closed many deals with the big press companies because it wants to have good sources of news from the most powerful players in the sector. There’s a clear advantage in negotiations with the artificial intelligence companies because its then much more difficult for them to deny that they’re using information and news. Once again, that’s why I’d recommend the three pillars I’ve already mentioned: legislation, negotiation, and coordination.