In May 2017, NERA Economic Consulting published a new study on the impact of the introduction of the so-called Google Tax or AEDE fee (article 32.2 of the Spanish Copyright Act), the so-called 2nd NERA report . In 2015, a first impact assessment was made (1st NERA report) but it was necessary to further assess the size and consequences for the market in the long run.
In a nutshell, article 32.2 of the Spanish Copyright Act establishes a copyright fee to be paid by online news aggregators to publishers for linking their content within their aggregation services (the so-called snippets). Publishers cannot opt out of receiving this fee, and payments are to be made through CEDRO copyright collecting society, that has announced its value amounts to approx € 0.05 per user, per day.
The study demonstrates how news aggregators are beneficial and crucial for publishers’ sites as they drive web traffic to them which otherwise would not have consulted those sources of information.
The key findings of the study are the following:
- There is no justification -neither theoretical nor empirical- for the existence of the fee since aggregators bring to online publishers a benefit rather than a harm;
- With this fee, a specific model against the press freedom of the newspapers is being imposed;
- As a result of the fee, online publishers, especially small ones, stop attracting significant advertising revenues (which can be estimated in the short term at around € 9-18 million annually), in addition to the creation of barriers to entry and expansion, with the consequent negative impact on concentration and competition;
- This has led to the closure in Spain of several news aggregation services, such as Google News, also erecting entry and expansion barriers in this sector;
- The fee also has a negative impact for consumers, due to the reduction in the consumption of news and the increase in search time;
- This has also a negative impact for advertisers, due to greater concentration in the advertising market, for example, for the loss of specialized channels; and
- Finally, it has a negative impact on innovation in all the sectors involved (news aggregation, online press, advertising, etc.).
This study is based in empirical evidence and clearly demonstrates how potentially detrimental the introduction of a EU-wide neighbouring right could be.
It is vital that policymakers have access to this and other studies alike that clearly demonstrate how in the long run freedom of press, citizens choice and access to information can be impacted without repaired.
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Signed by: Innovative Media Publishers