Google Gets Blocked by Brazilian News: Here’s Why

Internet and tech giant Google (NASDAQ:GOOG) has been flagged more than once for dubious behavior. From allegedly spying on Gmail users to infringing on copyright related to its Library project, the company has made more than one enemy in its rise to prominence. Now, the 154 members of Brazil’s National Association of Newspapers is making the case that Google News not only decreases traffic to their websites, but commercially benefits for content it refuses to pay for.

Advertising, and by extension traffic, is king in the new era of news reporting. There is something of a Catch-22 relationship  between Google News and independent news organizations if it is true that the service hurts the papers. Users go to Google News because it is aggregates content, and there is value in being able to parse many headlines at once. There is — theoretically — value in a newspaper having its story sourced by Google News, because users of the service can easily find or be exposed to the story if they would have not otherwise visited the paper’s website.

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Of course, if users of Google News are satisfied with only reading headlines and snippets of articles and never clicking through, then the system falls apart. This is pretty much what the Brazilian papers are arguing — there is no value in Google’s aggregation service, because it actually leads to less traffic. Following through, if the newspapers receive no advertising dollars, they can’t support themselves to produce the news, reducing the amount of content, and therefore the value, of Google News.

In that sense, much of the paradigm of online news is flawed. Each service is rehashing news events and attempting to imbue the story with an added value that will engage its readers — ironic, right? Successful newspapers and news services are those that have developed a loyal following, one that would prefer to read any given story through the service for the sake of supporting the service, or those that legitimately add value and compel readers to click through. Google’s value add is clear: it pretty much has every headline on the Internet.

There are a few interesting comparisons to the model. Any company that makes its money by leveraging user-generated content in exchange for the use of its service is doing something similar to Google News. The analogy isn’t perfect, but Facebook (NASDAQ:FB) is valuable because the data generated by its users is valuable to advertisers seeking to spend marketing budgets in informed ways. Websites like Yelp (NYSE:YELP) are only as valuable as the number and quality of the reviews generated by its users. In each case, the company is trading use of its platform for the right to use the information generated through it. Google’s model is — again, theoretically — the right to headlines and snippets is traded for exposure to  Google’s users, who are using the service because it has those headlines.

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