Veteran tech blogger Lauren Weinstein describes this risk well in a recent blog post, in which he calls what the government of France is doing “extortion,” and warns of the long-term risk of Google acceding to such demands that it pay for the simple act of linking and excerpting content:

“There is little evidence to suggest that ‘paying off’ a party making unreasonable demands will do much more than quiet them for the moment, and they’ll almost inevitably be back for more. And more. And more. Even worse, caving in such situations signals other parties that you may be susceptible to their making the same (or even more outrageous) demands, and this mindset can easily spread from attacking deep-pocketed firms to decimating much smaller companies, organizations, or even individuals.”

As my colleague Jeff Roberts noted in his post on the Google settlement, the French originally wanted the company to pay as much as $100 million, and wanted almost all of that to go into a fund that publishers could use for their own purposes, rather than into ad buying or other joint ventures. And he also noted that with the latest deal — which comes on the heels of a similar settlement with Belgium — Google is sending a very obvious message to other countries such as Germany that it is prepared to pay.

Google’s tactics set a dangerous precedent

This may make sense for Google, since it is trying to avoid as much litigation as possible, and wants to be on good terms with European countries (where it has already run into multiple roadblocks and barriers around services like Street View and privacy concerns). But I think Weinstein is right when he argues that this is only going to encourage countries like Germany — and plenty of others as well — to assume that if they push Google on the subject of linking, they will get cash.

Google wants these payments to be seen as a helping hand to publishers, which is why the fund is described as “supporting digital publishing initiatives,” and why it puts so much emphasis on the strategic partnership angle. But regardless of the picture it is trying to paint, the settlement is being described by many as a “pay for links” deal, and that perception is dangerous. As Weinstein puts it:

“France’s complaints regarding Google related to activities that are absolutely part and parcel of the fundamental and fully expected nature of the open Internet when dealing with publicly accessible Web sites [and its] success at obtaining financial and other concessions from Google associated with ordinary search and linking activities sends a loud, clear, and potentially disastrous message around the planet, a message that could doom the open Internet and Web that we’ve worked so long and hard to create.”

In other words, this issue is much bigger than just Google. While it may serve Google’s purposes to settle with France and Belgium, and perhaps other countries as well, all that does is encourage other governments and companies to see payment for links as an appropriate strategy. How long until U.S. newspapers and publishers start to argue the same thing? What about other companies? Director Harvey Weinstein (no relation to Lauren) said in a recent interview that the U.S. should have legislation to make this a reality — and Google is helping that kind of thinking gain momentum.

It’s cruelly ironic that the company spent so long arguing (correctly) that excerpts of books were fair use in its long-running legal battle with book publishers and authors — a battle in which at least one court has agreed with the company — and now here it is paying newspaper publishers for what is fundamentally the same practice. It’s a short-sighted appeasement strategy, and we could all be the worse for it.

Post and thumbnail images courtesy of Shutterstock / Alexander Santander and Flickr user Affiliate

It was the French government that put an end to it. According to a New York Times report of a press conference on Monday, the country’s digital economy minister Fleur Pellerin stepped in and told Free to restore full access to the web, ads and all.

“An internet service provider cannot unilaterally implement such blocking,” Pellerin was quoted as saying. “This kind of blocking is inconsistent with a free and open internet, to which I am very attached.”

Free’s move had of course alarmed publishers who rely on advertising for their revenues. There was more to it, though.

It seems it wasn’t purely coincidental that this happened at more-or-less the same time as French regulators began to delve into Free’s alleged degradation of YouTube traffic. An email sent to a journalist by Xavier Niel, founder of Free parent Iliad, strongly suggested that the ad-blocking was just a warning shot in an ongoing war with Google. Indeed, it appears that only Google ads were blocked.

So, with its ad-blocking turned off again, Free has done what it intended to do, namely to demonstrate to Google that it can hurt the company’s core activities in France. However, Free also managed to get the relevant government minister to come out in favor of net neutrality, which is precisely what the ISP is trying to do away with. In soccer terms, this was what you might call an own goal.

The case exposes a deep irony in the treatment Google has received in France. Bear in mind that, just months ago, the French government was siding with the nation’s publishers in a bid to get Google to pay licensing fees for reproducing snippets of text in Google News. As in Germany, opponents of that stance pointed out that publishers benefited from Google News, which sends traffic their way. Now the French government and publishers are effectively holding hands in defence of Google.

However, it would be premature for the U.S. firm to break out the champagne.

“What is the financial incentive for operators to invest billions in their networks without seeing any return?” Pellerin also asked. “We have to put in place a win-win system.”

If Pellerin is countenancing a system where Google would have to pay Free to carry all that YouTube traffic, that is “inconsistent with a free and open internet”, to borrow her own words. That would be doing away with net neutrality – and, by making content delivery even more of a big money game than it already is, it would also disadvantage smaller players that want to break in.

If the French government really wants to keep the internet open, and to give French startups an opportunity to take on the likes of YouTube, it should perhaps try to make its messaging around net neutrality a bit more considered and consistent.

As my GigaOM colleague Bobbie Johnson pointed out in a recent post, the French government has been making some strong — and controversial — statements about what it wants the company to do after an outbreak of homophobic, racist and anti-Semitic comments erupted on Twitter. The minister for women’s rights, Najat Belkacem-Vallaud, wrote in a newspaper opinion piece that the government believes the service must “respect the values of the Republic” and take action to stop or censor hate speech. She said French authorities will be discussing how to do this with Twitter, and added (translation by Google):

“Even before the work is started, it should already be possible to act to remove tweets that are clearly illegal and, at the very least, make access impossible, so that the damage already done [to homosexuals, etc.] do not persist or do not cause additional problems with young people attracted by the publicity given to this unfortunate story.”

Many governments want to use Twitter to control speech

Since French laws make hate speech illegal (as similar laws do in a number of other countries, including Canada), the minister is really just asking Twitter to do the same thing the German government did: that is, to censor speech that contravenes the laws of the country. In the case of Germany, it was tweets by a neo-Nazi group, since expressing Nazi ideologies is illegal there. Twitter explained at the time that it had no choice but to obey the laws of the countries it does business in, but that it would try to limit the impact on free speech by only blocking access to those tweets for residents of Germany — as permitted by the regional-censorship tools it announced about a year ago.

Although they haven’t gone as far as France or Germany, officials in Britain have also broached the idea of trying to restrict Twitter speech — and for what they say are similarly virtuous purposes: after the riots in London last year, the government argued that much of the violence was driven by social media, including Facebook, Twitter and Blackberry instant messaging. The authorities held discussions with most of the major players about how (or whether) they should regulate such conduct, but in the end no action was taken. Twitter has also been involved in some of that country’s infamous “super-injunction” cases, where even the mention of an injunction is considered illegal.

In some ways, the German example was the most clear-cut case Twitter could possibly have wanted: it referred to specific speech — expressing Nazi ideology — that is illegal, and is relatively easy to nail down. But this ability opens a vast can of worms for a company whose CEO and general counsel have both repeatedly referred to it as “the free-speech wing of the free-speech party.”

In Turkey, for example, it’s illegal to say or do anything that is seen as insulting to Turkishness — a law that the government has used to block YouTube videos, among other things. What if Turkey was to ask Twitter to block or ban tweets or accounts that engaged in anti-Turkish behavior? A similar kind of question came up during the recent hostilities between Israel and the terrorist group Hamas, when both sides used Twitter to hurl threats at each other. What if Israel asked Twitter to ban or block Hamas accounts or tweets sympathetic to this illegal organization? What if Egypt had asked for censorship during the Arab Spring?

What qualifies as hate speech on Twitter?

The racist and homophobic tweets targeted by the French government are an even slipperier slope: even if hate speech is against the law, what 140-character messages would fall into that category? Would simply using a hashtag like #SiMonFilsEstGay (If my son was gay) or #UnBonJuif (A good Jew) qualify? If Twitter was supposed to be removing or blocking access to specific tweets, how would it determine which were genuinely hate speech? Would it have a list of banned words, or run some kind of sentiment algorithm filter on the entire stream?

In a very real sense, what the French government seems to want Twitter to do — or wants to help it do — is virtually impossible. Twitter sees almost half a billion tweets every day, and has difficulty even providing a search function that works over a longer period than about a week. How could it (or anyone else) manage to filter through those millions of tweets to remove or block access to ones that expressed specific thoughts or opinions? And even if it could, would that be the right thing to do? Glenn Greenwald at The Guardian makes a persuasive argument that it would not, although others have argued that France should renounce the “free-speech fetish” of the U.S.

As it becomes an increasingly global media entity, however — and one that controls its own platform, unlike the declining media giants of the past — this is an issue Twitter is going to have to confront head on. And how it handles these kinds of censorship demands will say a lot about how much trust we can have in this digital free-speech machine.

Post and thumbnail images courtesy of Flickr users Hoggarazzi and Shutterstock/Jirsak

We have recognized that fact for some years now — but France’s lead is getting greater and greater. Now over a quarter of French homes’ primary TV sets receives an IPTV service, according to IDATE and other data crunched by U.K. communications regulator Ofcom’s International Communications Market Report 2012.

That compares with a measly five percent in the U.S. and below one percent in the U.K.

Why is France forging ahead? The relative slow adoption elsewhere is “due in part to the challenges of gaining a foothold in the face of a range of well-established competing digital platforms,” Ofcom said.

That is, many countries beside France already have strong broadcasting ecosystems with major pay-TV operators offering a multitude of content. In France, pay-TV only began over digital networks, which support wider choice, in 2005. But most French ADSL providers offer digital TV through internet-enabled set-top boxes.

Non-Francophones should not fret, however. The French may have more IPTV-enabled main sets — but that doesn’t mean they use internet video more than the rest of us.

According to Ofcom research, only 13 percent of French consumers use the internet to watch TV on a weekly basis. That’s less than 17 percent in the U.S. and almost half as many as do so in the world-beating U.K.

Says Ofcom: “This is probably driven by the popularity in the U.K. of internet TV catch-up services from the free-to-air broadcasters, such as BBC iPlayer, 4oD and ITV Player.”

The gap between France’s leading IPTV penetration and the U.K.’s leading internet TV viewing habit is explained by the relative higher attractiveness of actual internet broadcast content, and because many British viewers are using the web, not TV, to watch internet TV.

As adoption of internet-connected TVs grows, much of that consumption is likely to move from the desktop to the big screen. But whether actual French consumption of internet video grows in lock-step remains to be seen…

Google chairman Eric Schmidt met French president François Hollande on Monday at the Elysée, which, in a statement, says:

“(Hollande) stressed that dialogue and negotiation between partners seemed, to him, the best way – but, if necessary, a law could intervene on this issue, as with the current project in Germany. The development of the digital economy calls for an adaptation in taxation in order to better understand the value of sharing and funding the creation of content.”

A unified policy from Europe’s two big axes, France and Germany, against Google’s view — that it crawls news stories but publishes only excerpts – could be a big problem for Mountain View.

Eric Schmidt meets France’s president, culture minister and other ministers

In August, Germany’s Bundestag passed Leistungsschutzrecht, a copyright law amendment devised by the country’s coalition government that will give news publishers a year-long exclusive right to publish their material online, requiring others obtain a license to excerpt.

Such legislation is likely devised from a position defending troubled industries, rather than genuinely safeguarding Fair Use-style rights. But that doesn’t mean Google won’t have to deploy its policy arsenal in defense again all the same.

Google wrote to several French ministers earlier this month with a threat of its own — if the levy is implemented, “as a consequence, (we) would be required to no longer reference French sites.” Google warned that France’s proposal would “threaten its very existence” and harm the content market, AFP reported.

Eric Schmidt arrives at the Élysée

This all sounds familiar…

Google’s most notable European news worries came in Belgium, where in 2007 a court ruled that Google did not have the right to run story excerpts from members of the Copiepresse trade group. Google duly pulled the newspaper sites’ out of Google News — ironically, much to their chagrin. Later, they struck an agreement — undetailed — through which Google restored the content in mid-2011.

Now the issue looks like re-opening again…

• France: Hollande is in a good position to make headway, emboldened both by the European Commission’s competition scrutiny of Google’s indexing algorithm and by its French-led inquiry that has ordered Google to re-separate its recently united privacy policies.
• Germany: The extent to which Google is really encapsulated by Leistungsschutzrecht is not fully clear, but a test could be on the horizon.
• Brazil: 154 newspapers comprising 90 percent of the market are withholding their content from Google News, and say they have barely lost any traffic.

Not everyone takes the same stance. UK newspapers, supported by the country’s copyright court, also now require commercial aggregators pay a license for re-use, but their definition of “commercial” encompasses only paid clipping services, not free services like Google News. That means Google can limbo under the law by choosing not to commercialize its service.

That is not necessarily a productive situation. Together with its stock defense (“we drive four billion clicks to news publishers”), this “we don’t profit from your content” argument may be one which Google deploys in negotiation. But that won’t necessarily trump the equal refrain from many a worried publisher: “Neither do we!”

But, although the service sees no problem heading to emerging young markets, high costs will keep it out of Germany for the foreseeable future.

“We’re about to launch in France, Spain and Italy,” international VP Nic Jones told Informa Telecom & Media’s Industry Outlook 2013 conference on Tuesday.

“The one missing country is Germany. Germany is very, very hard to gain digital rights to be able to build a digital business.”

License rates required of digital services by royalty collectors are still relatively high in the country.

“They (rightsholders) genuinely believe they are protecting the music industry,” Jones said. “They need to embrace the future without being so scared of it.”

Jointly owned by Sony Music Entertainment, Universal Music Group and Abu Dhabi Media Company, Vevo has so far launched in six countries, including Brazil. Whilst that choice might raise some eyebrows, the territory is growing up fast.

Jones said Vevo aims to launch in countries where people are most passionate about live music: “Actually, there is a market to monetize premium videos in Brazil – and Mexico, too.”

Such expansion will see mobile become Vevo’s primary distribution device.

“UK growth is far greater than on mobile than anything else,” Jones said. “Asia s a bit down the track for us. But we don’t see Vevo as a desktop proposition

“We are talking with various potential partners in India, where Indians many will only ever see the internet as a mobile proposition.

“Eastern Europe is going to be a high priority for us next year- places like Russia are incredibly important.”

But, as mobile becomes the majority, free content operators are posed with a challenge – advertising models are playing catch-up.

“Monetising mobile is much more hard,” Vevo VP Jones told Informa Telecoms & Media’s conference.

“The formats aren’t clear yet. The idea from agencies that mobile should be treated separately is a mistake. There is a view that mobile should be sold at a lower CPM. Most advertisers buying VOD are thinking about the laptop or the PC.

“There is a very big job to educate the advertisers and agencies. Not to educate the users – they are naturally emanating toward mobile.”

The challenge of emerging markets being mobile-first is one recognised by others like Facebook, which conceded in its IPO filing that it is increasingly well used in developing countries on handsets, where its business model is virginal.

But what Jones was also speaking to was a growing grumble I am hearing, from content services, that – even in the west – mobile advertising effectiveness just isn’t yet cutting it.

Jones speculated that Vevo may float on the market “one day”. And he said, in future, it would innovate around presenting live music gigs. He cited an example of a Led Zepplin concert which attracted two million applications for 20,000 tickets as proving there is a ready audience of people to pay for online gig streams.

Recipients include large indies like All3Media, Endemol and ITN; online distributors like Diagonal View and Base79; web producers like ChannelFlip and publishers like Au Feminin and IDG.

New channels in Europe for the first time include The Jamie Oliver Food Channel, Netmums, Mixmag TV and Studio Bagel, some of which have already been publishing videos for some time now. New US channels include ESPN, Sarah Silverman and Everyday Health.

Meanwhile, BBC Worldwide has renewed its YouTube deal to include two new YouTube channels (one for nature, another for science), some new full-length archive TV shows and additions to its library of 8,000+ clips on its six existing YouTube channels.

YouTube began the first phase of funding for original high-quality content 12 months ago, when it carved out up to $100 million for 100 channels that would produce 25 hours of content per day.

New York Times reports: “As part of the new effort, Google is investing a fresh $200 million to market the shows. It is also investing an additional, undisclosed amount – on top of the $100 million it invested last year – to pay for production equipment and, in some cases, pay the full production costs.”

So great is YouTube’s audience, many content brands had already viewed it as the most important platform to which to publish their work.

By giving them extra cash incentives, YouTube hopes to lock them in to platform exclusivity, in the coming era of internet video service abundance. The deal also sees YouTube’s own sales force sell ads in to the videos, NYT reports.

YouTube’s global content VP Robert Kyncl, at Mipcom in Cannes to announce the program extension, blogged that the service’s top 25 original channels are now averaging over a million views each week.

This story and headline was updated at 2pm PT after Google corrected the NYT’s assessment of how much it was spending on the new effort.

Then Spotify convinced it and other labels that freemium subscription services could reduce their iTunes dependence. How times change. Now WMG’s owner is so enamoured with the new model that it is ploughing a €100 million ($130 million) investment in to Deezer, Le Figaro reports.

The financing, which had been rumoured earlier last week, gives Deezer welcome financial muscle as it vies with rivals like Spotify, Rhapsody, Rdio, Mog and a host of services cropping up around the world.

But note also how two of the key players are now part-owned by the very content companies with a vested interest in making them work. Labels are believed to own 18 percent of Spotify, and now one of their owners is taking a chunk of Deezer. In theory, Access Industries’ new interest in Deezer could make Warner’s renegotiations with Spotify and others potentially interesting.

This new music consumption model could be huge. But its gravitational pull has begun to centre on Spotify as a leader. Each of the services is rapidly moving in to new countries around the world, but Deezer’s globalisation strategy has been particularly potent, aiming to quickly roll out to over 200 countries – a cash-intensive slog.

Hoping to avoid head-on competition with the aforementioned services, the US  is not on that roll-out list. This is smart, since it is arguably in high-piracy emerging markets where the biggest subscription music opportunity lays…

Japan, for example, saw the launch of only its first unlimited-music service, from Sony, recently this year. While western music downloads have boomed but growth has slowed, China still has precious little music downloads industry to speak of – if piracy there can be overcome, as it has begun to be elsewhere, unlimited-access like that offered by Deezer could be the first digital music model to take hold.

What pot of gold might these protagonists find at the other end of this rainbow?

Right now, subscription music’s economics are highly challenged and low-margin. The services are paying sizeable royalties to labels and most must offer much music for free to snag paying mobile customers.

Spotify revenue more than doubled last year, but so did its costs, meaning losses grew again. Deezer is fortunate to have found more money to finance its global expansion – but all such services may need to be global to achieve the scale necessary to make their margins worthwhile.

In other words, large sums of money are required to propel these companies toward a business opportunity, in multiple continents, that could be large but which no-one yet knows for sure.

Deezer rocketed at home in the peculiar French market thanks to bundled carriage via mobile contracts with shareholder Orange. Although it has since repeated this deal in other markets in which Orange is present, its quoted subscriber count has not moved from 1.5 million in months.

Orange told me in June it held 11 percent of Deezer. Le Figaro reports €25 million of Deezer’s €100 million new funding is to buy out some other existing shareholders. The money from Access Industries would seem to rule out, at least for now, a deal in which Orange could buy the whole of Deezer.

Indeed, now that Deezer is prevalent in most countries in which Orange operates, what greater use could Orange want from it? Orange has also been retrenching from its content ambitions – a strategy shift that could also dead-end its option on fully buying out Dailymotion.

After interviewing Facebook executives for three hours on Tuesday, France’s Commission nationale de l’informatique et des libertés is now debunking rumors of a privacy bug in Timeline, the Facebook feature that shows a user’s personal chronology.

The investigation came after the French tabloid Metro reported on Monday that private messages were appearing unexpectedly on users’ Timelines. The rest of the European press and some US tech blogs quickly repeated the allegations, leading to widespread fear that Facebook had exposed people’s personal lives.

The French privacy regulator, however, has now accepted Facebook’s explanation that the “messages” were simply old public Wall posts that became visible once more. According to a report yesterday in Le Figaro, French ministers had initially proposed that the regulator file a complaint with the public prosecutor. Now, any legal action appears to be out of the question.

The CNIL did, however, find that Facebook’s decision to make the old Wall posts visible with relatively little notice had led to confusion among users.

Le Figaro adds that the French ministers have accepted the explanation, but stated that Facebook’s actions had stirred up “a lot of emotion” among users. They also said the matter highlighted the importance of protecting personal data and showed a lack of data transparency by actors like Facebook.

(Image by InfinityPhoto via Shutterstock)

Hollande had hinted during his campaign that he would consider changing or reforming Hadopi so that it was less repressive and more cooperative, winning him some fans but straining relationships with some protective industries. But, once he took power, he started a review of the organization — and in August the hint came that it would be scaling back funding for the policing of the web.

Now, however, it seems that Hadopi is fighting back — hard.

In a progress report on Wednesday, Mireille Imbert-Quarratta, who chairs the Committee on Protection of Rights (the group at the center of Hadopi), warned the government that it could not undercut funding for the agency without fundamentally undermining French law.

“Hadopi will take part in an effort to reduce its costs, as with all governments,” she said. “But we are an independent authority, and the Ministry cannot get rid of Hadopi or deprive it of funds, because it has been created by law. This would undermine the separation of powers.”

In fact, her argument went even further, drawing a comparison between an attempt by the French government in 1981 to try and effectively get rid of the death penalty by starving the execution service of money. That loophole failed, she pointed out, although it’s worth remembering that France did enact a law that got rid of the death penalty soon afterwards. But the warning was clear: try to kill off Hadopi by the back door, and you won’t find it easy.

So what next?

Campaigners have long opposed Hadopi, which they say can act as judge and jury over claims of copyright infringement, using unreliable evidence such as IP addresses, and putting the burden of proof onto the accused rather than on the state.

The government’s main practical arguments about Hadopi, meanwhile, are that it is expensive and largely ineffective. While the organization’s own internal reports suggest that 95 percent of the hundreds of thousands of citizens it has contacted have subsequently stopped filesharing, there is plenty of evidence to suggest that it has not been responsible for shifiting P2P use. And, two years after it was implemented, the first cases are only now going to court — potentially making it an extremely expensive deterrent.

It looks like the first real battle may come with those cases: the way the courts go could hand one side or the other a lot of political capital.

Police photograph courtesy Shutterstock user Jbor