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Google to Pay News Publishers $1B in Launch of New Product

Google will pay news publishers more than $1 billion for licensing over three years as it launches a new product, News Showcase.

Google will pay news publishers $1 billion for licensing as it launches a new product, called Google News Showcase, parent Alphabet's  (GOOGL) - Get Alphabet Inc. Class A Report chief executive, Sundar Pichai, said.

The deal is for three years but will extend beyond that, he said in a blog post.

The News Showcase will display story panels where publishers can package the stories that appear within Google’s news products with features like timelines, bullets and related articles. Other components like video, audio and daily briefings will come next.

"This approach is distinct from our other news products because it leans on the editorial choices individual publishers make about which stories to show readers and how to present them," Pichai said.

News outlets will be paid based partly on the number of stories they curate and summarize for Google News.

The news service is live for readers in Brazil and Germany. In coming months the service will expand to other countries where local frameworks support these partnerships, Pichai added.

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The company has signed licensing partnerships for News Showcase with nearly 200 publications across Germany, Brazil, Argentina, Canada, the U.K. and Australia. 

Publishers including Der Spiegel and Die Zeit in Germany and Folha de S. Paulo in Brazil have signed up to be part of the rollout program.

Google is in talks for similar alignments with publishers in the U.S., The Wall Street Journal reported.

News publishers including Rupert Murdoch’s News Corp.  (NWSA) - Get News Corporation Class A Report and German media giant Axel Springer have been calling on Google to pay them for their content for almost a decade, but the search giant had refused up until now. 

Google and Facebook  (FB) - Get Facebook, Inc. Class A Report dominate the digital-ad market, which was once led by publishers in the news industry. Shrinking ad revenue has led hundreds of U.S. newspapers to close, particularly hurting coverage of local issues.

Since July, Australia has been moving to impose sweeping new rules that would require Facebook and Google to pay media organizations to use their news content, CNN reported.

Shares of Google parent Alphabet were up 1.7% to $1490.71 at last check.