Googled! How the web giant is cashing in on the news

On The Press: Investors are rubbing their hands. So is it payback time?

Google's share price went through the $500 (£259) barrier last week. It was $84 when the company was floated 27 months ago. Not bad if you happen to have held Google stock for the past two years.

Very few companies manage to turn a brand name into a verb. Hoover was one, and these days we do not search the web, we google. The two are linked in that Google stands accused of accumulating advertising, and thus revenue, by hoovering up other people's product and delivering it under their own brand. It is known in the trade as aggregating.

Google News has no reporters, no correspondents. Instead, it has sophisticated web technology that pulls on to its one site news published in various forms by other news organisations. They do the expensive business of news gathering and publishing: Google News provides the one-stop location for finding it. Very quickly Google News has become first port of call for the many people who access their news online.

Google makes no pretence that this is their own news. Everything is properly attributed to the source publisher and everything is linked to the site on which it was originally published. This is an important part of Google's defence to accusations that they are news parasites.

The argument, however, is not about ethics but money. That $500 share price is the cold measure of the company's success. Some analysts on the business pages suggest that Google is overvalued and a day of reckoning may lie ahead. But it doesn't feel like that today, and Google certainly doesn't feel like

We are now in an era of falling advertising revenues and, in most cases, falling newspaper circulations. Convergence is the talk of the times, with newspaper owners and editors investing in new media alongside their traditional print products. The argument against that, accepted by many for a decade, was that you couldn't make significant money out of online journalism. Even those like The Guardian who have long invested in their website and developed an international brand on the back of it, have not seen the advertising revenues rolling in.

But that is not the case with Google News. The company which has made fortunes for its billionaire founders Larry Page and Sergey Brin would laugh at the idea that you cannot make money through advertising on a news website. To which those who are providing the content would ask "Whose news?"

Andrew Neil, key lieutenant of the Barclay brothers, owners of the Telegraph titles, said just this at the Society of Editors conference earlier this month. It was time for a conversation with Google. They were selling advertising on the basis of aggregating "our" journalism and they were not being charged a penny. "There has to be a price for it; or we won't do it [gather news]."

Alan Rusbridger, editor of The Guardian, said: "What's happening at the moment is that they [Google] are hoovering up stupendous amounts of money on the back of our content."

Nathan Stoll, the man from Google, put less emphasis on the money Google was making out of its news site than on its contribution to the "democratisation of news" which "allows multiple perspectives on the same topic". He did talk of fair dealing, by which he seemed to mean ensuring that traffic (visitors to Google News) was directed to the originators of the content. Or did he mean Google was open to Neil's "conversation"?

In effect, Stoll was saying: "We are providing a shop window for your news and redirecting to you any number of people who would not otherwise visit your sites. You can use these extra visitors to generate your own advertising revenues." What he was not saying was: "Plenty of Google visitors may find that sufficient and not visit you. And anyway we get the ad revenues first. And our share price is now $500. And thanks for the news copy."

Time for a conversation.

Peter Cole is professor of journalism at the University of Sheffield