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Google to help the French press online

French President Francois Hollande (R) meets with Google Executive Chairman Eric Schmidt during a signing agreement at the Elysee Presidential Palace on February 1, 2013 in Paris.
Philippe Wojazer | AFP | Getty Images
French President Francois Hollande (R) meets with Google Executive Chairman Eric Schmidt during a signing agreement at the Elysee Presidential Palace on February 1, 2013 in Paris.

Google has offered an olive branch to France's newspaper industry and government with the launch of a €60m ($81m) fund to support the country's press through its move into the online world.

The fund, which was created Thursday, is part of a deal made with the industry and the government to finance projects aimed at increasing the audience and revenue of online news outlets, and comes after years of bitter disputes with the French press.

The disagreement took a drastic turn mid-2012, when representatives of the French media sector asked for the creation of a "neighbour's right" to allow newspapers to be paid each time a search engine indexed one of its articles online.

(Read more: Google offers new concessions to avoid fine in EU antitrustcase)

The government, rallying behind the press, had then threatened the online giant that it would start thinking on ways to legislate the issue unless the two sides could quickly reach an agreement.

This year, Google's chairman, Eric Schmidt, flew to Paris and signed an agreement, along with President Francois Hollande and the newspaper industry at the Elysee Palace. The accord was welcomed by Nathalie Colin, president of the Association for the Political and General Press, as "a first worldwide", adding that it would enable publishers to work on the biggest challenge facing the sector, the"digital mutation".

"Everything that can allow the press to finance its transition to digital is good enough, and from this point of view, we welcome this fund," Pierre Haski, president of online news service Rue89, said on the new Fund for the Digital Innovation of the Press.

Despite appearing like a victory for the French press, €60m of investments on different projects yet to be outlined, seems to be but a drop in the ocean – especially when it is compared to state subsidies for the industry.

(Read more: Yahoo beats Google to the top spot for US web traffic)

The French Court of Auditors chose Wednesday to release a report reviewing State aid to the Press since 2009 and highlighting that "however costly they may be, aids to the Press have yet to demonstrate their efficiency".

Stressing upon the sector's dependency on State subsidies, the report calculates that since 2009, the government had injected about €5 billion into the industry. The report said that these funds have had no effect on the "persistent and growing" crisis affecting the sector.

It added that the level of aid to the newspaper industry is very elevated in France, compared to other countries "of similar sizes, where support to the press is limited to indirect aids, generally through a preferential VAT rate".

Google's new Fund for the Digital Innovation of the Press will start examining projects handed in by eligible media outlets on October 17 and "will determine the selected projects and the amount of their financing on criterions including innovation, business plan, potential impact, new offers created for the reader and the original production of editorial and journalistic content".

Google's French division did not reply to any request for comment on the fund.

(Watch: Google 9 years after IPO: Buy, sell or hold?)

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