Back in December, Google announced that it was shutting down Google News in Spain as the result of a new law in that country that requires every Spanish publication to charge Google and other news aggregation services to show snippets from those publications regardless of whether or not the publisher actually wants it that way.

As you may know, some publishers (typically of the old media variety) aren’t fond of Google indexing their content and showing snippets to users. Some claim it is bad for their traffic despite evidence to the contrary. It would appear that Google News shutting down was actually much worse for traffic (as if it could have possibly gone any other way).

The law is similar to one in Germany that ensured publishers could charge services like Google for displaying snippets with links, but the difference with the Spanish law is that publishers actually have to charge. That way Google can’t just omit the ones who want to charge. There would be no option to opt out of Google News or to continue letting Google carry on as normal for free. So rather than paying every single publication just to link to their sites and drive them traffic (which is absurd), Google just shut down Google News in Spain and basically washed its hands of the whole mess.

Unfortunately for the publishers who were happy to get traffic from Google (and again, from other aggregators as well), things aren’t going so well for them either.

TechDirt is reporting on a study commissioned by the Spanish Association of Publishers of Periodical Publications (AEEPP) on the effects of the law, and they’re not good. It found that it’s stifling innovation in news and hurting publishers of all sizes, but especially smaller ones who don’t have the brand recognition of the bigger players.

TechDirt’s Mike Masnick hits the nail on the head when he writes, “Of course, for the major newspaper publishers, maybe that’s what they really wanted all along: less competition. But it’s difficult to see how that’s a legitimate public policy strategy.”

Even beyond the decreased competition among publishers, the aggregator market has apparently dried up in the country. Google still has a business without Google News, but while some others have reportedly found ways to shift business models, a number of aggregators have had to shut down entirely. The report specifically names Planeta Ludico, NiagaRank, InfoAliment and Multifriki.

What’s particularly disturbing is that this all seems pretty much like the only possible outcome of such a law. It remains a mystery how it could have possibly helped the news industry in Spain.

You can find the actual study here. It’s in Spanish obviously.

Image via Google