Figure 1. The News Media and Digital Platforms Mandatory Bargaining Code is set to alter completely the medial world in Australia. Source: Unsplash.
You thought news found online was free? Well, Australia has decided to put a stop to this. As of 25 February 2021, social media giants and tech companies, like Facebook, Google etc., will be obliged to pay not only publishers, but also local media outlets for the news content posted on their online platforms.
What is the new Australian media all about?
The Australian Parliament made an unprecedented move and introduced the world-first law - dubbed the News Media and Digital Platforms Mandatory Bargaining Code - which will require Google and Facebook to negotiate with and pay Australian media companies for news to appear on their platforms or else face arbitration. In December 2020, it was unveiled by the government who sought to address the massive bargaining power imbalances between Australian media businesses and major digital platforms. These negotiations aim to give value to the quality of original journalism throughout the country and, in particular, regional areas.
The so-called Code, which was materialised after a deep and extensive analysis from Australia’s anti-trust regulator, will essentially guarantee that news media corporations are fairly compensated for the content they create and provide to the tech companies. In their joint statement, Treasurer Josh Frydenberg and Communications Minister Paul Fletcher, assured that the Code will benefit journalism in Australia by giving it the economic boost needed to further develop and expand. After three years of public consultation, the new law will attempt to fixate the power imbalance caused by the lack of regulations concerning the flow of news presented online.
A recent Guardian poll found that the majority of Australians wanted the government to regulate the digital giants and supported the political initiative to make Facebook and Google pay for mainstream media content. Such supportive measures will help media companies navigate the tough financial climate they operate in and accelerate trusted journalism and support for local small businesses. The Australian Competition and Consumer Commission (ACCC) - a market regulator - says publishers have had little negotiating power until now because they are so reliant on tech monopolies like Google and Facebook. According to statistics, it is estimated that 81% of revenue from online ads in Australia goes to Facebook and Google, whereas for every USD 100 of advertising spent, $53 goes to Google, USD 28 to Facebook and USD 19 to everyone else.
Figure 2. Social media giant Facebook has moved to prohibit publishers and people in Australia from sharing or viewing Australian and international news content in response to Australia's proposed media bargaining laws. Source Unsplash.
What is the purpose of the new law?
When the pandemic hit Australia’s news industry, over a hundred local newspapers across the country had to dismiss journalists, stop printing, or shut down. The loss of advertising revenue has been partially offset by digital and newspaper subscriptions, but it hasn’t been enough to stem the rot in newsrooms and of journalists leaving the industry. News Corp Australia stopped printing 60 of its local newspapers and regional newspapers in Victoria, some older than 100 years and advertising revenue dried up overnight during the pandemic last year. Google ended up making USD 4.3 billion in advertising revenue in Australia, and Facebook earned USD 700 million. The News media bargaining will address this increasing loss of advertising revenue.
What is the response of the tech companies?
The Code specifically addressed the two biggest and most influential tech companies, Google and Facebook, which, of course, opposed vehemently to the implementation of the newly-passed regulation. Both companies argued that they already promote news publishers by driving traffic back to news sites from their social and online platforms and essentially help people come across news content in general. In a move that caused much controversy and disapproval, Facebook, temporarily blocked users and publishers from viewing and sharing news content on its platform and recalled the ban only after the Australian government agreed to make a series of amendments to the proposed law. Google also initially implied that it would have to halt the use of its search engine from the country if the law came into force, but it later abandoned its plans. Instead, the company chose to cooperate and seal deals with media corporations to pay them for news content. These include a three-year agreement with Rupert Murdoch’s News Corp. that will allow Google to host content from publishers like The Wall Street Journal and The New York Post for a significant amount of money in return. Nevertheless, news report that the purpose of these deals is to allow Google to evade paying for stories linked to in regular search results.
Figure 3. Google is striking deals in Australia to pay for journalism but Facebook is vowing to restrict news sharing. Source: Unsplash.
After a series of meetings and an-11-hour-talk with Facebook’s CEO, Mark Zuckerberg, the Australian government agreed to a series of amendments in the Code. The company has already proceeded with the sign of at least one deal, with Seven West Media, and it is currently negotiating with other Australian media corporations.
How will the new law function?
In general, media companies are encouraged to make commercial deals with Facebook and Google outside the Code. But the Code will be the one giving them a framework to bargain and reach a binding agreement. If they cannot agree, an arbiter will implement the “final offer arbitration” model to determine the level of remuneration.
Essentially, Australia will become the first country where a government-appointed arbitrator can decide on the final price that either platform will have to pay Australian news publishers. According to experts, the decision will come by a ruling in favour of either party — the digital platform or the publisher — with no room for a middle-ground agreement. In this week’s amendments, the government said the parties involved will get a two-month mediation period to broker deals before they are made to enter arbitration as a last resort.
Figure 4. Australian government wants Facebook and Google to pay for news on their sites. Source: Pexels.
The Code also forces tech platforms to give notice to news publishers of changes in their algorithms, which are the ones deciding which stories are being displayed and promoted.
The amended law also now requires the government to consider a platform's existing contributions to journalism - such as commercial deals with publishers - before applying the code to them. This means Facebook and Google could escape the arbitration process entirely.
The first step has been made. It is only a matter of time before other countries, like the United Kingdom or the European Union, follow the example of Australia.
Could this be the wave that will shake the media world?
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