 "Journalism, newspaper")
Last week, the Australian government passed a law that made it compulsory for Big Tech firms like Facebook and Google to pay news organisations for using links to their work, setting a strong precedent in a long tug-of-war for revenue between the two camps.
Google is the de-facto gateway to the internet, and social media (Facebook, et al) is where people come to consume and share. News media has long argued that Google and Facebook have profiteered from news but have passed on little in terms of monetary gains. The Australian new legislation is meant to fix the discrepancy. And global leaders are watching.
Australia has reached out to countries including India, Canada, France and the UK to back it up with similar regulations. India's Information and Broadcasting Minister Prakash Javadekar had said on February 25 that "India is watching the development closely."
Whether India would benefit from something like this is a debate best had after analysing whether the legislation would "sizeably" benefit news organisations in Australia to begin with.
This requires a deep dive into the law itself and specifically the deals Google signed with Seven West Media and Rupert Murdoch's News Corp. It is also essential to look at the relationship between news organisations and internet platforms and how that has evolved.
To be sure, both Google and Facebook have been, for some years, investing modest monies into the news ecosystem through initiatives like Google Showcase, Google News Initiative and Facebook NewsFeed. But more on this later.
Bargaining code: The fine print
In essence, the News Media and Digital Platforms Mandatory Bargaining Code states that "some" internet platforms are "unavoidable trading partners" for news organisations, with the former deriving business value from the latter. It also says, based on a government review, that internet platforms have excess bargaining power – given their control over tech that determines what users see and what articles are shown first.
A step deeper: The law makes it mandatory for platforms to strike deals, but does not specify how those deals should be structured. It could be a one-time annual or quarterly payment or based on traffic.
The platforms can either strike deals under the process listed or cut deals on their own and inform the regulator. In the event the two camps are not able to arrive at a deal, a government arbitrator could decide the final deal.
Further, the Australian government rests the right to decide which internet platforms will have to follow the law. For media firms, those with more than 150,000 Australian dollars ($0.12 million) in annual revenue are eligible.
But there's at least one contentious condition. Platforms must apprise news companies about any changes to the back-end tech or algorithms that would affect traffic to the publishers' sites. This has to be done 14 days in advance. The truth is, Facebook and Google constantly make changes to their tech systems and rarely make the changes public, unless they are big.
Facebook reluctant, Google in
Unlike Google, Facebook had been reluctant to bite the bullet. It said that publishers and users voluntarily post news on Facebook, which is different from Google, where news gets indexed and appears in Google search.
The law "fundamentally misunderstands the relationship between our platform and publishers who use it to share news content," Facebook's Australia managing director William Easton wrote in a blog post on February 17. In fact, Facebook helps publishers garner reach and tangible gains.
Facebook finally conceded after Australia said it was introducing "further amendments" to the law which would give the social media firm more time to work out deals with news organisations, helping it avoid the mandatory arbitration it's been so against. Experts say it is a tactic to gain more control over the deal process.
"It will be interesting to see what kind of deals Facebook makes with news publishers under the Australian law. I don't think it will be anything significant. And in other countries Facebook could just point to its earlier initiatives to show that it supports news media," said a senior media analyst who did not wish to be named because Facebook was a client of his firm.
Facebook has committed $400 million to support growth of the news industry globally. It set up a bunch of grants like Report for America in the US, Community News Project in the UK, and a special Pulitzer grant for newsroom doing local stories. It has also given funding to a number of small newsrooms to adopt tech.
In 2019, it launched a dedicated News Tab (in some western markets), where it partnered with publications like The Guardian, The Economist and the Independent and paid them to produce special snippet-style stories.
Meanwhile, Google has been far more aggressive. In 2020, it committed itself to paying $1 billion over three years to publishers for content that appears in a cross-service "News Showcase" product. News Showcase is live in several European countries and has over 450 news outlets signed up.
Small monies
Google's News Showcase is much further along than Facebook's plans for news. Though the deals singed under News Showcase are private in most cases, Bloomberg Opinion columnist Alex Webb pointed out that payments were not significant and Google's goal was to cultivate relationships with news organisations and readers directly.
"Major publishers in Germany are receiving a flat fee of just a few million euros every year from Google — between 1 per cent and 2 per cent of their annual revenue. Given that the search giant can account for more than a quarter of their traffic, it's a drop in the ocean. Facebook is paying similar amounts in the UK," wrote Webb in an 18 January column.
Google is also using the Showcase route in Australia. Seven West Media, Nine Entertainment, News Corp and Guardian Australia are some of the more than 50 publications in the country that have signed up for Showcase, reports suggest.
The financial terms in any of the transactions are not made public, but reports peg the deal with Seven West Media, one of the biggest media networks in Australia, at 30 million Australian dollars ($23 million) a year. For reference, the sum is a mere 1.8 per cent of Seven West's 2020 revenue of $1.2 billion.
Google is the de-facto gateway to the internet, and social media (Facebook, et al) is where people come to consume and share. News media has long argued that Google and Facebook have profiteered from news but have passed on little in terms of monetary gains. The Australian new legislation is meant to fix the discrepancy. And global leaders are watching.
Australia has reached out to countries including India, Canada, France and the UK to back it up with similar regulations. India's Information and Broadcasting Minister Prakash Javadekar had said on February 25 that "India is watching the development closely."
Whether India would benefit from something like this is a debate best had after analysing whether the legislation would "sizeably" benefit news organisations in Australia to begin with.
This requires a deep dive into the law itself and specifically the deals Google signed with Seven West Media and Rupert Murdoch's News Corp. It is also essential to look at the relationship between news organisations and internet platforms and how that has evolved.
To be sure, both Google and Facebook have been, for some years, investing modest monies into the news ecosystem through initiatives like Google Showcase, Google News Initiative and Facebook NewsFeed. But more on this later.
Bargaining code: The fine print
In essence, the News Media and Digital Platforms Mandatory Bargaining Code states that "some" internet platforms are "unavoidable trading partners" for news organisations, with the former deriving business value from the latter. It also says, based on a government review, that internet platforms have excess bargaining power – given their control over tech that determines what users see and what articles are shown first.
A step deeper: The law makes it mandatory for platforms to strike deals, but does not specify how those deals should be structured. It could be a one-time annual or quarterly payment or based on traffic.
The platforms can either strike deals under the process listed or cut deals on their own and inform the regulator. In the event the two camps are not able to arrive at a deal, a government arbitrator could decide the final deal.
Further, the Australian government rests the right to decide which internet platforms will have to follow the law. For media firms, those with more than 150,000 Australian dollars ($0.12 million) in annual revenue are eligible.
But there's at least one contentious condition. Platforms must apprise news companies about any changes to the back-end tech or algorithms that would affect traffic to the publishers' sites. This has to be done 14 days in advance. The truth is, Facebook and Google constantly make changes to their tech systems and rarely make the changes public, unless they are big.
Facebook reluctant, Google in
Unlike Google, Facebook had been reluctant to bite the bullet. It said that publishers and users voluntarily post news on Facebook, which is different from Google, where news gets indexed and appears in Google search.
The law "fundamentally misunderstands the relationship between our platform and publishers who use it to share news content," Facebook's Australia managing director William Easton wrote in a blog post on February 17. In fact, Facebook helps publishers garner reach and tangible gains.
Facebook finally conceded after Australia said it was introducing "further amendments" to the law which would give the social media firm more time to work out deals with news organisations, helping it avoid the mandatory arbitration it's been so against. Experts say it is a tactic to gain more control over the deal process.
"It will be interesting to see what kind of deals Facebook makes with news publishers under the Australian law. I don't think it will be anything significant. And in other countries Facebook could just point to its earlier initiatives to show that it supports news media," said a senior media analyst who did not wish to be named because Facebook was a client of his firm.
Facebook has committed $400 million to support growth of the news industry globally. It set up a bunch of grants like Report for America in the US, Community News Project in the UK, and a special Pulitzer grant for newsroom doing local stories. It has also given funding to a number of small newsrooms to adopt tech.
In 2019, it launched a dedicated News Tab (in some western markets), where it partnered with publications like The Guardian, The Economist and the Independent and paid them to produce special snippet-style stories.
Meanwhile, Google has been far more aggressive. In 2020, it committed itself to paying $1 billion over three years to publishers for content that appears in a cross-service "News Showcase" product. News Showcase is live in several European countries and has over 450 news outlets signed up.
Small monies
Google's News Showcase is much further along than Facebook's plans for news. Though the deals singed under News Showcase are private in most cases, Bloomberg Opinion columnist Alex Webb pointed out that payments were not significant and Google's goal was to cultivate relationships with news organisations and readers directly.
"Major publishers in Germany are receiving a flat fee of just a few million euros every year from Google — between 1 per cent and 2 per cent of their annual revenue. Given that the search giant can account for more than a quarter of their traffic, it's a drop in the ocean. Facebook is paying similar amounts in the UK," wrote Webb in an 18 January column.
Google is also using the Showcase route in Australia. Seven West Media, Nine Entertainment, News Corp and Guardian Australia are some of the more than 50 publications in the country that have signed up for Showcase, reports suggest.
The financial terms in any of the transactions are not made public, but reports peg the deal with Seven West Media, one of the biggest media networks in Australia, at 30 million Australian dollars ($23 million) a year. For reference, the sum is a mere 1.8 per cent of Seven West's 2020 revenue of $1.2 billion.
