Can Australia’s News Media Bargaining Code be a blueprint elsewhere?

The battle between the traditional media and big-tech has reached the precipice in Australia, forcing the government to step in. At the heart of the matter is revenue sharing between media houses and platforms such as Google and Facebook.

Traditional media contests that Google and Facebook use the content generated by them for free to aggregate and share news while appropriating the entire advertisement revenue generated from such traffic. Google, Facebook and YouTube make up more than 80 percent of Australian digital advertising. For every $100 of online advertising spend, $53 goes to Google, $28 to Facebook and $19 to the rest.

This has led to a crisis for the traditional media with several of them closing down last year as sources of funding and revenue dried up due to the economic disruption caused by the COVID-19 pandemic.

Drawing upon the enquiry by the Australian Competition and Consumer Commission's (ACCC) Digital Platforms, the Australian government is now pushing a News Media Bargaining Code seeking to provide a framework for the fair bargaining between the tech behemoths and local media platforms.

Local media companies and platforms invest considerable resources and effort in quality journalism, which Google and Facebook later aggregate. They can better target these stories to the audience due to the data collected from their users while not paying the content generators, despite news content being highly valuable to these digital platforms.

This has led to both a monopoly and monopsony in the news market as news companies can neither avoid using these platforms, nor are critical enough to be indispensable to these platforms. This power imbalance is the rationale behind State intervention to protect the local media's interests.

While the immediate flashpoint concerns the news and media company, the real issue is much bigger than it. It is about the digital monopolies created by the big-tech, which is now reshaping the real economies. It is also about the sovereignty and clash between the big-tech corporate practices and national laws. Are national boundaries digital boundaries too?

The Internet has been so successful because it is free and transcends national boundaries with little regulations. Sir Tim Berners-Lee, the inventor of the World Wide Web puts it, “The ability to link freely — meaning without limitations regarding the content of the linked site and without monetary fees — is fundamental to how the web operates, how it has flourished till present, and how it will continue to grow in decades to come”. Any move that will hamper this ability to link freely will compromise the free Internet's fundamental characteristic and potentially break the World Wide Web if all the countries do the same.

There is no doubt that the Internet has changed how we consume news and media content. Furthermore, news companies need to evolve in how they engage with the readers, augment resources, and compete in a more democratic marketplace where entry barriers have fallen drastically primarily due to Google and its services. Many have tried to counter the falling funding and revenues by adopting the subscription model, but there are only a few success stories.

The real question here is about the ownership of the content and the content creators' rights. Should Google and Facebook pay to the news companies? If yes, how? The proposed code in Australia covers the full spectrum of the Google and Facebook services, protects against discrimination, mandatory disclosure of relevant information for fair and transparent commercial negotiation, apart from providing for arbitration if needed. It does not require the platforms to provide user data to news companies or prevents them from making changes to its algorithm.

So far, Google and Facebook have strongly resisted paying news and media companies for the content. But the threat of the new code has forced Google to reconsider and is negotiating commercial deals with several news companies. It reportedly reached a deal with the Seven West Media and Nine Entertainment and agreed to pay AUD 30 million a year for content.

The proposed code's positive outcome is that vendors and the vendee are now willing to work out a market solution. The legislative intervention should only concern itself with providing the framework of fair and transparent bargaining. The issue with government regulation is that it can soon become the conduit of undue pressure at the behest of other interest groups like traditional media corporate lobby. However, Facebook has chosen to block Australian users from news content sharing in Australia signifying a long drawn battle over the future of the internet and news.