Last Friday, the entire news media industry was — or certainly should have been — focused on Australia. Its consumer watchdog, the Australian Competition and Consumer Commission (ACCC), published details of what Tech Crunch calls “a first pass” at a mandatory code of conduct between publishers on the one side, and Google and Facebook (and potentially other digital platforms) on the other.
Robert Whitehead, head of INMA’s Digital Platform Initiative, wrote this piece explaining the terms and exactly why this is such a big deal, including the implications and next steps. If you want to catch up with what led to this momentous news, you can read INMA’s earlier coverage here.
Of course, publishers and governments in other countries are also moving toward significant rebalancing. Following the announcement late last week, we caught up with members and representatives of INMA’s Digital Platform Initiative Committee to get their initial thoughts.
Global efforts to rebalance the distribution of power
“In the United States, we must borrow from the models of Europe and Australia to build a framework that works with our current system,” said Maribel Perez Wadsworth, president/news at Gannett Media and publisher of USA Today. “Our congressional leaders are mobilised. We see strong bipartisan support for such things as the Journalism Competition and Preservation Act, and we will continue to advocate for their support for compensation for news publishers here in the U.S..”
And it isn’t the first time a sovereign nation has made attempts to rein in the power of the tech giants, which has been notably imbalanced vís-a-vís news organisations. Germany, Spain, France, all have history there.
But as Espen Egil Hansen, former editor-in-chief and CEO of Aftenposten and second vice president of INMA, points out, this time is different: “It’s worth noting that Australia builds its framework on approval of collective bargaining rather than copyright, as has been the case in Europe. We still need to hear the counter arguments from Facebook, Google, and others, but it seems like a fair and effective principle and could inspire similar approaches around the world.
“This is a great example that the world’s regulatory bodies are slowly catching up with the new reality where a handful of digital giants have become dominant. ... [I]t is difficult to regulate these platforms because they operate across national borders, are pure digital players, and because of their size. I am impressed with the Australian government’s determination to cut through these challenges with the aim of levelling the playing field between the tech giants and the news media.”
No guarantees of passage
The next big date is August 28, when consultation on the draft is scheduled to conclude (insofar as anything can be dependably scheduled anymore). At that point, the Australian Communications and Media Authority will set legally binding terms on behalf of the government unless arbitration has led to agreement, Reuters reported. According to the ACCC’s Web site, final legislation should be introduced to the Australian parliament shortly thereafter. The code will be reviewed in a year so that the process can be changed based on feedback, reported Australia’s ABC News.
According to The Wall Street Journal’s analysis: “Parliament’s passage of the new proposal isn’t guaranteed. The government doesn’t have a majority in the Senate — the upper house — where laws are passed. The opposition Labor Party said it welcomed the progress in developing the new rules, but expressed concern that the requirement for tech companies to negotiate wouldn’t apply to public broadcasters funded by the government.”
Predictions for the next 90 days
“We’ll be watching closely to see if Australian regulators are truly willing to rein in digital platforms and make explicit the value of premium news content,” said Wadsworth, who serves as INMA’s first vice president.
INMA President Damian Eales, also a member of the Digital Platform Intiative Committee, referred comment to Campbell Reid, head of the News Corp Australia’s Corporate Affairs and Government team that has been working closely on platform issues. Campbell said he believes this “has the potential to be a significant step in rebalancing the relationship between the platforms and the people who produce the news.”
Campbell continued: “The response of Google in particular suggests it regards this move in Australia as aggressive, we would characterise it as necessary. Anything less than a strong and enforceable code would not have had any impact on the practices of the platforms.”
In particular, he welcomes that “the issues around appropriate visibility and display of original news reporting on the platforms is mentioned in the draft of the code,” and expects that “details of how this will work in practice will unfold over time.”
Campbell predicts that in the next 90 days, “interested businesses on both sides of the code will consult with the ACCC and raise possible changes and issues before the code goes to the parliament. You can expect the platforms to continue to lobby that the code is unnecessary. We argue the exact opposite, of course.”
Valuation: How and how much?
One big question that remains unanswered at this point is the actual valuation of Australia’s news product — the question of how and how much.
- Google registers the value of the billions of clicks on news content each year at A$218 million. The Sydney Morning Herald reported that Google and Facebook “scooped up almost $400 million more in Australian advertising revenue than five major domestic media outlets combined last year.”
- Facebook, as reported by France24, has argued that “it is not healthy nor sustainable to expect that two private companies, Facebook and Google, are solely responsible for supporting public good and solving the challenges faced by the Australian media industry.” It has also argued earlier that its traffic to news is worth about AU$195.8 million, and has said it “receives very little direct commercial value from news content.” To add insult to injury, “news content is highly substitutable,” the company said in its September submission to the ACCC.
- News executives have given news content a much higher estimated value. “The biggest of the Australian news media companies, News Corp and Nine Entertainment, have estimated the code will unlock annual fees from Google and Facebook to publishers in the range of about US$500 to US$750 million, or about 10% of platforms’ regional revenues,” INMA’s Whitehead said in his analysis.
- The U.S.-based trade association News Media Alliance estimates Google’s 2018 earnings from the work of news publishers was US$4.7 billion, adding: “The findings clearly point to Google responding to an increase in consumers searching for news, creating and tailoring products that keep users within its ecosystem. This means more money goes back to Google and not the publishers producing the content.” The association also found in a 2018 study that while it is difficult to quantify news publisher contributions, one way is “by using news content for product development, such as training its Artificial Intelligence services,” according to CBS News.
News companies know what goes into producing quality content and want to be treated honourably and fairly for that. But as Sherine Conyers, a researcher at the school of media and communications at the University of Leeds, told France24, “[F]or tech companies, the value is likely held in the behavioural data produced as this content circulates around the Web.”
And access to that data is one of the things granted by the code. So while remuneration is important, data access may be just as big a boon to publishers in the long run. In the terms of an old parable, one is the fish, the other is the fishing pole — allowing publishers to secure their relationships with readers and envision unique new business models that simultaneously accommodate the dual status of commercial enterprise and public service, while providing for the long-term survival and resurgence of the industry.
“This aspect of the proposal looks intended to tackle the problem of dominant platforms using their market power to maintain their grip on the attention economy by being able to monopolise access to data by blocking content producers from being able to access information about how Internet users are engaging with their work,” wrote Tech Crunch.
“The theme here,” the article continued, “is increased agency for news businesses vs. Facebook and Google so they have a better chance to shape public debate happening around their own content — platforms having gobbled up the sorts of conversations, which used to happen via a newspaper’s letters page.”
Polarised visions of the way forward
Google’s approach to the news industry’s woes has often been altruistic, mostly shying away from talking remuneration in favour of initiatives and training that allow it to continue to control the purse strings (although it recently penned licensing deals in Germany, Brazil, and Australia). The titan’s altruism misses the point for the many publishers who are seeking autonomy (even as they seek collective bargaining options) and the independence that is a keystone of the industry, and do not want to be beholden.
But their vision of the way forward continues to diverge from Google’s.
Mel Silva, managing director and vice president of Google Australia and New Zealand, said in a statement reported by Reuters: “The Code … sends a concerning message to businesses and investors that the Australian Government will intervene instead of letting the market work …. It sets up a perverse disincentive to innovate in the media sector and does nothing to solve the fundamental challenges of creating a business model fit for the digital age. We urge policymakers to ensure that the final Code is grounded in commercial reality …”
It is clear the positions are polarised at this point. As Wadsworth said, “Over the past year, regulators in Australia realised how significant the market imbalance is between digital platforms and news publishers, and that private negotiations could not move forward in good faith. It is significant that Australia’s competition authority, ACCC, was willing to step in and recalibrate that imbalance.”