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Deciding who is worthy of government, platform money is not that simple

By Dr. Merja Myllylahti

Auckland University of Technology (AUT)

Auckland, New Zealand

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A current debate in New Zealand shows that deciding who in the media is worthy of financial support of the government, or platforms, is not that simple. Our government is currently supporting public interest journalism with a US$36.9 million PJIF fund, and some criticism has arisen from this funding.

The government and the New Zealand Commerce Commission are currently pondering whether platforms should be mandated to negotiate with news companies about compensation for news content. The News Publishers Association is seeking permission for collective bargaining from the Commission.

However, both Meta and Alphabet argue, as usual, that collective bargaining is not necessary. Meta says it is already “in active negotiations with a diverse set of publishers” and Alphabet says it has “reached an agreement with three news businesses — and two are already receiving payment.”

In the digital age, which platforms receive funding and from which companies is a relevant issue.
In the digital age, which platforms receive funding and from which companies is a relevant issue.

A recent report from the research group Sapere, commissioned by the Ministry of Culture and Heritage, makes some strong yet surprising policy recommendations. I agree with some, but not with others. (In full transparency, I was one of the 26 people/organisations interviewed for the report.)

The report states there is no need for ongoing public funding for national news content. It warns that large-scale, permanent funding from the government purse “risks propping up inefficient business models, and may unwittingly tilt the prospects of success/failure for businesses.”

However, the report supports public financing of regional/local news. I tend to agree with this, but of course the view is problematic because news companies differ — and some of those news companies providing national news also produce regional/local news. So, where is the boundary going to be drawn?

More controversially, the report argues there is no case for New Zealand to adopt the Australian news media bargaining code. The report concludes that “news firms derive significant benefit from the current arrangements that drive traffic to their sites” and therefore the presence of digital platforms, including Google and Facebook, “does not undermine the ability of news firms to make money from their content.”

Perhaps things are a bit more complicated than that. For example, if Google dominates search and news discovery, it surely has an impact on news companies’ traffic, revenue, and profitability?

Perhaps we can look at this from a wider perspective. When releasing the latest financials, News Corp said its deals with Google, Facebook, and Apple “continued to benefit our journalism and our bottom line.” News Corp said it has expanded its multi-year global agreement with Apple, “which is expected to be an important source of subscriptions and advertising revenue for our news sites around the world.” So, without these deals, bottom lines would be considerably weaker.

While relying on platform funding is not a great idea, receiving money from the platforms makes a difference to news organisations, or some of them, at least in a short term. The funding can create losers and winners, as discussed in my latest academic article. On the other hand, relying primarily on government funding is perhaps not such a great idea either.

The Sapere report notes that “several stakeholders expressed concern that funding decisions had crossed into editorial decision-making,” and that the funding support was “uneven and creating winners and losers in the industry.” If the boundaries are crossed, it should be a great concern for anyone providing the news.

About Dr. Merja Myllylahti

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