Melbourne, with the news bargaining incentives released by the government this week, it is worth reconsidering the origins and achievements of its predecessor, the News Media Bargaining Code.
Both have the same goal: to get paid from search and social media companies that profit from the use of media content but do not effectively pay for the inputs required to run their businesses.
So what did we learn from the first law? How does this apply to new attempts to get tech companies to pay for news?
The case of market failure
The bargaining code originated from the Australian Competition and Consumer Commission’s Digital Platforms Inquiry from December 2017 to June 2019. The inquiry is tasked with examining competition, consumer, advertising and news issues.
There were 23 recommendations, including one on news media bargaining codes.
The logic of the code is that search and social media companies want news, but they can choose any media channel. But the media has no choice but to align itself with the major platforms.
As a result, an imbalance of market power arises, which is a classic market failure. While not all market failures require a response, this one does, given the critical role the news media plays in our democracy.
The logic of the code design comes from access regimes regulated by the ACCC in other areas. For example, many companies export products, but only one port can do so, giving that port significant market power.
In this case, a “regulated access regime” may be used, requiring the parties to negotiate the cost of access and, if agreement cannot be reached, to be determined by arbitration. Fees will be determined through a negotiation/arbitration process rather than utilizing significant market forces.
controversial beginning
The News Media Bargaining Code requires designated platform companies to negotiate with media companies, and if an agreement cannot be reached, an arbitrator will decide how much search and social media companies pay for media content.
Of course, there are some enhancements. Perhaps crucially, the code requires platforms to negotiate with all eligible media companies that primarily focus on public interest journalism.
Both Google and Meta oppose the legislation. Google threatens to leave Australia, while Meta removes all news and more from Facebook.
Both companies eventually backed down, but they got a compromise from the government: Platform companies wouldn’t be included in the code if they did enough deals with media companies.
This actually worked out well for media companies, as the platforms closed a large number of deals in about six months—much faster than the stated pace.
They are not designated under the Code, but that was never the purpose; the transaction was.
Transaction volume exceeds US$1 billion
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The News Media Bargaining Code is a success and a world first as public policy initiatives progress.
Deals worth about $250 million a year with Australian media companies met the ACCC’s expectations.
Google does business with almost all relevant media companies, and Meta does business with most of them. Importantly, on a per-journalist basis, some smaller media companies get better deals than the larger ones.
While more than $1 billion was paid to media companies over five years, problems arose. When Meta’s three-year agreement expires, it said it would not pursue any further transactions. Most of Google’s five-year deal continues.
Meta said it was not required to publish news on its platform, and in response to Canadian legislation that largely replicates Australia’s code, under which Meta was automatically designated, Meta removed all news from its Canadian platform.
While many have called for Meta to be designated under the code here, it must be assumed that if this were the case, Meta would also remove the news from its Australian platform.
How are the new initiatives different?
More than 18 months ago, the Australian government said it would take a new approach to address this “flaw” in the News Media Bargaining Code. News bargaining incentives will be introduced that will cover these platforms regardless of whether they carry news.
It was never explained in any way why this clause could not be inserted into the original code. That said, news media bargaining rules will apply to Google, Meta and TikTok regardless of whether they carry news.
This will provide continuity as Google will continue to work within the guidelines and provide 70% of the total payment.
Meta would object, of course, but no more than would be the case under news bargaining incentives.
Since there is no arbitration mechanism under the incentives, the government said the platforms do not have to deal with all media companies. Indeed, four is enough. Requiring an agreement with everyone means media companies can charge high fees because they know platforms must reach an agreement without having to resort to arbitration to resolve disputes.
The incentive is guided by the News Media Bargain Code payment, which sets the financial parameters of the deal value. If the transaction fails to complete, the platform involved will be required to pay a “fee” that is 50% higher than the expected transaction value. This is a very different approach, with certain complexities and potential inequalities.
Nonetheless, the government is to be congratulated for continuing to advance the noble cause of protecting journalism. A consultation on news bargaining incentives is ongoing and is likely to be legislated by mid-year.
Australia is once again leading the world in taking such action. Let’s hope some modifications are made and the incentives work well.
GSP
This article was generated from automated news agency feeds without modifications to the text.
