Three years ago, Australia’s ultimatum to internet media platforms, including Meta (Facebook) and Google to “voluntary” settle with mainstream media providers for use of their news content in platform posts, or face mandatory government-sponsored mediation to determine the terms under which such payments would be made, led the world. While Google complied, Meta initially resisted, “unfriending” Australia by cutting content links on its site for eight days assessed to be “Australian.” In the ensuing chaos, a significant number of Australian businesses –and more than a few state and federal government entities – were revealed as reliant on Facebook to communicate with customers and stakeholders.
Meta eventually (grudgingly) agreed to negotiate with large media companies, including Rupert Murdoch’s News Corp and the government’s own broadcaster, the Australian Broadcasting Corporation. This forestalled the government’s invocation of the mandatory code contained in the 2021 legislation.
Three years on, it is timely to assess the effectiveness of the Australian arrangements.
First, eligible media companies have certainly received significant sums. Meta claims to have paid over A$70 million per year to 13 outlets for the three years the voluntary agreements have been in place. The Google payments are likely similar, with 23 contracted outlets. While media companies claim the payments have “been reinvested into journalism, supported rural reporters and funded trusted news gathering and storytelling to inform and enlighten communities,” they have been paid primarily to large national and state-level entities rather than small local or regional publishers. The latter are now mostly memories, while local matters are covered at the discretion of the larger urban media behemoths. Ironically, Facebook, WhatsApp and similar online groups have become indispensable for community-authored local news-sharing in many rural communities.
Second, despite its much-vaunted world leadership, the Australian system has not been widely copied. Last year Canada implemented Bill C-18, regulating online media platforms to compensate traditional media outlets, and New Zealand is considering similar legislation, but few others are following.
Third, as contract renewal approaches, Meta has announced that it will not continue with the voluntary deals. The Australian Prime Minister called Meta “arrogant” and “irresponsible” for backing away, while Meta says “all options were on the table” with regard to ceasing to carry Australian news content on its platforms if the government chose to enforce the mandatory bargaining provisions it gave itself the option to execute in the 2021 legislation.
Canada’s experience is apposite. In that country, Meta chose not to comply with the mandatory laws, and instead ceased to provide news coverage on Facebook and Instagram. While legitimate Canadian news content has disappeared, the gap has been filled with viral, misleading or false content which isn’t blocked. Yet Facebook and Instagram usage appears to have changed little, and advertising revenues on the platforms do not appear to have been affected. It also does not appear to have harmed the large news publishers, who have been able to channel more traffic to their own online sites. However, it has proved harmful to the small local groups previously using Facebook to distribute their content, such as local indigenous online publisher IndigiNews. That is, exactly the same rural publishers that are not compensated by the platforms in Australia.
The Canadian situation highlights the fact that the real issue facing traditional media companies is not compensation for use of copyright content but loss of advertising revenue to the online platforms. In typical two-sided market fashion, these revenues subsidized subscription and other income to fund “public interest journalism.” Competition from new entrants with even larger subscriber bases, lower costs and better audience targeting and hence more appeal to advertisers had eroded the incumbents’ advertising revenue base, leading to a threatened reduction in the quantity and/or quality of locally created news content. The “voluntary” payments are not really compensation for copyrighted content, because the traditional companies had been facing this problem arguably even before the internet reduced distribution costs. More accurately, they are a tax on selected new entrants to prop up some incumbents’ failing content creation cost recovery model.
The real challenge facing policymakers is the ongoing funding of public interest journalism. If this is truly underprovided without advertising subsidy revenue, then this should be an impost on all of society, not just selected platform operators. Arguably, a tax on all online advertising paid to a contestable fund open to many different sorts of journalism – not just a few hand-picked media companies – may be both fairer and more sustainable in the long run?
