Making Big Tech pay for news : the Australian media bargaining code will not solve the crisis in journalism

By Media Reform Coalition / Thursday January 26, 2023 Read More

This post by our Australian colleague Benedetta Brevini looks at the recent review of the Australian News Media Bargaining Code, and why this is not a solution to news deserts or the crisis in journalism in the UK.

The Covid-19 pandemic and resulting economic turmoil have further exacerbated the long-standing crisis faced by news organizations in the West, which has been in decline for the past two decades. This crisis is primarily driven by two factors: the deregulation of the media market, leading to a concentration of ownership (and consequent decisions not to invest in local news), and a decline in commercial revenues due to loss in readership and advertising revenues which have been migrating to digital players and in particular to Tech Giants. As a result, news deserts are on the rise in many countries were there isn’t a solid tradition of public investments in news, like the US, for example (Abernathy, 2020), disproportionately impacting specific rural regions, communities of colour, and lower socio-economic neighbourhoods. Likewise, in the UK In 2019 65% of the 406 Local Authority Districts (LADs) in the UK were not covered by a single daily local.

Instead of radical interventions in media systems that would require the introduction of a series of regulatory mechanisms and public subsidies to address the structural problems of concentration, news deserts and lack of media diversity, the focus in public debates has switched. From Canada, to NZ, from India to the UK, policy makers are debating tools to force the Digital Lords of Silicon Valley to negotiate with publishers about payment for the use of their content, or be forced into arbitration.

The most discussed of such policy tools to make the Big Tech – or Digital Lords – contribute to news. The first legislation for this is the now globally famous Australian ‘News Media Bargaining Code’ – as I discussed in a previous MRC blog.

What the review of the Media Bargaining code says: success or failure?

The Australian Code came into effect on 3 March 2021 and a first-year operation review of the News Media Bargaining review was published by the Australian Government in December 2022. A careful read of the report of the Treasury prompts the following considerations.

Firstly, the News Media Bargaining code has in praxis, never been applied to date, as no Tech Giant have been subject to the regulatory ‘designation’ that is effectively forced to arbitration. However, Google and Facebook/Meta reached agreements with a range of large and regional news businesses during the Code’s first year of operation, with many commercial agreements made “in anticipation of the Code taking effect”. The list of the agreements reached between the Lords and the news organisations have been compiled on the basis of voluntary submissions by the organisations, as the Government, the Media Authority and the Competition authority (ACCC) did not want to explicitly use their power to secure more details of the deals from the organisations.

The Australian Government explicitly declared that “the review has not been provided with the details of these agreements by either digital platforms or the relevant news businesses,despite highlighting the importance of this information in the consultation paper released in April 2022. In the words of the government, the lack of transparency on these private deals “limits the assessment of the Code’s performance’.

However, the Review provides a list of the deals reached between the Lords and the news organisations, explaining that Google has reached 23 commercial agreements and Facebook/ Meta.

Google’s agreements with the most powerful News organisations in Australia, Nine Entertainment and Seven West Media run for 5 years, and its global agreement with News Corporation runs for 3 years, while no further information on the terms of its agreements with other news businesses.Likewise, Facebook Meta did not provide details on any of their agreements. Unlike Google, Meta/Facebook has not reached agreements with the second most important Public Service Broadcaster in Australia, Special Broadcasting Service Corporation (SBS) or the news outlet “The Conversation”, explaining that “the budget to support content agreements for these products was limited and it was therefore inevitable that some news businesses would not receive a deal”.

The list of the agreements provided by the review to the public does not include any data on the resources allocated for each of these deals and the specific nature of the agreements.

The closest estimate of the funds overall invested was provided by the Chair of the Competition Authority that initiated the Digital Platform Review: in May 2022, the former Chair of the ACCC, Rod Sims, estimated that he is “confident” that commercial agreements have provided over $200 million to news businesses.

The most useful details on the agreements were offered by the Australian Public Service broadcaster ABC that volunteered to report that the deals with have financed the appointment of 57 journalists to regional positions, “including reporters in 19 locations, 10 of which did not previously have them”. The agreement came shortly after the Australian government withdrew $1.2 billion of funding to the ABC.

Of course, the most vocal news organisations, critical of the code, were the publishers, mostly small, that have so far been left out of the agreements. The Conversation, for example, declared that “without providing a reason, Facebook declined to negotiate with The Conversation and SBS, as well as many other quality media companies otherwise eligible under the Code .Similarly, the Association for Commercial Radio echoed that the Code “is not achieving its objectives in relation to the commercial radio industry. Much of the commercial radio industry has experienced significant difficulties in engaging Meta and Google in commercial negotiations. Few benefits have been received as a result of the Mandatory Bargaining Code: 90% of commercial radio networks have been unable to strike a deal with Google; and 95% of commercial radio networks have been unable to strike a deal with Meta”.

The News Media bargaining code does not aim at redistributing resources for the news sector

Despite the lack of details on the funds effectively allocated to news organisations, the types and objectives of the deals and their effects, the Treasury Review makes a very important clarification it its Key Findings on the value of the Media Bargaining Code in policy terms.

These considerations should be considered carefully in jurisdictions like the UK where such policy options are currently under examination. The aim of the Code was not to address the worrisome problems of news deserts in Australia, nor to “redistribute resources across the news sector or to guarantee that all news businesses receive funding”. The aim of the Code was to only “address bargaining power imbalances so as to ensure news businesses receive fair remuneration from digital platforms for the value their content generates” (Australian Treasury, 2022 :13).

These considerations translate firstly into the legitimised prioritisation for the Digital Lords of commercial agreements with the biggest news organisation in Australia, as in the words of the Code they generate more value for their content. Secondly, these commercial deals are by nature kept private. In fact, the Treasury clarifies that “by encouraging parties to reach private commercial agreements” and consistently with “standard commercial practice” these agreements typically contain strict confidentiality clauses.

So, it should come as no surprise that the most dominant Australian media companies have secured profitable deals with Facebook and Google, with Rupert Murdoch’s media empire having benefitted the most, after having intensely campaigned for the Code on the pages of their papers. His media empire has already gained impressive global deals with Google for amounts that in Australia topped 50 billion. Under the terms of the global deal, News Corp titles such the New York Post in the US, The Times, Sunday Times, and The Sun in Britain makes some content available on Google News. Overall, Australia’s three biggest players in print media (News Corp, Nine, and Seven West Media) scored hundreds of millions of dollars in payments from the Lords. Estimates suggest that News Corp, Nine, and Seven West Media will together gain around 90% of Facebook’s and Google’s total contributions under the code (Brevini and Ward, 2021: 37).

Evidently, the Code suffers from a series of issues, highlighting the aversion of Australian policymakers to come to terms with the challenges of media diversity, the concentration of ownership, the economic and political power of the media corporations, all comprehensively detailed by Australian Senate’ Media Diversity Inquiry of 2021.

The Code’s deficits are particularly laid bare when attempting to ascertain how many agreements have been reached, with what companies, and the value of these arrangements; of which none is clear. The impact on Australia’s public service media organisations (PSM) is also unclear as one PSM institution, the ABC, tries to offset massive Government funding cuts, and the other, SBS, is excluded from the process.

There are not enough data available, over a year after its approval to ascertain whether the News Media Bargaining Code is helping smaller, local and independent media entities. Rather, it may have indirectly bolstered the dominance of already powerful media corporations.

At the same time, there is no clear public strategy which seeks to secure the future of smaller publishers. We rest in the dark as to how the code affected regional media, including what types of regional and rural publishers have not been able to engage in negotiations.

This is, of course, set against the backdrop of a country where one single corporation – an entirely unchallenged dominant player – owns a 59% share of the metropolitan and national print media markets by readership (Brevini and Ward, 2021). The industry remains monopolised by dominant media players who offer no tangible evidence that any of the received funds will be invested into quality journalism as the Code offer no guarantee in this regard.

For example, we know from the Parliamentary Inquiry into Australia’s regional newspapers that Google Australia has also launched a Digital News Academy with News Corp Australia which will incorporate online tutorials, formal education, de facto bringing journalism training away from the Media Departments of Australian Universities.

The idea of making Digital Lords contribute to journalism is not a new policy idea. With the Media Reform Coalition, we have argued for a levy on the revenues of Digital Lords during the policy discussion concerning the Leveson Inquiry back in 2012. However, the type of levy proposed by the Media Reform Coalition would have entailed the creation of a public fund which would redistribute resources to non-profit ventures in a transparent way, with a mandate to produce original local or investigative news reporting. These proposals have been outlined in more detail in the MRC’s Manifesto for a People’s Media.

This proposal implied a clear policy intervention in the public interest to redistribute resources across the news sector, exactly the opposite ethos of the News Media Bargaining Code. The proposal entailed clear transparency requirements for the funds provided by the Digital Lords and the type of redistribution of the funds to specific news ventures, with specific obligations of quality and public interest journalism.

Instead, policy interventions like the Media Bargaining code have the effect of privatising notions of the public good by linking them to market-based logics and practices: the idea of only addressing “a bargaining power imbalance”. (ACCC,2020).

Shunning away from a strong public intervention to address the structural problems of media concentration and the lack of diversity that dominates the Australian Media environment public policy is instead privatised, outsourced to businesses and private entities through private contracts and negotiations.

Furthermore, we should be questioning to what extent private deals with Digital Lords will encourage more clickbait, sensationalistic and low-quality journalism to be shared, following the profit-driven demands of the Digital Lords. Where are the guaranties that these deals supported by the Digital Lords will generate quality, public interest journalism?

We know too well by now that Digital Lords’ business model favours a type of content that generates more attention (meaning more data and advertising revenues) with very scarce public interest-content being prioritised. Is this the solution that other jurisdictions should adopt to save journalism from its structural crisis? The privatisation of media policy with its opacity and limited market- based scope is never the optimal solution for media policy in the public interest.