The Big Tech + Media Bargain

Australia’s media bargaining law that requires digital platforms to share revenues with Australian news companies only allows companies that deal in core news to enter into these revenue-share agreements. This excludes smaller publications and those that provide non-news content. Digital platforms decoupled content from distribution allowing small content providers to reach larger audiences. The Australian legislation will reverse this trend by supporting big new at the cost of independent content providers.

This article was first published in The Mint. You can read the original at this link.

Sometime last year, the Australian Competition and Consumer Commission said that it would require large digital platforms to share revenues with Australian news media businesses in an attempt to address the bargaining power imbalance that has resulted in news content being included at less than favourable terms on platforms like Google and Facebook. Both the digital platforms that had been directly targeted by this new law, opposed it vehemently when it was first announced. And then last week, thanks to a wholly unexpected plot twist the entire saga came to an unexpected denouement.

News Corp, Australia’s largest news media organisation and arguably the strongest proponent of the new law, announced that it was entering into a multi-year partnership with Google to provide trusted journalism from its news sites in return for significant payments by Google. This alignment was all the more surprising because, until then, Google had been a vocal opponent of the new law. Soon thereafter, Facebook announced that rather than enter into any such arrangement, it was going to prevent publishers and the Australian people at large from sharing or viewing any Australian or international news content. If the diametrically opposite response of the two platforms seems strange it is because their business imperatives are not immediately obvious.

Two Very Different Platforms

Facebook is a platform on which users share content of their choice with their friends and family. News accounts for less than 4% of all the content on the Facebook newsfeed. If Facebook had complied with the requirements of the new Australian law it would, in its own words, have be penalised “for content it didn’t take or ask for.” It is worth mentioning here that Australian publishers received close to 5.1 billion free referrals from Facebook last year - worth, in total, an estimated AU$ 407 million. This suggests that Australian publishers need Facebook far more than Facebook needs Australian publishers. Viewed in this light, Facebook’s decision wasn’t in the least bit surprising.

Google, on the other hand, is a search company. It needs to have the ability, where relevant, to include news in its results. If the Australian law became a reality, Google would have little option but to negotiate the best arrangement it could with publishers like New Corp, or else risk having the quality of its search offering in Australia be drastically impaired.

Global Reaction

The new Australian law had received mixed reactions around the world. Tim Berners-Lee made it clear that if this trend were followed around the world and internet companies were essentially required to pay for linking to content the web as we currently know it would become entirely unworkable.

Tama Leaver added a layer of nuance by pointing out that big tech platforms do more than just link - they actively curate by extracting content from top search results and featuring them prominently at the top of the page. Does this, he asks, justify different treatment - and is there a simple fix that will address Tim Berners-Lee’s concerns. Could we, for instance, limit the need to strike media bargains to just content that is reproduced or in respect of which a preview is made available.

Ben Thomson looked elsewhere into the text of the Australian law and pointed out that it only allows media companies that deal in “core news” to enter into bargaining agreements with digital platforms. The term core news has been narrowly defined to mean publicly significant issues like political and court reporting as a result of which the vast majority of content providers - including those who report on sports, technology and the like, will not be able to benefit from the new law. This, he pointed out, was a sure sign that the law had been written to favour the big Australian News companies.

Broader Consequences

As tempted as I am to get into the weeds of the Australian law, I believe it is more important to assess the broader consequences of this particular approach to re-ordering the relationship between content providers and the digital platforms in order to assess the impact it will have on the way we consume content. There is no doubt that if digital platforms can be coerced into to enter into media bargaining arrangements in Australia, a similar approach will be adopted by governments around the world and, sooner than later, will find its way to in India. Before that happens we need to figure out whether this is good for us.

In the days before the internet, news reached readers through distribution channels that were largely under the control of big media corporations. We hardly remember it now, but in those days we had far fewer sources of news to choose from and what newspapers we did get covered a broad range of topics — only superficially.

Digital platforms democratised access by de-coupling content from distribution. While this meant that news media companies lost control over their end consumer, it gave readers greater access to a wider range of highly specialised news sources.

As good as this was it brought with it its own challenges. With an overabundance of sources, relevant content became hard to find. We knew there was good content out there but had no clue where to go to find it. Digital platforms solved this problem for us by building algorithms that were designed to serve up content most relevant to our needs. They perfected the art of extracting signal from the noise and by doing so perform an invaluable role in the digital ecosystem.

Independent Content Creation

It is because of this that independent content creators can, today, reach relevant audiences without relying on the munificence of big media corporations. Entire industries have been born as a consequence - blogs, podcasts, vlogs and even the recently resurgent digital newsletter (such as the one you are reading right now). All this has resulted in an unprecedented explosion of content — an evolution in news that consumers have, on balance, benefited from.

Which is not to say that this has come without any unsavoury side-effects. The fact that anyone who creates content will find an audience that is interested in it, has polarised our society in ways that we have never experience before. It has resulted in the creation of echo chambers that have made public discourse much less civil. But, perhaps most importantly, it has set in motion the inevitable deconstruction of the news industry as we once knew it.

The Australian media bargaining legislation attempts to address this last issue (and this last issue alone) by offering the traditional news industry a subsidy paid for out of the revenues of intermediary digital platforms. It does so without recognising that by going down this path it will make it that much harder for small, independent news providers to earn revenue or to continue to maintain the high search rankings they need to be able to reach their audiences. And without appreciating the extent to which this will result in the contraction of choice - potentially to the point where we will find the front page of search results comprised entirely with content from the big media houses with whom digital platforms have entered into media bargaining agreements.

Paying the Price

Shortly before this article went to print, Microsoft went on record that it sided with Google on this issue, going so far as to suggest that European publishers should follow Australia’s lead. This was followed by the news that Facebook had arrived at a fresh agreement with the Australian government as to the contours of the law that gave it the assurance it needs to begin to restore access to news on Facebook in Australia.

It appears that, at the end of the day, Big Tech will, one way or the other, be willing to pay the price that Big Media demands of them.

I am just not sure I am.