The Australian parliament is poised to pass a landmark media law that would make Google and Facebook pay news publishers for displaying their content.
The Australian law is separate to a deal Facebook made to pay mainstream UK news outlets millions of pounds a year to license their articles, but has a similar motivation.
The legislation, which will be debated this week, is designed to support Australian public interest journalism and is backed by all the nation’s media companies, big and small.
Why was it necessary?
Regulation was needed to ensure journalism was properly funded after the digital behemoths took the lion’s share of advertising revenue away from traditional media: for every A$100 of online advertising spend, $53 goes to Google, $28 to Facebook and $19 to everyone else.
The media companies have argued that Google makes money from news and analysis provided by them, and users would find the sites much less helpful if no news appeared on their feeds or in their search results.
How did the legislation come about?
The Australian Competition and Consumer Commission held an 18-month inquiry which found there was an imbalance in power between the platforms and the media companies that threatened the viability of the news businesses.
What did the regulator propose as a solution?
The ACCC proposed a bargaining code to ensure that news media businesses are fairly remunerated for the content they generate.
The code gives them a framework to bargain and reach a binding agreement.
If they can’t agree, an arbiter will implement the “final offer arbitration” model to determine the level of remuneration.
Breaches of the code, including not bargaining in good faith, would be punishable by a fine of $10m or the equivalent of 10% of annual turnover in Australia.
But media companies have been encouraged to make commercial deals with Facebook and Google outside the code, and several have been announced or are imminent.
What was the government’s response?
The Coalition government embraced the idea and won the support of the opposition and the minor parties, after some horse trading that resulted in the public broadcasters – the ABC and SBS – being included as eligible under the code.
How did the digital platforms react?
Not well. Facebook threatened to block Australians from sharing news and Google ran a public campaign against the media code arguing it was unfair and that it would “break search”.
At a parliamentary inquiry last month Google Australia’s managing director, Mel Silva, threatened to remove search from Australia. But the government stood firm and continued to push the legislation through a committee and into parliament.
Silva said the proposed news code was untenable and would set a “dangerous precedent” of paying for links.
Has anything been going on behind the scenes?
Yes, a lot. Desperate not to see this “dangerous precedent” become law in Australia and threaten its business model globally, Google softened its stance and launched its News Showcase product in early February.
It immediately signed up several smaller publishers to the scheme, and say those mastheads had 1m views of their content in eight days.
This week Google signed one of the big four media companies, Seven West Media, in a reported $30m-a-year deal. Seven has described the deal as “fair payment” for original journalism.
How did the government react to News Showcase?
The government has held talks with platform leaders and has welcomed any fresh ideas.
The prime minister, Scott Morrison, has suggested the government is open to a compromise in how the code could be applied to Google.
The treasurer, Josh Frydenberg, has also indicated the talks between the tech companies and the media companies have been going well and deals are “very close”.
Frydenberg said on the eve of the bill being debated that Google and Facebook were in “very productive and constructive talks with the commercial players”.
It’s understood Google may be willing to pay media companies similar amounts via Showcase licensing deals to avoid setting the precedent of paying for content displayed in search.
In that case, the treasurer would retain the ability to designate search as the service covered by the code in the future if Google was not seen to be negotiating fairly with media companies.
The legislation will be debated in parliament this week.
Has everyone agreed to sign up for News Showcase?
No, there is a way to go yet for separate deals, but talks between the parties are advanced. Nine Entertainment (publishers of the Sydney Morning Herald and the Age, and the owners of the Nine TV network), News Corp Australia, Australian Community Media and Guardian Australia are still in negotiations with Google.
Facebook has been quiet of late but has reportedly been in “positive” talks with at least one media company over its licensed product Facebook News – a news section inside its main mobile app – which would be used to make commercial deals with media companies. It is curated by journalists and prioritises original stories.
Will it all be over when the legislation is passed?
No. Once passed into law the treasurer will review the working of the code in 12 months to check that the revenue is being spent on Australian public interest journalism and is not just lining the pockets of shareholders.
The intention of the government is to “level the playing field and to ensure a sustainable and viable Australian media landscape”. A review will ensure the tech giants and the media companies are both acting in good faith and the money is flowing into newsrooms.