Thu Aug 11

Australia’s News Media Bargaining Code led the world. It's time to finish what we started

Written by Rod Sims, Professor in the practice of public policy and antitrust, Crawford School of Public Policy, Australian National University

Public interest journalism is essential to a well-functioning society, even for those who do not watch or read it. It holds the powerful to account, provides a journal of record and is a forum for ideas.

Australia’s News Media Bargaining Code ^[1] was a world-first: set up to value public interest journalism, it’s made it easier for most Australian news media to do deals with global platforms such as Google and Facebook.

It was conceived of and largely formulated by the Australian Competition and Consumer Commission, of which I was chair until March 2022.

It was passed into law by the Australian parliament in February 2021 despite threats, widely publicised around the world ^[2], to remove Google Search from Australia and to take all news and more off Facebook.

But while that code has since become a template for several other countries, there remains unfinished business in Australia.

Fixing ‘market failure’

Google and Facebook need to have news on their platforms to maximise user attention and enhance the targeted advertising on which their revenue depends, but they do not need the content of any particular news business.

On the other hand, each media business needs to be on each of the platforms.

This imbalance (“market failure ^[3]”) means commercial deals cannot be expected to achieve fair payment for the benefit the platforms get from news content.

The outcome is that less journalism can be afforded and provided.

While not all market failures need to be corrected, this one did and was.

Prior to Australia’s media bargaining code, news organisations were unable to negotiate with the platforms for any payment for their content.

After the code, they could require the platforms to negotiate, and trigger arbitration if those negotiations broke down.

The mere threat of arbitration evened bargaining power, as both sides wanted to avoid letting an arbitrator decide commercial arrangements.

For those with the market power, the threat of arbitration means they can no longer simply dismiss the claims of those whose products they use.

$200 million a year more for Australian journalism

Australia’s code has achieved its main objective. From not being able to engage with the platforms, Australian news organisations are getting deals worth more than A$200 million per year.

While some media organisations used payments from the code to significantly boost staffing numbers (The Guardian increased its staff 50% largely because of the code), for others the outcome is less clear.

But a number of journalists have told me and others that now is a great time to be a journalist, thanks to the media bargains struck under the code.

The code was a world first. While Google and Facebook had made minor payments throughout the world, largely in the form of grants, they had never effectively negotiated commercial deals.

But some organisations have been left out

In settling the details of the News Media Bargaining Code in discussions with Google and Facebook, the federal government commendably held its ground. It did make several changes, most of which were of no consequence.

One change that meant a lot to Google and Facebook was a provision that said before considering “designating ^[5]” a platform as subject to the code, the treasurer would consider whether it had already made a “significant contribution to the sustainability of the Australian news industry through agreements relating to news content of Australian news businesses”.

In order to avoid designation, Google and Facebook did deals quickly. It meant deals were done commercially, rather than by arbitration.

It’s time for designation

There remains, however, a problem. Google has completed deals with essentially all qualifying media businesses. But Facebook has not, by quite some way, leaving companies employing 15-20% of Australian journalists out in the cold.

Among others, Facebook has not done deals with the SBS, Australia’s multicultural broadcaster, or The Conversation ^[7], which brings together Australian academics and journalists to publish research-based news.

Both represent some of the purist public interest journalism in Australia.

In my view, Facebook should now be “designated” by the Australian treasurer, so it is forced to negotiate with the remaining media businesses and face arbitration if commercial deals are not reached.

As provided for in its Act, the Treasury is currently reviewing the media bargaining code ^[8] and is due to report in September.

The US is considering a Journalism Competition and Preservation Act. Celil Kirnapci/Shutterstock

Canada, the US, UK and India following our lead

Australia’s code has been copied in many other countries.

Canada has legislation ^[9] out for comment at the moment. An improvement is that the deals need to be reported to the Canadian broadcasting regulator, who would tally them up and publicly report them.

In Australia, the ACCC did this informally and I spoke to media chief executives. This allowed me to say that the deals were worth more than A$200 million per year.

I think it makes sense to formalise reporting as Canada is doing.

The Canadian bill also lists more explicit criteria for exempting a platform from designation, another improvement Australia’s review should consider.

The United States is debating the Journalism Competition and Preservation Act ^[11], which has key features of the Australian code, but applies only to news businesses below a certain size. This seems workable, given that the mere threat of Australian-style legislation has prodded Google and Facebook to deal with larger companies.

Britain is considering overarching legislation applying to large digital platforms with “strategic market status ^[12]” that will allow a range of codes to be put in place.

The first code being contemplated when the legislation passes, hopefully next year, is one that closely resembles the Australian code.

Other countries are looking at adopting the approach; for instance, India’s Minister for Electronics and Information Technology and Electronics has foreshadowed ^[14] bringing one in.

In all these countries, as in Australia, Google and Facebook are employing enormous resources to lobby against bargaining codes. The key to success is for media businesses to be united in pressing for change and to lobby political parties to support codes like the News Media Bargaining Code.

Governments can be strong on issues in which they have the support of all of the media and all political parties, as happened in Australia.

If news organisations get paid for their content in enough countries, journalism’s future might just become secure. It’s something worth achieving.

Disclosure: Facebook has refused to negotiate a deal with The Conversation under Australia’s News Media Bargaining Code. In response, The Conversation has called for Facebook to be “designated” under the code. This means Facebook would be forced to pay for content published by The Conversation on its platform.