As New Zealand media companies organize to launch collective bargaining with Google and Facebook over payment for news content carried by the larger platforms, Rod Sims offers some insight into pioneering efforts in Tasman.
Rod Sims was chairman of the Australian Competition and Consumer Commission from 2011 to March 2022.
Opinion: The Tinbergen Rule, named after one of the first two Nobel Prize winners in economics, actually states that every policy instrument must be targeted to achieve a policy objective.
It may have side benefits, but to be effective each policy instrument needs to be true for the same purpose for which it was designed. All policy makers should be aware of this rule and follow it.
The News Media Bargaining Code (NMBC), passed by the Australian Parliament in February 2021, is a prime example of this, despite threats to remove Google Search from Australia and all news and Facebook.
NMBC was intended to address the huge imbalance in bargaining power between Australia’s news media businesses and platforms.
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Google and Facebook need to have news on their platforms to maximize user attention and therefore the ad revenue they rely on, but they don’t need the content of a particular news business. On the other hand, every media business needs to be on every platform.
This imbalance, or market failure, means that commercial deals cannot be made for platforms to receive fair payments to profit from news media content on their platforms.
The result is that less journalism costs can be borne. Journalism benefits society in many ways, even for those who don’t, because it is powerful to account for, provides a journal of record and a platform for ideas. While not all market failures need to be addressed, it should have happened with NMBC.
Prior to the passing of the Australian NMBC, news media businesses were unable to negotiate with the platform for any payment for their content; With this, if those negotiations don’t yield proper results, they may need platforms to negotiate and initiate mediation.
The threat of arbitration also increases the bargaining power as all parties wish to avoid setting up a commercial arrangement by the arbitrator; It is better to get it than to offer to take or leave from a monopoly, but it is also better to settle a commercial arrangement.
Australia’s NMBC has been extremely successful in achieving its stated objective. By not being able to connect with the platforms, Australian news media businesses that have deals under NMBC are comfortable with them, and these deals are yielding news businesses more than $200 million a year.
In addition, the platforms have struck deals with media businesses employing over 95% of Australian journalists.
However, NMBC has been criticized for the fact that the deals made were not transparent; that it favors the incumbents and therefore does not promote media diversity; And that no platform has been specified under NMBC and no arbitration has resulted.
Transparency was not the aim of Australia’s NMBC. If the bargaining power were the same in the first place, not only would commercial deals not be transparent, but the outcome of any arbitration under NMBC was required under law to be kept confidential.
This was because making commercial or arbitration deals transparent could see various deals made or secured to the detriment of news businesses.
With regard to diversity, NMBC was intended to allow commercial negotiation for payment for existing content; How can a platform require you to pay for content that hasn’t been created yet?
NMBC was only one of nine recommendations affecting the media from the Australian Competition and Consumer Commission’s 2019 Digital Platforms Inquiry. Others, such as government grants to support the media and allowing a tax deduction for donations to the media, will benefit media diversity.
The designation and the arbitration result were not the object of NMBC. It was expected that the threat of arbitration would lead to commercial deals. However, these were acquired with the threat of the designation [requiring the tech companies to enter into the bargaining code, rather than allowing them to approach it voluntarily],
However, there are two issues that need to be addressed.
First, Google has struck deals with nearly all media companies, but a small number have drawn the line, arguing that they should not qualify under NMBC because they do not produce public interest journalism.
There is strong objection to those media businesses being left without a deal. The Australian Treasurer recently launched a review of NMBC as required by its law and will address the issue of whether media businesses must qualify. The Australian Treasury will assess whether all who should have got a deal got one, and if not, why not.
More worryingly, Facebook has made several fewer deals than Google, including no deals with SBS, Australia’s multicultural media business, or The Conversation, which publishes research-based news stories among Australian academics and journalists. allows to do. Both will qualify under any NMBC criteria.
Then, now or after the Treasury review, an important question is whether Facebook should be designated under NMBC. Until Facebook rolls out more deals it would seem reasonable.
- Rod Sims is a professor at the Crawford School of Public Policy at the Australian National University.