The Australian bill—good or bad for the media industry? 

The last few months have brought multiple hurdles to the giants of the tech world, but the latest bill in Australia, which seeks to make Google and Facebook pay for media outlets, might be their biggest challenge. The Australian government argues that tech companies siphon ad dollars from the content provided by news outlets, so they should pay them for their links. Google has quickly reached an agreement with some news organizations to pay for some content and display it on the search engine. Facebook, however, did not comply at first. With other countries interested in the bill, two things are clear—the Internet has changed, and the media will start receiving proceeds from the tech world.

The problem has been around since the beginning of the Internet. In the late 90s and early 2000s, when the online world started emerging, news organizations did not understand the web’s impact. They published their content online, for free, while no other industry did the same with their products. As a result, readers got used to the idea that information should be free online, and newspapers became increasingly dependent on Google searches and social media apps. Paywalls came later. Except for the Wall Street Journal, which launched its hard paywall in 1996, most news outlets did not start designing subscription models until the 2010s. For instance, the New York Times launched its metered paywall in 2011. Media outlets trusted readers would jump from their links on Facebook to their websites, so they could monetize their content.

But with time, these two companies have managed to seize the largest advertising pie piece, leaving the media outlets to fight over the crumbs. Amazon, Google, and Facebook control more than 60% of the digital ad market in the United States. In the background, the journalism industry crumbled, with layoffs, local outlets’ closings, and new competition from native digital organizations, such as Buzzfeed and Vice. However, those digital-only outlets soon suffered because their revenues were completely tied up with social media algorithms. Every change in the algorithm would send waves across the industry, leaving Facebook and Google at the media market’s helm. 

As arbiters of media, these tech giants have launched several initiatives for the news industry over the years. Facebook has toyed with media publishers for a long time, looking for formulas to monetize their content. Some of them were the pivot to video, the Instant Articles in 2015, or the recent ploy to launch the Facebook News tab. Google has followed similar paths, with its Accelerated Mobile Pages (AMP) to load articles faster on phones or its Google News Initiative. But despite their efforts, the media industry has continued to suffer, with increased layoffs and money poured into social media strategies. News organizations depend on Twitter, Google, and Facebook for their traffic and, as such, for their revenues. And Australia has said enough.

The bill, which has been in the works since 2018, would introduce a bargaining code that would make large tech companies pay media outlets to display their content online Media publishers would have more leverage to negotiate payments. If those talks failed, the Australian Communications and Media Authority would act as judge in the dispute, picking one of the two numbers in the discussion. Google and Facebook are left with two options—either sign deals with individual publishers to avoid arbitration or reject the legislation altogether. Google has opted for the former, while Facebook for the latter (at least for a week.)

The Mountain View-headquartered company is highly dependent on articles to drive traffic. Google is the largest search engine because it has access to millions of results in the form of links for its users. If it were to ban all news articles from its search, its traffic would definitely decrease, leaving a door open for its competitors (such as Microsoft’s Bing). Following that reasoning, Google inked a contract with Rupert Murdoch’s News Corporation, one of the largest publishers in Australia and the United States. Under the terms of the deal, Google will pay News Corp to feature its content in its News Showcase product for three years. The firms will share the advertising revenue and invest in more video journalism to be featured on YouTube. Google caved.

But Facebook took another route at first. Mark Zuckerberg’s company announced they will not pay media outlets. Instead, the tech giant banned news outlets in Australia from sharing their links on Facebook. “Contrary to what some have suggested, Facebook does not steal news content,” said Facebook’s vice president of global news partnerships, Campbell Brown, in a blog post. “Publishers choose to share their stories on Facebook.” The move came with its own problems. For instance, Facebook used its machine learning systems to bar news content and banned other pages such as Australia’s Bureau of Meteorology. After a five-day standoff with the government, the parties reached an agreement. Facebook would cease to ban news outlets in exchange for changes to the legislation. Facebook, in a way, won.

But Facebook, unlike Google, could do it. Tech reporter Casey Newton notes that only 4% of Facebook’s posts come from news sources. On Facebook, content is mixed up. A user can scroll through the app and see a friend’s picture, an ad for a brand you follow, or an SNL video. You can also see fake news or conversations in groups with members asking about the weather. In this context, it was already hard enough to distinguish the news outlets’ content. We were giving the same value to a news link as to a friend’s post.

At the same time, the ban was a disaster for news outlets. According to the Nieman Lab, news publishers saw 20% or more of their audience disappear. It’s not a surprise. The Reuters Institute’s latest reporter notes that more than 50% of Australians get their news on social media, the most popular platform being Facebook. The ban could have ended up hurting news organizations more than the current situation.

Neither response, nor Facebook’s deal, provides a solution. On the one hand, the Facebook ban would have resulted in overall decreased traffic to news outlets. But with a silver lining: interested readers would have adapted and gone directly to news sites or the outlet’s newsletters to stay informed. Newspapers could have regained some control of their distribution channels. Still, they would have lost casual readers who open links they find on Facebook. The platform would have also suffered losses, as no one would have been able to fact-check fake content. On the other hand, the Google response, and Facebook’s second approach, does not provide a solution for the industry. The tech giant will strike deals with large corporations, not small publishers, leading to further market consolidation. Besides, it is not a long-term solution, just a three-year contract for a specific product type.

What’s clear is that the Internet has changed, and that quality content will no longer be given out for free. Tech giants and news outlets must reach an agreement in some kind of shared-revenue model. There are several options. For example, governments could create a Google and Facebook tax and dedicate those resources to news outlets across the spectrum. Another option is to provide a percentage of the money from those ads to the news site owner, ensuring those dollars are used for journalism. 

We are reaching a consensus in which we agree that tech companies should pay in some way for journalism as a form of civic duty. Platforms provide a public plaza, while journalism ensures those citizens are well informed. But the Australian bill might not be the best way to go about it.