Why should digital platforms pay for news?

Just forcing payment doesn’t work. We need a rational reason.

An Australian parliamentary report on digital platforms demonstrates the failure of the current legislative approach to funding news.

I’ve always believed the News Media Bargaining Code to be absurd. After three years of the Code’s operation, the Second Interim Report of the Join Select Committee on Social Media and Australian Society backs that up.

The report explicitly examines Meta’s refusal to make new deals - ie give more money to news publishers - and its threat to remove news from Facebook in Australia should it be made subject to the Code (the NMBC).

The report was released on Monday night, and I spent yesterday reading it.* 

It recommends:

• Creation of a Digital Affairs Ministry (DAM!)

• Investigation of a digital platform levy to fund news

• A transition fund to cover lost Meta revenue in the short-term

• Investigation of “must-carry” laws

• A media literacy fund

• Reviewing the existing voluntary mis/disinformation industry code

What it does not recommend is the designation of Meta under the NMBC.

The story so far

Crawford Media/Midjourney

Let me summarise the situation in Australia, which has led the world in terms of extracting money for news from big digital platforms.

The Code was introduced in 2021 to force Meta and Google to do deals with big news publishers. It was legislation as threat: it set up a framework for negotiation between the parties, but didn’t actually “designate” Meta or Google. 

The decision to designate was left up to the Australian Treasurer, and it worked as a threat because the Code employed final offer arbitration. That means the negotiating parties submit their offers and an independent arbitrator decides which one is fairest.

Rather than submit to this process, Meta and Google decided to enter into private deals with big publishers. It is widely supposed the total value of these deals to be around A$200m a year, or A$600m over three years. That’s a lot of money for news.

I hear you cheering. What’s not to like?

The interim report details two of the problems.

• Small, independent and regional news publishers have no political power, therefore no power to force private deals with the platforms. They have received little or no money under the Code.

• There is no requirement to use the money for news, and there is evidence some publishers simply used it to increase profits.

While these are problems, they aren’t why I think the Code is absurd. The biggest problem is that the Code is based on a lie. The lie is that Google and Meta have been paying for news.

If that were true, all the parties involved would act accordingly. They would act as if news was valuable to the digital platforms. But they do not act that way. 

Meta, for example, uses less and less news on Facebook. It is happy to have none at all. Google hides news away in marginal products that it clearly doesn’t care about.

And while news publishers value their own content highly, they do not really act as though the platforms value it similarly. Instead, they seem aware of the platforms’ indifference to news.

Instead of a clear value exchange, the deals are in fact protection money. The platforms have paid to stay out of trouble. Now, at least, Meta has had enough of the farce and is ready to walk away in Australia. In New Zealand, Google has threatened to pull a similar move.

Back to basics

I want to go back to the beginning, and a question that I think is key.

Should big digital platforms be responsible for (partially) funding news?

Like a lot of people, the answer for me feels like yes.

But I’m not sure exactly why. 

Here are three answers that on the surface seem plausible:

1. Because digital platforms use their market dominance to avoid paying for news content

2. Because digital platforms took the advertising money that previously supported news

3. Because digital platforms distribute content to the majority of people

I don’t think the first two points are good answers. 

1. As explained above, I don’t think it’s accurate to say the platforms value news but use their market dominance to get it for free. The problem is rather that they do not value news.

2. Yes - not only did the platforms gobble up most of the ad money, they also reinvented the product and expanded the market. That implies a news responsibility but on its own it’s not a compelling case.

For me, only the third point really hits home. A handful of digital giants control what billions of people see, hear and know. I think this probably is where the obligation to carry news stems from. This is the foundation on which any payment for news must be built.

Must-carry is the beginning

Crawford Media/Midjourney

The problem with baldly requiring digital platforms to pay for news is that in order for such payment to be justified, there has to be a nexus between the platform and news.

For example, we are not seeing calls for Netflix or Spotify to fund news. The idea doesn’t occur because they don’t carry news.

Meta has shown - both in Canada and Australia - that it can remove all news from Facebook and thus sever the nexus. With no news on the platform, how would paying for it be justified?

The first step is to require news on platforms. The criteria for which platforms must carry news are yet to be determined, but would probably include reach, revenue, and existing content genres.

I wouldn’t be afraid of being expansive in must-carry. For example, news may also be required on streaming video services.

The precedent for this requirement to carry news is found in broadcasting in many jurisdictions. Local content, regional, and public interest obligations are established in broadcast licenses. This implies the need for a social media/digital platform licensing regime.

With a licensing regime and must-carry established, we can then proceed to build a funding system that transparently distributes money to news organisations for the purpose of creating news content.

Is this the right thing to do?

I used to think that requiring digital platforms to both carry news and pay for it was some kind of perversion of natural justice.

I hadn’t considered the precedent of broadcasting, where local content quotas already represent exactly that: you must carry this content, and you must pay for it.

The situation is not exactly analogous, because currently digital platforms like Facebook and Google do not pay for the vast majority of their content, unlike TV stations. 

I don’t think that is insurmountable. 

What is clear is that any solution here has to be able to survive a legal challenge. Having previously spoken to legal experts, I know that Section 51(xxxi) of the Australian Constitution could be a sticking point. 

That’s the bit that enables the Federal government to acquire any property “on just terms”. For example, buying property in order to build a military base. The concept extends to cover things like forced payments. For an appropriation of money (a news levy) to withstand a legal challenge, the Australian High Court must agree that it is fair.

Again, this brings the focus back on the licensing regime established as the basis for must-carry and levies. Is it justified? Do we know why some platforms are licensed and others not?

Important

It’s worth building this thing right. Digital platforms have a responsibility to the open societies that gave birth to them, and from which they derive big profits. 

Currently, we have little regulatory reflection of that responsibility. And the digital giants are ready to walk away from a key democratic institution: news.

We’ve got to stop that from happening.

Have a good week!

Hal

*I tried to get ChatGPT to summarise the 100+ page document, but it didn’t really help. My experience with these kind of critical documents reveals you can’t get AI to do your reading for you. One: because you only know it’s a good summary if you’ve read the whole document, and Two: because you can’t outsource understanding.