big tech
Treasurer Josh Frydenberg (Image: AAP/Lukas Coch)

It was a contorted path to find a way to block the ABC and SBS from accessing the government’s attempt to force open the Google/Facebook money pot to traditional media, but Treasurer Frydenberg seemed to find it this morning as he announced the next step on the road to a mandatory code between big tech and old media.

It required trashing the key principle underlying the Australian Competition and Consumer Commission’s (ACCC) rationale for requiring big tech to pay Australia’s old media. As a result, the government’s approach reflects more the whinges of publishers than the findings of the ACCC.

The principle that the ACCC used to underpin its proposal for a mandatory code to govern arrangements between news media and the Google/Facebook duopoly was simple: the tech platforms have built and monetised their reach through the content produced by others — particularly news media.

As ACCC chair Rod Sims said this morning: “News content brings significant benefits to the digital platforms, far beyond the limited direct revenue generated from advertising shown against a news item. News media businesses should be paid a fair amount in return for these benefits.” (Google and Facebook say “news” is only a small part of the content on their platforms.)

Payments should, Sims says, take into account the cost of producing that journalism. Boiled clear of any waffling and legalese, the publishers’ complaint has been that big tech has taken their advertising dollars and they want them back.

This global shift in advertising has gutted the commercial media business model which has been unable to compete with the tech platforms for digital advertising. Over half of all advertising in Australia is now online, and most of that flows through Facebook and Alphabet-owned Google.

That’s the rationale behind the value News Corp Australia’s boss Michael Miller put on the use of news content: about 10% of the largely advertising-based Australian revenues of the big two tech companies. $1 billion.

Frydenberg backed the commercial publishers this morning, talking up the crisis in privately-owned media, particularly regional and local media.

But the ABC, he said, was funded by the government and didn’t need big tech’s money.

Beyond the money, the newly announced code will require news media to get 28 days’ notice of algorithm changes likely to affect traffic to news, including display and presentation, ranking of news behind paywalls, and advertising directly associated with news.

It will also require the tech companies to give news media the data they collect through how readers (that is, you) consume news on digital platforms — how much, how long, etc. Platforms (in this case, Facebook) must also include an ability to turn off comments on individual stories, as publishers may be liable for defamatory comments.

The proposals will be out for public comment for the next four weeks. After that, the process for the code will be embodied in legislation which the government will hope to have in place by the end of the year.

The legislation will empower the commercial publishers to form their own “union” for collective bargaining and require platforms designated by the Treasurer — initially Facebook and Google — to negotiate with that “union” over use of news content, including payment. 

If the two sides can’t agree within three months, the publishers “union” get something real unions don’t: “final offer mandatory arbitration” — access to an agreed (or imposed) arbitrator who picks whichever offer they consider most fair.  

The timeline through comment, legislation, negotiation and arbitration suggests the process should take between nine months and a year, in time for Australia’s next election.