news media bargaining code
(Image: AP/Josh Reynolds)

If you read the papers, the federal government’s proposed mandatory news bargaining code seems like the sliced bread of media regulation — the breakthrough that ends the disruption of old media.

The apparent benefits are exploding: once, it just levelled the power between old media and big tech; then it returned the advertising dollars that old media shed when big tech offered a better tool.

Now in Australia it’s apparently the solution to fake news and digital echo chambers while in the United States the Google and Facebook advertising duopoly hollowing out old media is being blamed for “cancel culture”.

But by donating a new money stream to old media, the code may well end up making fake news and the opinion silos it feeds much worse.

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Social media platforms act as echo chambers (or the “oxygen of amplification” as Data & Society’s Whitney Phillips best describes it). But what are they echoing?

It’s usually the words of leading political figures (from Donald Trump to Craig Kelly) mediated through hot takes from masthead opinionists or cable news commentators in the conservative media ecosystem that, through News Corp, dominates Australia.

A guaranteed income flow from big tech to old media removes the market demand of having to broaden the audience prepared to pay for the product. It exchanges the social licence given by willing users for a political licence given by a friendly government.

While the market has always been a clunky tool to force accuracy in news media — fake news is also about demand as supply — it’s always been better than the alternative of government mandate.

Right now, in the US, Fox News is finding out what happens when the market turns against you: advertisers pulling out (under pressure from groups like Sleeping Giants) and the audience going both further to the right and back to the fact-based centre.

It’s also facing bankrupt-making legal cases for broadcasting falsehoods. Voting technology company Smartmatic is suing Fox and three of its presenters for US$2.7billion over false claims they broadcast that wrapped it into the “stolen election” narrative.

This threatens to be this decade’s equivalent of the UK hacking scandal which cost the Murdoch companies more than $1.6 billion, forced News of the World to close, ended the family’s bid for full ownership of Sky UK, and ended the rise of James Murdoch. (That last bit? That’s the bit current heir Lachlan will be thinking about.)

Fox News has whiplashed. Before the case landed, it was shifting right, bringing forward its nighttime opinion programming, making its daytime news more opinionated and promoting its Trumpist presenters.

Now one of the three presenters named in the Smartmatic writ — early Trump-backer Lou Dobbs — has been moved on. As plenty of the company’s UK journalists discovered post-hacking, company loyalty ends where the family’s survival begins.

No wonder a Google/Facebook income flow seems an easier way out than dealing with an ungrateful audience. That’s why News Corp is hanging tough. (And why Canada’s old media oligopoly came out with blank front pages last week to pressure the government to help them gouge income out of the platforms.)

How much are the publishers hanging out for? In the early ambit claims, News Corp’s Australian boss Michael Miller nodded at $1 billion and Nine’s Peter Costello reckoned $600 million would do. They would be expecting between a quarter and a third of that. (One of the interesting fights to watch is what cut the Daily Mail expects for its 15% of Australia’s digital news audience.)

Google has announced a global pool of $1.3 billion, reflected in the annual €50 million French deal. This translates to about $50 million in Australia, which seems to be the basis of Google’s News Showcase deals based on the reported $2 million being paid to ACM for its 4% of the digital market.

Given the pressure on Google (and its continued profitability) expect the global pool (and Australia’s share) to double, with a squeaky wheel loading for Australia perhaps mediated through other Google products such as YouTube, the Play Store and Google subscriptions.

It’s nice money, although it may end up hurrying on old media’s day of reckoning with its audience.

Private Media, the parent company of Crikey, is a participant in the Google Showcase program. Content from Crikey and other Private Media brands is featured on Showcase as part of a commercial partnership.