February 19, 2021

Google and Facebook are right to think the News Media and Digital Platforms Mandatory Bargaining Code (MBC) is a hit-job.
The stated purpose of the law is to help the sustainability of Australian news media outlets by addressing their “bargaining power imbalance” with digital platforms.

Media Bargaining Code

The bargaining power being equalised is not that between news outlets and platforms. Any concerns in that space – if outlets had a legal right to compel payment – could already be powerfully enforced in the courts. What the law does, is make up for the failure by traditional news outlets to recruit subscribers in volume through their own paywalls by deeming platforms to be content distributors and forcing them to share advertising revenue ostensibly to defray the cost of news production. The MBC introduces draconian changes to how Australians source information and is deserving of wide and ample discussion.

And not just because such examination reveals just how far the Australian government has bent over to please legacy media interests. Or how ineffective Google and Facebook have been in countering old-school lobbying.

Platforms are deemed to be distributors of an Australian news producer’s content by doing any of the things they legally do now without having to pay for the privilege: ranking, curating or promoting content.

The “imbalance” addressed is traditional media’s inability to persuade consumers to source their news and other content by subscription when the overwhelming preference is for a range of colourful, easily digested summaries as opposed to the full story.

Viewed this way, the code will deny consumers the benefits of industry disruption and create an economic distortion the adverse consequences of which will magnify over decades.

Given that the usually highly-vocal commercial news outlets have lots to gain from the MBC, the lack of debate over the benefits and detriments of the proposed law is not surprising.

Not even a hint of the hullabaloo that would normally accompany a ground-shifting policy change has surfaced anywhere. Newspaper and other media editors are very content to have nil debate on this particular topic and to beat up on any platform for deciding not to distribute Australian news.

Any organisation that has the primary purpose of creating and publishing “core news content” to “professional journalistic” standards for Australian audiences and has an annual revenue of $150k (a “news outlet”) can register with the Australian Communications and Media Authority (ACMA).

Content is considered to have been “created” even if the outlet obtains it from a third party. TV and radio broadcasters qualify as a news outlet if their content is also published eg online.

According to the Treasurer, the “code ensures that digital platforms share the benefit they obtain from using Australian sourced news content with the news media businesses who create that content”.

Why though should platforms pay to refer volume traffic via a snippet or link to a news outlet’s website? Shouldn’t there be equal consideration of the benefits of platform referrals? Shouldn’t the Code also consider money flowing in the opposite direction ie to platforms?

Only as an afterthought – by way of a recent amendment to the Bill – does the Code contemplate that news outlets get referral benefits.

But the money flow dictated by the Code is entirely one-sided, with absolutely no obligation on outlets to pay platforms for net benefits.

And while platforms have heavy obligations to report on ‘user interaction’ on their sites, the corresponding duty on the part of news outlets is minimal. Platforms must even pre-notify changes that will impact referral traffic to an outlet. Doesn’t that of itself imply referrals from snippets and links convey benefits to news producers?

The code is to be implemented by adding Part IVBA to the Competition and Consumer Act 2010. What are its key concepts?

“Core news content” is the product of reporting, investigation and explanation of current affairs at a national, state, local government or community level or issues that “inform democratic decision-making”.

“Pure opinion or commentary” on current affairs and “private” or special interest reporting is not core news content. Neither is sports reporting or entertainment news.

Registration bestows all the code’s advantages on the news outlet not just in respect of “core new content” but to almost all of the outlet’s product which is called “covered news content”.

The broader category brings in the outlet’s sports reporting and entertainment news and interviews, they being things or events “of interest to Australians”.

Registration first allows an outlet (on its own or collectively with other outlets) to demand a designated digital media platform (“platform”) negotiate the price payable for the platform to even reference the outlet’s content.

Second, it requires the platform to comply with the code’s “general requirements” and “minimum standards”, discussed below.

A news outlet may however choose not to bargain, ie it may simply demand a price, but if negotiations start, they must be conducted in good faith.

Payments to the news outlet might be as a lump sum or cost per click, impression or any other measure they agree. Payment is envisaged even where a platform merely includes a link to the outlet’s article and/or displays a “snippet” of that story.

If a payment level or mode can’t be agreed, each party makes a final offer and a panel chooses between them by taking into account the cost of producing news content and the respective benefits both parties receive by the platform distributing the outlets’ product and (presumably) from referral traffic from the platform.

Maximum penalties for breaches of the code start at $10 mil but can be as high as three times the value of the unremunerated benefit the platform receives from such content or 10% of its annual turnover.

Injunctions are an available remedy as are damages and other compensatory orders.

“General requirements” – that extend to the broader category of “covered news content” – include an obligation to appropriately recognise an outlet as the source of “original” covered news content and to give advance notice of algorithmic or similar changes intended to alter the amount of covered news content on the platform.

Changes that will impact “referral traffic” to the platform’s covered news content must also be pre-notified and user interaction data must be supplied not just to the producing news outlet about to all outlets.

One of the 5 things considered in determining the price that platforms must pay for distributing an outlet’s news content – along with the cost of producing the news content – is the benefit received by a platform from housing news (including snippets that link to the outlets own webpages).

Facebook has demonstrated most emphatically that it sees no such benefit and will not be compelled to pay for an arrangement the benefits of which flow in the opposite direction.

Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021

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