Why Google and Facebook Pay For News in Australia, And How the US Might Follow

by in Industry

When Australia passed a law last month requiring Google and Facebook to pay for the distribution of news on their platforms, Facebook cut access to all news stories for Australian users. After initially opposing the law, Google and Facebook both reached deals with Rupert Murdoch’s News Corporation, agreeing to make “significant” payments for the articles published by the media outlets under Murdoch’s ownership.

Facebook has since restored access to news for Australian users in exchange for amendments to the law. And both Google and Facebook are in the process of negotiating deals with other outlets in Australia. The standoff between the tech companies and the Australian government offers a preview of what may happen as U.S. lawmakers consider similar legislation.

[Read More: Facebook Reaches Deal with News Corp Australia, Allaying Fears of Another News Ban]

The Journalism Competition and Protection Act has been introduced in both the House and the Senate with bipartisan support. Similar to Australia’s law, it would allow print or digital news organizations to bargain with news distributors, like Facebook and Google, to be compensated for their news stories through payment of a distribution fee.

“We must enable news organizations to negotiate on a level playing field with the big tech companies if we want to preserve a strong and independent press,” said Sen. Amy Klobuchar (D-MN), a co-sponsor of the bill and the chairwoman of the Senate Judiciary Subcommittee on Competition Policy, Antitrust, and Consumer Rights.

“Google and Facebook aren’t just companies—they’re countries, and we can’t tolerate tech giants’ strangling their print news competitors,” said Sen. John Kennedy (R-LA), another co-sponsor of the bill.

The Australian Competition and Consumer Commission found during an 18-month-long inquiry that for each $100 spent by advertisers, Google receives $47 and Facebook receives $24. As Steven Hill points out in an op-ed for Inside Sources, this leaves a much smaller proportion of digital advertising for thousands of Australian media outlets.

“The purpose of the code is to address the market power that clearly Google and Facebook have. Google and Facebook need media, but they don’t need any particular media company, and that meant media companies couldn’t do commercial deals,” said Rod Sim, the chairman of ACCC. 

In the U.S., the justifications for the Journalism Competition and Protection Act are similar. In 2018, 60 percent of the digital advertising industry went to Facebook and Google. The disparity is even greater at the local level, with Google and Facebook claiming 77% of digital advertising revenue in local news markets.

“They’re taking the original content produced by newspapers and by television broadcasters, they’re not paying the broadcasters or the newspapers for and they, meaning the social media platforms, are putting it on their sites to draw viewers,” Kennedy said during an interview with Fox News. “All my bill would say is … you can share it but you’ve got to pay for it.”

A survey conducted by the Pew Research Center last year found that 60% of U.S. adults get their news online often, and 26% get their news online sometimes. More than half get at least some of their news from social media.

Source: Pew Research Center

Although online news readership is higher than ever, digital, print and local news have seen revenues consistently drop. In the U.S., newspaper revenue declined by 62% between 2008 and 2018, and newsroom employment declined by half during a similar time frame. 

While digital ad revenues have been increasing in recent years, they are a “growing share of a shrinking pie” according to a Brookings study published in 2019.

In 2010, Google announced publishers were receiving 68% of online ad-revenue for content advertisement (ads that appear on a publisher’s website) and 51% for search ads (ads that appear next to Google search results).

The Association of National Advertisers estimates that publishers currently only receive 30 to 40% of ad revenue because of the ad placement fees publishers pay Google. 

In 2020, Facebook earned $31.4 billion in ad revenue while Google earned $39.5 billion. In its entirety, the print and digital newspaper industry made $14.3 billion in 2018, approximately one-third of Google’s ad revenue alone.

The bill proposed in the United States would institute a four-year exemption of antitrust laws, allowing news organizations of all sizes to collectively negotiate the terms for Google and Facebook to distribute their content.

This differs from the law passed in Australia, which requires each individual media company to directly negotiate with distributors like Facebook and Google. If the two parties cannot agree on terms, the issue is arbitrated by the ACCC, which would ultimately decide how much Facebook or Google would pay to distribute news stories.

When Facebook removed news for Australian users, the company cited concerns that it would not have the ability to decide if news content would appear on its platform and would subsequently be forced into arbitration.

“Going forward, the government has clarified we will retain the ability to decide if news appears on Facebook so that we won’t automatically be subject to forced negotiation,” said Campbell Brown, the vice president of global news partnerships for Facebook in an interview with BBC News in late February.

The Electronic Frontier Foundation acknowledged the damage that Facebook and Google have done to the news media but critiqued the U.S. legislation as an attempt to return to last century’s media landscape instead of helping new media industries.

“Few truly small, independent media operations exist right now. And in the case of certain companies—like the ones owned by the Murdochs or the Sulzbergers—it would be a mistake to assume the ills of the industry are actually being visited upon them: or that catering to their needs will trickle down to the rest of the journalistic ecosystem,” Katharine Trendacosta and Danny O’Brien wrote in an article for EFF.

Tagged with: , , , , , , , , , , , , ,

Leave a Reply

Your email address will not be published.