MPs urged to take sides in media vs big tech tussle

Media bosses warned MPs this week journalism is in jeopardy here if they don't back a Bill making offshore tech giants pay for news carried on Facebook and Google. It's based on laws already in place in Australia and Canada. Mediawatch asks the ex-editor leading the publishers' pitch how it might work.

It’s not uncommon to find anguished articles in the media about the perilous state of the news media business these days - both here and overseas. 

The New Yorker published a grim essay last weekend under the headline Is the Media Prepared for an Extinction-Level Event?

Author Claire Malone said the expert predicting 'extinction' had cited the prospect of Google rolling out A.I.-integrated search tools. 

If Google’s A.I. interface answers routine search queries itself rather than referring users to the online sources of news and information it could be devastating for media websites, he said.  

“We are witnessing nothing less than the end of the mass-media era,” media analyst Brian Morrissey said.

“Clinging to scraps of hope” was how New Yorker writer Claire Moloney summed up the prospects for news media companies. 

The owner of the biggest publisher of news in New Zealand echoed that in Parliament on Thursday before a committee considering  the Fair Digital News Bargaining Bill.

Stuff owner Sinead Boucher said the advent of generative AI looked "increasingly like an extinction-level event" for news publications. Journalism here “is in a fight for its life" and “clinging on by its fingertips . . .  against some of history's biggest companies,” she said.

The FNDB Bill is a tool to pressure Google and Facebook owner Meta to pay NZ news media companies for the local news and content they carry on their lucrative online platforms. 

Their success in the past twenty years has come at the cost of local media. They have lost the lion’s share of their ad revenue to Google and Facebook while at the same time becoming more dependent on them to reach an audience online. 

Australia’s government reacted with legislation to force the tech titans to do deals with news publishers if they didn’t hammer out their own deals by themselves. 

The process was fraught, but a bargaining code is now putting millions of dollars back into Australian news publishers.  

Here, news publishers got permission from the Commerce Commission to bargain collectively with Google and Meta to make sure big and small publishers could all benefit if they ever got around the table. 

But they needed the government to create a legislative backstop. 

The Fair Digital News Bargaining Bill the former Labour government finally put forward last August tasks the Broadcasting Standards Authority with overseeing a bargaining code.  

If for digital platforms and news media companies can't reach agreement, an arbitration process kicks in.

The BSA could hand down fines and penalties for failing to bargain in good faith, or refusing to engage in compulsory bargaining.

But Labour  lost the election two months later - and it looked like the FNDB Bill would follow it out the door,  

The National Party’s minister-in-waiting Melissa Lee told Stuff governments should “not be involved in the business of  the Fourth Estate” and ACT opposed it in Parliament last year too. 

But the minister didn’t kill the Bill when she was appointed in November. She allowed it to go through to the select committee.

Earlier this month the Briefing to the Incoming Minister warned Ms Lee that “traditional media business models are failing.” 

Making the case 

Late last year the News Publishers’ Association (NPA) hired Andrew Holden - former editor of the The Press in Christchurch and Melbourne’s main daily The Age - as its first Public Affairs Director. 

“The heartbeat is there. It may not be exceptionally strong, but still the heartbeat is there. There is hope. The opportunity is there for us to make the case,” Holden told the Sunday Star Times recently. 

That opportunity came this Thursday before Parliament's Economic Development Science and Innovation committee chaired by Act MP ParmJeet Parmar.

Media bosses who spoke gave the impression their own heartbeat wasn't too strong either  - and they were in an unfair fight to survive against Google and Facebook. 

The first up was Daryl Holden, managing editor of the Ashburton Guardian. He said that in spite of innovating online and putting up a paywall, his 145-year old paper was in jeopardy - and it wasn’t the only one.

“This could be the collapse of New Zealand media. And with that, we know what effect that could have on communities that it relied on for so long.”

“What the government is asking New Zealand media companies to do is compete against the likes of Google and Meta - in the current regulatory framework. That is like asking the All Blacks to compete at a Rugby World Cup in bare feet,” Jana Rangooni  - chief of commercial radio’s umbrella group the Radio Broadcasters Association - told the committee.

“It is not a living level playing field. This legislation is about  . . . trying to deal with the issues of a huge imbalance in the market structure that we're operating in,” she added. 

RNZ doesn't have to worry about digital ad revenue being fully funded by the taxpayer, but its chief executive Paul Thompson told the committee that the survival of journalism in New Zealand was a matter of national sovereignty. 

 “A robust media system is not a nice-to-have. It’s essential as a sovereign nation. It’s the bedrock of our sovereignty as a nation. If we don’t tell our stories, someone will come in and do it for us from offshore.”

“How do we sustain a viable diverse media sector to keep our democracy safe and strong? It’s not a given we’ll be able to do that as a sector without some change.”

“If we don’t tell and own our stories. If New Zealanders don’t have a range of media to come to. If they don’t have a choice, they will get the information from somewhere else and it will break our democracy.”

Thompson also said that the tech platforms hadn’t acknowledged the benefits that had from New Zealand news and wouldn't do so of their own volition. 

“A level playing field  . . . allows us to enter into good faith negotiations and extract the value from those discussions. If they were going to happen to a satisfactory level they would have happened by now. 

There was plenty more said by more media bosses on Thursday - and also from opponents of the Bill who argued it was unnecessary or possibly even an overreach of state power on the the media and business. 

Google and Meta didn't turn up at the hearing. But their submissions on the Bill say that it's unfair, ignores the economic reality of publishing today. They also believe it misunderstands the way their platforms work - as well as the value they believe they do deliver to news publishers. 

“During the past 12 months in New Zealand, we have sent around 390 million clicks to registered New Zealand publishers – additional traffic worth more than NZ$33 million in estimated value,” Meta claimed in September 2022.

Leading the push 

hen his own turn came to speak at Thursday's hearing, the NPA’s Andrew Holden cited Cyclone Gabrielle which struck one year ago this week.

“Put simply, the market is broken. Just like the homes, properties and businesses in Tairāwhiti, it needs to be fixed.”

“We know about the difficulties in Tairāwhiti and Hawkes Bay because of the journalists on the ground reporting and telling us exactly what's occurring there. Google and Facebook know that we value news, but because of their dominance of search on social media they're taking the lion's share of the digital advertising. And they're paying nothing to the companies who provide that information.”

“We believe this legislation is the most efficient and timely way to do this here in New Zealand.”

But in the past publishers were pretty keen to exploit the rise of search and social media. It opened up a new playing field  - the online one gave new audiences far beyond the ones they could reach in print and on air. 

So at what point did new publishers believe they needed a law to level up this new playing field? 

 

“I think we've seen that progression over certainly the last five years where companies like Google and Facebook started to change and tighten the algorithms that operate within their platforms that then determine what kind of information is presented to you,” he said. 

“These tech companies saw the advertising opportunity and geared the algorithms on their platforms to suit them. Publishers over the years have had no warning and no opportunity to argue the toss around what gets presented first and how their own material is developed. “

The last time rival media bosses were all on the same page like this was when they pushed for the merger of NZME and Stuff in 2018. 

30 editors and executives at both rival companies went public with a statement which said it was the only way to fight market dominance of the tech giants - and they argued journalism was in jeopardy without a merger. 

But back then, opinion was not unanimous among the rank and file and the Commerce Commission was not persuaded such an anti-competitive move was in the national interest. 

This time the mutual interests of news producers are clear - but are they the public interest too? 

“You could certainly use the Profumo scandal line: ‘Of course, they would say that wouldn't they?” But these (media) companies that are more than happy to compete aggressively with each other. What's very clear here  . . . is that this is basically a market breakdown and it's skewed dramatically in favour of the big tech companies,” he said. 

What about the argument Google and Facebook do refer traffic of significant value to news producers’ sites and apps already - as well as the benefit they accrue themselves? 

“They do deliver some value, but it's a minuscule amount compared with what they're getting out of it.These are the same arguments they've used in Australia and Canada, they use them in every jurisdiction. The reality is that they do take the lion's share of the income, and they've manipulated their platforms and processes to ensure they get it.” 

“The vast majority of people will go on to Google or Bing and they'll search  - say - ‘Cyclone Gabrielle.’ They might even write in Stuff’ because they want to go to the Stuff website for news, but they're going to it via Google and that gives Google the opportunity to make money out of that and clip the ticket long before you get anywhere near the Stuff website.”  

“We've seen from both the Australian and the Canadian examples that when they are obliged to come to the negotiating table, they do do deals.” 

But the introduction of Canada’s Online News Act as not been smooth. 

For Newsroom, economist Eric Crampton said Canada’s regime “opened platforms up to potentially large liabilities if they facilitated Canadians’ access to news.”

“Meta blocked all links to news on Facebook. Google threatened it would follow.Smaller news sites that had depended on links from Facebook saw huge drops in web traffic,” he said. 

“Lobbyists for news companies then pleaded for tax credits to avoid layoffs – a substantial increase on previous subsidies to news companies.”

Holden disagrees. 

“Google has done a deal via the Canadian government to deliver $100 million every year across the media organisations within Canada. And they've come up with a formula that determines which news organizations get a portion of that and that's an ongoing deal.”

“Meta and Facebook’s retribution - if you like - has demonstrated they have no corporate social responsibility. They're happy to damage the communities that they've profited from, if it means that they don't have to get forced into a room to have a negotiation.” 

“The question here for New Zealand is: what do we believe is fair in terms of that lion's share of digital advertising? If that means that we feel we need legislation, to bring the likes of Meta to the negotiating table, then we should introduce it.”

The MPs on Parliament’s EDSI committee must now consider what they heard on Thursday and ponder amendments to the Bill. 

The media minster Melissa Lee told reporters on Thursday she doesn’t support the Bill “in its current form” in part because it may need amendments to take account of relevant  - and rapid - advances in A.I. technology.

She said she will consider the committee’s response which is expected in May. 

An entire industry and two titanic tech companies will be watching this space closely.