5 hours ago
4
The government’s news bargaining incentive (NBI) consultation paper is welcome but it has taken too long to get to this point, the envisaged scheme is complex and it risks favouring the big tech companies.
The background to all this is important. The Australian Competition and Consumer Commission’s digital platform inquiry, which was completed in mid-2019, recommended what became the news media bargaining code (NMBC). The logic was that Google and Facebook, in particular, were benefiting significantly from news content without paying for it.
The ACCC recommended that a voluntary scheme of negotiation for a fair payment be tried first but this failed as it could not overcome the huge bargaining power advantage that the platforms had over the publishers.
No business can keep producing without being paid for what they produce. Journalists hold power to account, they provide a journal of record as to what is going on and they allow debate based on fact. Journalism is fundamental to our democracy. Getting the NMBC right was vital and the same necessity applies to the NBI.
Let’s deal with the issues.
The original bargaining code was extremely successful. Three- and five-year deals were entered into by Google and Facebook with virtually all publishers, large and small, and about $1bn has been paid since its inception.
But the three-year deals have expired, Facebook, or Meta, has said it will not do further deals and the remaining deals expire in early to mid-2026.
It is important to understand that the NMBC only applies to platforms that carry news; Meta has apparently said it will take news off Facebook if it were to be designated under the NMBC. Thus the need for a new approach, which has resulted in the NBI.
Under the processes envisaged by the NBI consultation paper it is easy to see 18-24 months pass before new deals are in place, yet by then all NMBC deals will be ancient history. Media companies will have to contemplate laying off the staff funded by the payments. Some expired deals have been rolled over in this interim period, sometimes with much-reduced money, most have not been.
Another problem is that the NBI would only apply to search and social media services. This would have been appropriate two years ago but the long delay has seen the rise of AI. ChatGPT and Anthropic are not search engines; they are now “answer engines” which often draw on news articles but with no links to them. Google’s Gemini does have links but how long will it be before it replaces Goole search?
Then we have the complexity.
The NBI seeks to provide an incentive for commercial deals between search and social media companies and publishers. It does this by legislating that tech companies caught by the scheme pay a charge to the government which can be reduced by the value of the deals they do with publishers – plus a further deduction percentage. So, if the further deduction is 50% you could pay 50% more by not doing deals versus what you would pay if deals were done.
But how do you set the charge payment? The consultation paper talks of a percentage of revenue but revenue can fluctuate and can be subject to manipulation via transfer pricing. And setting the percentage of revenue that constitutes the charge must be done by predetermining what revenue the government thinks the deals will realise. Then how do you determine what mark-up penalty there should be for not doing deals?
Most importantly, how do you ensure a balanced distribution of support among news businesses? Rather than requiring good faith bargaining and deals to be done with all eligible publishers, as the NMBC does, the NBI seeks to cap the size of the larger deals so that the bargaining obligation cannot be met by simply doing deals with a few large players. Setting this cap is extremely difficult but worse it will see many publishers of public interest journalism miss out on a deal.
This goes against a central tenet of the NMBC and it leaves too much of the bargaining power with the platforms if they can pick and choose who they deal with.
Finally, the NBI leads to one of two outcomes; commercial deals are done, or they are not and the incentive payment is made to the government which must then decide how to allocate it back to media companies. No one wants to see the government in this position.
What to do? There are three options.
First, resolve the complexity so that all this is operational in early 2026, not 12-18 months later. To assist with this the government should simply name now the obvious entities to be caught under the legislation and include criteria to add others later.
Second, the NBI “is intended to apply to large digital platforms … irrespective of whether they carry news content”. We could just change the NMBC in the same way; search, social media and AI companies must bargain with publishers, and face potential arbitration, whether or not they carry news.
Third, immediately activate Google’s involvement in the already legislated NMBC while working on other later solutions. Google’s payments were about 70% of the $250m paid each year. Google cannot run a search engine without news and so is still caught under the NMBC.
Whatever option is chosen, getting this right is urgent - and vital if we value public interest journalism.
