Media code for Facebook and Google provides win-win result for all

New code is about deals in the shared best interests of media and the digital giants, not rigid rules and busybody regulators, says Terry McCrann.

The government’s proposed code to get social media and search engine platforms — initially Facebook and Google — to pay something for the content they’ve been effectively stealing from media companies is both sensible and smart.

It’s finely balanced between a hands-off and oppressively interventionist approach. It aims at promoting deals in the shared best interests of both the media companies and the digital platforms, as against opting for rigid rules and busybody regulators.

Critically, it does not seek to lock in either 20th century or even 21st century industry structures — obviously, specifically, on the media side; or guarantee a future or even just a short-term profit for any specific players.

Bluntly, all media — not just traditional print and free-to-air TV but also the new players that have sprung up — will all still have to carve their own sustainable and functional business operating models in the unrelenting dynamics of the globalised digital reality.

There’s clearly both a brutally competitive but also symbiotic relationship between media companies and digital platforms, precisely because of the power wielded by, but also the ravenous appetite of, the platforms with their 24/7 real-time pervasiveness.,

The platforms need the content the media groups generate and they need it continually and in real-time. Just like the hot media competes of yore, no platform can survive being continually five minutes late to link big, breaking stories.

The media companies need the platforms to sustain the eyeballs on which their successful and sustainable operating models have always, and I mean always, been built — whether via advertising or cover price.

So there’s a “shared best interest” to be seized and developed.

Media companies — and an exploding plethora of others — develop content and have the resources to keep developing it; winning eyeballs directly but also via the platforms.

The platforms generate their dollars from their algorithm-driven pervasive reach — now way, way, beyond that possible for any individual media company or even the media industry in combination — and then direct some of those dollars for the content to help sustain their pervasiveness.

The “shared best interest” wasn’t being seized and developed because the platforms were growing exponentially, and at the same time the media companies were declining — with the platforms able to cannibalise the still-strong media content generation.

So what the code proposed by Treasurer Josh Frydenberg and Communications Minister Paul Fletcher does is essentially two things.

First and importantly, it calls “Whoa!” to this rush to implosion, certainly on the media side but also I would suggest damagingly to the platforms. But it does so not in an absolutist or permanent way. It also encourages both sides to chart exactly that “shared-best-interest future”.

If it works, it should be a win-win for platforms as a group and for media companies as a group, with the stress on the word group.

It certainly does not force-feed long-term subsidies for any individual player, and indeed it is not force-feeding subsidies at all; just legitimate payment-for-product, freely negotiated in an appropriately regulated market.

That means you leave open competitive dynamics within each space — media and the platforms — and, indeed, between them.

There’s nothing to stop a new Facebook, a new Google, a new Twitter, or what could develop in the app space or indeed who knows what as we march — or more likely, stumble — through the 21st century.

Equally, the payments will not guarantee the survival of a Nine or a News Corp or indeed anyone else. It stops the platforms stealing their futures — while they still have to make them.

Originally published as Media code for Facebook and Google provides win-win result for all