News payments to take into account the 'eyeballs' Google, Facebook bring

Google and Facebook will be forced to pay news organisations for their content under proposed Australian laws with global implications, but the amount of money publishers receive may be offset against the value of the online traffic they get from the tech giants.

Treasurer Josh Frydenberg and Communications Minister Paul Fletcher unveiled the government's long-awaited news media bargaining code on Tuesday, which provides a framework for commercial deals to be struck between the digital platforms and news organisations including the ABC and SBS.

Treasurer Josh Frydenberg unveiled the details of the government's media bargaining code to force Google and Facebook to compensate news organisations at Parliament House on Tuesday.Credit: Alex Ellinghausen

"This is a huge reform. This is a world first. And the world is watching what happens here in Australia," Mr Frydenberg said.

In a major win for Google and Facebook, the code will provide for a two-way value exchange in the arbitration process, allowing the tech giants to argue they provide news companies with millions of dollars in referral traffic each year.

Mr Frydenberg, who will table legislation to give effect to the code on Wednesday, said it would ensure compensation could go only "one way" – in the direction of media businesses – but indicated the payment could be diluted as a result of the value exchange.

"The money can only go from the digital platforms to the traditional news media businesses," he said on Tuesday. "But the arbiters need to take into account the benefits the traditional news media businesses get by having eyeballs on their product when they appear on Google and Facebook."

Mr Fletcher said the code was designed to ensure news businesses received "fair payment for their content ... so, in turn, they can continue to provide public interest journalism about things that are important to Australians".

In further concessions to Google and Facebook, YouTube and Instagram will not be included in the code, while the requirement that the tech giants give publishers advanced notice of algorithm changes has been scaled back to capture only significant changes.

It is not clear whether the concessions will be enough to stop the tech giants carrying out threats to limit their services in Australia if the government proceeded with a code they viewed as "unworkable".

Mr Frydenberg said he had briefed the Australian operations heads of Google and Facebook on Tuesday morning, but declined to say whether he had been given any assurances.

The code will be scrutinised by a Senate committee over the summer before going to a vote next year.

Labor has given in-principle support to the code's objectives but the party's communications spokeswoman, Michelle Rowland, said it would wait to see the legislation and the committee's conclusions before making its final decision.

"The key question here is: Has the government delivered a workable code?," Ms Rowland said.

The finalisation of the code comes after a protracted negotiation process, with the government facing fierce opposition from Google and Facebook to key elements of the draft code prepared by the Australian Competition and Consumer Commission (ACCC).

Google had heavily lobbied for the two-way value exchange, which did not feature in the draft code, claiming it directed more than 3 billion visits to Australian news publishers in 2018, worth about $218 million.

Facebook said on Tuesday it would review the legislation once it was made public while Google released a brief statement saying: "We haven't seen the revised code yet."

News Corp Australia executive chairman Michael Miller said the code was a "significant step forward" in a decade-long campaign to rebalance the relationship between digital platforms and media companies.

"As a result of their lobbying, the tech platforms have won concessions, and there should be nothing stopping them now from reaching fair commercial agreements. Ultimately, this code will benefit Australian consumers by helping sustain Australian news from Australian media companies," Mr Miller said.

Nine Entertainment Co, owner of this masthead, criticised the two-way value exchange model, saying it "seriously undermines" the policy intent of the legislation to address the bargaining power imbalance between news businesses and the tech giants.

"The continued concessions to the digital platforms only entrenches both their monopoly power and the significantly unfair imbalance in regulation,” a Nine spokesperson said in a statement. “These companies pay little or no tax, contribute little and often negatively to our culture, and employ no creative teams."

ABC managing director David Anderson said the broadcaster would reinvest any compensation it received from the tech giants into its regional journalism.

"The inclusion of the ABC in the remuneration arrangements under the code has the potential to provide a major boost to coverage of regional Australia, telling and sharing local stories," Mr Anderson said.

Greens communications spokeswoman Sarah Hanson-Young said the inclusion of ABC and SBS in the code was an "important part of tackling the power and greed of the tech giants and protecting public interest journalism".

The Sydney Morning Herald and The Age first reported in November that the government was considering weakening the code to incorporate a two-way value exchange.

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