Onus on tech giants to pay their share of journalism costs

This year will be a pivotal one for journalism as news publishers and the big tech companies work together to forge commercial business partnerships that lay the foundations for a positive future.

News Corp will begin talks this week with Google over the federal government’s directive that the tech giants commit to a code of conduct for the negotiation of terms with media companies.

In these discussions with Google — and we hope Facebook also takes part in similar talks — we are confident that 2020 will mark a turning point for media sustainability in the modern digital world.

The agreements reached this year will come from the government’s response to the Australian Competition & Consumer Commission’s inquiry into digital platforms.

News Corp has led the global debate about the need for a rebalancing of the relationships between the tech giants and publishers to ensure a strong and vibrant media sector.

The ACCC’s inquiry was a world first and ACCC chairman Rod Sims said: “Google and Facebook have grown to have almost unfettered market power with significant impacts on consumers.”

Consequently, the government’s directive that platforms must enter codes of conduct with publishers offers a serious opportunity to address many of the concerns raised by media companies.

At the heart of publishers’ concerns is the need for media companies to be compensated appropriately by platforms such as Facebook for how they use the journalism created by publishers.

Digital disruption and the tech titans’ rise over the past two decades have dismantled the traditional journalism business model, cost thousands of jobs and closed many media outlets across the world.

These discussions are timely, and recent commercial arrangements with Facebook in the US and Apple have shown a constructive new path for relationships between publishers and platforms.

In the US, we are seeing early, but welcome, signs of how this issue is shifting, with digital platforms such as Facebook and Apple recognising the value of journalism to society.

As News Corp’s global chief executive, Robert Thomson, noted just last week, while News’s commercial deals with Facebook in the US and Apple are evolving, they have set a precedent for how media companies can be compensated via commercial arrangements for their journalism.

The federal government, in its response to the ACCC inquiry, has been explicit in its intent that the proposed codes of conduct can set frameworks for the negotiation of such terms.

Treasurer Josh Frydenberg and Prime Minister Scott Morrison have both expressed their ­expectation that codes will be agreed between publishers and platforms voluntarily. However, if this does not happen, the government is prepared to implement a mandatory regulatory outcome.

“This code will cover such things as how revenue is shared, how content is accessed and ­presented, as well as forewarning about changes to algorithms that go to how the content is ranked online,” Mr Frydenberg said when announcing the federal government’s response to the ACCC inquiry.

“The government will be seeking an update from the ACCC on the development of these voluntary codes by May and we are expecting that an agreed code will be entered into by November.”

News Corp’s position remains clear that the best solution for the industry — and for society — is for the tech companies such as Google and Facebook to enter arrangements that pay a premium for use of premium journalism.

The conduct codes are a ­regulatory mechanism to compel the parties to enter into negotiations to achieve these business outcomes.

The talks that publishers such as News Corp and the platforms are now starting come at a critical time in history and for democracy.

Australians need a strong media able to support journalism that informs a nation, holds the powerful to account, scrutinises how our taxes are spent, exposes corruption, campaigns for good causes and justice, gives a voice to the disadvantaged and celebrates our country’s successes.

The current situation, sadly, is unsustainable — and the government and ACCC have recognised this fact. Without change, many media outlets won’t survive ­because, while their content has helped and is helping the platforms grow their businesses, the returns and compensation for the publishers are inadequate.

The solution is now clear, fair and will be mandated if necessary: Big Tech should pay publishers from the profits and in the process secure a strong, sustainable media industry and a healthy society.

Michael Miller is executive chairman of News Corp Australasia