News media bargaining code in Australia- All sides of the story
Let’s understand the issue.
Google and Facebook have locked horns with the Australian government over payment to news publishers for using news snippets in the Google and Facebook feed. Google has even threatened to remove their Search platform from Australia if they are forced to pay.
Australian Consumer and Competition Commission (ACCC) says there’s no major competition, hence this leaves no ground for fair play. 90% of desktop searches and 98% of mobile searches are on Google in Australia.
81% of the Total Digital budget in Australia goes to Facebook and Google. This has been cited to quote that many smaller publishers have died. The revenues of the Top News sites are declining every year (again being linked to the above).
Publisher Side story – Google and Facebook are using the news snippets and monetizing. There is no transparency even if the money is involved. The publishers are getting a lesser pie as it’s not transparent. This is equivalent to saying like a platform should take a smaller commission for buying and selling the inventory and the Sell Rate and Buy Rates should be transparent (like Stock brokerage) but since it is not transparent, the platforms are keeping a bigger chunk for themselves and passing on pennies to the publishers.
Platform side story – Google and FB says they are helping publishers get the reach, views, money, and traffic to their sites/apps without charging a penny. Google says they cannot pay for the snippets as they themselves are not monetizing.
Facebook says the news posts by the people are only 5% and the rest are still about people posting about their personal lives. They will simply block news posts and FB will have no real monetary loss but will lead to a drop in the traffic for the news sites.
Industry leaders representing media agencies like Chanchal of GroupM Malaysia have said that if Google exits, space will be taken not only by Microsoft’s Bing but also by newer entrants like Grab. He also mentions the real effect that could be on the smaller businesses as they have built their first online ecosystem around Google Search.
And Satya Nadella had already had word with the Australian PM and assured him that Bing can easily fill the void (if Google Search moves out)
Historical references – In 2014, Spain passed similar law and Google removed News snippets, but the publishers saw no fall in their traffic. Google did not withdraw Search as a service from Spain. The same year in Germany, big publishers like Axel Springer and others agreed to give their news snippets to Google for free as they said their experiment to run without Google saw their traffic falling by 40%. In France now Google has signed with many publishers to pay them for the content.
In 2020 Google pledged a budget of USD 1Bn for signing up with the news publishers “to create and curate high-quality content” for new story panels that will appear on Google News. The company has already inked deals with 200 publications in Germany, Brazil, Argentina, Canada, the U.K., and Australia
One side seeing the relationship as parasitic, the other side portraying it to be benevolent.
Google and FB have reached a dominant position because they created a unique proposition for the future and kept on improving and acquiring competition, that today they hardly have competition.
The revenue of news houses has been going down as the traditional print and TV media are facing huge challenges. The print is hurtling downwards, and it has got nothing to do with the quality of news, but the way digital has changed the behavior. A newspaper (a decade back) used to have supplements/sections on Sports, Retail, Matrimonial, Auto, Property, Health, Finance, and so forth. But today each of these has become big categories and has sites/apps that people go to a News Sites only for Geo-Political News.
Purely in Media parlance – Time and Reach does play a critical role in deciding the Media mix. And when a Gatekeeper/Platform starts becoming a monopoly, some will acquiesce, and some will try to bring them down.
Google has to arrive at a mid-way recourse to avoid having a domino effect across other geographies. When Google displays the news-snippets, not all converts to click, as many consumers just see the headlines and leave, but Google is collecting the user info and monetizing it later.
The news industry wants compensation and fair play but this needs a simple and trusted approach rather than asking to share the details on the algorithm changes that Google is doing with 14 days’ notice! This is just a bureaucratic approach and will lead to nothing but stagnation. This is exactly why getting compensated (for now) will not lead them to survival in the long term. News publishers need to think ahead, think differently, and innovate. The money hand-shake deal (if it happens), the smaller news houses will again be the losers and finally, the big sharks will join hands and survive.
On another note, Politicians need a favor and desperately seek positive reviews from the News media and when you do something against the Goliaths – you tend to feel and send out the message that you are today’s David!
About the author:
Anup Kumar, Patner, YAAP & Co-founder, Oplifi