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We Told You So: Small Publishers Struggle for a Seat at the Table in Negotiations With Platforms in Australia and France

July 21, 2021 , , , , , , ,
people at a table

Recently, we published a blog post and warned policymakers about the Journalism Competition and Protection Act (JCPA), which proposes to create a “safe harbor” from antitrust law and allow news companies to collectively negotiate compensation terms for their news stories with the largest online platforms. We cautioned that the proposal, which is being advocated for by some of the largest and most powerful media players, has several harms including the likelihood of leaving small publishers and news outlets out in the cold. We described similar efforts to secure payment for news content in other countries, including Australia and France, hoping they would preview what might happen in the U.S. if the JCPA is passed.

Now, small publishers in Australia and France appear to be struggling to secure their seats at the negotiating table between so-called Big Media and Big Tech. Don’t say we didn’t warn you.

News Reports Signal Growing Frustration Among Small Publishers in Australia

Earlier this year, the Australian Parliament passed a law requiring designated digital platforms to negotiate with news organizations, either individually or collectively, for payment for news content. The largest media companies in Australia spearheaded the industry’s lobbying for the law. But Facebook and Google used their lobbying prowess to secure a last-minute amendment: If the platforms make “a significant contribution to the sustainability of the Australian news industry,” then they can avoid being designated as subject to the law. Unsurprisingly, Google and Facebook then went after meeting this vague “significant contribution” burden so they could avoid designation as well as the legal arbitration process that would have provided transparency and public oversight of the negotiations. They started cutting deals with Australia’s largest and most politically influential media organizations to license content for Google’s News Showcase and Facebook’s News Tab. This also allowed them to avoid opening up the core products that are the actual source of their monopoly power: Google’s search and advertising technology and Facebook’s news feed.

So how’s it going? Google’s News Showcase launched in Australia in February and so far has signed partnerships with about 100 Australian media outlets. But already, newspapers in Australia have described concerns among smaller news companies that they haven’t been treated fairly. And there have been news reports about how Google’s compensation structure favors large publishers. Facebook’s News Tab hasn’t even launched in Australia yet, but Facebook has already pointed to a separate initiative to support “regional, rural, and digital” outlets — but it won’t be available for months. In response, small independent publishers have complained that the law has created a two-tier industry, where large companies get deals and small ones miss out.

We’ve seen editorials and newsletters in the United States touting the results in Australia as signs of good things to come if the JCPA is passed. But small publishers in Australia don’t seem to share that rosy view.

Smaller Publishers Still Waiting For Their Turn in France

Things aren’t going so well in France, either.

In 2019, the European Union adopted a new Copyright Directive on digital copyright, requiring among other things that certain digital platforms — basically Google and Facebook — pay news publishers for any incidental use of their content other than a bare link. France promptly passed its own version of the law and ordered Google to negotiate with French news publishers for payments to link to content.

Google responded by announcing they’d simply publish bare links (that is, links without any preview of the actual article), placing French news publications at a significant disadvantage in search results. The French competition authority intervened and ultimately ordered Google to engage in “good faith negotiations” to determine how much they would pay news providers. (We think it’s problematic to create a new intellectual property “right” and then require other entities to use and pay for it, but that’s another story.) As has been the case in several other countries that threatened or enacted similar legislation, Google then announced that Google News Showcase would come to France! Google described a framework in which the criteria for compensation would include “the publisher’s contribution to political and general information, the daily volume of publications, and its monthly internet traffic.” In other words, just as in Australia, the largest and most established news publications will get the largest license fees.

Google completed deals with a few large publications, and in January, they forged a preliminary framework for negotiating with the individual members of a lobbying group representing 121 more French publishers. (That framework left some other French news publishers “infuriated” that Google failed to hold talks with them in good faith to find an agreement.) However, now things are kind of….starting over.

Google put negotiations with publishers on hold a few weeks ago when French antitrust investigators accused the company of “exceptionally serious” violations of its 2020 orders on how to conduct the negotiations. In its decision last week, the French authority described the violations (and fined Google $593 million). One was that Google didn’t provide enough information to publishers to determine what revenue they should receive. But the authority also complained about Google pushing publishers into News Showcase instead of creating a distinct payment stream for news content in search results. They said that French publishers can now ask Google for new deals that comply with the French law, and set a two month time limit for completing negotiations. The case-by-case negotiations may still leave small publishers in the lurch. (Google has said it will “take the French competition authority’s feedback into consideration and adapt [its] offers”.)

Things with Facebook are stuck, too. As of a couple of months ago, there were “active discussions” about launching the News Tab in France, but there is “no launch date specified” as of last month.

(For more on the sequence of events between the digital platforms and the French and Australian Competition Authorities, see a previous Public Knowledge blog post.)

Negotiations Are Highly Challenging and Inevitably Favor Large Over Small

Our position in our last blog post was that however a law may be structured, the actual negotiating process is highly uncertain, and the incentives that drive it always favor fewer, larger participants. Big publishers have little to no incentive to protect little publishers — and neither do Google and Facebook. There are more political incentives for the dominant digital platforms to negotiate with large and powerful media players than even collections of small ones. The economic incentives also favor scale: the more players who secure compensation, the more complicated and expensive it becomes for the platforms to negotiate and distribute it (we’ve learned this lesson from royalty sharing consent decrees in the music industry). And as we pointed out in our post, no one has any real idea of what the right “compensation” is anyway, since there are fundamentally different views of the financial value of news between publishers and platforms, and there is no functioning market mechanism to reconcile them and establish the “fair market price.”

There are some material differences among the Australian and French laws and the JCPA. And the language of the JCPA may evolve as it makes its way through the legislative process. But so far, laws with similar aims haven’t created anything approaching an easy win for publishers. And whether it’s Australia or France, the criteria for negotiations, the structure of the terms, and the urgency with which the players have approached the negotiating process have so far all seemed to benefit large legacy news organizations over smaller, newer, digital-first, or diverse news organizations that are often closest to their communities. Thus far, overall these laws seem to be doing little to create the more representative and diverse news ecosystem that serves democracy best. We hope policymakers in the U.S. will see these developments as a warning, and reconsider moving forward with the JCPA.

Maybe large legacy news organizations don’t really care if these laws truly address “power imbalances” or “level the playing field” if platforms’ money starts flowing to them. Maybe they don’t care if the platforms get regulated at all, as long as Facebook and Google come to the negotiating table in the U.S. (Remember, Australia’s Treasurer has said the Australian bargaining code won’t apply to Facebook and Google if the platforms reach agreements with enough media companies.) And maybe they don’t care about creating a more diverse and representative news ecosystem. But we the public should. Our efforts to address the power of the most dominant platforms need to get to their core business models and protect competitors and consumers from their outsized influence on public discourse — not just line the pockets of the largest media conglomerates.

 

 


About Lisa Macpherson

Lisa is a Senior Policy Fellow, focused on countering misinformation on the internet and developing alternative business models for local journalism. Prior to Public Knowledge, Lisa was a consumer marketing executive at Fisher-Price, Timberland, Hallmark, and Custom Ink, and an independent marketing consultant at Pernod Ricard. Her experience driving digital marketing transformation on behalf of brands led to concerns over the broader impacts of digital technology on individual well being, civil society, journalism, and democracy. She applied to the Advanced Leadership Initiative at Harvard University, where she is now a Senior Fellow studying how to mitigate the negative externalities of digital technology. Lisa is a current or past member of the Association of National Advertisers, Marketing 50 (M50), and the Marketing Leadership Council of the Conference Board, and a founding member of the Council of CMOs of the Conference Board. In 2017 she was selected as one of the D.C. Techweek 100, which recognizes excellence in technology and entrepreneurship in the DC area. Lisa received her B.A. from Colgate University and her M.B.A. from the State University of New York at Buffalo. She was raised near Boston, MA, and loves to travel, read, cook, and spend time with her daughter, Kelsey.