A shock recommendation against pursuing a crucial piece of legislation sent the news media into a brief spiral. It turned out to be a false alarm.

The headline was stark: “Select committee advises against online news bill”. Daniel Dunkley’s report for BusinessDesk dropped with little warning on Tuesday, suggesting that the bill, an attempt to force tech giants to fund local news media, had hit a major roadblock. 

A few hours later, the NZ Herald’s Adam Pearse had updated the story, with media sector minister Paul Goldsmith acknowledging “confusion” on the issue. In a statement supplied to The Spinoff, a spokesperson for the minister reaffirmed that the government’s position had not changed: “no Government decision has been made. My intention as Minister is still to review the bill.” So why did the committee recommend against its moving to a second reading?

According to Labour’s Reuben Davidson, who sits on the committee overseeing the bill, the legislation is caught in a strange bind – near-unanimously supported by local industry and by a majority of parties in parliament, but with National seemingly unable to figure out the politics of it thanks to its origins under Labour. That’s causing major issues within the news media sector, says Davidson. “The longer that news media is made to wait for engagement, the less news media there will be when that happens.”

Sources familiar with the current version of the bill suggest that it has strikingly evolved since it was first tabled, which should allow National to feel more comfortable claiming it as a coalition win. For example, the new version makes persistent reference to “an artificial intelligence system trained using news content”, placing it in a different era to similar legislation floated by Australia in 2021.

The news media is operating in a very subdued economic environment, and has seen hundreds of redundancies, capped off by the complete closure of Newshub. The Fair Digital News Bargaining Bill is a rare bright spot for an industry that has seen the advertising that is the core funder of news devoured by tech giants in the transition to digital. The bill is an opportunity to redress that – if only it can make it through what has been an unusually fraught process.

Remind me, what’s the bill about?

The Fair Digital News Bargaining Bill, introduced by the Labour government’s then broadcasting and media minister Willie Jackson in August 2023, is a close relative of a piece of legislation that first arose in Australia. It argued that platforms like Google and Facebook had built enormous ad businesses through wrapping advertising around the distribution of news, and that their quasi-monopolistic market positions made striking bargains with news publishers impossible. 

It sought to force tech companies to strike deals with local news publishers, or submit to binding arbitration that would leave the tech companies exposed to unknown costs, set down by a third party – in New Zealand’s case the Broadcasting Standards Authority.

Australia’s conception of the relationship between news and technology platforms has become widely copied. Last year, Canada passed similar legislation and just last week the UK did the same. New Zealand’s bill does differ from Australia’s in several crucial respects, most notably that it has been drafted after the emergence of generative AI, and does not involve naming and designating specific companies.

What is the argument in the bill’s favour?

News media and many politicians argue there remains a huge social and democratic need for news. Even David Seymour, leader of the only party definitively opposed to this legislation, says that a country likely does “require some content that is widely viewed or listened to or read in order that there’s a common narrative”. To arrive at that common narrative, “if not journalists, then who?”, as a recent report authored by former Herald editor Gavin Ellis for Koi Tū suggested. 

Given that search and social media have largely taken over the revenue and information distribution function that once funded the news media, those in favour of the bill argue they are best placed to fund journalism. Stuff’s submission in support of the bill typifies the news media position, pointing to a bargaining “imbalance [that] has resulted in market failure whereby these global giants have been able to build businesses of unimaginable size and amass market dominance using “free press” on their platforms – news made and paid for by media companies – without any fair commercial remuneration to the Aotearoa New Zealand media companies that invest in local journalism.”

What do critics say about it?

Its harshest critics are, understandably, the tech companies most in its sights. Google is in the unfortunate position of having signed financial deals with a number of major New Zealand news organisations while also being lumped in the same bucket as Meta, which has essentially abandoned news. Google’s submission noted that the bill put its deals at risk, while going on to note other concerns.

“The Bill inadequately defines public interest journalism, creating incentives that put the objective of the legislation at risk [and] undermines the linked foundations of the open web,” wrote Google in its submission. Most ominously, it made a vague reference to Google’s presence in New Zealand that goes far beyond news. “Our view is that, if passed, the Bill is so unworkable for Google that we would have to reassess the manner in which it operates in New Zealand.” (This is likely sabre-rattling given that Microsoft would welcome the market opportunity and has expressed support for Australia’s bill).

Meta, the owner of Facebook, Instagram and Whatsapp, has concerns that are if anything more strongly expressed. “[The bill] will compel Meta to enter into commercial agreements that ultimately ignore the realities of how our platforms work, their voluntary nature, the preferences of the people who come to Meta for content, and the free value we provide news publishers.” The company has signalled it will not renew agreements signed in Australia, has eliminated news from its platforms in Canada and intentionally crashed news distribution across its platforms worldwide.

It’s not just platforms that take a dim view of the legislation. Former venture capitalist turned tech commentator Benedict Evans joined former Newshub head Hal Crawford’s podcast in 2021. “To look at this and say, ‘Well, we used to all have all this money and now Google has got it’, it’s just idiotic. It’s as though you’re an ocean liner company and you’re saying, ‘Boeing stole all our money’. That’s not really what happened.” Evans instead advocates for calling a subsidy a subsidy, and enacting one to support news, if that’s what a country believes in.

Is there any alternative?

This still-young decade has seen the collapse of magazine giant Bauer Media; the sale of Stuff for $1; Today FM being shuttered while live on air; the end of Newshub; along with Sunday and all TVNZ’s news bulletins aside from 6pm. The number of journalists employed in New Zealand looks to have halved in just six years. Which is to say that absent significant change, the news media industry is staring down a situation that could well see journalism become confined to either state-funded organisations or paywalled news sites, likely built around more lucrative segments like business news.

The most chilling thing to remember is that the news media is currently operating under the assumption that this bill will pass. Were it to be abandoned, it’s likely there would be immediate and deep cuts, and it’s not inconceivable that another major publisher might quickly go the way of Newshub. Which means that if the government were to abandon the bill, it would need to do so with another solution to hand.

The most attractive is a levy on digital platforms that use news media content. The screen production sector, suffering through its own related issues, has been lobbying for a levy on paid streaming platforms like Netflix and Amazon Prime for some time. Gavin Ellis’s report came down on the side of a levy too, and The Spinoff understands that it is more palatable to the tech companies, in part because it rises and falls with their income and market share.

Would that mean heading back to square one? Some who’ve explored the legislation suggest it would not – that there is the ability to reach agreement on a levy system within the proposed legislative framework. Similarly, those with knowledge of the proposed legislation point out that it has significantly evolved since the bill was first tabled last year, with that finely tuned language around the training of AI systems inserted recently. That could and should be retained, even if other parts of the bill change.

This sense of openness to the changing nature of the internet is crucial to its robustness. Because as much as Meta has withdrawn from the distribution of news within its feed, its Llama generative AI model is now live within all its apps. This currently uses real-time synthesis of New Zealand news providers to create natural language answers to user queries, without sending any traffic to the news organisations that created the original reporting. 

Will this time be different from the social web era for news organisations? All eyes remain poised on the most important piece of media legislation in a generation.