Legislation requiring the big digital players to share revenue with local publishers is directly inspired by examples in Australia and Canada. Toby Manhire looks at the history and the stakes.

On February 18 last year, Facebook folded its arms, held its breath and did something unimaginable: it banned the sharing of news content on its platform for all of Australia. 

The legislators had told those behemoths of Silicon Valley, Google and Facebook, they should compensate Aussie news outlets for linking to, excerpting and feeding off their content. That they must share the revenue from their bloated advertising bellies. The Zuckerberg colossus decided to call the bluff.

It lasted less than a week. Facebook declared it was satisfied with some softening of the New Media Bargaining Code. Cynics said they’d blinked. 

Since April, a sequel has been playing out in Canada. Executives from Meta, as the Mark Zuckerberg juggernaut is these days known, told a parliamentary committee looking at similar legislation that “we may be forced to consider whether we continue to allow the sharing of news content on Facebook in Canada”. That threat, and specifically the words we may be forced, were issued at least eight times at the Ottawa committee and in written Meta submissions.

Yesterday saw the first frames of a second sequel. Even as Canada’s hearings continue, New Zealand has officially begun a process of its own. Willie Jackson, the minister responsible for media, steered the world’s third parliamentary cab off the rank, promising legislation to oblige the giants of the internet to strike deals with local publishers. 

What would the New Zealand law look like?

Speaking on Q+A yesterday, Jackson said the legislation will draw heavily on the Canadian example. There, he said, more than 150 publishers have signed deals even before the legislation is in place. The source for this, presumably, is Google itself saying that it has reached deals with more than 150 Canadian outlets. Google offers such a data point as an argument against fresh law-making. Publishers say without the spectre of legislative action, these great distended offshore sponges wouldn’t even be at the table.

The formula here is the same: large digital players such as Google and Meta (owner of Facebook and Instagram) would be encouraged to strike deals with news publishers. Should they fail to do so to the satisfaction of the regulator – in New Zealand’s case the Broadcasting Standards Authority – it would hit the “backstop”, in the form of an independent arbitrator determining the compensation. 

How did we get here?

It used to be that local advertisers spent their local money with the local outlets that produced local content. However simplistic and once-upon-a-time that framing may be, it is roughly right, and that virtuous circle has fundamentally, perhaps irrevocably, broken. 

The digital giants, partly by plan, mostly by accident, happened upon the media lunch and ate it. They developed ways to target advertising that blew people creating and publishing content out of the water. They continued to feed on and deal out the content audiences were keen on, but they did nothing to pay for its creation. 

Policymakers around the world have pondered whether and how to deal with that breakdown in media circuitry. In 2020, the Australian government tasked the competition regulator, the ACCC, with looking into power imbalances between the big platforms and local news businesses. That culminated in the News Media and Digital Platforms Mandatory Bargaining Code of 2021. 

The state of play in New Zealand 

The media industry in Aotearoa has to some degree stabilised after the rolling crises of the early days of Covid, which witnessed, among other things, the complete shutdown of Bauer NZ. The broader outlook, however, remains precarious. Costs are rising sharply. A recession has been promised, even engineered, by the Reserve Bank – and among the first victims of any recession is advertising, media spend, and “reader revenue”, in the form of memberships and subscriptions.

It is against that backdrop that this new legislation is progressing. If the TVNZ-RNZ merger – however clumsily it might have been communicated – is an initiative intended to secure the future of public media in an increasingly platform-agnostic, digitally disrupted future, the New Zealand state staring down the leviathans of Silicon Valley is designed to do the same for commercial operators.

Last month the Commerce Commission confirmed its provisional decision from April that permitted New Zealand media operators, in the form of the Newspaper Publishers Association plus a few stragglers including – ding, ding, full disclosure, The Spinoff – to collectively negotiate with Meta and Google for a period of 10 years. 

“The NPA’s collective bargaining arrangement is likely to allow the news media companies to pool their resources, improve their bargaining power when they are negotiating with Google and Meta, such that they obtain better contract terms, and ultimately improve the production of news content,” said Commission chair Anna Rawlings.

NZME, which operates the Herald and Newstalk ZB, grimaced awkwardly and excused itself from the collective negotiating table when it struck direct deals with both Meta and Google, however. The company nevertheless issued a statement yesterday saying it supports the proposed legislation, which “ensures the future sustainability of our local news media and contributes to a healthy media ecosystem”. Google has also agreed deals through its News Showcase project with RNZ, Scoop and Newsroom.

The opposition spokesperson for media, Melissa Lee, told The Spinoff yesterday that the National Party will take a formal position once they’ve seen the legislation itself, but that she was concerned “the threat of legislation is an overstep”, given that Google and Meta have already undertaken a number of deals with New Zealand publishers. She was concerned, too, that instead of supporting journalism, funds from the digital giants might end up in “the back pockets of shareholders”.

Follow Duncan Greive’s NZ media podcast The Fold on Apple Podcasts, Spotify or your favourite podcast provider.

Did it work in Australia?

Depends, obviously, who you ask. Some smaller publishers have complained they have not had a fair suck of the sav. There is no doubt that the Murdoch empire – without whose muscle, some reckon, this whole process would never have kicked off – has done handsomely. That in turn has led to claims that shareholders are benefiting, rather than journalism. 

But one of the architects of the Australian News Media Bargaining Code, former chair of the Australian Competition and Consumer Commission Rod Carr, has judged the legislation “extremely successful”. In a report for the Judith Neilson Journalism Institute in May, he concluded: “The NMBC has been successful by any measure. It has almost completely met the objective set for it, and more quickly than initially hoped for. Few other government measures can claim the same.”

Carr’s advice for “those wishing to replicate but improve it” was this: “Think carefully about whether what [you] are seeking to do will make good commercial deals between the news media businesses and the platforms more or less likely.”

The Canadian debate

Canada’s legislation differs from Australia’s by adding a tool which, according to one supporter, “allows more publishers to get access to funding and provides some democratic oversight, accountability and transparency to those funding deals”.

The committee discussions on Canada’s bill have, however, been fiery. One parliamentarian accused Meta of adopting “modern-day robber baron tactics” in its threat to repeat the pulling of the news plug.

Google, for its part, submitted that the law as proposed “fundamentally breaks the way search (and the internet) have always worked”. Their argument is that it constitutes a “link tax”, thereby destroying the central organising mechanism of the internet. (The definition is rejected by many who say it’s quite unlike the EU antecedent.)

Opponents of Trudeau’s Liberal government have also got stuck in, but often for different reasons. In a heated session of the Heritage Committee on Friday, Conservative MPs said the bill would hurt local operators. “The losers clearly on this are local newspapers in our communities,” said one Conservative MP. “This will favour established legacy media outlets that have the size, clout, and connections to meet all the criteria.”

Another said small and ethnic minority media had not been represented while “this bill has absolutely been placed in favour of the large broadcasts and large newspaper conglomerates. That’s a sad day for Canadians.”

Facebook and news

In recent months Meta has substantially scaled back its initiatives focused on the news media industry. It has shuttered its newsletter platform, closed Instant Articles and winded back its Accelerator programme (in which The Spinoff has previously participated). With 11,000 redundancies and a multibillion-dollar bet on the Metaverse, its claim that news is way down the priority list is no mere negotiation tactic. Facebook might called it the “news feed” but on the main trunk of content these days, Meta says, less than 4% of what users see is actually news. 

There is at the same time a discernible resentment among many of those in the Zuckerberg cosmos at the ingratitude of the organisations upon which their algorithm can shower clicks. The Meta position on the new legislative initiatives, as put to Canada’s lawmakers by global policy director Kevin Chan is this: “We would be forced to pay publishers for giving them free marketing on Facebook.” That’s my emphasis, but there’s no emphasis needed on the eyelid fluttering on what he called “a most peculiar and unorthodox arrangement”.

Chan told the Canadian parliamentary committee that his platform sent 1.9 billion clicks a year to news sites, “free marketing” worth $230 million (NZ $265m). According to Meta, the equivalent numbers in New Zealand, across the last 12 months, saw 390 million clicks worth what they would calculate at a value of NZ $33m.

The company is yet to get to the point of intoning “we may be forced to consider” in New Zealand, but its regional policy director, Mia Garlick, yesterday said: “This proposal fundamentally misunderstands the relationship between Facebook and news, publishers are the ones who control whether and how their content appears on Facebook and receive significant value from sharing it.”

She told The Spinoff in an email: “It also fails to recognise our current commercial deals in New Zealand or government’s own independent advice that news legislation won’t solve the longstanding digital transformation challenges facing the news industry. We are concerned about the unintended impacts future legislation will have on innovation in both the media and broader tech sector, in particular for smaller entrepreneurial publishers including Māori, regional, digital first and diverse media.”

Google did not respond to a request for comment. 

A global trend

Australia, Canada and now New Zealand are being watched closely by other jurisdictions. A number of larger countries are mulling similar moves – Brazil, India and the United States among them.

The Columbia Journalism Review is monitoring the progress of the various initiatives around the world. There is an urgency in the moment, it says. “Recession is predicted in many countries, following the economic turmoil precipitated by the Covid-19 pandemic and the Russian invasion of Ukraine, with advertising markets a likely early casualty.”