New laws to make tech companies pay for news will help, but there are 4 key problems
- Written by: Weekend Times
The government has finally tabled its News Bargaining Incentive legislation to make big tech companies pay for the Australian journalism they use on their platforms.
The government developed these laws to
fix a problem with the original News Media Bargaining Code introduced under the Morrison government.
While the code generated between $200 million and $250 million a year through deals struck with Meta and Google, it allowed them to stop making deals with news companies by not carrying news on their platform.
The new laws aim to close this loophole by making social media and search companies strike deals with eligible news publishers, or pay a charge based on their Australian digital advertising revenue, which would be distributed to news organisations through the News Journalism Payment Scheme.
While setting up new revenue streams for struggling newsrooms is a welcome move, the laws themselves are far from perfect.
Read more: Albanese government set to pass new media bargaining code
How would the laws work?
The News Bargaining Incentive is made up of a couple of parts.
First, the government wants large social media and search companies with an annual digital advertising revenue of more than $250 million in Australia – likely to include digital giants such as Google, Meta and TikTok – to enter deals with at least eight eligible Australian news businesses.
If they fail to strike enough deals, they will be forced to pay a charge: 2.5% of their Australian digital advertising revenue.
To encourage deals, the charge is offset by 150%, and this increases to 200% if the deal is with small or medium-sized businesses.
Revenue collected from the charge will be administered through the News Journalism Payment Scheme. These funds will support the production of core news content in Australia. That means, according to the Australian Communications and Media Authority’s definition:
[…] content that reports, investigates or explains issues or events that are relevant in engaging Australians in public debate and in informing democratic decision making; or current issues or events of public significance for Australians at a local, regional or national level.
The scheme is primarily designed to sustain the employment of journalists and help build capacity of news organisations.
Funding to news publishers will be decided by a weighting formula based on the number of full-time equivalent journalists in each organisation.
In a welcome move, the definition of journalist has been broadened to include a range of essential news roles, such as:
journalists
photojournalists
videographers
data or visual journalists
editors or producers who are involved in the production of news content
and freelancers and volunteers (low-revenue organisations) who produce core news content.
Of the charge funds, 10% will be set aside for grants, including 5% to fund AAP (Australian Associated Press) in recognition of its public-interest role, and a further 5% for small organisations that are not eligible for funding from deals under this scheme.
Exactly how the collected funds are to be administered is not clear.
What will it mean for media companies?
On the positive side, the new laws will guarantee a steady flow of revenue for the Australian news industry, either through deals or charges.
This stops the digital platforms opting out of giving financial support to the news industry, which is welcome.
There has, however, been criticism from the news industry in four key areas.
1. A smaller funding pool
The pool of funding from which the charge is drawn is smaller than the original proposal. It was initially based on the annual revenue of the platform in Australia. Now it will be drawn from its digital advertising revenue.
While there has been a small increase in the charge, from 2.25% to 2.5%, it might not make up the shortfall.
More importantly, for this to work we need a more accurate definition and estimate of advertising revenues earned by digital platforms in Australia.
2. Uneven expenditure rules
The minimum number of deals that need to be struck to avoid the charge was doubled from four to eight.
But the maximum share of expenditure per news business is 25%, which means a platform can give four companies 99% of the money and split just 1% among four additional companies.
This could continue the problem of propping up the larger mainstream news outlets at the cost of smaller publishers, which are playing an increasing role in the way audiences access news and information.
3. Favouring larger organisations
The charge distribution mechanism also favours larger organisations. To be included on the Australian Communications and Media Authority’s register of eligible news businesses you must generate more than $150,000 in annual revenue.
This excludes many small and independent outlets. For example, among roughly 200 Local and Independent News Association (LINA) members, 35% earn less than the threshold. The 5% grant built into the scheme is promising, but not sufficient to support the diverse range of publishers operating in Australia, particularly in regional areas.
4. No AI companies included
The government chose not to include AI companies in the scheme.
Excluding AI services creates a significant regulatory gap. AI platforms have become an increasingly dominant source of news and information for the Australian public.
With the advent of generative AI-enabled platforms, news organisations are now facing a “zero-click” era as artificial intelligence (AI) summaries reduce referral traffic to news websites.
This is clearly a missed opportunity at the precise moment when their market power and impact on journalism are accelerating.
Are the laws likely to be effective?
Overall, the new laws will channel badly needed funds into the struggling news industry.
However, while the government has made small changes to the News Bargaining Incentive legislation, they don’t go far enough to reflect the industry’s feedback and support the diversity and sustainability of public interest journalism.
Sora Park receives funding from the Australian Research Council, Creative Australia and the Department of Infrastructure, Transport, Regional Development, Communications, Sport & the Arts.
Caroline Fisher does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.
