Australian media will be able to bargain with Google and Facebook to quickly secure fair payment for news content if a draft mandatory code released by the ACCC today is adopted.
The draft code is aimed at addressing acute bargaining power imbalances between Australian news businesses and Google and Facebook, including through a binding “final offer” arbitration process.
If the news businesses and the digital platforms cannot strike a deal through a formal three month negotiation and mediation process, then an independent arbitrator would choose which of the two parties’ final offer is the most reasonable within 45 business days.
This would ensure disagreements about payment for content are resolved quickly. Deals on payment could be reached within six months of the code coming into effect if arbitration is required.
The draft code would also allow groups of media businesses to collectively negotiate with the platforms. This could include, for example, regional and community mastheads.
“There is a fundamental bargaining power imbalance between news media businesses and the major digital platforms, partly because news businesses have no option but to deal with the platforms, and have had little ability to negotiate over payment for their content or other
issues,” ACCC Chair Rod Sims said.
“In developing our draft code, we observed and learned from the approaches of regulators and policymakers internationally that have sought to secure payment for news.”
“We wanted a model that would address this bargaining power imbalance and result in fair payment for content, which avoided unproductive and drawn-out negotiations, and wouldn’t reduce the availability of Australian news on Google and Facebook.”
“We believe our proposed draft code achieves these purposes,” Mr Sims said.
While the draft code would initially apply only to Google and Facebook, other digital platforms may be added if they attain a bargaining power imbalance with Australian news media businesses in the future.
The release of the draft code follows lengthy and intense consultation both before and after the release of a concepts paper in May, which sought feedback on a range of options for the draft code. More than 40 submissions were received.
“We recognise the contributions of many parties to this process, including Google, Facebook and a diverse range of Australian news media businesses,” Mr Sims said.
“We look forward to further discussions as we finalise the details of this draft code.”
Further consultation on the draft mandatory code will take place during August, ahead of the code being finalised shortly after.
Bargaining process between news media and digital platforms
Under the code, news media organisations would notify Google or Facebook of their intention to begin bargaining over payment for content, as well as over any other issues they want to negotiate.
The code would require the digital platforms and news media businesses to bargain in good faith, and provides for a three-month negotiation and mediation process.
Media organisations could form groups to collectively bargain with the platforms as part of the code.
“We recognise that the bargaining power imbalance between news media and the digital platforms is particularly acute for smaller media businesses, including regional and rural media,” Mr Sims said.
“We note that 88 smaller media businesses teamed up to submit a joint submission as part of the process of developing the code. Under our plan, these businesses could again work together to negotiate with the platforms over fair payment for their content.”
“News content brings significant benefits to the digital platforms, far beyond the limited direct revenue generated from advertising shown against a news item. News media businesses should be paid a fair amount in return for these benefits,” Mr Sims said.
“We believe that our final offer arbitration proposal provides a compelling incentive for parties to put forward fair and reasonable proposals, given each has just one chance to make an offer, and only one offer can prevail.”
“We have ensured that the cost of producing journalism would be taken into account in arbitration. However, the arbitrator is also required to consider whether the payment proposals from news media businesses place an undue financial burden on the digital platforms,” Mr Sims said.
Minimum standards on non-payment issues
The code would also set down minimum standards to govern non-payment related issues between the major platforms and news media businesses. These are standards that digital platforms must meet in their dealings with news media businesses, and cannot be negotiated away.
Under these standards, digital platforms would be required to give news media businesses 28 days’ notice of algorithm changes likely to materially affect referral traffic to news, algorithm changes designed to affect ranking of news behind paywalls, and substantial changes to the display and presentation of news, and advertising directly associated with news.
In addition, the platforms must give news media businesses clear information about the data they collect through users’ interactions with news on digital platforms; for example how long users spend on an article, how many articles they consume in a certain time period, and
other information about user engagement with news content across digital platform services.
The platforms would also be required to publish proposals for how they would recognise original news content on their services. They would also need to provide news media businesses with flexible user comment moderation tools, including an ability to “turn off” comments on individual stories they post to digital platforms.
The minimum standards would also allow news media businesses to prevent their news content being included on any individual digital platform service.
Breaches of these standards would be subject to potential enforcement action by the ACCC.
News media businesses and news content covered by the draft code
The ACMA would use set criteria to determine which Australian news media businesses are eligible under the draft code.
Media businesses would be eligible if the online news content they produce investigates and explains issues of public significance for Australians; issues that engage Australians in public debate and inform democratic decision-making; or issues relating to community and local events.
In addition, they must adhere to minimum levels of professional editorial standards, and maintain a suitable degree of editorial independence; operate in Australia for the main purpose of serving Australian audiences; and generate revenue of more than $150,000 per
The code is not intended to capture any non-news media content, such as drama, reality television, entertainment content or sports broadcasting.
On 12 December 2019 the Australian Government asked the ACCC to work with Google and Facebook and news media businesses to develop and implement voluntary codes of conduct. In April 2020, at the request of the Government, the ACCC provided a progress report indicated the core issue of payment for content was highly unlikely to be resolved through this voluntary process.
On 20 April 2020 the Government announced it had asked the ACCC to develop a mandatory code of conduct, with a draft code be released for public consultation before the end of July 2020, with a final code to be settled soon thereafter.
The ACCC has been working closely with the Treasury and the Department of Infrastructure, Transport, Regional Development and Communications to consult with stakeholders and develop a draft code.
The ACCC’s 2019 Digital Platforms Inquiry examined the impact digital search engines, social media platforms and other digital content aggregation platforms have on competition in media and advertising services markets.
The ACCC released its preliminary report for the inquiry in December 2018 and a final report on 26 July 2019. The final report first identified this fundamental bargaining power imbalance between Australian news media businesses and Google and Facebook, and recommended the introduction of industry codes of conduct.