The art of turning good news into a train wreck

This is an on-the-one-hand-but-on-the-other-hand commentary.

On the one hand, legislation forcing ‘big tech’ to pay for the news they appropriate from New Zealand media is welcome. On the other hand, fence-sitting for the past two years robbed the Ardern Government of an opportunity to give the move true international impact.

The government has had a soft approach to the social media platforms and search engines (save for the Christchurch Call on harmful content) because it relies heavily on them for direct contact with the electorate. The Prime Minister has 1.9 million Facebook followers and 1.7 million on Instagram. She may wish to suggest her 800,000 Twitter followers follow her elsewhere as Elon Musk turns it into a swamp.

The government could – and should – have collaborated with its Australian counterpart at the beginning of last year to pass identical legislation on both sides of the Tasman forcing ‘big tech’ to negotiate deals or face compulsory arbitration. Such a united front would have sent a stronger message to Meta, Alphabet et al than this country could do alone. It would also reinforce a determination to take an international approach to regulating those who believe they are laws unto themselves.

In a Tuesday Commentary in August 2020, I advocated a common approach after Australian Treasurer Josh Frydenberg announced a mandatory code that would make the social media giants pay for news. He promised that legislation to enact the code would pass through the federal Parliament before the end of that year. The News Media Bargaining Code passed into law in February 2021, but not before Facebook made a colossal error of judgement and blocked Australian users from seeing news on the platform (before realising that, strewth, Aussies can live without it).

In all likelihood, New Zealand will now pass similar laws but simply looks like a latecomer to the party. Third in line, in fact, after Canada which introduced its equivalent of the Australian legislation in April. On the other hand, better late than never.

The move has been welcomed by New Zealand media organisations including NZME, which has already cut its own deals. I believe the publisher of the New Zealand Herald let the side down by going it alone in deals with Google and Facebook. In so doing it weakened the position of every other organisation that was in line to negotiate with Big Tech. The collective bargaining approval that the remainder of the industry subsequently received from the Commerce Commission would have been all the stronger if NZME had been inside the tent.

Now we can look forward to collective bargaining on the basis that, if Big Tech doesn’t play fair, it will face some form of compulsory arbitration. That process will apparently be under the control of the Broadcasting Standards Authority which yesterday welcomed the opportunity. Its chair, Susie Staley, acknowledged that “more and more people are seeing media content via online platforms, and media outlets have not been remunerated accordingly.”

The choice of the BSA as the facilitator surprised me. It does not currently regulate online content, nor does it engage in the type of negotiation that American heavy hitters will undoubtedly bring to the table. Online content regulation is the province of the NZ Media Council but, given it is an organisation supported by those on one side of the negotiating table, it is unlikely to have been acceptable to Big Tech. I would have thought the Ministry of Business, Innovation & Employment would have been a more obvious choice. MBIE already has experience in dealing with large-scale industries, in digital development, and in dispute resolution. In Australia the process is monitored by the Australian Competition and Consumer Commission, which is the equivalent of our Commerce Commission. ComCom could have been another potential contender for the role here.

To its credit, the BSA has already signalled an open attitude to how it should fulfil an addition to its regulatory remit. Susie Staley says the authority is “very open to hearing any views or concerns” and will keep in contact with “broadcasters and stakeholders” as the legislation takes form. They will also have to learn the P-word. Those ‘stakeholders’ are publishers.

The choice of the BSA as overseer may be recognition that the proposed law – like those of Australia and Canada – is effectively a reserve power that government hopes will not be exercised. That has been the outcome so far across the Tasman, where both Google and Meta have negotiated agreements without the code being triggered. The ACCC reported earlier this year that 20 deals had been signed with Google and 14 with Meta.

A criticism of the Australian code is that it favoured the larger players, perhaps because News Corp sealed a three-year deal with Facebook worth $50 million a year. However, a former ACCC chairman, Rod Sims, has given the lie to that criticism in a submission he made on the Canadian legislation.

 Australia’s code has been extremely successful in achieving its objective. From not being able to engage with the platforms because they wouldn’t allow them to, the Australian news media businesses that have done deals under the code are comfortable with them, and these deals are yielding well over $200 million Australian per annum to the news businesses. Further, Google has now done deals with essentially all eligible media businesses, while Facebook has likely done deals with media businesses employing around 85% of Australian journalists.

He added:

The amounts paid per journalist were usually much larger for the smaller businesses. Indeed, Country Press Australia, which represents 180 rural publications, received possibly the highest payment per journalist employed.

The latter point will come as a relief to smaller publishers and the online news start-ups, whose ‘plight’ exercised the mind of Communications Minister Willie Jackson when he announced the proposal on TVNZ’s Q&A. He said the legislation would particularly help smaller publications. That is particularly good news, although two examples he cited – Northern Advocate and Whanganui Chronicle – are, in fact, owned by NZME. He hinted that the legislation would include collective bargaining rights that will remove the need to jump the Commerce Commission’s high hurdles in future.

Rod Sims’ evidence, together with the fact that Big Tech has done deals with more than 150 Canadian publications even before its code becomes law, suggests that the likes of Google and Meta will swallow dead rats before succumbing to regulatory obligations. Their entire operating model is based on staying beyond the reach of regulators.

A robust piece of legislation, drawing on the best of the Australian and Canadian models, will be needed. As AUT academic Dr Merja Myllylahti sagely observed in an online post yesterday: “It is worth remembering that platforms’ interests come always first and their actions are unpredictable.”

Why is the legislation now forthcoming? Jackson’s claim that the government was becoming frustrated at the lack of deals done by Big Tech rings a little hollow. It is far more likely that the reason is sheer pragmatism. It coincides with the winding down of the Public Interest Journalism Fund. The TVNZ/RNZ merger is soaking up a large chunk of the government’s media allocation over the next few years, but simply turning off the PIJF tap will undoubtedly bring an embarrassing end to some high profile journalism if media outlets cannot self-fund them. Alternative sources of new funding had to be found and the answer lay in forcing the hand of Big Tech to front up with a fraction of what they extract from this country each year.

Minister Jackson estimated deals with Facebook, Meta and their ilk will produce between $30 million and $50 million a year. Let’s take the generous approach and say $50 million. That is only three per cent of the annual digital-only advertising revenue generated in this country. Most of that goes to Google and Meta.

On the one hand, that part of Willie Jackson’s interview with Q&A’s Jack Tame was a bit of good news and he can take credit for a move that will undoubtedly benefit journalism. On the other hand, the remainder (in which the TVNZ/RNZ merger was discussed) was only bad news for the minister.

Prime Minister Jacinda Ardern did nothing to improve the situation in an interview with Ryan Bridge on AM in which she was asked about a Curia poll for the New Zealand Taxpayers Union poll showing only 22 per cent support for the merger. She responded by saying 25 percent of respondents answered “don’t know” and that highlighted “some of the issues haven’t been well-traversed”.  Well, yes, they had – by the 989 organisations and individuals who made submissions on the merger’s empowering Bill. I was co-organiser of one of them. You’ll find a link here. And there was no getting away from the 53 per cent in the poll who said they did not support what was being proposed.

She went on to say: “Look, that means that we need to continue to make that case as well.”

I disagree. What the Government needs to do, on the one hand, is make an unsafe Bill fit for purpose. On the other hand, it must tell Willie Jackson to stop digging the hole into which it has put itself by misconceiving the public service media entity and the role of government in it.

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