There’s a kind of hush all over the Digital News Bargaining Bill

New Zealanders can be forgiven for being unaware that their government had made good on its plan to make social media and search platforms pay for the news they use. The proposed legislation caused hardly a stir when broadcasting minister Willie Jackson introduced it to Parliament last Thursday.

Only Businessdesk’s media writer, Daniel Dunkley, provided a summary of the Fair Digital News Bargaining Bill. His story rated a brief in Shayne Currie’s Media Insider column in the Weekend Herald and the same day The Post acknowledged the Bill with a highly critical commentary by Dr Eric Crampton, chief economist at the free-market thinktank The New Zealand Initiative, who called it a “shakedown racket”.

The subdued reaction may reflect a view that the Bill will die with the current Labour-led government. That was the view of Newsroom co-founder Tim Murphy when I polled media leaders on the introduction of the proposed legislation. The only other media boss to respond was Radio New Zealand CEO Paul Thompson, who sees the Bill as a sound approach that will benefit a number of outlets. However, he doesn’t see it becoming law “any time soon”, nor as a panacea for all the news industry’s problems.

For all that, the Bill deserved a far better public airing than it has so far received, not least because it also announced an end to direct public funding of private sector news operations.

The explanatory preamble to the Bill states: “It is not desirable for the government to continue funding the news media industry directly, because it increases risks of eroding public trust in the media…Government funding is not required if news media entities are empowered to bargain for the value of their news content, Accordingly, commercial bargaining will better maintain trusted, independent news media, as well as ensuring the financial sustainability of the industry in a digital environment.”

That is a clear signal that anything even vaguely resembling the Public Interest Journalism Fund will not be repeated. That was a certainty under a National government, now it seems also to be the case if Labour is returned at the October election.

The PIJF may go away but, as Paul Thompson says, the problems remain. Therefore, even if the Bill was introduced in the dying days of this Parliament and will lapse, it is worth examining what it proposes. First, however, it should be put in context.

Introduction of the Bill follows the adoption of measures by Australia and Canada to bring some balance to a playing field tipped on its end by the immense power of Alphabet (Google) and Meta (Facebook).

A Cabinet Paper on the proposal, tabled by Broadcasting Minister Willie Jackson, stated: “The overwhelming feedback from the New Zealand media sector has been that in all respects of their commercial dealings with Google and Meta, news media organisations must accept ‘take in or leave it’ terms that are weighted in favour of the platforms. This inherently limits news media companies’ ability to negotiate about what is a fair return for their investment in news content.” The document also noted the companies had no ability to negotiate over issues such as changes to algorithms that affect the distribution of content. Since the paper was tabled, Facebook did change its algorithm affecting New Zealand news, resulting in a drop in page views across our news media.

A bargaining code was the most preferred of three options proposed to the minister. The other suggestions were a levy on digital platforms to produce a pool of funds to be distributed to news media, and a ring-fenced tax on the multinationals for the same purpose.

It is clear that the bargaining code was chosen because Labour has been spooked by the disinformation created around the PIJF and wishes to distance itself from the funding role. What is proposed would achieve that end while – theoretically – providing media with much-needed revenue.

The Bill has a much closer resemblance to the form of the Canadian Bill C-18 than to the Australian News Media and Digital Platforms Mandatory Bargaining Code, although all three have numerous common elements.

At the core of the proposed law is a framework for negotiation between the digital platforms and news media entities. There would be a specified exemption from the Commerce Act to allow the news organisations to engage in collective bargaining. That would be a significant change: The News Publishers Association had to seek an exemption from the Commerce Commission last year to negotiate with Google and Meta on behalf of its members. It took the best part of the year before it was granted.

The framework sets out clear timelines on negotiation, mediation, and final offer arbitration if required. There are equally clear definitions of what types of digital platform would be captured by the legislation. Unlike the Australian law, where a government minister designates which platforms will be included, the New Zealand proposal (and the Canadian law) adopts a catch-all approach from which a platform could be exempted if it meets a string of conditions showing it has already significantly benefitted the New Zealand news media sector. Off the top of my head, I can’t recall one that would easily vault over that bar.

News media entities would be required to register to be parties to the bargaining process. Some see that as ‘licensing the press’. I am always keenly aware of such dangers, but I don’t harbour fears here. Registration would be a necessary precursor to participation in arbitration processes and I see this as nothing more.

To qualify for registration for the bargaining process, news media entities must satisfy professional standards conditions (principally through regulation by the BSA or Media Council), or by observing a standards code. The latter may prove problematic because it invites the production of an ever-increasing range of standards when, by definition, news media should be guided by common ethical norms. The jurisdictional criteria of the BSA and Media Council are wide enough to embrace any entity worthy of the news media label. The second-tier definition should go.

The Bill nominates the Broadcasting Standards Authority to oversee the law. That is a good choice and far preferable to oversight by a government ministry. Certainly, it is far preferable to Australia’s approach, where the communications minister decides which platforms will come under its code and administration is through the ACCC (their equivalent of our Commerce Commission).

Although the BSA’s board members are ministerial appointees, it has a strongly independent track record and, importantly, it has media industry knowledge. One of its first tasks under the proposed law would be the creation of a bargaining code. The Bill contains the kernels for that code and the deeply detailed Australian version could fill any gaps.

The Bill confers considerable enforcement powers on the BSA through the High Court, with a range of punitive civil remedies. They range from fines up to $300,000 for failing to supply copies of bargaining agreements or publish official notices, through fines of $3 million or more for failing to bargain in good faith, to fines of more than $10 million for refusing to engage in compulsory bargaining.

This does, however, highlight the anachronistic nature of our regulatory framework: The BSA does not currently handle digital services. These are overseen by the industry-funded Media Council, which will continue to adjudicate complains about online content.

The Bill cannot be used to over-ride existing agreements between the digital platforms and New Zealand news media entities. Nor can it be used to renegotiate the terms of those agreements.

At first sight, that seems to make the Bill something of a nullity. Our major publishers and a raft of online start-ups already have agreements with Google and Facebook, even if (to re-use a phrase from last week’s commentary) they are paid from the petty cash box.

However, the agreements to date are specific and do not amount to all-encompassing agreements to pay for all news content used by their various services, a nicety that both platform owners have assiduously avoided. The agreements relate to carrying news on Google’s News Showcase (highlighting three stories from each participating outlet) and a number of Facebook-funded digital innovation projects. The way should still be open for those catch-all negotiations.

The Fair Digital News Bargaining Bill has been characterised by Eric Crampton in his column in The Post as “disgraceful”, suggesting that it will put platforms in a position of having to accept what he characterises as a mafia boss’s offer. It is one you are not meant to refuse.

I disagree with that assessment. The legislation proposed by the Bill can be triggered only if the platforms fail to bargain fairly with media outlets that want to open negotiations on financial recognition of what they have invested in their own intellectual property. It is, in fact, an incentive for the platforms to voluntarily enter good faith bargaining with media organisations – outside the legislative framework. If the platforms moved away from their own strong-arm take-it-or-leave-it approach, the statute would simply gather dust.

The fact that the government deemed it prudent to introduce the Bill – albeit far too late to be effective – is an indication that these multinationals will only kick the ball around a level playing field if they are frog-marched onto the pitch.

The Australian media have benefitted from the existence of their law. There are now 30 voluntary agreements between Alphabet/Meta and local news organisations. It is not perfect and a review after the first year of operation has made a number of recommendations, including asking the ACCC to investigate whether bargaining power imbalances still exist. However, the compulsory bargaining process has not yet been triggered.

Canada, meanwhile, is toughing out Facebook’s ban on news to Canadian users because it passed Bill C-18. On Saturday the BBC carried a story about the difficulty the ban had imposed on people trying to share news about the wildfires that are sweeping the country and which has placed the whole of British Columbia under a state of emergency. The Minister of Heritage, Pascale St-Onge, called Meta’s decision to continue to block news “irresponsible and unreasonable”, and called on the tech giant to restore access to news. As I write this, it shows no signs of doing so. That is hardly a display of good corporate citizenship.