Media mogul Rupert Murdoch yells ‘Jump!’ Frydenberg and Fletcher respond by leaping into battle

“News Corp is an $8.6 billion corporation run from Sixth Avenue in New York. It is controlled by the (American) Murdoch family. Its exploits over seven decades have been as brutal and Darwinian as any media company in history. It has regularly dispensed “we will wipe you out” threats to small and large competitors across the world. Now, we’re told, “international platforms” who have “no commitment to local communities” are responsible for depriving 60 Australian local communities of the news they have depended on for decades. At some point in Australian history, the malevolent abuse of power by the billionaire family who milks its former colony will be exposed.” [Crikey Editor Eric Beecher, News Corp’s abuse of power must be exposed — and stopped, 3 April 2020]

Australian Treasurer & Liberal MP for Kooyong Josh Frydenberg speaking at a joint doorstop interview on 20 April 2020:

Well, good morning. It’s a real pleasure to be here with my friend and colleague, the Minister for Communications, Paul Fletcher. It’s time the tech titans were held to account and we had genuine competition, we have a level playing field, we have more transparency and we get payment for original journalistic content. The rise of the digital platforms, and in particular Google and Facebook have delivered real and significant benefits to consumers. But it’s has also been a period of great disruption. And it’s called into question the adequacy of our existing regulatory frameworks and the viability of traditional media outlets. This is why Scott Morrison, when he was Treasurer,= tasked the ACCC to undertake a ground-breaking report, a report that took them 18 months to put together, into the digital platforms. The ACCC led by Rod Sims, produced an outstanding report which made a number of recommendations. Recommendations that the Government has accepted. One of those key areas of focus for the ACCC was to develop a voluntary code between the traditional media businesses and the digital platforms to govern their relationships. Last year, the Government announced that it hoped a voluntary code would be reached by November of this year. Well those negotiations were held and no meaningful progress was made on the most significant component of which the code was to deal with, namely payment for content. And in the words of the ACCC, they did not believe that progress would be made and a deal would be done with a voluntary code. So the Government's taken a decision to move to a mandatory code, with a draft mandatory code to be released by the end of July and to be put together by the ACCC. We hope it will be legislated soon thereafter. We’re very conscious of the challenges we face and that we are dealing with some of the most valuable and powerful companies in the world. In France and in Spain and in other countries where they have tried to bring these tech titans to the table to pay for content they haven't been successful. But we believe this is a battle worth fighting. We believe this is critical for the future viability of our media sector and it's all about competition and creating a level playing field. So together with Minister Fletcher and our colleagues led by the Prime Minister, we will move with the ACCC to put together this mandatory code in the weeks ahead and hopefully it will deliver lasting reform for the sector and importantly, ensure that we have a level playing field into the future…

the ACCC is going to be looking at the method by which the payment for content would occur. There are a number of different options. You can do it on a value option or you can do it on a cost option, meaning that the tech titans would end up paying a fraction of what the cost was for producing that original content every time that they use it. The other alternative is in terms of the value to that particular digital platform that they get from getting eyeballs onto their sites by using that content. So this is to be worked out by the ACCC over the next three months. This is a very significant reform. It’s about holding these tech titans to account. It’s about ensuring genuine competition. It’s about delivering a level playing field. It’s about keeping jobs in journalism, and it’s about ensuring a fair outcome for all….

...these are very profitable platforms so this may eat into their profitability, to the Facebook’s and to the Google’s. But it’s only understandable that they would be paying for that content that they use to get traffic through their websites. You see the way Google and Facebook operate is that they don’t necessarily charge a fee for their service but they attract eyeballs onto their sites and then sell the advertising that goes with it. So this is about ensuring that they are genuinely rewarding and compensating the content that they use….

...but what was clear from the ACCC is that on the key issue of payment for content, there wasn’t a hope that there would be a deal reached between the parties. And the fact that we could not see a light at the end of that tunnel meant that we would move from a voluntary code which was the original intention, to a mandatory code which would be legislated through the Parliament.

One independent media company did not agree with Frydenberg’s assessment of the situation.

Crikey, 23 April 2020:

Earlier this week, Treasurer Josh Frydenberg and Communications Minister Paul Fletcher got up and struck a blow for foreign multinational News Corp in its ongoing war with the tech giants that have used innovation and the internet to wreck the Murdochs’ media business model….

...government has recycled demonstrable lies peddled by News Corp about how it is being robbed by Google and Facebook, with the aim of helping prop up News Corp’s failing Australian media businesses….

News Corp charges that when Google (mostly) and Facebook use its headlines and automatically generated “snippets” of News Corp stories on their sites, they are stealing content, and should be made to pay for it via a licence fee that will “reflect the financial benefit digital platforms derive from using snippets”.

It also complains that longer “snippets” deter people from clicking through the attached link to the original story because they get all they need from what’s displayed.

Except the Australian Competition and Consumer Commission’s (ACCC) digital platforms inquiry found that News Corp’s claims don’t stack up.

Headlines and snippets aren’t theft of content: “generally, digital platforms’ use of article headlines is unlikely to infringe copyright protections in Australia,” the ACCC noted. “Digital platforms reproducing a snippet of a copyright-protected news article does not infringe copyright protections if the snippet does not reproduce a substantial part of the article.”

And the ACCC found that the tech companies, media organisations and consumers all benefit from the use of snippets. Specifically, “media businesses benefit because a snippet provides context and an indication to the user of the value of that content, increasing the likelihood of consumers clicking through”.

Real-world evidence backed this up. “As a result of a German copyright law requiring Google to pay fees to publish snippets from news media websites, Google stopped showing snippets from [media company Axel Springer’s] news articles. Axel Springer noted that the lack of snippets led to a nearly 40% decline in referral traffic from Google Search and an almost 80% decline in referral traffic from the Google News user interface”.

The ACCC also “does not agree that longer snippet lengths necessarily have a negative effect on referral traffic, with users remaining on an aggregator or search platform rather than clicking through to a news media business’s website”. As a result, it did not recommend that a mandatory licence fee be imposed.

Where it did agree with media companies is that they have little bargaining power with Google et al when it comes to the length and composition of snippets. They can block Google from automatically generating snippets, but beyond being able to “opt out”, they have no way of managing them, or maximising click-through.

The ACCC thus proposed the industry-led development of a code of conduct to be agreed between media and tech companies to address this “imbalance of power” and enable media companies to get access to data and negotiate more effectively with the likes of Google.

Such a code of conduct might also cover how revenue is shared “where the digital platform obtains value, directly or indirectly, from content produced by news media”.

How much value do digital platforms obtain from news content? Google doesn’t show any ads on its news feed, and “does not generally sell advertising opportunities next to search queries that are considered by Google as having a ‘news intent’”. In other countries where it has been ordered to pay fees, it has simply stopped carrying snippets if it can’t do so for free. In Spain, it shut down Google News.

Interestingly, the result in Spain — and one echoed elsewhere — was that smaller media sites lost a large volume of traffic while major media sites suffered relatively little loss. 

It would be to News Corp’s considerable advantage if that same result eventuated in Australia, with smaller competitors in an already marginal economic environment suffering a major loss in traffic…..

[my yellow highlighting]