The Government has unveiled a $50 million package to help the media industry which has seen advertising revenues plummet due to the coronavirus pandemic.
COMMENT:
As someone who lost a chunk of my income when the New Zealand Listener shut down three weeks ago, news of the government's $50 million support package for the media is bittersweet.
Would magazine publisher Bauer Media have clung on if it knew the relief was coming? No. Bauer didn't even apply for the wage subsidy in March and this package wouldn't have helped its cash flow issues anyway. Print media was largely overlooked today.
But Bauer had already made its decision, probably over one of those long Sunday lunches in Hamburg the Bauer family is known for, to quit New Zealand.
Some of the relief measures may defer similar heavy discussions amongst the owners of the remaining large publishers, Mediaworks in particular, but as with coronavirus, we need to treat the cause, not the symptoms.
You have to tip your hat to Google and Facebook. Their innovation with digital platforms has seen them eat the media's lunch when it comes to digital advertising. Those two companies now claim somewhere between 60 and 80 per cent of all online advertising revenue in New Zealand.
Yes, we have state-owned media in RNZ and Maori TV and the private sector is experimenting with online subscriptions. But if we want to continue to have a thriving and diverse media ecosystem, we need to plug that massive gap in the balance sheets of publishers that our current corona-crisis has only exacerbated.
ACCC takes the lead
On that front, the Australians are streets ahead. It may well be the influence of the Murdoch-owned media, which for years has been hectoring the Liberal Party to tackle the power of the tech giants.
But it is backed up by the compelling arguments of the Australian Competition and Consumer Commission, which last year published a thorough inquiry into the power of the digital platforms and their impact on Australia's media sector. Similar inquiries are now underway in the US and the UK where the media are facing exactly the same pressures.
The ACCC found that for every $100 spent by advertisers in Australia on online advertising, excluding classifieds, $47 goes to Google, $24 to Facebook and $29 to other participants. Online advertising in Australia is an A$9 billion ($9.5b) industry and two Silicon Valley giants are siphoning off the bulk of it.
Bauer Media didn't apply for the wage subsidy in March before closing its NZ operations. Photo / File
Those "other participants" include media outlets employing journalists and generating news, snippets of which appear in Google search results and on Facebook, allowing those platforms to draw the large audiences that attract advertisers.
It should be a symbiotic relationship - Google and Facebook send traffic to media websites and in turn use topical news content to make their own platforms magnets for eyeballs. But the relationship went skew-whiff almost from the outset in the 2000s and media companies have been slowly bleeding out ever since.
The ACCC gathered Google, Facebook and Australian publishers together to develop a voluntary code of conduct covering sharing of data, ranking and display of news content and the sharing of revenue generated from news snippets displayed by Google and Facebook.
Make it mandatory
Talks on that latter point of money stalled, so on Monday the government forced the issue requiring a mandatory code to be developed by July, with the ACCC's oversight. It will be enforced by law, with penalties for lack of compliance.
The whole world is watching how this plays out because previous efforts to get tech companies to pay for the privilege of hosting news content have failed. Australia now has a shot at putting a precedent-setting system in place. A legally-binding code of conduct, complete with levies paid to news publishers is a good way to go, rather than amendments to copyright legislation or attempts to place a content tax on companies based on their revenues. Both of those approaches have failed elsewhere.
With no preparatory work of this kind undertaken by our own Commerce Commission to date, we can now closely monitor how the Australian media experiment plays out and decide whether to implement it here. Let face it, leading the charge on this as a small nation would never have succeeded anyway. In true Anzac spirit, we can follow their lead.
Google and Facebook may well opt to avoid paying by just removing news article snippets from their platforms in Australia. That could prove annoying for news consumers, but I'm not convinced it would be devastating for anyone concerned.
When Spain attempted to force Google to pay for running news content in 2014 through copyright law, the search giant instead shuttered the Spanish version of Google News, the internet's largest news aggregator. There is conflicting evidence around the impact that had on publishers.
Exit Google News
A 2017 Stanford Business School study only examined data from a few weeks before and after Google News disappeared in Spain, but found that news consumption fell 20 per cent overall and 10 per cent on the websites of publishers other than Google.
However, a study published in November by the News Media Alliance, which represents the US media industry, came to a very different conclusion when it looked at the impact over five years from 2014 to 2019.
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It found that unique monthly visitors increased with many publishers and overall website traffic trends were largely unchanged. The big Spanish newspaper El País, reported 8.5 million unique monthly visitors in October 2014 before Google News shut down. In December 2015, that number had increased to 16.6 million.
Our media companies would likely do just fine without Google and Facebook if it came to that, they'd just get more direct traffic and it would open the door for new local innovation to help news consumers discover content.
Time for action
But I hope it won't come to that. Google and Facebook have struck some genuinely useful collaborations with publishers. But media executives that appeared before Parliament's epidemic response select committee last week echoed the findings of the ACCC and well articulated the precarious position of their industry.
Broadcasting, Communications and Digital Media Minister Kris Faafoi, a former TVNZ journalist himself, came across as vague and lacklustre during that Zoom call. Here now is his opportunity to follow up short term relief with a solution that tackles the key structural issue plaguing the media industry.
Faafoi could start on that by looking across the Tasman and he flagged today that he was doing as much with a second package of relief measures to be informed by the Australian efforts.
