As Google ramps up threats to remove links to New Zealand news content, a newly released Cabinet paper reveals the potential benefits to local media firms of new legislation. Shayne Currie reports.
New Zealand media companies may be able to negotiate deals totalling up to $50 million a year as a result of a planned new law forcing the likes of Google and other global tech giants to pay for the journalism that helps drive their business fortunes.
A Cabinet paper released to the Herald under the Official Information Act details a raft of options considered by the Government in August, in the face of “multiple and complex challenges” for local media.
Every major commercial media company has been cutting costs - and in the case of Warner Bros Discovery’s Newshub, an entire news operation - as a result of tough economic headwinds and, media firms say, unfair settings that allow global tech giants to reap huge profits without fairly paying for the local content that drives their business machines.
The Cabinet paper highlights key areas where the Government can adjust settings - including the introduction of the Fair Digital News Bargaining Bill; broadening the screen production rebate settings for local productions; and ending a ban on television advertising on Sunday mornings and four other public holidays (Anzac Day morning, Christmas Day, Good Friday and Easter Sunday).
It says the lifting of the advertising ban would see an estimated additional $5 million a year in revenue for broadcasters (a ban on radio advertising would also be lifted on Christmas Day, Good Friday and Easter Sunday).
The Fair Digital News Bargaining Bill, meanwhile, would bring even greater benefits - up to $50 million a year, according to the Cabinet paper.
The Bill, backed by New Zealand’s media industry, was introduced by the Labour Government last year and supported, with amendments, by National and NZ First (but not Act) at the Cabinet table in August.
The new law, due to be passed by the end of the year, would force tech giants such as Google and Meta (Facebook) to negotiate with media companies and pay for the New Zealand journalism and news content that help drive their fortunes.
The Cabinet paper, tabled by Media and Communications Minister Paul Goldsmith, states: “In Australia, the News Media Bargaining Code is delivering an estimated $AUD200 million to news businesses through commercial agreements. In Canada, the Online News Act incentivised Google to invest $CAN100 million annually to the news media industry, and despite Meta removing news from its platforms there, more Canadians are going directly to local news websites.
“In New Zealand, estimates are that news media companies may be able to negotiate deals worth between $30-50 million to the sector.”
Goldsmith’s paper says the new legislation is designed to “support a free and independent news media without the need for direct government funding and ensure media companies can be profitable in a digital environment”.
“Media companies themselves have stated they do not want handouts from government and have asked for a legislative backstop to support commercial outcomes,” says Goldsmith’s paper.
“To date, companies that post news content online struggle to monetise products because digital platforms are reluctant to enter commercial discussions with comparatively small New Zealand publishers.”
The Cabinet paper states that the issues are not unique to New Zealand.
“In 2019, the Australian Competition and Consumer Commission found that there is a bargaining imbalance between news media entities and large multinational platforms like Google and Meta; and although these platforms create referral traffic to news media sites, this benefit does not outweigh the subsequent loss in advertising revenue.”
Goldsmith told Cabinet that amending the bill to align it more closely with the Australian approach to news bargaining legislation would “minimise the risk of adverse consequences and provide business certainty for local news media”.
“The key change will ensure the Minister for Media and Communications makes the final decisions designating digital platforms.”
He said while international experiences had been mixed, overall “it appears the outcomes for countries that have implemented bargaining frameworks are positive. I am persuaded that the Bill is worth pursuing”.
His paper also adds the bill does not pre-empt the outcome of negotiations.
“If a digital platform can show it does not make any money from news content, then it is not required to compensate the news business.
“Likewise, whether to make news available is a commercial decision for digital platforms. If a company chose to give up its market position, I expect another platform would fill the gap, or (as in Canada) consumers will go directly to the news websites.”
His paper also spotlights difficulties facing the local screen production sector, saying as one example that “over the last four years the advertising revenue derived from screening Shortland Street has not covered the cost of producing it”.
The paper highlighted the value the show provides: “Shortland Street has provided over $18 million per year in direct spending into the sector since 2011/12. Between then and 2021/22, a report by Olsberg SPI found that the show generated $221 million in Gross Value Added (GVA), including $69 million in direct GVA, $120 million in supply chain, and $32 million in induced impact.
“Shortland Street provides a unique and invaluable source of steady employment in an industry dominated by the ‘gig economy’, and a pipeline of talent that sustains our ability to attract and service international screen productions: In 2023, it employed 70 core crew staff, with a further 98 core and over 200 casual crew contractors. 157 actors made up the cast,” the paper says.
It offers “trainee and assistant positions across departments, gateway programmes for secondary school students, and training initiatives to support career progression, and cultural and social benefits. It showcases local cast, crew and stories, building and reflecting our national identity in an access.”
There have been calls for changes to the New Zealand Screen Production Rebate, first introduced in 2014. Goldsmith says “amending NZSPR criteria is an appropriate and manageable action for the government.
“I am proposing to implement an alternative expenditure threshold for scripted series, set at $10 million total QNZPE [Qualifying New Zealand Production Expenditure] per season ... a discrete change of this nature reflects the rebate’s purposes – it supports the creation of New Zealand content and stories, the development of New Zealand creatives, and the industry’s sustainability, scale and critical mass.
“In the current context I consider that the benefits of this proposal (economic, local sector development, and cultural) outweigh the cost to government, which will be limited in the medium term as it is highly unlikely any other or new local productions would meet the alternative criteria. Moreover, no additional funding is required as the cost (likely to be $6 million per annum) can be managed within the existing baseline funding that was provided in Budget24 until the end of 2025/26. 40 I am seeking Cabinet’s approval of this change to the NZSPR-NZ now to ensure clarity and certainty for all concerned parties and to avoid job losses.”
On Friday, Google - which made almost $1 billion in New Zealand last year - went public with its anger and opposition to the Bill, threatening to end existing New Zealand news agreements and remove any ability for users to find local news on its search engine.
Google has a range of existing licensing deals in place with New Zealand publishers for its Google News Showcase platform - the total value of these is likely to be far less than any deals struck under bargaining legislation.
“We’ve been transparent with the Government that if the Bill were to proceed on its current trajectory and became law, we would be forced to make significant changes to our products and news investments,” Google New Zealand country director Caroline Rainsford wrote in a blog post.
“Specifically, we’d be forced to stop linking to news content on Google Search, Google News, or Discover surfaces in New Zealand and discontinue our current commercial agreements and ecosystem support with New Zealand news publishers.
“These are not outcomes we want for New Zealanders, news publishers, or our business.”
She described the new Bill as a “link tax”.
News Publishers Association public affairs director Andrew Holden said it was no such thing and says Google’s threats are little more than “corporate bullying”.
“It creates the environment for New Zealand media companies to sit down and have a proper commercial negotiation with big tech companies about their use of our journalism. This has only become necessary because the likes of Google have distorted the market, and become some of the largest and most powerful businesses in corporate history.”
Citing recent and ongoing cases against Google in America, Holden quoted US Attorney General Merrick Garland describing one case as “a historic win for the American people” and that, “No company – no matter how large or influential – is above the law.”
“The NPA agrees, and also believes that the Government of New Zealand should be able to make laws to strengthen democracy in this country without being subjected to this kind of corporate bullying.
“We trust the Government will stand firm and act in the interests of New Zealanders.”
Editor-at-Large Shayne Currie is one of New Zealand’s most experienced senior journalists and media leaders. He has held executive and senior editorial roles at NZME including Managing Editor, NZ Herald Editor and Herald on Sunday Editor and has a small shareholding in NZME.
The event is described as a series of aggressive sales pitches.