CCIA 2024

Reflections on Australia’s News Media Bargaining Code and Canada’s C-18 Bill

Axel Bruns

• 10 Sep. 2024 – Invited presentation at the US Computer & Communications Industry Association event “The Impact of Link Taxes on News and Beyond: Lessons from Australia and Canada”, online

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Reflections on Australia’s News Media Bargaining Code and Canada’s C-18 Bill

Prof. Axel Bruns, Digital Media Research Centre, QUT

Hi everyone, I’ve been asked to provide some reflections on the impact of the Australian News Media Bargaining Code, or NMBC, as well as on Canada’s C-18 bill, which is a close copy of the NMBC. My name is Axel Bruns, and I’m a Professor and Australian Laureate Fellow in the Digital Media Research Centre at Queensland University of Technology, where we have also recently assessed the NMBC’s consequences as part of a submission to a current Australian federal parliamentary inquiry – and I’ll base my remarks in part on that submission. Given the timezone differences, we thought it best if I prerecorded this contribution rather than speak to you at 4 a.m. my time, but I look forward to any responses you may have.

So: the central purpose of the Australian News Media Bargaining Code is to facilitate revenue-sharing. The argument put forward by its architects is that Australian news media are missing out on online advertising revenue because of the dominant market position of major platforms like Google and Meta, and that a substantial share of that revenue is generated by those platforms because they are now where online audiences go to find out about the news.

In other words, the logic is that if those platforms didn’t exist, online audiences would go to the Websites of news providers instead, and because of that (hypothetically) greater popularity online advertisers would then also spend more of their money on those news sites, and thereby finance the production of quality news. But since Google, Meta, and other platforms do exist, news publishers miss out on the revenue, and quality news production suffers. (I’ll say more about whether this logic actually makes sense a bit later on.)

The NMBC seeks to rectify the situation by essentially forcing platforms to negotiate with news publishers about sharing some of their online advertising revenue. There are two options here: either they do so voluntarily, or the government ‘designates’ them under the NMBC and thereby essentially forces them to share revenue. The NMBC was designed by the Australian Competition and Consumer Commission (ACCC) under the leadership of Prof. Rod Sims, and Sims also advised the Canadian government on the development of Bill C-18.

The NMBC was proposed in 2020, and immediately received strong criticism especially from Google and Meta; Meta, in particular, threatened to remove any news content from its platforms completely if the NMBC became law. The Australian government at the time claimed that this threat was nothing but a bluff, and Rod Sims in particular said that Meta wouldn’t do this since news was such an important part of what people go to Facebook for.

But when the NMBC came into effect in February 2021, Meta did exactly what it had said it would do: from 18 February 2021 onwards, it removed any existing posts linking to Australian or international news sites from the Australian Facebook, prevented any user engagement with such posts, and prohibited the posting of new links to Australian and international news sites in Australia.

I say ‘news sites’ here, but in fact this ban covered a broader range of sites including some lifestyle magazines, weather updates from the Australian Bureau of Meteorology, and – especially problematic at the height of the COVID-19 pandemic – even updates about lockdowns and vaccination services from federal and state health agencies. It was subsequently revealed that the ban implemented by Meta was deliberately designed to be so broad, as a deterrent to other governments looking to implement similar laws. (Clearly, Canada didn’t get the message.)

The Australian ban was lifted, some ten days later, only after some urgent negotiations between the Australian federal government and Meta, during which the government promised not to ‘designate’ Meta under the NMBC, in exchange for a relatively vague commitment by Meta to engage in good-faith negotiations with some Australian news publishers about making some payments at least temporarily.

But while such funding was certainly welcomed by those news publishers that benefitted, unfortunately this quick-fix solution otherwise produced the worst possible outcome for Australian news media and the general public: in essence, it simply kicked the underlying problem down the road.

Here are some of the issues: first, Meta could pick only a handful of key news outlets to negotiate with, while many others, and especially smaller, new, and innovative outlets missed out completely; second, the deals it made with those publishers remained confidential, removing the possibility of any government or independent oversight; third, there was no obligation whatsoever to actually invest the money from Meta into quality journalism (as opposed to, say, passing the added income on to shareholders); and fourth, these deals were ever only set up to run for a few years, with no built-in renewals mechanism.

So, a brief stop-gap measure that perhaps temporarily saved face for the then government, but did nothing to address long-standing structural issues in the Australian news media, or even provide reliable investment in Australian quality journalism. By now, Meta has already announced that it will not reveal these deals, and of course that globally it is looking to substantially reduce the visibility of news content on platforms like Facebook and Instagram.

From what I know, the situation in Canada began in much the same fashion: as Bill C-18 came into effect, Meta responded by again removing all news content from the Canadian versions of its platforms – and then some: included in the early bans were also some news satire Websites, which were later reinstated. Here, however, there were no further negotiations or stop-gap solutions: with both sides digging in, news content has been absent from Facebook in Canada since August 2023. Happy anniversary to our Canadian friends.

The fundamental problem here is that the NMBC and C-18 were always atrociously designed pieces of legislation: they address a serious problem – the sustained unprofitability of news production in the Internet age – in the worst way possible, because they are based on fundamentally flawed assumptions. As I wrap up this brief contribution, let me outline some of these issues and offer some suggestions on how to solve them.

First, the idea that news production is unprofitable because Google, Meta, and other platforms have somehow siphoned off online advertising revenue from its rightful place on news sites is simply wrong: the business model of news was broken when news publishers decided to give away their content for free on the Internet, back in the mid-1990s. Since then, audiences expect news to be free, and show little inclination to pay for news subscriptions except for very narrow specialty interests. 57% of Australians surveyed for the 2024 Digital News Report would not consider paying for news at all, for example.

Second, the claim that news is actually important on Facebook, Instagram, and other major platforms is demonstrably incorrect, too. Sadly, this claim is a favourite of news outlets as they argue for the NMBC, C-18, and similar revenue-sharing mechanisms; News Corporation CEO Michael Miller, for instance, appeared before Australia’s current parliamentary inquiry to say: “Meta says that news makes up less than three per cent of what people see on Facebook. That is … not true. … Actually 48 per cent of Australians get their news using a Meta platform”.

Allow me to unpack this: yes, a substantial percentage of Australians get news from Facebook, at least some of the time – though the 2024 Digital News Report puts this at 32%, not 48% –, but of course that doesn’t mean that they explicitly go to Facebook for news, or that news is the only content they engage with there. Rather, they’ll often see news updates accidentally, serendipitously, while doing other things – which means that Meta’s claim that only 3% of all the content that people encounter in their Facebook timelines is news is certainly plausible, although of course Meta is itself an interested party in this debate and can’t just be trusted at face value with its numbers either.

But news executives like NewsCorp’s Miller who are making such arguments are displaying a very selective innumeracy in their claims – it’s as if they are saying that if 32%, or even 48%, of all Australians are getting their tomatoes from the supermarket, it is utterly impossible that tomatoes make up only 3% of the total range of products we buy there. I’m sure I don’t need to explain any further just how nonsensical that argument is.

And indeed, and this is the third flaw in the NMBC and C-18 frameworks, of course the online advertising revenue has, genuinely, moved to the major platforms precisely because they are all-round services and don’t just provide news updates. If the aim is to reach large audiences, why would companies advertise on news sites which – I’m sorry – cater for the fraction of the population that actually cares about the news, and not on the popular general-purpose platforms where consumers spend a substantial amount of their time, day in, day out?

But nothing in that shift of online advertising to where it can actually reach mass audiences says that this is somehow advertising revenue that the popular platforms of the Internet age have somehow stolen from the once-popular platforms of the print or broadcast age, and must be corrected by law – that fundamental argument of the NMBC and C-18, and especially of the drivers and supporters of such legislations in the legacy media industries, simply doesn’t hold water.

Now, none of this means that quality, critical, in-depth journalism doesn’t deserve support – of course it does. Such journalism is crucial to democracy and good governance, and if it is threatened by the fact that the commercial companies which have historically played a central role in providing it ignorantly broke their own business model when they moved online in the mid-1990s, then there is a very strong argument for implementing sensible mechanisms to support it.

Governments around the world do so with other industries that are critical to their democracies, societies, and economies – for example, they subsidise healthcare, education, agriculture, or research. But they usually don’t do this by randomly forcing one strong sector of the economy into negotiating to share revenue with another struggling one: we don’t see the Australian government asking our profitable mining companies to sit down with our unprofitable childcare companies to discuss how much money they should hand over.

The sensible, obvious thing that happens here – and that should happen in the case of the news industries too – is that government creates a subsidy scheme, funded from tax revenues. In the present case, this could have an input and an output component: first, given that the major platforms are genuinely generating substantial profits from their dominant positions in online advertising markets, close the offshore loopholes and tax those profits appropriately.

Second, distribute those tax revenues transparently to those news organisations that make a credible case for investment. That case should include aspects like journalistic quality, diversity of coverage (addressing for example the growing news deserts in areas outside of Australia’s urban centres), investment in staff and training, and innovation in news production.

Indeed, in both Australia and Canada the core elements of such a framework already exist, but are applied to date only in making funding decisions for their public service media organisations – and as a result of such quality controls, Australia’s two public service media ABC and SBS are reliably ranked as the most trusted news outlets in the country.

Commercial news media seeking state subsidies to fund their ongoing operations – as those news industry players in Australia and Canada that so enthusiastically supported the implementation of the NMBC and C-18 did, even if they used terms like ‘revenue sharing’ rather than ‘subsidy’ – should be held to the same journalistic standards as our public service media already are, then. But frankly, their support for the convoluted, unworkable ‘forced negotiations’ framework of the NMBC and C-18 as opposed to a transparent, equal-opportunity state subsidy scheme for quality journalism says a lot about their unwillingness for their journalism to be held to such higher standards.

As I said at the start, in Australia these matters – along with a range of other topics related to social media – are now the subject of a current parliamentary inquiry, and you may be interested in the submissions to this inquiry that my Centre and various other organisations have made. Whether our current federal government has any appetite to unravel the NMBC and replace it with something more intelligent remains to be seen; it could still decide to simply hang on to the current legislation and finally ‘designate’ Meta under the Code, in an attempt to force the platform to negotiate with news outlets on a new round of revenue-sharing agreements.

If so, my best guess is that Meta would again ban news from its platforms in Australia – and most likely permanently this time, as it has in Canada. It could then make a very credible public as well as legal argument that – since its platforms no longer carry any news content – it should be exempt from the NMBC, whose express purpose is to share the advertising revenue generated by news content on those platforms.

In return – and indeed news industry organisations in Australia are already starting to push for this – the government might introduce legislation designed to force Meta and other platforms to carry news content. Here things start to get downright absurd, though: in this case the government would be forcing a platform to carry news content just so the government can then force the same platform to negotiate with news publishers to share some of the advertising revenue that the news content it is forced to carry is now generating.

Legally and morally this seems a dubious solution at best, and even its earnest consideration and endorsement by some advocates betrays just how broken the business model of commercial news now is. Surely at some point the realisation must sink in that accepting government subsidies for quality journalism is actually the more sensible path forward?

And on that … hopeful? … note, let me end my remarks and again thank the organisers for their invitation to speak. I’m sorry I can’t be with you live and in person, given the time differences, but I hope this has been useful and look forward to any responses you may have.