Overnight Facebook ramped up its efforts to pressure the Australian Government into dropping a proposed law that would see online platforms pay media companies for the use of their content. The latest move saw all content linking to the sites of Australian news organisations vanish from Facebook. This has left the Facebook pages of a range of Australian news outlets, government agencies and some charities empty. Some of the content that vanished contained emergency services information or information related to the response to COVID. The move raises serious questions about Facebook’s power as a monopoly and inappropriate use of that power to influence government.

In his speech to parliament introducing the legislation the Treasurer, Josh Frydenberg, said that, “The code ensures that digital platforms share the benefit they obtain from using Australian sourced news content with the news media businesses who create that content.”

The bill before parliament covers cases where an entire article is republished by a technology platform, where a snippet is published, or where a link to news content is published. It requires platforms to pay the producers of such content under a revenue sharing arrangement set by the government, or any alternative agreement the technology platform reaches with the content provider. The arrangement would only apply to new sources whose revenue was larger that AU$150,000 per year, which would exclude many online and community-based news sources.

The move follows concern that Australia news content is at risk as advertising revenue from Australian businesses that once flowed to Australian media organisations is now following to the likes of Facebook and Google.

The change means a substantial drop in the available funding for journalism in Australia which decreases both media diversity and the coverage of Australian news more generally. This weakens the power of the fourth estate substantially which has implications for democracy and public accountability of individuals and organisations large and small. With less journalism, it also as implications for Australia’s vulnerability to fake news and some forms of information warfare.

This is the second major confrontation the Australian government has had with technology companies. The last clash was in 2019 over abhorrent violent content laws following the Christchurch terrorist attack. That law, again an international first, holds technology platforms liable and subject to fines if they fail to take reasonable action to prevent the distribution of video content filmed by a terrorist during an attack. In that instance the Australian government pushed ahead with the new law despite strong objections from the technology companies.

Australia’s latest move challenge Facebook’s business model in a fundamental manner and is being seen at as a test case by other countries. In a traditional media model, a news source would generate revenue from a combination of sales (e.g. newspapers, pay TV) and advertising. Platforms like Facebook and Google News have inverted the relationship. They operate on a model like that of the old classifieds. The news content is just another item someone wants to advertise. The platforms earn revenue by ads they display next to links to the news articles, as well as from the media companies themselves if they pay to further promote their content. The model, to the frustration of the news industry, works as the platforms have become a vital gateway to other online content.

Far more people see the headlines of news articles than will dive in to read the article in full. This makes advertising on a platform like Facebook, where the headline is displayed, more effective than advertising on the media site where the full article is displayed. This further drives down the revenue opportunity for media platforms.

While journalism is still needed, the role of publishing is in many ways outmoded by the large online platforms. The problem is that these online platforms see the producers of news content not as partners to be rewarded for their created work, but as customers who should be please to be given access to an audience, and willing to pay if they want greater access to that audience. This is of course the same way media organisations themselves usually treat expert commentators who provide them with content in return for the exposure it brings.

 A different model can be seen on platforms like YouTube where content producers with large audiences are given a share of the revenue they generate from advertising. Participating in the YouTube scheme does not require one to be part of a particular industry and rewards the production of content based on its popularity with an audience. It has potential to benefit a far wider range of content producers than the proposed media code, including primary sources and commentators, but lacks any quality filter. Revenue from Google Ads works in a similar manner. This approach creates an incentive for the spread of clickbait, fake news and conspiracies.

We’ve yet to find an idea model for social media revenue sharing. One option would be to rewards all produces of content, but with a premium paid for journalism. Journalist could also be given automatic higher visibility and could be clearly identified as verified news content. A similar scheme might operate for press releases from civil society organisations focused on promoting the public good. Rather than a fixed license fee, such schemes should be based on revenue the platforms receive from advertising displayed near the content. A final tweak to consider would be allowing news sources and charities to convert the income they would receive to discounted advertising credits. This would enhance the goal of favouring content that is beneficial to society within our online environments.

The clash between the Australian Government and Facebook is not in the public interest. While the legislation in this case is overly beneficial to commercial media, at the expense of smaller media organisations and other content producers, it is not unfair to Facebook. The push by Facebook to avoid profit sharing amounts to a demand for a right to continue to exploiting and profiting from the content of others. That model is unsustainable. Facebook’s action, and their poorly executed implementation with the harm it has caused to emergency information, is inexcusable. It demonstrates the unconscionable used of monopoly power and highlights why further regulation of social media is badly needed.

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