Why I don’t think making online giants pay for links is the best way to save the media

news inscription on neon signboard hanging on street
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You may have seen articles recently about the Australian proposal to create a code requiring Facebook and Google to bargain with the news media to pay for links to news articles.

The code will require parties (tech giants on one side, and the media on the other) to undertake commercial negotiations about how much should be paid to the media for these links. In the event they’re unable to agree then the code will punt it to an independent arbiter who will choose between two final offers from each side. The code will also require Facebook and Google to give 14 days advance notice of deliberate algorithm changes that impact news media businesses.

In the last few weeks you may have seen that Google is threatening to pull out of Australia if the code goes ahead. Facebook is also strongly against the code.

While I think the tech giants have too much market power, and the news media is a vital public service, I think the Australian proposal is fundamentally flawed.

Hal Crawford (the former Chief News Officer at MediaWorks NZ) has written some great analysis on this issue, pointing out the fundamentally broken logic behind the code:

The view among Australian media is that:

  1. Google and Facebook are making huge amounts of money through advertising
  2. The news media used to make huge amounts of money through advertising
  3. Google and Facebook don’t make any news but they do link to news
  4. The news media makes news and it’s expensive
  5. News is good
  6. Therefore Google and Facebook should pay news media for linking to news

The first five points are uncontroversial. The sixth point does not follow. If Google and Facebook should be paying for news links they would already be paying for news links with their market power manifesting in unfair pricing. Presumably, in that world, they would also be paying other content makers for linking to their content. But that’s a world that doesn’t make fiscal sense, because people want to be linked to, and to pay them for something they want would bankrupt any organisation. It gets the most basic issues of supply and demand wrong. The only way out of this economic contradiction is to argue that there is something unique about news content that sets aside supply and demand. I haven’t seen a good argument to that effect.

While finding a way to support news in the face of market failure is commendable, targeting legislation at two companies based on their momentary wealth and market power is a bad idea.

Forcing companies to pay for links is just fundamentally contrary to how the internet currently works. Aren’t you providing a benefit to a website when you link to it? How could you keep track of all that money across the whole web whenever anyone linked to anything else?

That’s also the view of Tim Berners-Lee, who says the code “could make the web unworkable around the world”:

Tim Berners-Lee, who invented the world wide web in 1989, said the draft legislation “risks breaching a fundamental principle of the web by requiring payment for linking between certain content online”.

In a submission to an Australian Senate inquiry on the News Media and Digital Platforms Mandatory Bargaining Code bill, Berners-Lee said the ability of web users to link to other sites was “fundamental to the web”.

Requiring digital platforms to pay to host that link, a world-first provision of the proposed Australian laws, would “block an important aspect of the value of web content”, the computer scientist said.

Berners-Lee argued the proposal “would undermine the fundamental principle of the ability to link freely on the web and is inconsistent with how the web has been able to operate over the past three decades”.

“If this precedent were followed elsewhere it could make the web unworkable around the world,” he said. “I therefore respectfully urge the committee to remove this mechanism from the code.”

I think a much better approach would be to ensure the tech giants are paying their fair share of tax, and then potentially subsidise the news media if it’s seriously at risk of failure (e.g. by putting a lot more money into NZ On Air, or expanding the Local Democracy Reporting programme). In my view the news media should also be more focussed on getting consumers of news to pay for it directly rather than relying on advertising – there have been welcome moves towards this in NZ recently.

Disclosure: I own a small number of shares in NZME and Sky TV.

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