The titanic struggle between Big Tech and Australia’s government over paying for news content this week produced two strikingly different outcomes. Facebook blocked sharing of news in the country, leaving users without access to news sites — plus some government health and emergency services sites — via its services. Google chose instead to agree licensing deals with Australian companies, and a global accord with Rupert Murdoch’s News Corp. Far from providing a model of how to rebalance the economics of online news, the Australian case highlights the potential pitfalls when using legislation to tackle the matter.
It has, at least, shone a spotlight on a pressing issue. The internet and the tech giants have torpedoed the economics of traditional media — by providing access to vast volumes of free content that has hit sales revenues and, thanks to their ability to attract vast numbers of users, scooping up the lion’s share of advertising revenues. The impact is especially acute on local journalism — a keystone of healthy democracies. By forcing platforms such as Google and Facebook to pay for media companies’ content on their sites, Canberra aimed to help Australian news publishers fight back.
The tech platforms argue they do not make revenues from news, but benefit news groups by driving traffic to them. In fact, Facebook and Google derive significant indirect value from enhancing their offerings with news links or content. A search engine, in particular, without news results cannot claim to be comprehensive — which may explain why Google chose to cut a deal.