This article originally appeared in the Line.
By Peter Menzies, August 11, 2022
In recent years, media outlets have set their sights on a new revenue source to prop up their failing organizations: Big Tech. Or, more specifically, as legacy media outlets have hemorrhaged advertising dollars to digital behemoths like Google and Facebook, many of them are looking to leverage whatever remains of their power and credibility to force Silicon Valley darlings to pony up some of that sweet tech cash.
But those outlets giddy at the prospect of slick newsrooms running on web giant gold ought to heed a warning now emanating out of Australia. Their future won’t include a blank cheque from Facebook.
First, a little background: Heritage Minister Pablo Rodriguez, through Bill C-18 (the Online News Act tabled in April), has dangled the prospect of financial salvation in front of some of Canada’s dying legacy newsrooms. In doing so, he’s referenced controversial Australian legislation that forces the likes of Google and Facebook to redistribute revenues to news organizations through “commercial” deals.
But Meta, which owns Facebook, Instagram and others, has used a review of Australia’s law to issue a global warning to those who see the deed done Down Under as their lifeline.
“Since its passage, the law has been globally touted by publishers as a successful model to support public interest journalism,” Meta states in a sweeping response to the Australian Treasury Department’s 12-month review of the news media bargaining law. “It is better described as an untidy and short-term compromise that we have nonetheless tried to work with in good faith.”
“As a result of the backdrop of the legislation, our overall investment package has over-indexed towards larger publishers and has been diverted away from investing in more innovative projects and towards business-as-usual activities by publishers that provide virtually zero commercial value for Meta. It has been very challenging to operate within this framework.”
Noting “significant global attention on the law,” Meta writes that its comments are intended “to contribute to the local and global public policy debate” in order to “be transparent about the business decisions Meta will face in future” and concludes that: “It is not certain that digital platforms like Meta will be able to continue or increase on our investment in Australian news.”
Sure, Meta could just be bluffing. Or it could not be. After all, it blocked carriage of news Down Under in February 2021 in order to force amendments to Australia’s first go at its legislation. And yes, some of the problems with the Rupert Murdoch-inspired Aussie shakedown don’t exist in Canada’s big tech mugging. But the Canadian version of this law has also inserted a component that could cause Meta to “unfriend” news in Canada.
Bill C-18 assigns a commercial value to “links.” Never mind that the Supreme Court ruled in 2011 that links don’t have value, Heritage Minister Pablo Rodriguez insists otherwise:
“If you click on the link and go to the news, there’s a value to that,” Rodriguez explained when the bill was introduced.
In other words: “because I say so.”
Meta, though, has discovered that there is value, if not to the links, then at least to the clicks on the links (stay with me here). According to its filing in Australia, Facebook provided news media in that country with 3.5 billion clicks on links to its websites last year. And those, says Meta, have an estimated US$340 million value … to the news media.
“Publishers are free to monetize this traffic however they wish,” is how Meta puts it. “This referral traffic is provided at no cost to news publishers.”
Assuming similar consumption patterns in this country and its larger population, Canadian news organizations are therefore likely getting about 5 billion clicks annually from the links that they post to Facebook. And those would be worth about CAD$650 million in free distribution.
Sounds like a heck of a deal. And it is, until you realize that in Rodriguez’s world, it is Facebook that has to start compensating the news industry for sending it five billion clicks annually. The argument implies that it’s not enough for the tech giants to be sending the news orgs readers. The tech giants apparently have to send the news companies a bit of money along with each reader, too.
If only Canada was at stake, companies like Meta might be able to roll their eyes and write modest (for them) cheques no matter how outrageous the shakedown. But Meta is a global, publicly-traded company, and turf conceded in one country is not easily defended in another. Plus, it would probably be easier for them just to pay a tax to finance a government-media subsidy regime than to engage in a forced negotiation that pretends a commercial value exists where one does not.
Of course, the easiest solution would be for Meta to just stop hosting news links.
Which is likely why Meta used its Australian filing to speak to policy makers in Canada (where it has not commented publicly on C-18) and worldwide.
“The Law does not solve the longstanding digital transformation challenges facing the news industry. It actually undermines — not supports — its purported public policy goals of supporting the long-term viability of journalism in Australia,” Meta states, noting that a bias favouring legacy media (see: Rupert Murdoch) “comes at the expense of smaller and potentially more innovative news publishers, including publishers that may become competitors to these larger players.”
And, given that publishers have successfully convinced policy makers that their industry is vital to the survival of democracy, few will be surprised that Meta has detected the scent of smug newsroom entitlement:
“We have faced concerted lobbying from news publishers who have no regard for the economic reality that commercial agreements need to be able to generate a return for both parties,” reports Meta. “The legislation has misled them into thinking they are entitled to payment simply for using our free services to expand their own audience. It is a near-impossible task to make commercially sound and innovative investments in news that could potentially bring a high enough return to trigger more investment in future — while balancing impossible expectations from news publishers.”
Let’s be clear. Meta didn’t come right out and say it’s prepared to disengage from news rather than be turned into a cow forever milked by media executives and their shareholders.
It’s just, you know, sayin’.
Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, past vice-chair of the CRTC and a former newspaper publisher.