A lot of dust has been raised over the past few weeks with the parts of Big Tech (the biggest tech companies around such as Amazon, Apple, Facebook, Google, and Microsoft) clashing with the news publishing world, which I’m sure you noticed. I am talking about the ruckus down under: Facebook’s and Google’s opposition to a proposed law where they would have to pay news publishers. Google threatened to leave Australia while Facebook blocked people from posting news stories.
This is a massive story that could radically change the face of the news landscape. Most notably, it could slow down (or hopefully) stop the decline of journalism and the digital publishing business model.
As such, publishers could come out as the biggest winner in this tug of war. Could – it’s not a certainty.
An overview of the problem
Along with Twitter, Facebook and Google are the platforms that are bonafide dominating the content distribution online, not to mention discourse in general. They do so by leveraging their news feeds and search results to monetize a seemingly never-ending flow of content.
And while Google relented and struck deals with Australia’s major publishing companies, Facebook opted to put up a fight and bargain for a better deal, which it apparently managed to achieve. Contrary to the search engine company (I still like to refer to Google as such, even though it has surpassed that moniker), Facebook’s core service doesn’t rely heavily on news articles. Approximately only 4% of posts on the network are works of journalism, which means many users never get to see a news article in the first place. At least not a proper journalistic one.
Two similar cases that have distinct differences but in both, the outcome is the same: commercial agreements with news publishers for the news content these platforms disseminate online.
A lot is at stake here. The rise of digital news was followed by the rise of tech platforms, especially those with a social element. In the ‘this town ain’t big enough for the both of us’ scenario, one side had to draw the short straw, and it was the publishing side.
Thanks to online ads inherent to these tech platforms, advertisers are able to easily bypass news publishers and expand their reach. Yes, publishers do get a piece of the ad revenue from the ads but at the terms set by the platforms. The advertising business comprises the vast majority of revenue for both Facebook and Google, so a pushback on any type of encroachment on advertising grounds is logical.
Plus, the argument from Facebook and Google is compelling enough. They help publishers by growing their traffic, even though some users may never click on the link, as an image, headline, and/or short description might be enough. All of this is packaged in the practice of open linking principles that make the Internet what it is today.
It doesn’t help that newsletters are under attack too
Twitter and Facebook have recently decided to get into the newsletter business: Twitter by acquiring Revue, a “service that makes it free and easy for anyone to start and publish editorial newsletters”, while Facebook is reportedly planning its own newsletter tools for journalists and writers.
Tailored newsletters have rapidly gained popularity among publications. For example, Forbes recently introduced Journalist Entrepreneurs paid newsletters platform where writers can launch their own paid newsletters under the publisher’s brand and generate revenue from their work. Financial Times launched Lemonade, tailored to help parents in lockdown, and now it has a database of parents that can be advertised to directly.
Some high-profile journalists are contributing too to this expansion. They have switched to the independent business model as the lure of complete editorial control and the ability to profit directly from the subscription revenue grew stronger. Substack has been a big success in this respect, raking in more than 250,000 paying subscribers through its newsletter-centric business model.
By offering newsletter tools themselves, Facebook, Twitter, and alike are clearly trying to cash in on this trend and pull the flow of information back onto their own platforms. There, they can feed users a constant stream of content the way they want to.
So, on one side we have publishers (and independent journalists) driving the growth of newsletters and trying to “survive” amid declining ad revenue. On the other is Big Tech who, by muscling into this area, could restore the model that newsletter creators have been hoping to escape. As a result, publishers, journalists, and their audiences will mostly be worse off as they go back to non-curated content that isn’t as personalized as tailored newsletters are.
Reining in the Big Tech’s hold over the news industry
Publishers depend more on these platforms than platforms do on publishers. It’s a subtle but firm grip on the news industry that has been a powerless observer of this power imbalance for too long. Obviously, the Australian government has had enough (having Rupert Murdoch on your side certainly helps) and could be the catalyst for other governments and countries to follow suit due to the more restrictive regulation than in the EU, for instance.
In this particular case, large tech platforms are required to engage in a form of arbitration with news publishers to come to an agreement on payment for news. The method demands that the two sides who can’t reach a deal, each present a final offer which will be picked by the arbitrator. The regulation is envisioned to level the playing field and reduce the disparity between the tech giants and publishers.
If this ends happening worldwide, it will likely be a slow and uneven process as copyright laws differ by country. Copyright is central here, especially in the U.S. where news headlines and Google snippets are usually considered fair use of that content under copyright law. This means that a company that displays that content isn’t obligated to pay or even negotiate a license fee from the copyright holder.
As you might have suspected, determining what counts as fair use is fairly complicated and a grey area that Facebook and Google very much like to explore. In Facebook’s case, all of this is happening while freely monetizing the engagement generated by a certain news post via its own ads.
In a first for Europe, Google agreed to pay a few news publishers in France for content online, and made a similar agreement with Reuters. So, the growing pressure from publishers and governments worldwide has resulted in regulation targeting Big Tech to pay for news.
One likely reason why this hasn’t happened yet in the U.S. is perhaps that Facebook and Google have far more power and influence than down under. I’m guessing it will be a fierce lobbying battle between the two camps but that’s a story for some other time and place.
A more balanced playing field
What’s important here is the transfer of power to publishers that isn’t stopping any time soon. This is a subject I previously only touched upon in the context of fake news and social media. In that regard, the publishing industry has been on an upward trajectory. By tidying the editorial content with fact-checking and improved quality standards, as well as enhancing the way users interact with the site when they consume information, news publishers (in particular) regained trust and reinforced their value (while social media remains a jungle almost untouched).
Having a framework for commercial deals with tech platforms for the value obtained from showing news content is additional fuel for reaching new heights.
This isn’t happening out of the blue, though. Google and Facebook in Australia are just the latest examples of companies accepting the broader idea of paying for news content. Apple is already doing so with publishers who participate in its Apple News+ service. Facebook is doing the same by compensating only a select few publishers through Facebook News, a combination of curated stories and articles based on what users read, share, and follow.
Let’s not forget Google’s News Showcase, a new product through which the company will pay $1 billion to publishers globally for their news over the next three years. In many ways, it’s a response to increased pressure from publishers and lawmakers who argue that Google is exploiting content creators by presenting much of their content in Google’s environment so that people have no need to click through to publisher sites (e.g. snippets).
A great example is Wikipedia, which has been losing huge amounts of traffic since 2015 when Google introduced Knowledge Graphs and Direct Answers in its search results. This change took away the need to visit a specific site or link to see the desired results, so search queries effectively end with “zero-click” results.
With these recent Aussie-driven moves, virtually every country in the world is now invited to pursue a “similar protection racket”, as someone on The Verge so eloquently put it. There are already moves in the EU and Canada to enforce measures similar to those of the Australian government. As for freely sharing links on platforms, the tenet of the open web – that will have to take a few punches for the larger good.
Is there a catch?
Not per se but things aren’t so rosy across the entire spectrum.
One of the major reasons (apart from the lobbying) why the hottest market in the world – the United States – isn’t privy to these tectonic changes is the encompassing scope of the legislation. It is designed to make sure negotiations benefit publishers of every size, as opposed to just a few with a large market share, which has largely been the case so far.
That’s because large national publishers already possess a certain level of leverage, whether in regional or global terms. The problem is making a unified front, securing some leverage for the small publishers to negotiate favorable terms. I am not sure that will happen without government help and legislation that ensures everyone is included.
Then, there’s the question of what publishers can do on their own.
Let’s say the general public sympathizes with the plight of the publishers around the globe. Let’s say they begin to seek their news elsewhere, however improbable that may sound, or simply start visiting sites, maybe subscribing to them or their newsletters. If more people come to understand the value of visiting trusted news sources directly, it’s fair to say everyone would be better off.
There are a few avenues publishers could explore, primarily on the digital distribution side. I often point to audio content as an example. As technology develops, the number of opportunities to distribute and monetize all sorts of audio content will grow. Readers are consuming more audio news and more frequently than ever before. Heck, even Facebook is following in the same footsteps by working on TL;DR, a virtual assistant to digest, summarize, and read out loud articles for users who want to skip reading it themselves.
People prefer to hear content so audio is just one of the answers going forward, even as a format for quick factual responses.
Australia’s regulatory model shows a lot of promise but it greatly depends on the other side playing along. As is already established – publishers are the more dependent party in this situation. Facebook has shown that companies can walk away from the news business if they are pushed to the limit. Publishers now have better cards to play with but they are by no means the winning ones.
Despite all the shows of strength by the leading tech media companies, the atmosphere seems to be more conducive for formal and informal arrangements for monetizing the news flow. Australia’s legislation is a clear, albeit aggressive attempt at regional regulation that has the potential to drive global change for how Big Tech platforms continue to operate.
While they pay for news now and possibly will in the future, they will do all they can for it to be on their own terms. Plenty of other countries around the world are watching closely but publishers can’t rest on their laurels.
They can’t risk that newly arrived money from Google and Facebook makes them even more reliant. I may be an idealist but an improved user experience that corresponds to changing media habits seems like a sure-fire way to step up the game and not get drowned out – with or without Big Tech.
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