Media Companies Plan To Force Facebook And Google To Share Advertising Revenue With Them

Media Companies Plan To Force Facebook And Google To Share Advertising Revenue With Them

advertising revenue
U.S. news media have been hurt by the coronavirus pandemic. Media companies plan to force Facebook and Google to share advertising revenue with them. Image: Giphy

News media companies in the U.S. have been decimated by the coronavirus pandemic, with about 33,000 workers laid off, furloughed or had pay reductions. Some publications that rely on advertising have shut down.

It’s not that demand has gone away for news. The opposite. “Hunger for news in a time of crisis has sent droves of readers to many publications,” Marc Tracy wrote for New York Times. “But with businesses paused or closed — and no longer willing or able to pay for advertisements — a crucial part of the industry’s support system has cracked.”

Australia wants to force Google and Facebook to pay media outlets, saying media companies that create the content should get paid for it. It’s part of an emerging global effort to rescue local publishers by making tech giants share their ad revenue, NYT reported.

Faced with a steep decline in advertising due to the coronavirus pandemic, Australia’s competition watchdog is developing a mandatory code of conduct for the digital giants, Guardian reported.

The Australian federal government initially asked the Australian Competition and Consumer Commission to develop a voluntary code between media companies and digital platforms. This voluntary code would require tech companies to negotiate in good faith on how to pay news media for use of their content, advise news media in advance of algorithm changes that would affect content rankings, favor original source news content in search page results, and share data with media companies, Guardian reported.

However, the sharp decline in ad revenue prompted the Australian government to write a mandatory code.

The mandatory code goes further to include penalties and binding dispute resolution mechanisms for negotiations between the digital platforms and news businesses. It will also define news content that is covered by the code and includes services beyond Google search and Facebook’s main platform, such as Instagram and Twitter.

“This will help to create a level playing field,” said Josh Frydenberg, Treasurer of Australia, in an interview with the Australian Broadcasting Corporation, the public broadcaster, on Monday.

The communications minister, Paul Fletcher, said the decision was about a strong and sustainable news media ecosystem.

“Digital platforms have fundamentally changed the way that media content is produced, distributed and consumed,” Fletcher said. “Digital platforms need to do more to improve the transparency of their operations for news media providers as they have a significant impact on the capacity of news media organizations to build and maintain an audience and derive resources from the media content they produce.”

The coronavirus pandemic is accelerating years of advertising losses at media outlets as Google and Facebook grabbed an ever-increasing share of the market.

Frydenberg said the government decided to force the issue after talks with Google and Facebook stalled on the voluntary system.

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“We won’t bow to their threats,” Frydenberg told reporters in Canberra, the capital. “This is a big mountain to climb. These are big companies that we’re dealing with, but there’s also so much at stake that we are prepared to fight.”

News content has been lucrative for giant online platforms. Google made $4.7 billion in 2018 from content produced by the news industry — a number it has disputed. Not much of that trickled down to media outlets. Google said searches on its platform drive users to news outlets’ websites.

Australia’s action could lay the groundwork for other governments to go after the tech giants, but its success will depend on the details, said Monica Attard, the head of journalism at the University of Technology Sydney.

“Governments around the world have actually been struggling with this issue for many, many years,” Prof. Attard said.