Instruments and objectives; explaining the News Media Bargaining Code - A report by Rod Sims AO - Former Chair of the Australian Competition and ...
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Instruments and objectives; explaining the News Media Bargaining Code. A report by Rod Sims AO — Former Chair of the Australian Competition and Consumer Commission Professor, Crawford School of Public Policy The Australian National University Judith Neilson Institute for Journalism and Ideas 1
Not only were there nine a deep understanding of the logic of the
recommendations concerning media NMBC which I believe must be under-
and journalism in the ACCC’s Digital stood before others seek to introduce
Platform Inquiry final report, but the versions of it in their jurisdictions.
NMBC was precisely targeted at the
issue of an imbalance of bargaining This article is in 5 parts, as follows.
power.
Australia’s News Media Bargaining Code (NMBC) is seen as world leading 1. I explain the logic of and context for
for allowing media businesses to bargain on broadly equal terms, and so The Tinbergen Rule, named after one of the recommendation to introduce the
commercially, with dominant digital platforms. Based on my close the first two Nobel laureates in NMBC.
economics, is a basic principle of
observation, it has facilitated over $200m being paid annually by Google
effective policy. Distinguishing between 2. I briefly describe the essential features
and Facebook to news media businesses, large, medium and small. (2) policy targets, on the one hand, and of the NMBC.
Further, these media businesses feel they could successfully bargain on policy instruments, on the other hand,
much more equal terms with the dominant platforms in ways not Tinbergen (1952) argued that to 3. I very briefly outline the negotiations
imaginable prior to the NMBC legislation being passed. successfully achieve nn independent that led to the NMBC’s introduction into
policy targets at least the same number the Parliament.
There have been, however, a range of criticisms of the NMBC. There is of independent policy instruments are
required. This has become known as the 4. I then explain what has been the
nothing wrong with criticism; indeed, issues of such importance need
Tinbergen Rule. (3) result of the NMBC legislation being
to be constantly debated and some improvements can be made. This is approved by the Parliament.
particularly the case as other jurisdictions, such as Canada, the USA and The Tinbergen Rule is a sound basis for
UK, seek to follow the NMBC example and introduce their own legislation all public policy, and a rule I have always 5. I address the many criticisms of the
to facilitate commercial bargaining between the dominant platforms and adhered to. In my terms for this article, NMBC.
the news businesses. if you have one instrument, the NMBC in
this instance, then it can only The first four parts are brief. The reader
directly seek to achieve one objective. It will be left with many questions which is
The issue this article seeks to address is that much of the criticism
can have other side benefits, but to be why I will try to write a much longer
focusses on the NMBC not achieving objectives it never sought to address. effective it needs to stay true to the paper at a later stage. These sections
I was once in a forum where it was said… “Rod, this Code does not seem single objective for which it was will, however, provide all that is needed
to be addressing all the problems of journalism”. Of course, it was never designed. to understand the all-important section
meant to. 5, which needs to be read and
Two further points. First, I am not, with understood now as other jurisdictions
this article, seeking to write the history seek to base their own legislation on the
of the development of the NMBC, and NMBC. This article is also timely given
Rod Sims AO (1) how it came to be what it is today. the current Treasury review of the NMBC
Hopefully I will get to this later. discussed below.
Rod Sims is currently a Professor at the Crawford School of
Public Policy at the Australian National University, and Chair,
Second, I do not claim to be an
Steering Committee, Competition Research Policy Network
unbiased commentator on the NMBC.
at the Centre for Economic Policy Research, London. From
I was Chair of the Australian
2011-2022 he was the Chair of the Australian Competition
and Consumer Commission. Prior to this, in addition to Competition and Consumer
many other senior roles, he was Principle Economic Adviser Commission (ACCC) when it conceived
to Australian Prime Minister Bob Hawke from 1988–1990. of the NMBC and were then charged
by the Australian Government with its
implementation. It is hard to step back
and be objective. That said, I also bring
Judith Neilson Institute for Journalism and Ideas 2 Judith Neilson Institute for Journalism and Ideas 3
that would otherwise be under With all such externalities there is a
The ACCC’s final report of the Digital provided, administered at arm’s length certainty that public interest journalism
Platforms Inquiry (4) was handed to the from government. will be underprovided from a social
Australian Government in June 2019 and welfare perspective if left to the
released publicly a month later. It Recommendation 11 – Allow tax commercial sector alone. Therefore,
contained 23 recommendations deductable gifts to be made to many nations provide some level of
covering competition (e.g. change encourage philanthropic support for public funding for journalism.
merger factors), consumer (e.g. journalism.
introduce an unfair practices provision With this logic the ACCC
into consumer law), privacy (e.g. have a Recommendations 12, 13 – Government recommended, as indicated above, that
comprehensive review of Australia’s programs be established to promote stable and adequate funding should be
Logic of and context for the outdated privacy laws) and other issues, digital literacy in the community, and in provided to the ABC and SBS, and that
NMBC Recommendation. of which nine can be seen as linked to schools. These recommendations were grants in the order of $50m per year be
media and journalism, as follows. aimed at helping people identify low made available to support specific areas
The Australian Government has the quality or unreliable news encountered where journalism is under provided.
power to direct the ACCC to conduct Recommendation 6 – A new regulatory through digital platforms.
Inquiries and, when it does this, the framework be developed to create a Recommendation 7 should therefore be
ACCC can compel information from level playing field between media Recommendation 14 – An independent seen in the context of the other
relevant organisations. In late 2017 the businesses, broadcasters and digital regulator monitor the initiatives of the recommendations and targeted at a
then Treasurer, the Hon Scott Morrison, platforms. As one of many examples, digital platforms to enable their users to quite specific issue. This was the
did so with a wide Terms of Reference. currently there is a “blackout” two days identify the reliability of news content imbalance of bargaining power of the
This covered competition, consumer, out from an election on political shown on their platforms. news media businesses when dealing
media and advertising issues associated advertising on conventional media but with the large digital platforms.
with digital platforms, particularly those advertising can still occur on digital Recommendation 15 – Digital platforms Google and Facebook were found to
involved in search, social media and platforms. should implement a Code to govern have substantial market or bargaining
news content aggregation. complaints about disinformation. This power in several markets from search,
Recommendation 7 – A code of conduct should initially be voluntary but, if an social media, and search and display
The ACCC is responsible for enforcing be implemented to govern the appropriate code is not submitted advertising markets. In their dealings
Australia’s competition laws, with the relationship between news media within nine months, a mandatory code with news media businesses platforms
Australian States and Territories it is businesses and digital platforms, with be imposed. were seen as ‘unavoidable trading
responsible for enforcing Australia’s nine months given to develop a partners’, effectively providing necessary
consumer laws including for product voluntary code and, if this fails to come The ACCC’s initial Digital Platforms news referral services.
safety, and it has important roles in the up with an acceptable outcome, a Report made it clear that public
regulation of telecommunications, mandatory code be imposed. interest journalism provides a The Inquiry found that while the
transport and other infrastructure. considerable positive externality, in the platforms needed news media in
Relevantly, the ACCC is the enforcer of Recommendation 9 - Stable and sense that the benefits to society extend general to attract and retain user
Part IIIA under the Competition and adequate funding should be provided beyond those who are willing to pay for attention to their services, they did not
Consumer Act (CCA), which allows in to the government owned Australian it, or even need the content of any specific media
certain circumstances for the ACCC to Broadcasting Corporation (ABC) and access it. This is because such company. However, the news media
arbitrate pricing disputes when users Special Broadcasting Service (SBS) in journalism holds the powerful to businesses needed Google and
seek access to essentially monopoly recognition of their role in addressing account, it provides a vital journal of Facebook to get traffic to their media
infrastructure. The ACCC also has the the risk of under-provision of public record, it provides a forum for ideas, and businesses sites. The news referral
power to authorise, and so exempt from interest journalism that generates broad it can campaign for wider society goals. services provided by Google and
prosecution, competitors getting benefits to society. While you benefit more if you directly Facebook were effectively ‘must have’
together to collectively bargain when access such journalism, all in society services which provided them with
this passes a net public benefit test Recommendation 10 – Grants be given benefit to some extent whether they substantial bargaining power.
which often boils down to an economic to support original and local journalism access it or not.
cost-benefit test.
Judith Neilson Institute for Journalism and Ideas 4 Judith Neilson Institute for Journalism and Ideas 5
The Inquiry found that in the absence unable to impose their own outcome.
of the bargaining power imbalance the Another argument was that the They must choose one of the ‘‘final
platforms and media businesses would platforms were not responsible for what offers’’ presented by the parties. (5)
bargain over the value created by the was happening; they simply provided
media companies from the use of their the billboard or phone lines. This, of This method was chosen over more
news content by the platforms, and the course, is incorrect; their algorithms conventional arbitration models be-
referral by the platforms of audience determine what is shown, often based cause it would force sensible offers to
traffic to the news media businesses, on who pays them the most, they have be put to the arbitrators. Without this
and reach a commercial arrangement. placed themselves between the media it was felt that both sides would put in
This was not possible in this instance, businesses and their readers, and they extreme ambit claims and so force the
however, because the platforms had profit enormously from all this. arbitrators to decide the outcome based
significant bargaining power and so on very
could unilaterally set the terms of any To sum up, the NMBC was not meant to little helpful information from the
such arrangement. This was clearly solve all the problems of the media and parties.
shown by the platforms refusal to even journalism. It was targeted at a specific
First, there was to be good faith
begin negotiations; they refused to problem, the imbalance of bargaining In the early days of discussion data was
negotiations between the platforms
countenance any payment for the power between dominant digital sought from Google and Facebook to
and news media businesses over the
content they benefitted from. They platforms and news media businesses; it understand the two-way value flow; the
payment for content and the direction
asserted, without compelling evidence, was part of a suite of recommendations; value to the platforms of the content
of traffic. If, after a certain period, those
that they provided more benefit to the and it came from an Inquiry with a wide from the media businesses, and the
negotiations were not successful then
news media businesses than they term of reference which did not include value to the news businesses of the flow
recourse to arbitration was allowed,
received in return, and in their view that providing all the answers to the of audiences from the platforms. Little
which would be binding on the parties.
was the end of the matter. problems facing journalism. useful information was forthcoming, so
A panel of arbitrators would be set up
quantification was going to be very
by the Australian Communications and
To the Inquiry this significant difficult by other than Google and
Media Authority (ACMA), involving peo-
bargaining power imbalance Facebook. It was felt, therefore, that the
ple with legal, economic and/or industry
represented a clear market failure that arbitration could only succeed if it was
needed to be addressed. While there The key provisions of the experience.
based on arbitrators deciding between
Negotiations without ultimate recourse
are many market failures in our NMBC to arbitration would fail. Without
reasonable offers; put in an ambit claim
economy, and not all need to be and see the other sides more reasonable
There were many provisions discussed recourse to arbitration the fundamental
addressed, this one mattered given the offer accepted in full.
and debated. These included advance market failure, being the imbalance of
importance of journalism. As already
notice of algorithm changes with a bargaining power, would not be
stated, the restriction of the It is important to stress that arbitration
significant effect on how content was addressed. Importantly, therefore, each
remuneration for public interest was not a goal in itself. Instead, it was a
delivered, provisions relating to what news media business registered under
journalism by the significant bargaining forcing device. The Australian
data is collected by the platforms, the NMBC had the right to negotiate
power imbalance led to an under experience, in different contexts, such as
information that could be requested and then, if the negotiations were not in
provision which harms our society. with Part IIIA referred to above, was that
from the platforms, and the like. Some their view successful, seek arbitration.
both parties did not want an arbitrated
Some argued in response, using made it into the NMBC that was outcome; they wanted more control of
ultimately legislated, others did not. Arbitration was to be of a “final offer” or
Schumpeter’s line, that this situation the outcome. Instead, the threat of
“baseball” arbitration. Final-Offer
represented “creative destruction” as arbitration gave considerable
The ACCC and the Government, Arbitration (FOA) is a form of arbitration
new business models replaced old ones. bargaining power to the weaker party; it
however, saw that there were three key that limits the available decisions of the
While the platforms may have invented largely evened up the bargaining power.
provisions that lay at the heart of the arbitrator. Under conventional
a superior advertising model, however, What is important is the threat of
NMBC; without each of them the NMBC arbitration, arbitrators have the power to
they were not producing journalism. All arbitration. It did not need to be trig-
would fail to meet its objective. impose their own outcome even though
that was happening was less journalism, gered to be effective.
parties can make submissions to the
not better journalism.
arbitrator. Under FOA, the arbitrator is
Judith Neilson Institute for Journalism and Ideas 6 Judith Neilson Institute for Journalism and Ideas 7
Second, there was to be a non- numerous small news media businesses The Government in April 2020 asked the News Corp, which is less that 1 per cent
differentiation provision. The essence that would struggle to effectively ACCC for its view and the ACCC said that of the market value of Google; further,
of this was that the platforms are not bargain on their own. Amusingly, the payment for content issues in many see Google itself as the large
allowed to replace the news content of Facebook argued that this provision particular did not seem capable of being company that controls the internet.
the media businesses that were facilitated cartels which put a technical addressed through the voluntary
registered under the NMBC with news interpretation above what competition process. In a recent submission to the USA
content from news businesses not law seeks to achieve in relation to Copyright Office, voicing concern that
registered under the NMBC, which market power. Allowing companies The Government with this and its own the NMBC might be replicated in the
included international news sources. In with, say, less than $500,000 revenue to view then asked the ACCC, working with USA, Google made arguments it often
that way the platforms had to choose; get together to bargain with a company the Departments of the Treasury and used when lobbying in Australia, as
they could show no news content at all, valued at well over $1 trillion would Infrastructure, Transport, Regional follows.
from anywhere, or they could choose to encourage competition; it could not Development and Communications
negotiate with news media harm it. (DITRDC), to draft a mandatory code. “The ability to link freely is a key feature
businesses in accordance with the The ACCC consulted widely getting of the free and open web. Changing
NMBC provisions. If they placed very Negotiating the NMBC written and oral submissions in response that would not only negatively impact
little or no value on having quality to an Initial Concepts Paper and the economic model that stems from it,
journalism on their sites then the former Negotiations over the NMBC took place released a draft NMBC in July 2020 as a it would force information to be
option was an easy choice; but this, of through 2020 and up until late February basis for further consultation and consumed in a particular manner,
course, is not the case. 2021 when the legislation was passed. discussion. favouring a narrow range of sources for
While there is much to be said about the diffusion of knowledge, and thereby
The combination of the first two this, and some fascinating stories, this This started a long process of undermining democratic discourse and
provisions outlined above was that every article will focus only on issues relevant discussion and negotiation, and strong media diversity.” (6)
eligible news media business was to an assessment of the NMBC’s public campaigns by the platforms
empowered to negotiate in a effectiveness in achieving its objectives. against the NMBC and many news These arguments, of course, raise many
commercial and realistic fashion, with media businesses in support of it. Some wider issues. Should the platforms be
the threat of arbitration ensuring this. The broad timeline was as follows. The issues raised reflected genuine issues able to freely gather content created at
No eligible media business could be Government received the report in June with the Draft NMBC. For example, the a cost by others to reinforce their own
excluded. There were, however, some 2019 and formally responded to it in draft only allowed the arbitrators to lucrative advertising business model?
very small media businesses that would December 2019. Most of the 23 recognise the value the news Google through its algorithm decides
still struggle because they could not recommendations were accepted in |businesses provided the platforms, with what people see, increasingly it would
bring the necessary resources to bargain large part. Recommendation 7, no reference to the value provided by seem to many through sponsored
properly. This situation was the logic for relating to the NMBC, was accepted in the platforms to the media businesses. rather than organic links. Further,
the third necessary provision. full and Google and to a much lesser The ACCC structured the draft this way Google would appear to want sources of
extent Facebook began engaging with to make the arbitrator’s job more information going to its users from other
Third, the NMBC allowed for collective the news media businesses. manageable, but this position was not than that provided by established news
bargaining by media businesses. This defensible. The ACCC recommended, media businesses who they likely see as
was an easy provision to include because Google held many meetings; and the Government accepted, that the competition for the attention of users.
Australian competition law already Facebook did not but publicly set out arbitrator had to consider the value
allows for this, as mentioned above. For the approach it would take with a flowing both ways. Other arguments run by Google were,
example, dairy producers will often apply voluntary code. The media in the ACCC’s and the Government’s
to the ACCC to be allowed to collectively businesses, and increasingly the With this issue out of the way Google’s view, misleading, but seemed capable of
bargain with large dairy processors to Government, began to get the sense focus shifted. They argued publicly, and gaining some traction. Google argued
make the bargaining more efficient and that, whatever efforts were being made, generated a campaign, to the effect that that the NMBC’s requirement that the
to get a more appropriate outcome. the platforms were not ultimately the NMBC would allow large companies platforms disclose to media companies
going to respond to the media to control the internet. This argument what data they collect from the users
Collective bargaining was felt to be businesses issues in a way that was often drew amazement as the “large of their site would somehow mean that
necessary because there would be consistent with Recommendation 7. company” Google had in mind was media companies could gain access to
Judith Neilson Institute for Journalism and Ideas 8 Judith Neilson Institute for Journalism and Ideas 9people’s data. This was a The sense was that the reaction to Facebook stopped using the term “News
misinterpretation, and not intended. Google’s announcement about leaving Feed” and renamed it just “Feed”. In
This measure was in fact aimed at Australia was not going as Google announcing the change Facebook said
benefitting smaller news media wanted or expected. Then detailed that the term “News Feed” suggested to
businesses who may not be aware of discussions occurred between the some that the feed was only news rather
the type of information Google collects Australian Treasurer, Josh Frydenberg, than also including posts from friends.
and already makes available to all media and Alphabet’s CEO, Alphabet being
businesses that use Google services. To the owner of Google. The Treasurer The result again was negotiations
avoid the distraction of this issue the approached the task with complete between the Treasurer and the CEO of
ACCC advised, and the Government focus and many discussions were held. Facebook, now Meta. Changes were
accepted, that this provision be After each discussion the Treasurer again made, largely to the timing of key
dropped. would debrief with myself and Treasury steps on the way to any arbitration, but
Deputy Secretary Meghan Quinn, and also to some definitions for clarification.
Likewise, there was a provision that new positions would be formulated (8).
required the platforms to give notice Eventually a deal was done after some An important change for Facebook was
of algorithm changes that could affect complex adjustments to what factors that the Treasurer now had to give 30
how media content was shown. Some the arbitrators would consider and some days’ notice before designating a plat-
past changes had radically affected other issues. The changes made were form. A clause was also inserted that in Results so far achieved
news media businesses and it was felt meaningful, but not ones that could not considering designating a platform the
that some warning of such events in the be defended. Treasurer had to consider whether that under the NMBC
future would be helpful. This was, platform had made a “significant Once the legislation was passed the
however, portrayed by Google as an In contrast to Google, Facebook largely contribution to the sustainability of the platforms started serious commercial
attempt by others to control what was had not been engaging on the issues Australian news industry through negotiations with the news media
seen on the internet. This seemed throughout the whole process. They agreements relating to news content of businesses. Google first, then after a lag,
farfetched, but again the provision was continued to reject the idea of the Australian news businesses” (10). Facebook.
watered down in the interests of NMBC itself. In a stunning move, and
keeping the arguments concerning the without notice to the Government, in Both platforms took this as a signal that The deals were complex and often took
NMBC as simple as possible. February 2021 Facebook took down all if they did not want to be designated, a long time to negotiate. Some saw the
news and much else from their site. We they should go out and do deals with time taken as the platforms not ne-
In January 2021 Google, for the first time in Australia woke up to discover what the media businesses quickly. gotiating in good faith but the ACCC’s
publicly, said that if the NMBC were Facebook had done. Designation would mean various constant contact with the news media
to become law Google would remove The move did not play well for Facebook obligations including the need to businesses revealed the depth and
Search from Australia. This statement (9)
. Not only did Facebook block all news negotiate and then potentially be frequency of the discussions.
drew enormous attention in Australia from their platform, but they also subject to arbitration according to clear
and around the world. There were many deleted a lot else, such as news about rules. Table 1 below provides the publicly
reactions. Most saw this as Google using how residents should deal with a available list of the deals done as at end
its muscle against the Government of bushfire in their area and important While this surprised some, it was of no October 2021. On the list are very large
Australia and resented this. Then health advice in a range of areas, made concern to the ACCC or myself. The ob- and very small media businesses, and
Microsoft stepped in and said it would all the more concerning given we were jective of the legislation was sound com- all in between. Some argue that only
invest further so that its search engine in the midst of the COVID 19 pandemic. mercial deals between the platforms large media businesses were able to
Bing could take the place of Google’s In running such a campaign it is never and the news media businesses. The get deals; this is simply untrue. Country
then 94 per cent share of the Australian wise to overplay your hand; Facebook threat of arbitration was replaced with Press Australia represents around 180
search market. The Australian Prime did this in a big way. the threat of designation and seemed publications and 60 owners; many are
Minister met with Microsoft’s CEO to more powerful. This will be discussed in very small indeed with only a couple of
discuss this (7). Further, it would be strange to have section 5 below. journalists employed. Around half of
your Facebook Newsfeed without any the businesses listed in Table 1 are quite
news from news media businesses. It is small players.
interesting that in February of this year
Judith Neilson Institute for Journalism and Ideas 10 Judith Neilson Institute for Journalism and Ideas 11Whether or not a media business was
Table 1 When Chair of the ACCC I mentioned
involved in activities that predominantly
Table 2 (13)
that Google and Facebook had deals
with media businesses that likely produced core news is decided by the
Publicly disclosed Google and Meta “The review will:
content remuneration deals employed well more than 90 per cent of Australian Communications and Media
Australian journalists (11). This is likely a Authority (ACMA). It can occasionally,
• assess the extent to which the Code,
however, be a difficult judgement and
Google significant underestimate, but it is hard
some news businesses will argue they
during its first year of operation, has
to tell as accurate and comprehensive delivered outcomes consistent with its
• Agenda Media numbers of journalists employed are are eligible while other people will argue
policy objective; and
not available. That said, I was then close they are not.
• Australian Broadcasting Corporation
enough to a range of data and people in • identify potential improvements to the
• Australian Community Media Facebook, now Meta, did deals with
news media businesses to be confident Code.
• Australian Associated Press many media companies involving large
enough to make the statement. And no
• Country Press Australia one has attempted to contradict it. sums of money. Having outlaid this it is
The review will not revisit the policy ob-
• Independent Australia puzzling that they stopped negotiating
jectives of the Code.
• Junkee Media Further, Google is still talking to news without completing deals with, for
• News Corp businesses and more deals may be example, SBS and The Conversation,
Initially, and subject to the results of
announced soon. who clearly produce significant “core”
• Nine Entertainment Co consultation, the review will assess the
news.
• Out Publications extent to which:
From Table 1 it can be seen that Meta
• Private Media SBS, or the Special Broadcasting Service,
has done less deals than Google. • commercial agreements between
• Schwartz Media Inexplicably Facebook, now Meta, let it is a hybrid-funded public broadcaster,
digital platforms and Australian news
• Scott Trust (Guardian) be known that they have now stopped with around two thirds of its funding
businesses;
• Seven West Media doing more commercial deals with news coming from the Australian
• Special Broadcasting Service businesses of the type envisaged by the Government. It has 5 TV channels, 7
• the designation provisions in Division 2
NMBC (12). radio stations and SBS online. Its role is
• Solstice Media of the Code; and
to be a multicultural and multilingual
• The Conversation broadcaster.
There are marginal cases where it can be • the registration provisions in Division 3
• Times News Group
difficult to know where to draw the line of the Code;
• Verizon Media between an eligible news media busi- The Conversation is a unique
collaboration between academics and
Meta ness and a business that it not eligible
journalists publishing research-based
have delivered outcomes consistent
under the NMBC. When preparing the with the policy objectives of the Code”.
NMBC, and defining which media news and analysis.
• Australian Broadcasting Corporation
• Australian Community Media businesses would be eligible, the focus
was on media that predominantly Not doing deals with such organisations
• Country Press Australia would not seem to align with the criteria
produced “core” news. That is, content Despite SBS and The Conversation not
• Junkee Media that reports, investigates or explains: for avoiding designation. Indeed, getting deals with Facebook, and some
• Mamamia Facebook are clearly risking future others not getting deals at all, the NMBC
• News Corp - issues or events that are relevant in designation under the NMBC. must be seen as a success, albeit with
• Network Ten engaging Australians in public debate some room for improvement. Certainly,
and in informing democratic In February the Treasurer announced a the Review will consider such
• Nine Entertainment Co
decision-making; or review of the NMBC, which its legislation improvements, and Facebook may well
• Private Media
- current issues or events of public required after 12 months operation of face future designation, but in my very
• Seven West Media the NMBC. The Review is to be
significance for Australians at a local, long public policy history there are few
• Schwartz Media regional or national level. conducted by the Commonwealth new policies that so closely achieve their
• Scott Trust (Guardian) Treasury and is to involve wide objective.
• Solstice Media Some examples of this kind of consultation. Table 2 outlines the key
journalism are political reporting, court part of the Reviews Terms of reference.
reporting, and reporting on crime.
Judith Neilson Institute for Journalism and Ideas 12 Judith Neilson Institute for Journalism and Ideas 13The objective was to even up the the result of their negotiation, but many Bill, a very experienced US journalist, Besides News Corp and Fairfax there
bargaining position of the news media others did at least in broad terms or came to Australia sponsored by the were suburban and regional newspapers
businesses in their dealings with the they made public comments. I simply Judith Neilson Institute, a journalism-fo- owned by other players.
digital platforms, as set down in the assumed that News Corp received the cussed thinktank based in Sydney. Bill’s
ACCC’s final report of June 2019. average of other similarly sized news article quotes a range of people who
This objective was repeated in the media companies. have criticised the NMBC. He makes the
Treasurers statement announcing the most thoughtful criticisms of the NMBC,
Review of the NMBC on 28 February While I, therefore, do not know the and I will quote him when appropriate.
2022, as follows. precise amount it is clear that the Most of the other criticisms have come
annual payments are well over A$200m. from statements in seminars or confer-
“The Code aims to address bargaining ences, or are from people being quoted
power imbalances to ensure that digital Prior to the negotiations I was asked in media commentary.
platforms fairly remunerate news where I thought the level of payments According to research data most people
businesses for the content they would be. I said that it would seem (a) The NMBC does not address all the aged under 55 primarily consume their
generate, thereby helping to sustain reasonable that the payments would be issues facing journalism news online (either accessing the news
public interest journalism in Australia. considerably more than 5 per cent media business website, or via Search/
The Code provides incentives for digital of the cost of journalists to a business, It was, of course, not meant to. It was social media referral). For those aged
platforms and news businesses to reach but likely no more than 30 per cent. At one of nine recommendations directed over 55, TV remains the primary source
commercial deals outside of the Code. If A$200m the payments are around 20 at media and journalism issues, and was of news. Few people report print only
that is not possible, it provides a per cent of what is the cost of targeted at a particular issue, being the or radio as being the primary source of
framework (following designation of a journalist’s salaries in Australia, based on imbalance of bargaining power with the news. This is consistent across all
digital platform) for good faith what broad data is available, so the over dominant digital platforms. Further, the generations. Across Australia, TV
negotiations and mediation between A$200m was not a surprising number to Inquiry’s Terms of Reference were broad remains the most popular main source
the parties. Where agreement cannot me. and not specifically directed to solving of news (51 per cent, an increase from 39
be reached, it sets out an arbitration all the issues facing journalism. per cent pre-pandemic). Online news is
process to determine remuneration Also based on approximate calculations, the second most popular (22 per cent,
payable by a digital platform.” (14) A$200m is likely more than 20 per cent (b) News Corp dominates media in down from 27 per cent pre-pandemic)
of the news media businesses combined Australia and should be big enough to and social media is third at 18 per cent
I and the ACCC stayed in close contact EBITDA, so the amount is significant. look after itself. (up from 21 per cent before the
with most of the news media pandemic) (16).
businesses during and after their I was at an OECD Competition Confer-
negotiations with the digital platforms. Addressing the criticisms ence late last year and it was said that From Table 3 below we can see that the
They were all largely satisfied with the of the NMBC: not achieving News Corp controls 65% of Australia news website of the ABC, an
deals reached. This is in stark contrast to media. Before the digital era this organisation funded by the Australian
their inability to negotiate with Google objectives it was never statement may have been directionally government, has the dominant website.
and Facebook prior to the NMBC targeted at right if only newspapers were counted. The Nine Entertainment Group has not
legislation. On this basis alone success Pre the digital era News Corp owned the only the second largest site, but also
There have been many comments on
must be declared. tabloid newspaper in each capital city, other sites marked with an *. News
and criticisms of the NMBC. Some are
except Canberra, and some Corp’s site is third but it has other sites
easy to respond to, others require more
As ACCC Chair I stated on many regional papers. Another company, marked with an **. Note that outside
explanation.
occasions that the NMBC deals delivered Fairfax, owned the broadsheets in the top ten sites News Corp would have
over A$200 per annum to news media Melbourne and Sydney, Australia’s two other sites, but so would other
The most considered critique of the
businesses. I derived this sum from largest cities by far, it owned Australia’s organisations.
NMBC that I am aware of was written
many discussions with the news media only national financial newspaper and
by Bill Grueskin in his article “Australia
businesses. I did not, however, get the some regional papers also.
pressured Google and Facebook to pay
numbers from all news businesses. For
for journalism. Is America next?” (15)
example, News Corp did not disclose
Judith Neilson Institute for Journalism and Ideas 14 Judith Neilson Institute for Journalism and Ideas 15Table 3 other regional newspapers, and a very The need for the NMBC came from the
wide range of smaller players. lack of bargaining power of the existing
Top 10 Current Events and Global News - DECEMBER 2020 (17) media organisations to get
It is hard to combine all of the above into commercially remunerated for their
news market shares, but News Corp’s content that so benefits the platforms.
share could be seen to be, say, 15-20 per The NMBC may, of course, increase
cent based on the number of journalists diversity if it encourages new media
employed and other criteria; it is businesses to enter.
certainly nowhere near 65 per cent.
To foster new media directly, however,
Some will argue that the print/online requires a different policy instrument,
news category should be ranked possibly such as government cash
higher because it generates the stories grants and/or tax deductibility for
and television and radio merely repeat donations to media businesses, both
them. While there is some validity to recommended in the ACCC’s Inquiry as
this it is now much less the case. For mentioned in Section 1 above.
example, in their book on the ABC
Ricketson and Mullins argue that while It is not at all clear why Google or
once the ABC generated few of its own Facebook should be required to fund
stories it now, in the digital age, new media, unless they see this as in
generates many (18). In the digital age their interest. They do have an interest
journalists must be able to write as well in many small media companies that
as speak, and there is a serious premium rely on their platforms, so they keep
on original content. users engaged with them. Larger
established media businesses are
(c) Only the large media businesses competitors to them.
benefitted.
It should also be said that while
This is easily dealt with. As shown above Australia’s media sector is concentrated,
More broadly, the ABC has the most site, and extensive newspaper interests this is simply not true. The Guardian with three to four large players, it is a
read online news site in Australia, the in Western Australia. is small in Australia, and it is joined by lot more diverse than it used to be and
most listened to radio news, and the many other digital natives such as The becoming more so. The arrival of many
third most watched television news. The While it is difficult to get a precise New Daily, Crikey, and so many more. digital natives has helped a lot, as has
Nine Entertainment Group has the reading on the different news They all employ well known journalists the ability of the ABC and other former
second most watched television news, companies’ reach across online, who used to work for one of the four big pure broadcasters to now provide their
three of the top eight online news sites, television, radio and print, it can be said players mentioned above. content print online. We even have a
and a number of radio stations that Nine, News Corp and the ABC are new printed paper, The Saturday Paper,
(including 2GB, 3AW, 4BC) that would the big three. While Seven West is a It is true that some small players do not that I now receive on my driveway every
make up most of the commercial AM little behind the big three, it has the have a deal with either Google or Face- Saturday.
radio stations. News Corp owns only Sky most watched television news through book, and the SBS and The Conversation
News on television with a quite small its evening news and Sunrise program. do not have a deal with Facebook, but Further, the internet allows access to
audience and Nova in radio news, owned Combined with the reach of Seven News from Section 4 above it can be seen that international media in Australia. Many
by Lachlan Murdoch, but it is online and The West Australian, it is the this headline criticism is wrong. Australians now have digital
Australia’s biggest newspaper fourth large player. subscriptions to the London FT, the BBC,
owner. Seven West has the country’s (d) Only the existing players benefit; The New York Times, and so on.
most popular television news program, Behind these four are The Guardian, there is no increase in media diversity.
the fourth most popular online news SBS, Australian Community Media which (e) Why not simply tax Google and
owns the Canberra Times and many
Judith Neilson Institute for Journalism and Ideas 16 Judith Neilson Institute for Journalism and Ideas 17Facebook to fund journalism. continuing negotiations, have done (j) The NMBC will encourage more
(h) Not every eligible news media busi- deals with or close to 100 per cent of “clickbait”.
There seems no logic to this. By all ness has got a deal. eligible businesses. If Treasury backs the
means ensure that Google and status quo, then Google may need to do Some have argued that the NMBC will
Facebook pay their fair share of taxes This is a serious issue, and of more deals. encourage payment “per click” and that
in Australia, which of course the plat- concern. But some context is needed. this will encourage media companies to
forms make very difficult. But once this Six months or so after the legislation Second, as things stand Facebook create and post attractive articles
is achieved there is no need for them to was passed the vast bulk of Australian should likely be designated so the re- seeking users to click on them rather
pay more taxes. Further, how will the media had achieved commercial deals maining deals that should be done get that producing serious news. In
rate be determined, and how will the in effect under the NMBC. Imagine an done. response the NMBC specifies that
proceeds be distributed? alternative world where few deals had payments must be lump sum, not per
been done because all were needing an Yes, these are important issues to be click, and every deal I have encountered
There are sound arguments for uncertain arbitrated outcome. There is addressed but they should not deter- as been entered into as a lump sum
governments funding particular gaps in no doubt which outcome the vast bulk mine whether or not the NMBC can be payment.
journalism, but the money should come of Australian media would prefer. classified as a success at this very early
from general taxation. stage; it clearly can be. (k) The deals that have been done are
Further, some say the NMBC has failed not transparent.
(f) Why not let the new business model because some media businesses have (i) Doesn’t the NMBC encourage cartels.
replace the old? not got a deal. A policy that sees media This is of key concern to many. In his
businesses that employ well over 90 per This issue is included for completeness, article mentioned above Bill Grueskin
As mentioned already there is no cent of journalists achieve a commercial but it is easy to deal with. says: “Given the government’s role,
Schumpeterian “creative destruction” deal cannot be called a failure. Govern- citizens have a right to know how much
going on here. While the platforms may ment policies that achieve well over 90 Under Australian competition law the tech companies are paying….”
have created a better advertising model per cent of their objective are usually ACCC can authorise collective
they have not replaced journalism; they hailed as an outstanding success. bargaining amongst competitors I do not agree for a range of reasons.
instead are a threat to it because they provided a net public benefit test is met,
use and greatly benefit from the output This is not to deny that there are issues as mentioned above. It is a small step First, if the bargaining imbalance did not
without hitherto paying for it. to be addressed. As mentioned already, for the ACCC to allow collective exist and the parties were able to reach
both SBS and The Conversation have a bargaining under the NMBC. commercial deals without the NMBC the
(g) No platform has been designated. deal with Google but not with public would not have any detail on the
Facebook. Some others that have been With no platforms designated under the deals struck. Second, if the deals were to
This does not matter except for the issue declared by ACMA as eligible for deals NMBC media businesses could not rely be determined by arbitration the NMBC
raised in (h) below. That is, the objective do not have them, although negotia- on it to sanction their collective made clear that the deals were to re-
was to support the sustainability of news tions between many of them and bargaining. They, therefore, came to the main confidential. Third, under Part IIIA
and journalism by evening up the bar- Google are continuing. ACCC under the standard of the current competition law in
gaining power so that commercial deals competition laws and gained approval. Australia if the parties do a deal without
could get done. This has essentially There are two issues to address. First, There would appear to be no detriment resort to arbitration the details of such a
been achieved. It cannot matter wheth- the Treasury Review will consider so any benefits at all would see such deal are also not disclosed.
er the result is attributed to an arbitra- whether the criteria under the NMBC collective bargaining approved by the
tion outcome, the threat of that ACMA uses to qualify news media ACCC. For example, the news There are good reasons why
arbitration or the threat of designation. businesses has stood the test of time. businesses within Country Press transparency was not sought under the
Google argue that not all those declared Australia, some of which would be the NMBC. First, the platforms could do a
To put this another way, the aim was not eligible by ACMA should be found to be smallest media businesses in Australia, quick deal with a weaker party and then
a series of arbitrated outcomes. To focus eligible. This will be tested in the were authorised to collectively bargain use that as a benchmark that it insists
on a lack of these is to Review. If Treasury were to align with under general competition law and so all others adhere to. Second, there is a
misunderstand the objective of the the Google view then Google may well, achieved a deal. strong chance that the deal that most
NMBC. at the conclusion of the currently meets the needs of both parties will
Judith Neilson Institute for Journalism and Ideas 18 Judith Neilson Institute for Journalism and Ideas 19contain provisions that both parties will 70 to more than 100 journalists in just
want to remain confidential for their the past year, its executives say”. The
own commercial reasons; transparency ABC also explicitly linked its extra
risks sub optimal deals. funding to more personnel and
facilities in regional areas. Anecdotally
It is understood that many media there have been several journalists
businesses would want to know about saying that post the NMBC is the best
other deals to guide what they ask for time they can remember to be a
but each media business is quite journalist given the number of jobs now
different and, I suspect, each media available.
business would prefer that its deal
remain confidential. (m) The NMBC deals will simply
entrench the importance of Google and
I can understand why people take a Facebook to journalism and make the Concluding comment
different view and want transparency. news media businesses less likely to
I am just pointing out that the lack of criticise them. The NMBC has been successful by any
transparency was by deliberate design measure. It has almost completely met
and for good reasons, particularly at the Again, this would be the outcome with the objective set for it, and more quickly
urging of many news media businesses. bargains struck with the equal than initially hoped for. Few other
There is a risk to the quality of the deals bargaining power the NMBC is seeking government measures can claim the
done if transparency is forced on them. to provide. That said, due to the NMBC same.
the news media businesses in
(l) We do not know the money will be Australia have now learnt that they can Those wishing to replicate but improve
spent on extra journalism. stand up to the giant platforms and it need to think carefully about whether
succeed. Further, there seems what they are seeking to do will make
Again, it must be said that the objective admittedly from mere observation to be good commercial deals between the
was to even up the bargaining position no diminution in Australian media news media businesses and the
as much as possible so that commercial articles critical of the platforms. platforms more or less likely.
deals could be achieved. Once evened (n) What happens in two to four years
up it is for the parties to decide how to when all the current deals expire. As indicated, two important issues
spend the proceeds. That is, this remain, and will be dealt with in or after
supposed lack of oversight of the spend My sense is that new deals will be done the current Treasury Review referred to
was from deliberate design. or designation will quickly occur. The above.
Further, “additional” spending is NMBC, understandably, has support
extremely hard to police; what would from all news media businesses and First, is the criteria for eligibility used by
have happened anyway? Without the from all political parties. The latter the ACMA appropriate and has it been
extra funding would more journalists seldom occurs in Australia or, I suspect, drafted correctly, or does Google have a
have lost their jobs which the additional in other countries. point that more businesses have been
remuneration has avoided? How much registered with the ACMA than should
of the additional remuneration is Further, I suspect other countries by be to achieve the NMBC’s objectives?
needed to supply the agreed content then will have similar arrangements in
or do other things agreed to with the place, such as Canada, the UK and Second, should Facebook now be
platforms? the USA. designated if it does not do further
deals?
Bill Grueskin points out in his article
that: “Revenue from the Code was a An interesting year ahead.
‘significant factor’ in the Guardian
building its Australian newsroom from
Judith Neilson Institute for Journalism and Ideas 20 Judith Neilson Institute for Journalism and Ideas 21Notes
(8) “Inside the 11th hour deal with Google
(1) Rod Sims was ACCC Chair when the and Facebook”, Paul Kelly, The
NMBC was conceived and implemented. Australian, February 26, 2021.
The views expressed here are his own
and not necessarily those of the ACCC or (9) “What Facebook’s Australian news
current Commissioners. ban could mean for its future in the US”,
Kari Paul, The Guardian, 27 February,
(2) I have heard a Google representa- 2021.
tive say that my estimate of $200m was
mere speculation. This is not so. I had (10) Treasury Laws Amendment (News
contact with most leaders of news Media and Digital Platforms mandatory
media businesses after they had Bargaining Code) Act, No. 21, 2021.
completed their deals with the digital
platforms and discussed ranges of the (11) “Australia pressured Google and
sums paid with them so I am Facebook to pay for journalism.
confident that the amounts paid were Is America next?”, by Bill Grueskin, About the Judith Neilson Institute
over $200m. Columbia Journalism Review, March 9,
2022.
for Journalism and Ideas
(3) “A note on the Tingergen rule”, by
Peter V Schaeffer, West Virginia (12) “Facebook snubs SBS, The We help people tell great stories
University Division of Resource Conversation on media deals”, Zoe
Economics and Regional Research Samios, Sydney Morning Herald,
Institute. September 22, 2021. The Judith Neilson Institute supports and celebrates quality
journalism and storytelling around the world. Our grants and
(4) “Digital Platforms Inquiry”, Final (13) Review of the News Media and education programs equip journalists with the resources they need
Report, June 2019, Australian Digital Platforms Mandatory to produce outstanding work. Our events and ideas program
Competition and Consumer Bargaining Code, 28 February 2022. provides forums to discuss the issues shaping the world.
Commission. Joint media release The Treasurer and
The Hon Paul Fletcher MP Minister for The Institute was established in 2018 by Australian philanthropist
(5) Tulis B.A., (2010), “Final Offer ‘Baseball’ Communications, Urban Infrastructure, Judith Neilson. We are based in Sydney but work with journalists
Arbitration: Contexts, Mechanics & Cities and the Arts. and media organisations around the world. We are non-partisan
Applications”, Seton Hall Journal of and governed by an independent board.
Sports and Entertainment Law, Vol. 20, (14) See footnote 13.
No. 1, pp. 85-130 at 91.
(15) See footnote 11.
https://scholarship.shu.edu/cgi/view-
content.cgi?referer=&httpsredir=1&arti- (16) Reuters Institute 2021 Digital News
cle=1002&context=sports_entertainment Report.
(6) “Google hits out at Australian media (17) Nielson Online News Rankings,
code as US reviews laws”, Zoe Samios, December 2020.
Sydney Morning Herald, 7 February,
2022. (18) Who needs the ABC, By Matthew
Ricketson and Patrick Mullins, Scribe
(7) “Microsoft tells the PM it can fill the Publications, 2022, pages 11-21.
void”, Phil Coorey, Australian Finacial
Review, January 31, 2012.
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