Recently Google has issued warnings to its users about proposed laws that would affect how big tech companies do business in Australia – specifically with how they treat news content. The Australian New Media Bargaining Code (NMBC) regulations have received a lot of criticism from independent internet content creators, while also being promoted by (employees of) established media companies – including the Murdoch press. A lot of these are valid and concerning.
However, how could we see this issue through the Georgist framework of monopoly or corporate power?
Established media has been on a long decline as its patronage becomes increasingly fragmented in the internet age, reducing its attractiveness to advertisers. Google and Facebook (along with the digital platforms they’ve acquired) armed with unfathomable amounts of cheaply extracted user data have disrupted distribution, enabling them to take a large share of the available advertising revenue. These tech companies are now effectively entrenched monopolies – through the network effect, the natural barriers to entry and difficulty in achieving scale.
Big tech companies and their digital platforms have become like the superhighways of the internet, but are effectively private road providers. Private (toll) road providers do add value, but they can also extract super profits. Devising a principled approach to regulating or taxing these companies has been difficult. Intellectual property (IP) is fraught with issues, both in principle and in practical implementation. Attempts have been made in Spain and Europe, but with mixed results.
While this goes on, established media companies still produce costly content. It could be argued that the cost of hard-hitting journalism, theatre criticism, and tell-all celebrity puff pieces are not effectively priced on the internet. It could also be argued that these media companies provide a social good that is very difficult for smaller content producers to replicate. Although in Australia, there is widespread suspicion of established media companies like NewsCorp. The established press are predominantly owned by people like Murdoch and Kerry Stokes, who leverage their own and their mates’ wealth and influence to manipulate rather than inform the public.
What it seeks to provide is a collective bargaining framework for established media to extract money out of big tech companies. It amounts to the creation of a new privilege, or form of Intellectual Property – the ability to force these companies to pay for content. Effectively news content receives an IP license (a bit like copyright) whereby it can only be distributed freely so long as it is not highly commercialised i.e. via tech companies like Google and Facebook. The regulations also give them unprecedented advantages over algorithms used to display their own news, and provides for a few other minimum standards.
Make no mistake, here is a case of classic rent seeking; entrenched corporate interests vs entrenched corporate interests; corporate media vs big tech.
Except in Australia the situation is somewhat unique, corporate media has more sway over the Government than big tech. Australia could be a rare example of corporate media overpowering big tech to have the rules rewritten in its favour. This sets an unpalatable precedent for big tech companies in other countries.
Additionally, some argue that media companies are the real beneficiaries of tech companies who freely route traffic to their publications with no immediate profit gained for doing so. While this is true to an extent, it should also be noted that news constitutes content that also provides valuable data. Currently no one has the market power to charge for their data and content, but the NMBC could in theory enable that (supposedly under the guise of public interest).
If the NMBC becomes law, big tech companies could pull out of Australia, but may compromise if their lost revenue does not outweigh their Australian-based profit (notwithstanding the temptation to make an example of our regulators). In practice the NMBC will more likely act as a super profits tax on big tech companies, hypothecating the proceeds to subsidise large, established media organisations.
What makes this more stark is that in order to really benefit from the NMBC, your news organisation must turnover an average $150k p.a. or more. Hence the NMBC will further entrench big corporate media, and raise the barrier to entry for smaller, independent media outlets.
An ideal world
This implementation of the NMBC has a number of ghastly flaws, but on balance it probably won’t change the status quo much aside from keeping established media alive. It is more interesting to consider how this concept could be better implemented.
Indirectly taxing big tech monopolies by forcing them to share revenue (or advantages) with the media more broadly could be a good thing in principle. One of the key pillars of the propaganda model is advertising.
An advantage of publicly funded broadcasters like the ABC is their immunity from the influence of advertisers (although they are more beholden to others e.g. government, board and management).
By making media less dependent on direct advertising revenue in general, it dilutes corporate and advertiser influence over news media. In theory, a media outlet could take a hard editorial line against a company, lose that company’s advertising revenue, but still receive advertising revenue from that same company indirectly via big tech advertising. Additionally, big tech media revenue could function like a meritocratic subsidy, that funded media based on its relevance. The real issue is, what media should qualify? Clearly that question was approached from a frame of benefiting NewsCorp, rather than sensible and fair principles.
To conclude, the NMBC provides a useful avenue to be explored. The idea of mandating media companies to guarantee minimum coverage, or balanced coverage, in the public interest during elections is not new – the UK already has similar laws. What is new is the notion of mandating big tech companies to provide special support and treatment of the media in the public interest. It’s definitely worth exploring, and has much more potential than any proposed direct super profits tax could.