Google and Facebook owe United States news publishers between $11-billion and $14-billion a year, according to new research.
“The tech giants have argued that news is not essential and that publishers are lucky to have their platforms driving traffic to their sites, which can then convert that traffic into subscriptions,” writes Haaris Mateen, an assistant professor at the University of Houston, and Anya Schiffrin, a senior lecturer in Discipline of International and Public Affairs at Columbia University.
But their study finds that “news is important to Big Tech platforms” even if value is created for both sides.
Big tech companies have “resisted paying traditional licensing and copyright fees” and are not forthcoming about providing audience traffic and impression numbers. What payments they make are “meagre” and often through small grants or private arrangements with major outlets, the academics found.
“Unsurprisingly, by keeping the cost of goods sold (news) down, Google and Meta have grown rich off the advertising revenue they reap from attracting the world’s eyeballs to their sites.”
“Meanwhile, news deserts have become a global problem as outlets struggle with the loss of revenue, although some – like The New York Times and The Guardian – have been able to offset the losses with subscriptions and other income.”
In South Africa, publisher Caxton with the Centre for Free Expression has asked Google to “provide transparent answers to a list of well-considered questions,” Caxton chairman Paul Jenkins tells the FM. These are the “very questions which media around the world seek answers to and yet we as the media face the byzantine maze of confidentiality protection that secretive organisations such as Google hide behind”.
This aims at “redressing of the disproportionate power of digital advertising platforms over the news industry”.
Caxton, like other media organisations in South Africa, has been wrestling with the digital revolution for nearly 25 years, he adds, and in that time the “behemoths of the digital world” have come to dominate the industry. The average American now spends seven hours a day on a screen, he says.
“Our ability as news organisations to hold government to account and report on society has never been more under threat. Journalism is in danger – and digital advertising follows eyeballs and does not discriminate between clickbait, fake news and cutting-edge journalism.”
“It is not melodramatic to say news as a public good and freedom of expression is at a tipping point, not unlike the climate crisis. But the blame game and finger-pointing are unhelpful,” Jenkins adds.
“News publishers all over the world have tried to estimate what Google and Meta owe them for the news they distribute to audiences. This is a difficult task due to a lack of publicly available data about audience behaviour and because a lack of competition makes the price tech companies pay for news artificially low,” Mateen and Schiffrin concur.
The academics have created a methodology they say is “transparent and replicable,” having used insights from over 50 years of research in the economics of bargaining to find the “fair” payment for news.
The “methodology offers the flexibility to change underlying assumptions based on the market and geography being analysed”.
It’s also important that publishers stick together as they negotiate, they say, as “more value is created when bargaining is collective”.
Australia’s News Media Bargaining Code, which was enacted in 2021, is a good template, they argue, and has forced Google and Meta to strike deals with Australian media organisations, resulting in payments of A$200-million a year.
“It’s no surprise other governments are looking at Australia’s law to find ways to get payments for their news too,” say Mateen and Schiffrin.
Read More: What’s wrong with programmatic advertising – and why you should never trust Google or Facebook again
Other countries considering similar laws are Indonesia, New Zealand, South Africa and Switzerland, they add. Japan has done its own study and “warned tech platforms [that] low payments to publishers could violate antimonopoly laws”.
Caxton and the Centre for Free Expression want to “use our generous South African constitution to protect our rights to freedom of expression and information, and to provide us with access to the data we need to protect these rights,” Jenkins tells the FM.
“We don’t accept that the trope of commercial confidentiality is an excuse for secrecy”.
- This feature originally appeared in the Financial Mail