How does the Media Bargaining Code affect small business advertising strategy?

The Media Bargaining Code has come in to effect, and with great fanfare in the media. But how does it affect small business advertising strategy?
March 5, 2021 10:29 am

Businesses of all sizes are concerned about the news media bargaining code and its current and potential impacts. The proposed law would require Google to pay fees for news links that show up in search results. In response to the legislation, Google removed the News option from Search, and Facebook blocked news organisation pages completely from its service in February 2021. Facebook has prohibited Australians from posting news links and articles to their profiles.

Let’s start by understanding a bit about where this has come from, and why the Australian Government has taken on this challenge to create this legislation.

The history of the Media Bargaining Code

On 20 April 2020, the Australian Government asked the ACCC to develop a mandatory code of conduct to address bargaining power imbalances between Australian news media businesses and digital platforms, specifically Google and Facebook.

On 31 July 2020 the ACCC released a draft code for public consultation and a series of questions and answers (Q&As) about the draft code.

Following consultation, the ACCC made recommendations to Government based on the views put forward by stakeholders. Government has now considered these recommendations and developed its final legislation.

The Bill was introduced to Parliament on 9 December 2020

Source: ACCC.gov.au

Why is it that Google Search / Facebook are free to use services?

Google and Facebook are able to remain profitable thanks to their robust advertising programmes and stock sales. Both companies run their income streams differently, but both use user data to help advertisers target users accurately.

  • Google has an advertising program where businesses can advertise to their users for a fee. Think of the YouTube videos you watch once in a while. They usually have ads at the beginning, middle, or end, and they sometimes show pop-up ads for brands that are related to the content you’re watching. Google also sells products such as its Google Cloud platform, Chromebooks, and apps it sells on Google Play, for example. The company enables non-Google websites to use the Google to show ads on their websites as well. When you search on Google you will also get listings that are sponsored to get your attention.
  • Facebook also sells ads and is a publicly traded company. It’s business model helped the company become even more profitable as many businesses pivoted to ecommerce and away from in-person sales. In 2020, ad sale revenue made up 98% of the company’s profits.

These income streams allow them to provide their services to you for free, gather data about you (your habits, likes & dislikes) and then sell it back to the advertiser in the form of meta data about you that can be used to target you for an advert.

What is the Australian government trying to achieve, and why?

The Australian government wants to ensure news media are properly compensated for their journalism, per the Australian Competition & Consumer Commission (ACCC). They argue that news publishers are providing their work to Google and Facebook for free. Google would then have to pay Australian news sites for links, previews, and fragments of news.

Changes in publishing and journalism business

Before the advent of the internet and online news sites, traditional newspapers were able to sell adverts in the classifieds in-house, this supported the journalists, and as you read your article the advert would be along side, or in a classifieds section.

Websites have created the expectation of free content and have reduced potential revenue opportunities for publishers, which makes it harder to produce original articles, long-form investigation, high-quality video content, and ultimately investigative journalism that helps keep democracy in check.

Google and Facebook argue that they are already assisting publishers by listing their content, essentially putting their links in view of relevant audiences for free, who then click through to read it.

Where are we at now

The news media bargaining code is new legislation passed in December 2020. It was negotiated for three years before it was passed, and discussions between the Australian government and these platforms were tense, with Facebook Founder and CEO Mark Zuckerberg taking on the discussions himself.

In February 2021, Google has made a deal with Rupert Murdoch’s News Corp as a response to the new regulation. Google has meanwhile committed $1 billion for global news partnerships and wants more say in the proposed legislation. The company has also signed deals with several large Australian news corporations, such as Nine Entertainment and Seven West Media.

The amount of money Google paid them is still undisclosed, and contents will now be part of a tab called the Google News Showcase, which will feature news from places for which Google has obtained a licence. Any other news sites will not appear in search results or other places in Google’s properties.

Facebook chose to walk away from conversations completely and now blocks news content on it’s platform – however this is a developing situation.

What will change?

You will still see news articles, excerpts, and links on Google, for publishers that entered into an agreement with Google. In the short term this doesn’t affect most businesses that are not news publishers.

How does it work?

The news media bargaining code means search engines will now have to deal with arbiters who will decide how much Google will pay for content. News publishers can bring up a case with the arbiter and ask search engines to pay a price. Search engines and newsrooms will each come up with a number, and the arbiter will mediate between both sides to negotiate fair compensation.

Publishers are welcome to bring up cases, but the news media bargaining code also makes it so that large search engines such as Google can negotiate one-time licensing deals for all content from a media company, which may help them obtain better terms.

Facebook has kept true to its word and blocked Australians from being able to publish news. Ultimately, Google decided to comply with terms to prevent search engage rivals from overtaking them as a service. Facebook, meanwhile, has less competition in this arena, as they also own Instagram, WhatsApp, and offer a different experience than their social media peers.

Is my business at risk?

Functions such as Google Maps, Google Workspace and other Google services that are paid for by your business won’t be affected. It’s likely that your SEO strategy can remain the same. As a company, Google was eventually able to come up with a compromise that worked for the Australian government, and major news media organisations. You should still be able to use their services normally.

News organisations can also opt out of appearing in Google search results, though people depend on these results so much that this might not be a popular choice.

For niche publishers, this will come down to a case by case basis as to whether they apply to the new code. The term ‘news’ is extremely broad, but the code does narrow this down to public interest journalism.

How does my advertising strategy change?

For most businesses that leverage advertising on Facebook and Google this should not affect your strategy. Facebook states that news articles make up less than 4% of their user’s attention on the platform, and so it is not a significant source of data for them, and their advertisers.

This leads us to believe that Search Engine Optimisation and Search Engine Advertising strategy will largely remain as-is for now.

Is it a good solution?

The Australian government is rightfully concerned about the value of news media and journalism, but Google and Facebook also brought up good points. Paying news sites for their links may cause a global precedent that could threaten free internet use. Facebook instead decided to walk away from any conversations and there is no word yet about any compromise.

In a statement about the new regulation, Facebook mentioned that they believe the law is quite complex, and they will believe “more work is needed to incentivise open commercial negotiations rather than an untested and unpredictable arbitration approach.”

Google, on the other hand, may have opened itself up to more regulatory laws around the world because of the way it negotiated with Australia. One thing that isn’t clear yet: the news media bargaining code doesn’t specify where money paid to publishers should go, and The Verge rightfully mentioned that it’s unclear if this will help journalists earn more money.

Leave a Comment

Login
Log in below to access your courses.
Log In With Google
Forgot Password
Enter your email address or username and we’ll send you instructions to reset your password.