London | European media companies’ long-running battle to extract advertising revenue from digital giants like Google and Facebook should tell Australian news publishers that disunity means defeat, experts have warned.
The European warning comes as the Australian Competition and Consumer Commission begins work on a world-first mandatory code of conduct to force the two US behemoths into paying Australian media companies for news content that appears on their platforms.
Failed attempts in Spain and Germany to reset the balance between publishers of news content and the digital distribution duopoly point to the structural pitfalls and strong-arm tactics that media companies might face. And nobody’s certain that France will yet succeed either.
The first problem is that media companies might not share the same commercial interests, said Rasmus Kleis Nielsen, director of Oxford University’s Reuters Institute for the Study of Journalism.
“One very real possibility is that there will be a divide-and-conquer moment where some of the major platforms essentially cut a deal with a limited number of very large publishers, or politically powerful publishers, who will then benefit – and everyone else risks not really getting any meaningful compensation,” he said.
This is partly what happened in Germany, said Angela Mills Wade, executive director of the European Publishers Council. “Google played a divide-and-rule game, and persuaded publishers to give them a licence for free.”
Google removed snippets by media outlets that didn’t want to agree to the terms the tech company was offering, and those outlets saw their traffic plummet.
“The coalition [of media companies] fell apart very quickly, as companies came to the conclusion that the monetary value of search traffic was better than nothing,” said Professor Nielsen.
It’s not clear so far that the French approach has changed the balance of power.
— Rasmus Kleis Nielsen, Oxford University
In Spain, Google faced a law rather than a negotiation. Forced by Spanish statute in 2014 to pay licence fees to display news content, the company responded by shutting down Google News there.
Ms Mills Wade said this prompted a temporary dip in traffic to media websites, but many companies eventually replaced it with more organic growth that they were able to monetise themselves.
The trouble was that the pain of the Google News pullout was borne more heavily by smaller publishers, sowing divisions within the Spanish media industry.
The smaller publishers argued that bigger ones had sought to pursue their own interests at the expense of innovation and financial health of the sector as a whole.
“A number of publishers in Spain are unhappy with how it turned out but a few are also content with what happened,” said Professor Nielsen.
“It’s essentially a question of whether that was to be expected, or whether there could have been a better model for everyone. A model that might benefit, say, the largest publishers is not necessarily the model that will benefit small or local publishers or benefit digital-only publishers.”
Fresh fracas in France
The Continent is now trying to tackle the problem at European Union level, through an early-2019 Copyright Directive that all 27 EU members must implement at national level.
In essence, countries waive their anti-trust laws to allow media companies to work collectively in negotiating a “publishers’ right” to royalties or copyright payments from tech platforms that display their product.
The bargaining takes place in the private sector, between the industry – through its licensing agency or copyright agency, for example – and the tech companies.
France, which has a history of taking on American tech giants, enacted a law last October. In response, Google began removing French media companies’ snippets from its search results, leaving only headlines and URLs – a means of avoiding licence payments, but one which threatened to reduce traffic flows to the news stories.
This month, France’s competition regulator ordered Google to negotiate in good faith, and set a three-month deadline. It also told Google to display the snippets during that period.
Google points to the work it already does with French publishers, based on an earlier agreement, which involves offering training, technology, innovation and support to publishers to help them adapt to the disrupted market.
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The company is now also looking at ways to help big-name news groups in France increase their subscriber base, as Google “engages with publishers to increase our support and investment in news”, according to company vice-president Richard Gringras.
Professor Nielsen said the outcome of the tech-media wrangle was far from certain. “It’s not clear so far that the French approach has changed the balance of power so much that the publishing industry is content with the state of affairs,” he said.
“It’s also not clear what the definition of success is here, either from the publishers or from the platforms, or for that matter from the French government – other than they have been pretty clear that they expect American companies to hand over cash to French publishers.”
Attitudes have changed, mainly based on knowledge of how these companies operate
— Angela Mills Wade, European Publishers Council
He said the “easy part” was to say there should be a fair share, but the hard part was working out what the value was and doing the sums.
“If expectations are that platforms will be forced to hand over hundreds of millions of euros amongst hundreds of different publishers, so that everyone gets something that makes a material difference to them, then I think these negotiations will be quite tough.”
He worried that the smaller and bigger companies could find their interests diverging again. But Ms Mills Wade said she expected a different dynamic might emerge this time. “Attitudes have changed, mainly based on knowledge of how these companies operate,” she said.
The French and Australian efforts will be closely watched elsewhere, although Professor Nielsen said most Western governments weren’t engaging yet and most publishers seem to have acquiesced to the status quo.
But the two Petri dishes are very different, he said. “France has a very long tradition of state intervention in the media sector. It’s interesting to see this being a focus in Australia that doesn’t traditionally have this interventionist, nationalist approach to media policy.”
Hans van Leeuwen covers British and European politics, economics and business from London. He has worked as a reporter, editor and policy adviser in Sydney, Canberra, Hanoi and London. Connect with Hans on Twitter. Email Hans at email@example.com