Big tech hit bargain with Big Media

For some time last year, the Australian Competition and Consumer Commission said Australian digital media businesses needed large digital platforms to share revenue in an effort to address the bargaining power imbalance, resulting in less content than favorable terms on news content platforms. Google and Facebook.

Last week, this exercise reached a very surprising blame. News Corp, Australia’s largest news media company and a strong proponent of the new law, has announced that Google is entering into a multi – year partnership with Google to provide credible journalism from its news sites in exchange for substantial payments. This arrangement is even more surprising, because until then, Google was a vocal opponent of the new law. Soon, Facebook announced that it was going to prevent publishers and Australians from sharing or viewing large-scale Australian or international news content. If the conflicting response of the two platforms seems strange, it is because their business needs are not immediately apparent.

Facebook is a platform where users can share the content they like with their friends and family. News accounts account for less than 4% of the total content in the Facebook news feed. If Facebook complies with the requirements of the new Australian law, in its own words, it will be fined “for content that is not taken or asked for”. It is worth noting here that Australian publishers have received close to 5.1 billion. Free referrals from Facebook last year — total, estimated at $ 322 million (US). This suggests that Australian publishers need Facebook more than Australian publishers. In this light, Facebook’s decision is not the least bit surprising.

Google on the other hand is primarily a search business. Its search engine must have the ability to include news in its results. If Australian law becomes a reality, Google risks seriously negotiating with publishers such as News Corp on the best possible setting, or seriously damaging the quality of its search submission in Australia.

As I have been tempted to get into the weeds of Australian law, I believe it is important to anticipate the broader consequences of this particular approach to rearranging the relationship between content providers and digital platforms. The way we consume content will be. If digital platforms can be successfully enforced in media bargaining arrangements in Australia, there is no doubt that governments around the world will adopt this approach. Before that can happen, we need to figure out if it’s good for us.

Before the Internet, news reached readers through distribution channels controlled by large media companies. We have fewer news sources to choose from and the newspapers we read cover a wide range of topics. Digital platforms have democratized access by separating content from distribution. This means that news media companies have lost control over their end users, giving readers more access to more dedicated news resources.

While it was welcomed, it did bring its own challenges. Due to the large number of sources, it is difficult to find relevant content. We know there is good content out there, but no clue where to go to find it. Digital platforms have solved this problem for us by creating algorithms designed to provide the most relevant content to our needs. They have mastered the art of extracting signals from noise and in doing so they play an invaluable role in the digital ecosystem. It is for this reason that independent media creators can reach relevant audiences without the importance of large media organizations. From it emerged entire industries: blogs, podcasts, blogs and e-newsletters.

All of this has led to an expansion of unprecedented content, with users benefiting from the balance. None of this came without undesirable side effects. The fact that anyone who creates content will find an audience interested in it has led to the polarization of society like never before. This led to the creation of eco rooms, which made public speech much less citizenship. But, perhaps most importantly, it led to the inevitable restructuring of the news industry as we once knew it.

Australia’s media bargaining policy seeks to address this last issue by subsidizing the traditional news industry through intermediaries’ digital platform revenues. By doing this, it makes it much harder for small independent news providers to earn revenue or maintain the high search rankings needed to reach their audience. This will eventually lead to a shrinkage of choice — digital platforms are likely to find the first page of search results filled with content only from providers who have entered into media bargaining agreements.

Shortly before this column was published, Microsoft publicly attempted to resume negotiations with Google and Facebook. From these responses, it seems that digital platforms are ready to pay the price.

Rahul Mathan is also a partner in the Triangle and a podcast titled Ex Machina. His Twitter handle @Matton

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