Fair Digital News Bargaining Bill ‘not dead’, but heartbeat weak
Sunday, 4 February 2024
EXPLAINER: The Newspaper Publishers’ Association has not given up hope for the Fair Digital News Bargaining Bill, which it says is set to be examined in oral hearings at Parliament this month.
The bill was introduced by the last government’s minister for broadcasting and media Willie Jackson as a New Zealand matcher to legislation in Australia which forced giant social media companies to negotiate deals with news media companies.
The premise of the bill, Jackson explained in August when it was introduced to Parliament was that social media companies like Meta and Google make money through advertising and other services, but do not pay news creators for the use of their content online.
The bill would, Jackson said, incentivise “fair commercial deals between news media companies and the big online digital platforms” by requiring them to negotiate commercial deals, with a failure to strike deals triggering a binding arbitration process.
But not only was the bill opposed by Meta, the owner of Facebook, and Google, but in its first reading in Parliament in August, National and ACT MPs lined up to attack the bill.
National’s Melissa Lee, now Media and Communications Minister, said the bill was “effectively another tax” from a Labour government in its dying days, and ACT’s Damien Smith said: “As New Zealand's only member of Parliament who is an anarcho-capitalist – believes in free minds and free markets – it's not going to surprise you that I've convinced our party to oppose this bill.”
“It's the State again intervening in the market place to force one industry to subsidise another declining industry,” he said.
“This bill will die when the current Government is not re-elected in October,” he said.
While Lee would not comment on the Government’s intentions for the bill, though it has been reported her stance on it has softened, however, an ACT spokesperson said: “I can confirm ACT’s views haven’t changed since Damien Smith’s speech.”
However, Andrew Holden, public affairs director at the Newspaper Publishers’ Association (NPA), said: “In simple terms, the bill is not dead because the minister has allowed it to go through to the select committee.
“She had the option in December, once she sat down in the chair to kill it off immediately at that point,” he said.
“The fact that Minister Lee has allowed it to go to the select committee gives us hope that the argument can be made that there’s value in the bill, and that there’s broad support right across the media industry, whether they are publishers that still have the component of newsprint, or fully digital publishers like Newsroom or Spinoff, that there’s virtue in this bill.
NPA’s members include Stuff, which owns The Post, and NZME, owner of The New Zealand Herald.
“Right across the board media companies here believe it is needed, and it will make a significant difference, a positive difference for the ongoing strength and the future of journalism in New Zealand,” Holden said.
“We’ve got the opportunity, later this month, we believe, to go in and make oral arguments to the select committee,” Holden said.
“The heartbeat is there. It may not be exceptionally strong, but still the heartbeat is there.”
“There is hope. The opportunity is there for us to make the case,” he said.
A briefing to Lee as the Media and Communications Minister by Mananū Taonga Ministry for Culture and Heritage on Thursday sent Lee a stark warning: “Traditional media business models are failing” with audiences moving to consumer news and entertainment online, decreasing advertising revenue for local media companies.
It wasn’t only digital platforms like Meta and Google, the minister is being urged to consider regulating.
“There is an opportunity to consider requirements for streaming platforms to show or produce New Zealand content and prominence and discoverability requirements to ensure local content reaches audiences and is given prominence on the platforms and on technology used by New Zealanders,” the briefing says.
When Jackson introduced the Fair Digital News Bargaining Bill, he cast it as an alternative to public funding of media organisations through the Public Interest Journalism fund, which was introduced in 2020 to support news media through the Covid pandemic, and which Lee said had eroded public trust in media.
While there has been a flood of public submissions on some proposed bills, like the Hauraki Gulf/Tīkapa Moana Marine Protection, or the Electoral (Lowering Voting Age for Local Elections and Polls) Legislation Bill, there have been only a handful that made submissions on the Fair Digital News Bargaining Bill.
“That doesn’t surprise us, to be honest,” Holden said.
“There are rare occasions where you see significant public support for elements of media. I can think of public demonstrations in support of the BBC in the UK, and the ABC in Australia, to protect those, and certainly there’s a very strong protective conscience around things like RNZ,” he said.
“To me what matters is that more than 50% of New Zealanders are going to New Zealand media companies, and reading New Zealand journalism every day.
“When a major crisis occurs like the Hawke’s Bay, or the Auckland floods, it’s those reputable news organisations people go to to find out what’s going on,” he said.
Google and Meta have both argued in submissions that the bill is predicated on a misunderstanding of the value exchange between news media and social media platforms.
“This bill ignores basic economic and commercial realities,” it said.
“Contrary to some public rhetoric the bill does not provide a framework to ensure fair dealings between digital platforms and news publishers in negotiations.
“Instead, it will compel Meta to enter into commercial agreements that ultimately ignores the realities of how our platforms work, their voluntary nature, the preferences of the people who come to Meta for content, and the free value we provide news publishers,” it said.
Meta said in 12 months between September 2021 and September 2022, people clicking on embedded links on Facebook to news stories delivered New Zealand news media companies 390m clicks, which it estimated to be worth $33m to them.
However, the NPA argues that the value exchange is tilted in favour of the giant digital platforms. It says that Australia the social media companies’ used the same arguments as they were in New Zealand, and yet once at the negotiating table, they struck commercial deals with news media companies.
Holden said: “Collectively the deals that have been agreed are around A$200 million (NZ$214m) a year, which is approximately 20% of Ebitda (earnings before interest, tax, depreciation and amortisation), that’s 20% of revenue they didn’t have before this bill was introduced.”
Sinead Boucher, executive chairperson and published of Stuff, said those deals in Australia had been transformational for the news media there.
“It has secured the newsrooms’ futures,” Boucher said, who was “cautiously optimistic” for the future of the bill.
NPA argues that the proliferation of digital platforms using generative AI-based chatbots that train themselves using professionally produced journalistic news content is a growing threat that requires government action.
“Since the bill was first presented the need for that kind of legislation has only grown more pressing,” said Boucher.
The AI search services the likes of Google were creating were designed to generate content to keep users on their platforms, rather than have them click through to news media sites.
She gave the example of Google’s Search Generative Experience designed to generate answers to people’s questions, and to keep the user entirely within the Google ecosystem.
“These models have hoovered everybody’s content, their IP, without their knowledge or agreement, and are now using it to create commercial products that will entirely by-pass the creator,” she said.
“These new products are even less likely to share any value back with the creators of the work,” Boucher said.
This posed an existential threat to news media, she said.
“We are increasingly in competition with companies that use our own products to build their value,” Boucher said.
“The playing field will never be level unless we have the right kind of legislation to support that,” she said.
“We can’t win in an environment where the deck is so stacked against us.”
The briefing to Lee said media companies were “calling for more work to be done on intellectual property issues to ensure our copyright regime remains fit for purpose” in the face of the AI challenge.
In New Zealand Google had done a deal with NZME, and another with other NPA members, after the Commerce Commission gave the NPA the go-ahead to do so, Holden said.
The value of the deals was confidential, but they were short-term deals, and there was no guarantee they will be continued, he said.
The money changing hands in those deals was less than media companies would get under “fair” negotiations, he said.
Grant McKenzie, chief executive of Allied Press, which owns the Otago Daily Times and 22 other titles in the South Island said he remained hopeful that MPs would listen to evidence presented to the select committee, and see the bill was essential to support the continued availability of professional journalism in New Zealand, and independent New Zealand news content, which was the fundamental cornerstone of New Zealand's democracy
“I have got faith in the democratic process, and I’m sure politicians are very wise people who will make the right decision,” he said.
McKenzie had been surprised at how much the briefing to the incoming minister had been focused on broadcast media, not news media.
“Where does TV and radio get their stories from? It’s all from the newspapers,” he said.
NPA’s submission on the bill said: “In the absence of such fair compensation there will continue to be an acceleration of the decline in the viability and sustainability of NZ News Media, and therefore on the availability of the news content and journalism that underpins our democracy.”
It said annual newspaper advertising revenue had fallen from $533m in 2011 to $210m in 2020, and since 2003, newspaper firms had only earned $1 in digital advertising for every $4 lost in print ads.
As a result, many jobs had been lost.
The number of journalists employed fell by more than 50% between 2006 and 2018 from 4284 to 2061, it said.
Awful numbers for local media
The briefing to Lee by Mananū Taonga Ministry for Culture & Heritage showed what had happened to media company revenue:
TVNZ reported a decline in profits from $59.2m in 2020/21 to $1.7m in 2022/23 and is forecasting a loss of $15.6m for 2023/24.
NZME reported a 76% profit drop for the second half of 2022, and MediaWorks reported a $9.7m loss for 2022.
Warner Bros Discovery has reported losses of $34m in New Zealand in 2022.
In October 2023, a manual scan showed Netflix had only six New Zealand titles in its catalogue, half of which were more than five years old.
Disney had none. Neon, Sky’s New Zealand streaming platform, carried 54 home-grown titles, making up 4% of its catalogue.