ITP Techblog

By now, you've heard how this story of disruption has played out. 

Around the turn of the millennium, our major news outlets embraced the internet, putting most of their content online for anyone to access - completely free of charge.

I was working at the New Zealand Herald at the time and, naively, was an enthusiastic advocate of the move. Putting my stories online opened me up to a bigger, tech-savvy audience. 

They could leave comments and email me news tips. I could update stories as there were new developments. Besides, there were buckets of money to be made in running adverts on news websites anyway.

Well, the party ended rather abruptly as Silicon Valley figured out the online advertising game. First, it was Google, with its ingenious search engine which allowed advertisers to pay to feature their wares at the top of search results. Then Google got into display advertising as well. A host of other companies did the same, commoditising online adverts in the process. Trade Me's online marketplace sucked the life out of the classified ad sections that had filled the backend of our weekend newspapers. 

Algo-driven advertising

Then came Facebook. Its newsfeed algorithms gave advertisers unprecedented abilities to target groups of people. The lumbering news media couldn't compete. For most of the 2010s, that was the pattern - a slow death spiral for media outlets while Google and Facebook divided the lion's share of the online ad market between them.

Then came a belated effort by media outlets to fight back. Some put up paywalls, others asked for donations. Those moves and a major injection of public funding into media outlets during the pandemic managed to keep the majority of them afloat. But the situation called for a more sustainable solution, where Google and Facebook reward media outlets for the undeniable benefits (chiefly audience stickiness) they gain from running snippets of news content on their platforms every day.

In February last year, Australia went head to head with Facebook, introducing a mandatory industry code that required the social media giant to pay large media outlets for featuring their content. To the surprise of many, Facebook refused, instead removing the content of Australian news outlets from its platform.

This was in the middle of the pandemic and the Australian Government worried that a key channel for disseminating public health information via social media had gone dark. Before long it had relented on some of the terms of the code, allowing Facebook and Google to do what they originally wanted - strike confidential, commercial deals individually with Aussie media outlets. They would only have to enter into arbitration as a last resort.

Collective bargaining

Around 30 publishers negotiated contracts with Facebook and Google rumoured to be worth millions of dollars each. It was a hollow victory, peanuts compared to the vast digital ad revenues those companies generate in Australia. The Australian Government is in the process of reviewing the Code, noting that numerous publishers have failed to reach commercial terms with Meta and Google.

But it encouraged New Zealand media outlets to band together to negotiate with Facebook and Google for a better deal here. The Commerce Commission this week issued provisional approval to the News Publishers Association for the likes of NZ Herald publisher NZME, Stuff and the Otago Daily Times to collectively negotiate with Facebook parent Meta.

Just a day later came news that NZME had broken ranks, striking a deal individually with Meta. That followed a similar deal it struck a few weeks ago with Google. While the Google deal involves payment to feature NZME content in its Google News showcase service in New Zealand, the Meta deal pointedly doesn't refer to content. Instead, the financial arrangement is to support NZME's "subscriber growth and retention". Meta's Mark Zuckerberg is philosophically opposed to sharing Facebook ad revenue with media companies but is willing to pay token amounts to fend off regulation.

It is a disappointing development as the major news publishers were likely to have more bargaining power together. It may well have been a sweet deal for NZME, but it throws the NPA's efforts into doubt and will make it harder for smaller publishers to pursue equitable terms with Meta - and Google.

Cosy deals

This is pretty much how it played out in Australia. Despite the Government's aggressive stance there, Big Tech won, winning the right to do cosy deals with publishers desperate for any additional revenue they can find. 

It's a stark reminder of the power the Big Tech players wield in numerous industries that they have disrupted from news to e-commerce. But it also points to the future for the media, which is radically reducing its reliance on social media. Stuff has led the way here, it only posts Covid-related public health information on its Facebook page. It appears to be doing just fine a year or so after deciding to abandon its Facebook presence. 

There's room for a more equitable arrangement between media outlets producing large volumes of news and public interest journalism and the digital platforms that benefit from hosting this content. But our media's prospects of achieving that diminishes every time an outlet is lured away from the collective bargaining table by what it believes is a sweetheart deal.