BotW: A digital levy for platforms now looks likely; Is the ad recession finally ending?
BotW: A digital levy for platforms now looks likely; Is the ad recession finally ending?
Welcome to Best of the Week, written on a grey Saturday morning in Hobart, after a tremendous couple of days running around at the south end of the island taking part in fireside chats, news jams and suchlike.
Today: The planets are aligning on a digital platforms levy - could it head off a war over the News Media Bargaining Code? And the end of year SMI numbers hint that the advertising recession may finally be bottoming out.
Happy International Hangover Day. I am an inadvertent participant. There can be no finer place in the southern hemisphere to drink Guinness on a wintery Friday night than The Whaler on Salamanca Place.
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Coffee in Auckland and Sydney?
I’m on the road again next week, if anybody fancies grabbing a coffee.
Myself and my colleague Clive Prosser, who joined Unmade last month as our Partnerships Director, are headed into Auckland for a quick visit. I’ve almost filled my dance card, but if you’re around on Wednesday and would like to say hello let’s see what we can do.
And I’ll be coming back in through Sydney if anybody wants to catch up on Thursday afternoon or first thing on Friday.
Email us at tim@unmade.media or clive@unmade.media
The levy is breaking cover
There’s something in the wind.
Today marks exactly five months since Meta went public that it was not going to renew the deals with publishers which it had signed under threat of being designated under the News Media Bargaining Code. We won’t have to wait much longer for the government’s next move.
Treasury minister Stephen Jones - handballed the decision on whether to designate Meta under the code, after his boss Jim Chalmers declared a conflict of interest - has moved slowly, at least as far as the outside world is concerned.
Advice from the Australian Competition and Consumer Commission and from the Treasury are sitting on Jones’ desk. A new joint select committee on the impact of social media upon Australian society, chaired by Labor’s Kate Thwaites, is due to present its first interim report within the next 12 days.
Behind the scenes, cogs have been turning. The phrase “digital levy” - which is a quite a specific form of words, has bubbled up too many times for it to be a coincidence.
The first time I heard the words, was when I was trying to figure out if there was any way of averting a head-on confrontation between Meta and the government. As I’ve previously written, the nuclear option of designation might trigger a course of events where: 1) Designation under the code leads Facebook to remove Australian news from its platforms; 2) The mandatory arbitration under the code sees Facebook successfully argue it has no obligation to pay because it no longer benefits from news; 3) The ACCC steps in and prosecutes Facebook’s owner Meta for abusing its market power by removing news to achieves this outcome; 4) Meta leaves the country rather than capitulate.
This week, the phrase was front and centre in a piece written for The Australian by Allan Fels. The former chair of the ACCC, he was one of the engineers of the original bargaining code. The word levy featured seven times in his piece.
As Fels put it:
“A standard, percentage-based digital levy in Australia would also create financial and operational certainty for digital platforms (and their shareholders) who pay it, rather than the uncertainty case-by-case negotiations with news producers has the potential to create.
“A digital levy could assist in financial support for public interest news production in this country, meaning content which records, reports or investigates issues of public significance for Australians — issues relevant to engaging Australians in public debate and informing democratic decision-making, and content which relates to community and local events.”
Such an arrangement would potentially provide a double benefit for local media players.
First, such a levy would create a pool of money to fund journalism.
Second, the platforms - likely including Meta’s Facebook and Instagram, Alphabet’s Google and YouTube, and TikTok - would presumably pass on the additional cost to their advertisers. That would help level the playing field in an environment where the platforms use mechanisms to book their profits, and tax liabilities offshore, which helps them undercut local players (thanks, PWC).
Until now, Jones and communications minister Michelle Rowland have said very little about what their intentions are. There seem to have been no back channel conversations with Meta and Google. They’re being extremely careful to follow a process least likely to face legal challenge.
During the week, The Age’s federal politics reporter Paul Sakkal reported: “A proposed levy paid by Meta and other tech giants to fund local journalism has been discussed in meetings between Jones and bosses from News Corp, Nine and other companies, according to high-level sources”.
And Jones was asked about the situation after an address to the Australian Press Club. When asked about it by the Australian Financial Review’s Ron Mizen, he had a reply ready to go:
“I knew one of you was going to ask me about the News Media Bargaining Code, and I’m pleased that you have.
“Let me just say quite succinctly on this: I’ve got a lot of material that I’ve had put before me, is required under the law and under the code, and I think, as your paper and many others have reported over the course of the last few months, the News Media Bargaining Code was a perfectly sensible and effective tool back in 2021 to deal with the circumstances in 2021.
“Those circumstances have changed significantly, and our response will be a whole‑of‑government response, which will deal with all of the challenges that we face in the news media environment in 2024. And it will include what we do under the News Media Bargaining Code, but it won’t end there, and you can expect us to have something to say about that in the near future.”
That phrase “whole-of-government” is key.
It aligns with News Corp executive chairman Michael Miller’s presention to the Press Club two months ago, where he urged for a literal social licence for the platforms, going beyond simply handing money to local news players:
“This Social License would be a package of laws and requirements that Tech monopolies would need to meet, if they want access to Australian consumers.
“Under this license the Australian government would be able to make the platforms liable for all content that is amplified, curated, and controlled by their algorithms or recommender engines - no hiding behind Section 230 in Australia.
“The licence should require that each platform has an effective consumer complaints handling system, including call centres contactable by telephone with expert staff in Australia.
“Other measures to be included:
:The ex ante competition framework set out by the ACCC which would address the problem of the monopolised digital advertising markets.
“A contribution to the money we are spending tackling mental health problems.
“A requirement for tech platforms proven to be the media’s unavoidable trading partners, would be to honour the Media Bargaining Code and compensate publishers and media companies.”
That certainly would be whole-of-government, if Jones and Rowland follow a similar shopping list.
The timing of what potentially happens next is in itself 3D chess. If the platforms (which are all, with the exception of TikTok, US owned) take exception to the digital levy idea, then they might lobby against it in the US. With Republicans and Democrats both in election mode, and fundraising, platform lobbyists might be able to turn US policy against such a move by framing it as a trade war.
And locally, comes the realpolitik of an opportunity for Labor to try to keep News Corp onside in the run up to a federal election which is maybe seven months away. That’s an incentive for Jones and co to take their time on legislation, or even make it part of a manifesto commitment.
And even if legislation passes, and the platforms don’t fight it (by no means certain), they’d certainly battle to amend it as favourably as possible.
And then would come the question of how these funds would be distributed. Purists (you’ll hear Private Media’s proprietor Eric Beecher make this argument in our podcast this coming Thursday) will argue for a narrow definition of public interest journalism.
Others argue that, for instance, an expert restaurant review, or unbiased tech recommendation is also deserving of support.
The structure would be tough too. Tax credits for journo jobs is one way to go, but that doesn’t, for instance, allow for the smaller not-for-profit outfits that do good work but pay freelancers rather than directly employing staff.
So, much still to be decided. But what became clear this week is that the government has done far more work on a digital levy than anybody realised.
How Unmade covered Meta’s announcement five months ago:
SMI numbers start to turn
If the numbers seen in the week’s data from SMI Guideline continue for another month or two, we may look back upon June as the month where the advertising market finally hit bottom for traditional media.
For the broadcasters, radio was down by only 1.6% compared to June 2023, TV was down by only (!) 4.8%. Compared to some of the double digit declines television has seen, that’s slightly encouraging.
With Nine’s Olympic revenue due to drop into the July numbers, we might be about to see the first up month for television since audiences began to collapse at the end of the lockdowns
A month where advertising revenue was down by just 1.1% is certainly an indicator that the decline might finally be slowing. For the full financial year, SMI reported a number that was 1.6% down, albeit with more than ever going to the platforms.
Blood on the Unmade Index again
The Unmade Index’s trip back above 500 points has come to an end after just two days, thanks to wobbly global markets.
The index - which tracks the movement of Australia’s listed media and marketing firms, lost 1.47% to land at 497 points.
However, the Unmade Index fell less than the wider ASX All Ordinaries, which lost 2% yesterday.
There may be more pain to come on Monday. After Australian markets closed, Europe and the US experienced a bloodbath, with the FTSE in London losing nearly 3% and the NASDAQ in New York more than 2%.
Time to leave you to your Saturday. Social media tells me there’s a giant secondhand book sale nearby which is, for me, a temptation impossible to resist before I leave Hobart, back to my less glamorous half the island.
Abe Udy and I will be back on Monday for the Best of the Week podcast
Have a great weekend
Toodlepip…
Tim Burrowes
Publisher - Unmade