Fair share

Web platforms and news generators' relation needs review

Google is getting set to “protest” a proposed piece of Canadian legislation, the “Online News Act”, which would mandate web platforms like the search engine and Facebook to pay for the news content they carry. The Bill is currently being debated by Canadian legislators and the search engine is testing a potential change that blocks access to news content for some Canadian users. This proposed legislation is similar to laws passed elsewhere such as France’s “neighbouring Rights” law and Australia’s “New Media Bargaining Code”. Each of these laws has been opposed by web platforms.

There are several arguments for and against such laws. It is undeniable that Facebook and Google, in particular, dominate the web space, with some other platforms such as Twitter also being significant players. Most consumers of online news tend to come to news content via one or another of these giant platforms, which all depend on advertising for the overwhelming share of their revenues. The platforms argue they actually drive traffic towards news websites, which the news content generators are free to monetise if they can. The news content providers argue that they should receive a share of the advertising revenues the platforms receive since they provide the content that is ultimately consumed. The arguments have gone back and forth for many years. During the past decade or so, traditional media has seen drastically shrinking revenues and many traditional media institutions have been forced to close down. Print in particular has lost much of its traditional revenues from localised, classified advertising, and has been forced to cut rack rates, and attempt to deploy alternative subscription cum paywall models. The situation in TV has also been somewhat similar.

It is true that the world’s news consumption habits have changed drastically with most surfers coming through links embedded in their Facebook, Twitter, and Instagram feeds, or via Google’s news platform or through a search engine query. In each case, the platform acts as a gateway and garners the lion’s share of ad revenues, often through contextually targeted advertising. There is nothing as such that prevents content generators from trying to implement alternative revenue models since the platforms do drive traffic. But it is also true that the platforms are, in a sense, “free-riding” on content that they don’t generate and simply serve up. This has created a business model for social-media content creators, who can build traffic on their own individual channels — such as YouTube channels and Facebook pages — and serve up advertising.

However, traditional media organisations have much larger overheads than social-media content creators. The traditional newspaper creates content across a far wider gamut of subjects, and this needs to be edited, authenticated, and curated for accuracy and depth. Maintaining such a structure is, therefore, far more expensive. So there’s the paradox — traditional media has more reach and circulation via the web but it struggles to monetise this online reach. The platforms do need the content as well. If Google, Facebook et al stopped serving up newslinks, they would lose viewership and engagement and, in turn, that would lead to a loss of ad revenue for the platform. It is a symbiotic relationship — but legally mandating revenue shares might not necessarily be the best way to ensure a fair division of the spoils.