Funding News Media by Compulsion
The Australian Changes and the New Zealand Situation
When he appeared before Parliament’s Social Services and Community Select Committee earlier this year Minister Paul Goldsmith dealt with a criticism of the Government’s media policy.
Green MP Ricardo Menendez March suggested that the Government was taking a “hands off” approach to media woes. Mr. Goldsmith rejected that suggestion and pointed to initiatives and expenditure that had been undertaken to support the media sector. He argued that this was not “hands off”.
That said, media regulation in New Zealand has adopted a light-handed approach. Most of the elements of regulation centre upon content although there are other elements of regulation dealing with broadcasting spectrum and telecommunications.
Objectionable content is dealt with by the Censor under the Films Videos and Publications Classification Act 1993. Although there are calls to review the way in which objectionable content is classified and widen the scope of the Act that, thankfully, has not happened. Censorship should apply only to the most extreme and potentially damaging content.
Broadcasting standards are the subject of a Code developed by the Broadcasting Standards Authority (BSA) which was set up by the Broadcasting Act 1989. This is a complaint based system and the process by which complaints can be made are regularly published.
Because of an anomaly in the legislation – some might say it is out of date – online radio outlets like the Platform and Reality Check Radio are not subject to BSA jurisdiction. This is because they do not fulfil the definition of a broadcaster. And as I understand it, the Platform and RCR prefer it that way.
On the other hand other media regulatory models are voluntary. The Press Council has been replaced by the New Zealand Media Council (NZMC) membership of which is voluntary. The Council entertains complaints about content.
Similarly the Advertising Standards Authority (ASA) is a voluntary complaints based system that deals with advertising issues.
A common feature of all these regulatory organisations is that codes have been developed against which the complaints about content are measured.
Finally there is the Harmful Digital Communications Act 2015 which makes remedies available for those who have suffered serious emotional distress from electronic publications. There are civil and criminal remedies depending upon the seriousness of the harm and the intention of the poster.
A regulatory model was developed by the Department of Internal Affairs. It went under the name the Safer Online Services and Web Platforms and proposed (for consultation) a single regulatory body to deal with online content. The proposal involved the development of codes and circumstances where compliance may be required along with penalty and take down provisions. It would have been a significant step in media regulation if it had proceeded but was ill-conceived and is no longer being pursued by the Luxon/Peters/Seymour Coalition. That said, because it was devised by the Department under a Labour administration and was supported by members of that administration, should the Left be in power it is likely that the proposals will be revived.
The next “big thing” on the media regulatory horizon is the Fair Digital News Bargaining Bill (FDNBB). I have already written about that unfortunate piece of proposed legislation. I have offered an alternative solution. I agree with media expert Dr Gavin Ellis that it should be abandoned.
In this article I shall outline the background to the Bill.
I shall then address certain developments that are taking place across the Tasman.
I shall conclude with the reaction to my suggested alternative to that proposed by the FDNBB and consider whether or not it should proceed.
The Background
As a refresher, as reported by Tom Pullar-Strecker, the Bill is designed compel internet giants including Google and Meta to help fund journalism to the tune of tens of millions of dollars a year by requiring that they strike “licensing” deals with media outlets on terms that could ultimately be set by a government-appointed arbitrator.
When the Bill was introduced by the previous Labour Government, an unsurprising initiative from a socialist oriented administration, National opposed it.
However the coalition vacillated on what was to happen. The absence of a clear policy approach meant the end of the previous Media Minister, Ms. Melissa Lee. The Select Committee hearing submissions on the Bill suggested it should not continue. This was not accepted by Mr. Goldsmith who, after some delay, indicated that the Government would proceed with the Bill.
However when it came to the Second Reading of the Bill it was removed from the Order Paper. Further work needed to be done.
It was recognised by the Minister is that direct financial support from the Government could further undermine public trust and confidence in the Media. He went on to observe that this was part of a growing distrust of institutions generally.
Admittedly there are degrees of separation between the Government and the provision of financial support for the media in the Fair Digital News Bargaining Bill. But the fact remains that the regime proposed involves a state created and supported system that would compel bargaining with a penalty regime for infractions and non-compliance.
That is neither bargaining nor is it fair. And in the final analysis it is a state created means of subsidization of the media. Public money – other than that necessary to run the regime – would not be used.
The problem is that no matter how one tries to approach it, any sort of Government involvement in media funding is fraught with problems, not the least of which is that of perception.
The Public Interest Journalism Fund (PIJF) – another Labour initiative - was a means by which the Government exerted a level of control over media with the criteria that it imposed for grants. But the PIJF – apart from perception difficulties – was unsustainable. Hence the Fair Digital News Bargaining Bill.
If that Bill goes further and is enacted there will be pushback from the Platforms. A simple expedient will be to disconnect from news activities as Meta has done overseas. That will be disadvantageous to mainstream media whose news stories are accessed from the Platforms rather than from their own “home” sites.
Similar legislation has been enacted in Australia and Canada. I shall outline the Australian position in the next section, but some rather dramatic changes are proposed for their regulatory model and Mr. Goldsmith is adopting a “wait and see” attitude to see what develops and how it will work.
Shayne Currie in the NZ Herald for 14 December 2024 reports
“The further delay to new legislation in New Zealand has been met with disappointment from the news publishing industry, which says there “isn’t any time to waste” following a year in which hundreds of New Zealand journalism jobs have been lost.”
So what is the Australian model? How does it work? And what is proposed by way of change?
Australian Developments
The Australian equivalent - the Treasury Laws (News Media and Digital Platforms Mandatory Bargaining Code) Act 2021 was enacted by the Morison Government.
It prescribes mandatory code of conduct which governs commercial relationships between Australian news businesses and ‘designated’ digital platforms who benefit from a significant bargaining power imbalance.
The code, which focuses on online content, came into effect on 2 March 2021. Under the legislation, the Treasurer is able to designate certain digital platforms as subject to the obligations under the code.
Up until the second week in December 2024 no digital platforms had been designated.
This is because the platforms and news media organisations had come to their own arrangements and it was not necessary for designation. It was considered that these arrangements were prompted by the mere existence of the Code and that the threat of possible designation acted as an incentive to an alternative solution.
The current version of the Code can be found here.
In deciding whether to designate a digital platform, the Treasurer is required consider whether there is a significant bargaining power imbalance between the platform and Australian news businesses, and also whether the platform has made a significant contribution to the sustainability of the Australian news industry, including through agreements to remunerate those businesses for their news content.
However, these agreements are set to expire and Meta (Facebook) has indicated that it will not engage in another round of negotiation.
Administering the Code
This is where differences between the Australian regulatory environment and that of New Zealand become clear and requires a further overview of regulatory structures.
By way of initial observation the Australian model is seen as a commercial and consumer law measure rather than a media protection measure although it has the latter effect. I say that because despite its title it was introduced as an amendment to the Competition and Consumer Act 2010 (Cth).
Many of the requirements of the Australian model are administered by an organization known as the ACMA or the Australian Communications and Media Authority. The ACMA is central to Australia’s media regulatory framework.
Other aspects are administered by the ACCC – the Australian Competition and Consumer Commission.
The ACMA - Background
ACMA was officially formed on 1 July 2005 through the merger of two pre-existing regulatory bodies: the Australian Broadcasting Authority (ABA) and the Australian Communications Authority (ACA). The merger aimed to streamline regulatory functions and create a unified authority to oversee both telecommunications and broadcasting, reflecting the convergence of these sectors in the digital age.
The ABA, established under the Broadcasting Services Act 1992, was primarily responsible for regulating television and radio broadcasting services, ensuring that content standards were met and that licenses were appropriately managed. The ACA, on the other hand, was formed under the Telecommunications Act 1997 and had a broader mandate encompassing telecommunications, including radio communications and postal services.
The merger was driven by the recognition that the lines between broadcasting and telecommunications were increasingly blurred, necessitating a holistic regulatory approach. By combining the expertise and functions of the ABA and ACA, ACMA was positioned to address the contemporary challenges of a converging media landscape.
The ACMA has a number of functions and these are as follows:
Regulation of Broadcasting Services
ACMA oversees the regulation of television and radio broadcasting in Australia. This includes issuing licenses, managing spectrum allocations, and ensuring compliance with content standards. The authority monitors broadcasting services to ensure they adhere to codes of practice, which cover a range of issues, from decency and accuracy in news reporting to the classification of programs.
Telecommunications Regulation
In the telecommunications sector, ACMA's responsibilities include managing the radiofrequency spectrum, regulating telecommunications services, and ensuring that service providers comply with industry standards. ACMA plays a crucial role in facilitating competition in the telecommunications market, promoting consumer protection, and overseeing the rollout of new technologies and services.
Internet and Online Content Regulation
With the rise of the internet and digital platforms, ACMA's role has expanded to include the regulation of online content. The authority works to ensure that online content adheres to Australian standards, particularly in regard to issues such as cyberbullying, online safety, and the protection of minors. ACMA also collaborates with other international regulators to address the global nature of internet content and services.
Spectrum Management
Effective management of the radiofrequency spectrum is one of ACMA's key responsibilities. The authority allocates spectrum for various uses, including broadcasting, mobile communications, and emergency services. By ensuring efficient use of this finite resource, ACMA supports the development of new technologies and services, while minimizing interference and optimizing the spectrum's economic and social benefits.
Consumer Protection
ACMA is dedicated to protecting the rights and interests of Australian consumers in the communications and media sectors. This includes enforcing rules related to telemarketing, spam, and customer service standards. The authority also provides information and resources to help consumers make informed decisions and resolve disputes with service providers.
Research and Analysis
ACMA conducts extensive research and analysis to inform its regulatory decisions and policy recommendations. By staying abreast of technological advancements and market trends, the authority ensures that its regulatory framework remains relevant and effective. ACMA regularly publishes reports and findings, contributing to the broader understanding of Australia's communications and media landscape.
The role of the ACMA in the Bargaining Code structure will be discussed below.
I shall now turn to consider the provisions of the Bargaining Code Act.
The News Media and Digital Platforms Mandatory Bargaining Code Act 2021
The Australian Treasury Laws (News Media and Digital Platforms Mandatory Bargaining Code) Act 2021, is commonly known as the Bargaining Code.
The primary objectives of the Bargaining Code are:
• To ensure that news media businesses receive fair compensation for their content.
• To promote competition, diversity, and sustainability in the Australian news media sector.
• To address the bargaining power imbalance between digital platforms and news media businesses.
Key Provisions
The Bargaining Code includes several key provisions designed to facilitate fair negotiations and ensure compliance:
Designation of Digital Platforms
The Australian Treasurer has the authority to designate which digital platforms are subject to the code, based on certain criteria such as the platform's market power and impact on the Australian news landscape.
Negotiation and Arbitration
Once designated, digital platforms are required to negotiate in good faith with news media businesses for compensation. If parties cannot reach an agreement within a specified period, the matter is referred to compulsory arbitration. An independent arbitrator then determines the final remuneration based on criteria such as:
• The benefits derived by both parties from the use of the news content.
• The cost of producing news content.
• Whether a particular remuneration amount would place an undue financial burden on the digital platform.
Non-Discrimination Clause
The code includes non-discrimination provisions to ensure that designated platforms do not disadvantage news media businesses that engage in bargaining under the code compared to those that do not. This prevents platforms from penalizing news outlets that seek fair compensation.
Minimum Standards
Designated digital platforms must meet specific minimum standards, including:
• Providing news media businesses with advance notification of changes to algorithmic ranking and display of news content.
• Supplying data on user interactions with news content.
• Ensuring transparency regarding the use of news content.
Compliance and Enforcement
ACCC Oversight
The Australian Competition and Consumer Commission (ACCC) to which reference has earlier been made, is responsible for overseeing the implementation of the Bargaining Code. The ACCC monitors compliance and has the authority to investigate complaints and take enforcement action if necessary.
Penalties for Non-Compliance
Digital platforms that fail to comply with the code's provisions may face significant penalties, including fines. These measures ensure that the mandatory bargaining process is taken seriously and adhered to by all parties involved.
Matters of registration of news businesses and compliance with those procedures is in the hands of the ACMA.
The key requirements of the process are as follows:
Registration of News Media Businesses:
News businesses must register with the Australian Communications and Media Authority (ACMA) to participate under the Code.
Eligibility criteria include adherence to professional standards and producing a significant portion of public interest journalism.
The obligations on Digital Platforms may be summarised as follows:
Good Faith Bargaining: Platforms must engage in good-faith negotiations with eligible news businesses.
Notice Requirements: Platforms are required to notify news businesses of algorithm changes that could significantly impact traffic or ranking of news content.
Revenue Sharing: Platforms are required to provide fair remuneration to news businesses for their content.
Exemptions:
Digital platforms can avoid designation if they demonstrate that they have entered into sufficient commercial agreements with news businesses outside the Code.
The operation and enforcement of the Act is in the hands of the ACCC. The various elements of the involvement of the ACCC and others are as follows:
The ACCC
· Oversees the implementation and operation of the Code.
· Advises the Treasurer on whether a digital platform should be designated under the Code.
· Investigates non-compliance and provides enforcement recommendations.
The Treasurer
· Holds the authority to designate digital platforms under the Code, based on ACCC advice.
· Determines exemptions for platforms that have already entered into acceptable agreements with news media businesses.
Arbitrators:
· Independent arbitrators appointed to resolve disputes when negotiations fail.
· Their role is to select the most reasonable final offer presented by the parties.
The ACMA
· Administers the registration of eligible news media businesses.
· Ensures compliance with the criteria for participation in the Code.
Outcomes and Impact
Increased Revenue for Media: The Code has resulted in agreements worth hundreds of millions of dollars between platforms like Google and Facebook and Australian news outlets.
International Precedent: The Code has inspired similar discussions in other jurisdictions seeking to address power imbalances between media companies and tech giants.
Pushback from Platforms: Initially, platforms resisted the Code, with Facebook temporarily blocking news in Australia and Google threatening to pull services from the country.
So What Has Changed?
As noted Meta (Facebook) is not prepared to renew its agreements with news media outlets. Up until now it has avoided designation and the consequences that flow from that.
That clearly has done more than irritate the Australian Government. It should be noted that the Albanese Government clearly sees the large digital platforms as a target. Over the last twelve months there have been three salvos directed towards the platforms.
One is the age-restriction requirements for young people under 16 from accessing social media platforms. The onus is on the platforms to devise effective age verification protocols. The penalties for non-compliance or for failure are significant.
The second salvo, which was unsuccessful though lack of support, involved making platforms responsible for dealing with misinformation and disinformation.
The third salvo was fired 12 December 2024 with the announcement of the News Bargaining Initiative.
The News Bargaining Initiative will be a new addition to the code which will create a further financial incentive for agreement making between digital platforms and news media businesses in Australia.
It seems that the designation power, which up until now has not been used, will be invoked.
Stephen Jones Minister for Financial Services (Reuters) said:
“Today, we announce measures to strengthen that code. The News Bargaining Initiative will be a new addition to that code, which will create a financial incentive for agreement-making between digital platforms and news media businesses in Australia.
The incentive will contain a charge on relevant platforms based on Australian-sourced revenue.
The charge will include a generous offset for the commercial agreements that are voluntarily entered into between the platforms and news media businesses.
The platforms who will be in scope for the charge will be significant social media platforms and search engines with an Australian-based revenue in excess of $250m.”
What this means is that platforms will not only be designated but that they will be levied or charged based on the revenue that is sourced from their Australian operations.
That charge may be reduced if the platform negotiated a voluntary commercial agreement with news media businesses.
Mr. Jones and Communications Minister Michelle Rowland suggested at a media conference that this will leave organisations such as Meta and Google with a bill far larger than if they had simply entered into agreements.
And the charge will be imposed automatically.
This is a significant step.
But that is not all. Even if it is not in the business of providing or linking to news a platform will be liable to pay the charge. Platforms that refuse to come to the bargaining table will still have to pay – regardless of whether they host news content on their sites.
Previously a recalcitrant platform would be designated and would then have to engage in the negotiation procedures under the Act. Thus under the Initiative platforms will be automatically charged but may have that charge reduced if a commercial outcome is negotiated with a news media outlet.
This will not apply to the smaller operators but the platforms with an Australian based revenue of over $A250 million. Although Mr. Jones described the payment as a charge it has been described as a levy and by some as a tax.
In many respects it seems to me to be the imposition of a statutory penalty imposed upon a platform that is legitimately doing business and deriving income by making services available that are similar but not identical to mainstream media outlets. There is no associated offence for such a penalty. Merely by conducting a certain business and reaching a certain revenue threshold the penalty becomes payable.
I have explained elsewhere that services such as Google News do not in fact reproduce articles from MSM outlets but provide snippets of and links to those article. Thus they are acting as an indexing system which is what search engines do.
Under the Australian regime it seems to me that if you fulfil the qualifications under the law you are levied irrespective of the technological aspects of what you are doing. This seems to me to be extraordinarily harsh and commercially destructive.
How Does this Line Up With the FDNBB
The approach of the FDNBB is similar to the original Australian proposal although it is not approach through a competition law lens. Were that to have been the case the legislation would have been driven by MBIE and the Commerce Commission.
What the Bill Provides
The objectives of the Bill are to:
- support news media entities to maximise the benefits they receive from the content they create that is aggregated and displayed on digital platforms
- ensure that implementation of its provisions will impose a minimal financial cost and compliance burden on the affected parties and government
- create equitable treatment and support for New Zealand’s diverse news media industry, including smaller, rural, regional, and ethnic news media entities, and, specifically, Māori news media entities
- support a free and independent news media industry by enabling media companies to be viable in a digital marketplace.
The Bill sets out to ensure fair revenue sharing between digital platforms and news media organisations by:
- promoting voluntary commercial agreements between digital platforms and news media organisations, with minimal government intervention;
- where agreement cannot be reached, establishing an arbitration process to determine commercial arrangements between digital platforms and news media organisations; and
- providing for collective bargaining with digital platforms by news media organisations.
In detail the proposal is to achieve the “fair revenue sharing” between platform operators and news media organisations by
- creating a fair bargaining environment through a bargaining code that will be established by the independent regulator and operate as secondary legislation
- requiring bargaining parties to comply with the bargaining code and to bargain in good faith, as well as requiring parties registered under the legislation to participate in the bargaining process
- promoting voluntary commercial agreements between operators of digital platforms and news media entities, with minimal government intervention
- where agreement cannot be reached, creating a stepped bargaining process to facilitate fair and equitable outcomes
- providing for collective bargaining by news media entities
- establishing civil penalties for non-compliance with the legislation.
An independent regulator will be appointed – an Authority. The Bill proposes that this be the Broadcasting Standards Authority. It is interesting to note that the appointment of an independent regulator was an integral part of the DIA proposals for Safer Online Platforms, although that Discussion Paper envisages a reduced role for the BSA, given that MSM disseminates news via online platforms.
The Purpose of the Bill
The purpose of the Bill can be seen from the background information provided. It is to provide support for MSM now that the various State based support mechanisms are coming to an end. The purpose as stated is to support sustainable production of New Zealand news content by ensuring that operators of digital platforms make a fair contribution to the cost of producing news content that is made available by their digital platforms.
That purpose is achieved by the following means:
- “incentivizing” operators to enter into news content agreements and other arrangements that contribute to sustainable production of New Zealand news content
- facilitating fair bargaining between news media entities and operators about the terms on which news content produced by the entities may be made available by the operators digital platforms; and
- where necessary, imposing news content agreements that require operators to fairly compensate news media entities for that news content through binding arbitration.
Thus there is a range of “stick and carrot” approaches. Operators will be “incentivized” by the threat of compelled coercive action if there is non-compliance or hesitancy in complying. This is not incentivization. It is “velvet glove” compulsion. The iron fist comes later. If “fair bargaining” does not produce a satisfactory result the State steps in and imposes agreements on platforms.
To be fair it should be observed that in overseas jurisdictions, the threat of a compulsory bargaining regime has been sufficient to bring companies to the negotiating table. For example, in Australia the bargaining, mediation and arbitration provisions have not been used, with agreements reached outside of the framework.
It is suggested that the legislation serves as a backstop encouraging companies to enter voluntary negotiations. The word “backstop” is a polite way or describing a threat.
How the Process Works – A Quick Summary
The Bill has a total of 125 clauses and I do not intend a clause by clause discussion. I shall very briefly summarise how the process is going to work.
The first step is to provide a means by which news media entities and operators may be registered so that they may participate in the bargaining process. Both news media entities and operators must comply with a bargaining Code that would be issued by the Regulator and bargain in good faith when engaging in news content bargaining.
There are various criteria for the registration of news media entities and for platform operators.
The Bill sets out provisions for the bargaining process. There are three stages – negotiation, mediation and final offer arbitration.
It is clear that if there are existing satisfactory arrangements in place the bargaining process does not override existing news content agreements or other contractual arrangements.
If the parties cannot reach agreement by negotiation the process moves to mediation. There is a period within which mediation takes place. If an outcome cannot be reached by mediation or withing the mediation period the matter goes to final arbitration conducted by a panel of 3 approved arbitrators.
Parties submit their final offers and the panel selects the final offer that fairly compensates the news media entity party for its news content being made available by the operator’s digital platform on the terms provided for in the offer. If both offers fairly compensate the news media entity party, the panel must select the offer that, in its opinion, better supports sustainable production of New Zealand news content.
The Bill provides that the “Authority” – the BSA at the moment - should have information gathering powers and may share information gathered with overseas agencies.
The Authority has certain enforcement powers.
These powers are similar (but not identical) to those contained in the Unsolicited Electronic Messages Act 2007 which dealt with spam. Undertakings may be given relating to enforcement. Corrective notices may issue where a person has contravened or is likely to contravene various provisions of the legislation. Warnings may be issued.
Enforcement of the bargaining provisions does not involve the creation of an offence but the creation of civil liability which may result in a pecuniary penalty order or the issue of an injunction. Pecuniary penalty orders are a feature of the Unsolicited Electronic Messages Act.
The remedies are available for contravention of the civil liability provisions. Those provisions impose substantive duties including:
· compliance with the bargaining code:
· bargaining in good faith:
· participation in the bargaining process:
· compliance with the terms and conditions of an exemption from the bargaining process:
· compliance with corrective notices and disclosure notices.
Pecuniary penalty orders would be imposed by the High Court. Three tiers of penalties are proposed.
Tier 1 has maximum penalties of $500,000 for an individual or $10 million for a body corporate (or a higher amount based on 3 times the commercial gain from a contravention or 10% of turnover). Tier 1 covers—
· contraventions of the duty to participate in the bargaining process:
· contraventions of the terms and conditions of an exemption from the bargaining process.
Tier 2 has maximum penalties of $200,000 for an individual or $3 million for a body corporate (or a higher amount based on the commercial gain from a contravention or 3% of turnover). Tier 2 covers—
· contraventions of the bargaining code:
· contraventions of the duty to bargain in good faith:
· contraventions of certain terms and conditions imposed on an exemption from specified provisions of the Commerce Act 1986 under subpart 2 of Part 6.
Tier 3 has maximum penalties of $30,000 for an individual or $300,000 for a body corporate. Tier 3 covers—
· contraventions of the requirement to give the Authority a copy of a news content agreement entered into through the bargaining process:
· contraventions of corrective notices and disclosure notices.
In determining an appropriate pecuniary penalty, the court must have regard to all relevant matters, for example, the nature and extent of the relevant conduct and the loss or damage caused by that conduct.
There are specific offences proposed relating to compliance with the Authority’s information-gathering powers and misleading or deceiving the Authority. The penalty for an offence under that clause is a fine not exceeding $500,000 for an individual and $10 million for any other person.
One has to question whether or not these activities are a comfortable fit within the current content regulatory powers of the BSA which does not deal with all media but with broadcast media only. It does not even deal with digital media. It would certainly amount to a significant extension of BSA powers and could well be a precursor to an even wider set of powers should the Safer Online Service proposals be revived.
Problems
The first point that should be made is that the purpose of the Bill is to support the sustainable production of news content.
At present MSM is in a crisis because a significant source of revenue in the form of advertising has vanished. This is attributed to the redirection of advertising revenue to the platforms.
The platforms actually support MSM by indexing their content and providing links to it – a factor which MSM conveniently ignores in its outpourings on this subject.
In addition perhaps MSM should look at itself and work out why advertising revenue is falling. Public trust and confidence is news media is declining. Bias is apparent. Audiences are migrating to other sources of news other than MSM. Why should an advertiser place an announcement where it is going to be seen or heard by a declining audience?
So the Bill really is designed to require the platforms to prop up a failing industry.
It seems that the lessons of history have not been learned. What was it that enabled the production and distribution of news sheets – those precursors to newspapers?
The answer is the printing press – the first information technology.
The age of the printing press was the first information paradigm. Although radio and TV introduced different means of distributing content they, like newspapers, relied on a centralized distribution model.
Paradigmatic change came with the introduction of digital technologies, the Internet and interactive technology protocols which enabled sophisticated search engines (more sophisticated than Gopher or AltaVista) and social media – among many other things. This paradigm shift revolutionized the way in which people consumed content and at the same time had a significant impact upon their expectations of content.
In addition the Digital Paradigm meant that everyone could become a publisher. It enabled the true participatory democratization of information.
Now if we accept for the moment that Government regulatory activity should be designed to create an environment and the circumstances within which businesses may succeed, should they really be spending time and effort in constructing an edifice like that of the FDNBB with enhanced powers for the BSA that will support a failing business model and an industry in which there is declining public trust and confidence.
Although this may sound like economic Darwinism, if MSM cannot support itself in the marketplace, perhaps it should give way to businesses or organisations that can.
The second and perhaps more salient point is this.
There is neither a right nor an entitlement to advertising revenue.
Perhaps MSM has made the same mistake that this country made in using and becoming reliant upon the UK as our primary market in the years prior to the UK joining the EEC. That demonstrated the importance of diversification of markets. Yet this country seems determined to pursue the same course, if Helen Clark and John Key were to have their way, of putting all our eggs in China’s basket. The lessons of history seem to have been ignored. However it is encouraging to note that increased focus is being directed towards India as an emerging market.
But I am straying from my point. MSM has relied on advertising revenue and it has dried up. Clearly it didn’t have a financial plan B. Clearly it had no understanding of the deeper implications of the Digital Paradigm and the way that the Paradigm has influenced audience behaviours.
What the FDNBB ultimately does is to replace lost advertising revenue – to which there is neither right nor entitlement - with a levy – negotiated or imposed - upon the platforms. It is almost as if the underlying premise of the FDNBB is that there is an entitlement to a certain revenue stream and if advertisers cannot provide it then someone else will be compelled to do so.
The third and final point deals with optics. New Zealanders are familiar with the Public Interest Journalism Fund (PIJF).
There is a Government interest at play although it is cunningly presented as a public interest. The State has an interest in maintaining MSM because of its objectives of countering misinformation and supporting democracy and social cohesion.
The State argues that a sustainable, local news media sector provides reliable, balanced information on which the public base choices as participants in political, economic, and social life, and acts as a watchdog on those in power. It also supports broader social wellbeing, through for instance the use of te reo Māori and promoting the culture of New Zealand.
This was one of the premises that lay behind the PIJF. A problem with the PIJF was that it was perceived, rightly or wrongly, as being a payment by a Government to buy a compliant MSM.
The FDNBB is a little more subtle in that it sets up a State-based system to provide a continued source of funding for a struggling and declining industry. Although payments are not – as they were with the PIJF – paid out of Government coffers there can be no doubt that the State will be seen as supporting MSM by devising a regulatory environment that supports a failing industry model. And once again, the optics are not good. There is little hope that public confidence in MSM will increase or be enhanced. The FDNBB will be seen as yet another prop for a business model that is failing.
Closing Observations
I am going to close on a personal note.
Regular readers of A Halfling’s View will be aware of the fact that I do not support the FDNBB.
However, my professional life has been dedicated to using existing rule systems to solve problems and present solutions.
Although I did not support the FDNBB it was my view that the assistance that MSM required could be achieved by means of another path. Because it appeared to me that there was an element of “free-riding” by platforms on MSM content, a few changes to the Copyright Act could well bring the activity of platforms within the scope of licensing arrangements that could produce a similar and more principled approach than the FDNBB.
I made this submission to the Select Committee earlier this year. I did not develop it in detail but the analysis of the submissions rejected the proposal.
I developed the proposal in more detail and made a submission direct to the Minister Mr. Goldsmith. A copy of my proposal and its summary may be found here.
I received a letter from Mr. Goldsmith dated 12 December 2024 rejecting my suggestions. It is clear that the face of his advisers is turned firmly against the Copyright solution although the legislative changes are minor and any perceived “imbalance in bargaining power” which would be present in any event under the FDNBB would be mitigated to a considerable degree by the Copyright Tribunal which can adjudicate on licensing arrangements.
So I have reached this conclusion. I will not try and offer any suggestions in future as alternative solutions for the problems faced by MSM. From this point I am firmly opposed to the FDNBB as it stands in its present form.
If Mr. Goldsmith chooses to follow the Australian lead and devise a system that imposes a levy on the Platforms he will struggle to find a principled basis for doing so, and his actions will result in declining trust and confidence in MSM who will be seen as the beneficiaries of a State-enabled handout.
An in addition his actions would be more in line with an interventionist Left-wing government rather than a Centre-Right Government that favours light-handed regulation and market-based solutions.
As it is the FDNBB sets up another regulatory structure and one wonders what Mr Seymour with his Regulatory Standards Bill would think.
Thanks for the summary of our bill and how it compares to the Australian one.
Instituting a tax on Big Tech to save dying media companies that have doubled down on 'activist journalism' is a terrible idea, but I do think we should ensure large multinationals are fairly taxed in our jurisdiction.
These behemoths largely avoid our company tax right now by funneling revenue earned by NZ subsidiaries to more favourable tax jurisdictions. I was hoping a digital services tax would be a way to stop this circumvention, but it was very disappointing that MSM shifted the conversation towards how to save them from their own failures instead.
Scrub all public funding for news outlets and let the free market decide. I do not want to be taxed for content I choose not to watch or listen to because it is partisan & woke. I already subscribe to the content that I desire to and public monies should be redirected to areas of actual need.