We should applaud the release of the Australian government’s exposure draft legislation for the news bargaining incentive (NBI). The government is acting to ensure that media companies get rewarded when their content is used by search and social media companies. Without intervention companies like Google and Meta profit from using news content without paying for it.
We should also applaud that the government is seeking to use world-first approaches to ensure payment. Search and social media companies will be subject to the regime whether or not they display media stories.
The original news media bargaining code (NMBC), which the NBI replaces, was also world leading and extremely successful. Three- and five-year deals were entered into by Google and Meta with virtually all publishers, large and small, and around $1bn has been paid since its inception.
But the three-year deals have expired, and Meta has said it will not do further deals, and the remaining deals expire by mid-2026. The NMBC only applies to platforms that carry news, and Meta has apparently said it will take news off Facebook if it were to be designated under the NMBC. Thus the need for a new approach which has resulted in the NBI.
What is not explained, and which seems strange, is why the NMBC legislation was not simply amended to apply, as with the NBI, to designated companies whether or not they carry news. This would have ensured continuity with a known scheme.
The NBI imposes a charge on covered search and social media companies of 2.25% of their Australian revenue, which they can avoid if they do deals with media companies worth 1.5% of their revenue. There is, therefore, an incentive for the covered entities to do deals with media companies much as were done under the NMBC. You pay 50% more by not doing deals versus what you would pay if deals were done.
There has been significant delay since the government first realised the need to act more than 18 months ago. Indeed, some media companies have been contemplating laying off the staff funded by the payments if new contracts were not in place by mid-year. The good news is that the government is seeking to now move quickly to avoid this outcome and has backdated the NBI to 1 January 2025.
Another result of the long delay is that the NBI applies only to search and social media services. This may have been appropriate 18 months ago, but the long delay has seen the rise of generative AI. AI companies are not search engines; they are now “answer engines” which often draw on news articles. It is to be hoped that the NBI will be extended to AI, or that the threat of this will see AI companies doing deals with many more media companies than has occurred so far.
The key issue is ensuring a balanced distribution of support among news businesses. The NBI seeks to cap the size of any single deal at 25% of the charge, and the intent seems to be that deals with at least four different news media businesses will be needed to fully offset the charge. This can see many particularly medium and small businesses miss out. This goes against a central tenet of the NMBC and, most importantly, it leaves too much of the bargaining power with the platforms as they can pick and choose who they deal with.
If the covered search and social media companies decide not to do commercial deals and simply pay the charge to the government it is to be distributed by the number of journalists a media company employs as a percentage of all journalists employed by all eligible media organisations. This could see unequal outcomes. Suppose half the charge on search and social media companies was offset by deals with just four media companies, which would probably be larger businesses, and half was distributed as just described. Four media businesses could have deals and also benefit from the per-journalist payment. Other media companies could miss out on a deal and only benefit from a more modest distribution pool.
There are some important issues to address during this consultation period but we need this arrangement operational by mid-year. Much to address and get done – journalism, and so our democracy, requires it.