Faceoff Down Under – Facebook Vs Oz

Breakfast with Bwana

For free societies everywhere, we need to find answers to protect free expression and journalism

By Anil Madan

Imagine yourself in 1990 writing a research paper on the Vietnam War, or the Sino-Indian war. If you found and quoted a pithy observation or historical factoid that you read in a foreign policy journal or history book in the library, you would have been obliged to reference it in a footnote. Otherwise, you’d be accused of plagiarism, or worse. A reader of your paper would have had the option to go to the library and read your referenced source to verify the accuracy of your quotation and attribution.

Facebook started restricting the sharing of news on its service in Australia on February 18, defying a proposed law that would require technology companies to pay publishers when their articles are posted by users. Photo: Bloomberg

But it would have been unthinkable for the author of the foreign policy journal or the history book to demand payment from you for citing the work.

Now, imagine yourself in 2021 writing a paper on the origins of the Covid-19 coronavirus. If you referenced a statement from a journal of virology or immunology or perhaps from an article in The New York Times, your citation to it would most certainly include a hyperlink that a reader could click and instantly display the source article on his computer screen. 

Ever since access to the Internet took on the characteristics of a public utility, the owners of websites have frequently requested that people referencing their content, provide both attribution and a link rather than just copying and pasting the information. They may or may not have protected their websites by requiring registration and a password for access, and some have sought to monetize access by creating a paywall. The primary objective is to drive traffic to their websites.

As with citations in the first scenario I depict, it has been unthinkable under the second scenario, to demand payment from the person citing a source for the privilege of doing so. In other words, there is no charge for inserting a hyperlink in one’s work. It is easy to see that if there were such a charge merely for linking to another person’s or company’s work, authors would instantly stop inserting hyperlinks and would merely reference cited works in a general way by title, date and source publication. If this were to happen, one aspect of the easy functionality of the Internet would lose its value. Readers wishing to explore source works would be obliged to expend some effort to locate them.

Along came Google, Apple, and Facebook as major players in a position to control functional access to the Internet (I distinguish this type of access to specific information from the general broadband connectivity, wired or wireless, that ISPs provide to the Internet). Google, with its almost ubiquitous search engine has the ability to display advertising content in response to inquiries and, indeed, to determine in what order the results will be displayed. This feature allows Google to sell preferential display positioning and as well to sell adwords that when part of a search, lead potential customers to the purchasers’ sites. Let us leave it there as this is not the place for an exhaustive discussion about the many ways in which Google makes money from search, online advertising, gmail, adsense, etc. 

It goes without saying that the money thus generated goes to Google and that the purchasers of positioning hope to profit from the customers driven to their websites.

Google’s platform is activated whenever it is the default search engine for an Internet user who is conducting a search. The default status of the search engine relies on a certain level of inertia on the part of users, i.e., that a user will not specify the search engine to be used each time a search is initiated. Facebook, on the other hand, is a social media platform that capitalizes on a different sort of inertia on the part of its users. If you think about the early days of the Internet when various websites implored you to make their page your homepage, you will get a sense of what is going on. Facebook has effectively won this battle because it has captured so many users who come to its platform in order to interact with family and friends but stay within the platform when searching for news, features or other entertainment.

In effect, Facebook has become the homepage of millions of users. Those millions of Facebook users are potential targets for marketers and if one can identify and segregate them by demographic or other relevant factors, one can make advertising more relevant to them as customers and more profitable for businesses looking to find those most likely to buy their products. Facebook’s ability to define its users allows it to offer targeted advertising to its business customers. 

News as a resource

Now turn your attention to news as a resource. Remember that whereas the production and reporting of news and related features fall under what we refer to as journalism and freedom of the press or freedom of speech, monetizing the process of getting that content to readers is a business proposition. 

How do publishers try to exploit this business opportunity? Obviously, as we know, they vie for your eyeballs through subscriptions, advertising, promotions and so on. When New York Times, The Washington Post, The New Yorker, or ABC News offer to send you “free” newsletters with summaries of “breaking news” or opinion articles, they are engaging in marketing. You may or may not be able to access the underlying articles depending on whether there is a paywall or subscription requirement.

  Facebook has attempted to monetize its users’ thirst for news and features by creating a “news” page that you can click on and get a flurry of headline-type of stories from various publications. So has Google with its Google News feature. So what’s the problem? Well, for publishers, it means the potential loss of hundreds of millions of potential readers who might directly access the publisher’s website rather than using either Google or Facebook as the conduit for getting their newsfeed. You can see the enormous marketing power that this creates for Google and Facebook who thereby are able to direct advertising to their users without sharing that revenue with the creators of the content that drives the users.

Even more sinister for publishers is what Apple did with Apple News and Apple News Plus. Apple announced that it would act as an aggregator of news and magazine features and sell that aggregated content to subscribers for a monthly fee just as it sells Apple Music or other services. Apple proposed that it would keep 50% of the revenue for itself and share the remaining 50% among the news and magazine publishers who signed up to allow their content to be spread by Apple and the revenue sharing would be based on the traffic generated by the various publications that Apple chose to include in its service. As more publications came into the fold, that 50% of the revenue is divided into ever smaller shares for the publishers. Apple’s ability to deliver potentially 125 million of its iPhone users is the enticement here and hence its ability to bargain for its 50% cut.

Many news organizations including The Wall Street Journal which is owned by Rupert Murdoch’s News Corp signed on. Last year, New York Times discontinued its affiliation with Apple. “We tend to be quite leery about the idea of almost habituating people to find our journalism somewhere else,” said Mark Thompson, Chief Executive of The Times. One might question this decision by The Times. Its six million subscribers pale in comparison to the potential 125 million Apple audience. But note that Apple also takes a 30% cut of subscriptions generated through its service.

Rupert Murdoch has attempted to exploit the Internet and digital media in a big way but failed. This does not, however, deter him from finding ways around his own failures. In Australia, where he has a more sympathetic audience for his lobbying and political efforts, he successfully lobbied for the Aussie law that would require Internet giants such as Google and Facebook which are said to control 81% of Australia’s online advertising revenue, to pay media publishers a fee for their content. 

Facebook balked and essentially blocked all news content on its platform. In the process, Facebook’s somewhat ham-handed and sloppy execution led to the blocking of public information about weather and government services.

The Aussie law required companies like Google and Facebook to negotiate pricing with publishers or resort to binding arbitration. And, as might be expected from a piece of legislation supported by Murdoch, it was heavily skewed in favour of large media giants like News Corp.

Following Facebook’s standoff, the Aussie law has been modified. It now contains a somewhat nebulous provision that enforcement “must take into account whether a digital platform has made a significant contribution to the sustainability of the Australian news industry through reaching commercial agreements with news media businesses.”

Facebook said after those revisions were made that the new agreement would allow it to “support the publishers we choose to.” And that says it all, this is about control.

In recent days, Google has announced that it has reached an agreement with News Corp to pay for its content and Facebook has reached agreements with at least three Australian news publishers.

A terrible precedent

The Aussie law is a terrible precedent for publishers and for the future of a free press. In effect, it allows a few publishers to gain a preferred position on social media platforms and search engines and essentially leaves the smaller publishers scrambling for the crumbs.

Apple’s news service is no better. Certainly, Apple affords to newspapers and magazines a potentially larger audience for their content but it is essentially a cash generator for Apple. The newspapers and magazines are left to a half share that Apple might in the future reduce. And, of course, since each publisher’s share is determined by readership on Apple’s site, one can see the beginnings of selling position rights. 

The sad truth is that the Internet has made news and features so easily accessible that there is little incentive for the average person to subscribe to a local newspaper. When you consider that much of the content in a local newspaper was an aggregation of stories from Reuters or UPI or other syndicated news services, the remaining value was from the quality journalism at the local level. Now, with diminished revenue, news publishers are strapped and unable to sustain their staffing levels. The result is a more generic newsfeed.

Unfortunately, the Aussie law is likely to put even more pressure on smaller publishers as their content will be frozen out.

In the U.S. the situation is likely to be different. The Aussie law would likely be unconstitutional because the government cannot tell Internet giants what they may and may not publish or force them to pay for content or go to arbitration. On the other hand, there is nothing to prevent large publishers from making agreements with Google, Apple, and Facebook to feature their content. This will erode further the visibility of smaller publications.

Deeper questions remain. Should a media publisher be entitled to ask that its material not be accessed by a search engine? Would any media publisher ever do that? Should media publishers be content to rely on paywalls to protect their content even as search engines identify that they are a potential resource?

Is it fair that advertising revenue based on identifying the work of others should not be shared with those who have produced the work? Before you answer, consider that the New York Times Book Review does not pay authors whose books are reviewed. Authors are happy to have their books reviewed in The Times because it means more sales. And, of course, The Times sold advertisements in its book review section without sharing those with the authors of the books.

Is it hypocrisy for The Times to complain that Google and Facebook don’t share revenue? Of course, when complete articles are reproduced by third parties, potential violations of copyright laws come into play.

We have not seen the end of this drama. It may well be that as the Internet has killed off many traditional businesses that have been superseded by digital commerce, the news business will be the next victim. For free societies everywhere, we need to find answers to protect free expression and journalism.

Cheerz…
Bwana

* Published in print edition on 2 March 2021