ROGER COCHETTI

Since the earliest days of online networks such as AOL and Prodigy, there has been a tension between the media (print and electronic press) and online platforms. That’s because they compete for advertisers’ spending and because online platforms unilaterally offer (or don’t offer) consumers access to media content by just clicking a link.

This tension has simmered over the past few years and is now at a full boil in the conflict between Google and Meta on the one hand and Canadian media on the other.

By the 2010s, many advertisers gradually concluded that advertising through large internet platforms was more effective than directly advertising in specific media, mainly because such platforms can identify the consumer and target ads to consumers with the greatest potential. This shift took place during the period that online classified advertising services overtook print media’s classified advertising services, putting additional financial pressure on advertising-dependent media.

The result has been greater dependence by many media businesses on subscription revenues as well as greater attention to controlling expenses and consolidations. Some media have migrated to non-profit models, and some have sought government support.

From my experience, the media’s perspective has been that the media creates content and value at considerable expense; consumers seek this content and benefit from it; society benefits from the content created by the media; and online/internet platforms do not create such content but are merely conduits to it.

Not surprisingly, the general sentiment among people in media is that internet platforms owe much of their financial success to the content that the media create, and that it is only fair that the platforms’ financial success be shared.

People on internet platforms have historically seen the relationship quite differently: The platforms’ consumers rely on the platform to provide consumers with a very wide range of content, of which media-created content is only a modest part.

As a result, at great expense, internet platforms create and operate complex facilities that sometimes deliver to the media consumers who might not otherwise have ever used that media’s content. And any consumer who wants to subscribe to a media’s content is free to do so. Few platform executives believe that media-created content is fundamental to their business.

It’s not unusual when two competing perspectives clash over fairness and societal benefits that one side seeks support from governments. So, over the past few years, media organizations around the world have sought government support in their efforts to get internet platforms to share their financial successes. Also, outside of the U.S., few officials miss the point that their media tends to be local in each country, while the largest internet platforms tend to be American.

The first major initiative probably occurred in Europe, where the European Union (EU) adopted a set of regulations in 2019 that require large internet platforms to enter into revenue-sharing arrangements with the media whose content the platforms reference.

In 2021, Australia passed its own law requiring large internet platforms to negotiate revenue-sharing arrangements with Australia’s principal media whom the platforms reference. During development of the final terms of Australia’s Media Bargaining Code, attention was drawn to Facebook’s strenuous opposition to the proposed terms and its temporarily blocking of all Facebook press links from Australia.

Importantly, legal experts note that both the EU and the Australian revenue-sharing mandates leave flexibility in the selection of both qualified platforms and media, and both primarily rely on private negotiations between the parties to resolve any financial arrangements. Partly as a result, revenue-sharing arrangements have been negotiated in several European countries and Australia, although few details have been disclosed; and similar laws are being considered in several other countries.  Conflicts have arisen in France regarding platform revenue-sharing by Google and, more recently, Twitter.

The current boil-over is in Canada, which in June enacted the Online News Act, which requires that by 2024 large internet platforms conclude revenue-sharing agreements with qualified Canadian media, subject to approval by Canadian regulatory authorities. Both Google and Meta/Facebook have stated their view that the law is unfair and unworkable; and that as a result they will stop providing access to Canadian media’s content.

In response, the Canadian government has announced it will fully enforce the law as approved and will stop its own advertising on Facebook/Meta (and possibly Google in the future.) Some Canadian political figures have even urged Canadians to use other internet platforms and boycott the objecting internet platforms.

Excluding litigation, which occurs in a structured environment, this is as close to open confrontation as we have seen involving major internet platforms and governments in Western countries. It leaves everyone uncertain over what is to come. Both sides have been quite public, and each seems to believe that the stakes are high, all of which leaves less room for quiet negotiation.

Squaring this circle will be difficult. Much of the media, particularly local and smaller media, are under financial pressure, and reliable, revenue-sharing arrangements (that cannot be dropped) are seen by some as a possible lifeline.

Alternatives such as government funding are widely seen as opening the door to government control, and conversion to a non-profit model leaves enormous unanswered questions. Much of internet platform leadership fears that detailed government control of revenue-sharing for the media is not only a step towards rate-regulation, but that it would immediately open the door to a wide range of other non-media providers of content and infrastructure, which would similarly claim that fairness and social benefits requires revenue-sharing with them. Quiet negotiations are probably the best hope for both groups.

   Source: The Hill