Australia’s News Media Bargaining Code (NMBC) is the global benchmark for enabling media companies to bargain on equal footing, and therefore commercially, with dominant digital platforms.
Posted at 1:00 p.m.
I do not claim to be an unbiased NMBC commentator. I was chairman of the Australian Competition and Consumer Commission (ACCC) when it designed the NMBC and was then commissioned by the Australian government to implement it.
According to my observations, the NMBC has enabled newspaper companies of all sizes to obtain more than $200 million a year from Google and Facebook.
In addition, these media believe that they can negotiate as equals with the dominant platforms, which seemed unlikely before the adoption of the legislation.
The ACCC’s survey of digital platforms clearly demonstrated that public interest journalism generates considerable positive externalities, since the benefits to society go beyond those who are willing to pay for access. Indeed, this type of journalism holds web giants to account, provides an essential archive, provides a forum for ideas, and can advocate for broader social goals. When you benefit more from this journalism, all members of society benefit to some degree, whether they have access to it or not.
Imbalance
We found an imbalance in the bargaining power of news media companies against large digital platforms. Google and Facebook have substantial market or bargaining power, whether in search markets, social media or display advertising. In their relations with press companies, platforms are considered “essential business partners”.
The survey found that while platforms need news media in general to attract and hold users’ attention to their services, they don’t need content from any particular media company. In contrast, news media companies needed Google and Facebook to drive traffic to their sites. The references to news provided by Google and Facebook were indeed essential services, which gave them significant bargaining power.
The survey demonstrated that without an imbalance of bargaining power, platforms and media companies would have negotiated the value generated through the platforms’ use of their news content, and the platforms’ referral of viewership traffic. to news media companies, and have entered into a commercial agreement.
However, this was not possible, as the platforms had significant bargaining power and could therefore unilaterally set the conditions.
This was clearly demonstrated by the platforms’ refusal to enter into negotiations; they refused to agree to pay for the content they enjoyed. They claimed, without compelling evidence, that they were providing more benefits to news organizations than they received in return, and that, in their view, the case was closed.
For the survey, this significant imbalance in bargaining power represented a clear market failure that needed to be addressed. While there are many market failures in our economy, and not all of them need to be corrected, this one was paramount given the importance of journalism. The decline in public interest journalism compensation caused by the significant imbalance in bargaining power has led to a decline in supply that harms our society.
Key provisions
Three key provisions are at the heart of the NMBC. Without each of them, the NMBC could not achieve its goal.
First, good faith negotiations must take place between platforms and news media companies regarding payment for content and traffic management.
If, after a certain period, these negotiations do not succeed, it is possible to resort to arbitration, which will be binding on the parties. A panel of arbitrators will then be set up by the Australian Communications and Media Authority, an organization similar to the Canadian Radio-television and Telecommunications Commission. Negotiations without ultimate recourse to arbitration would be doomed to failure. Indeed, the fundamental market failure, namely the imbalance of bargaining power, would not be addressed without this recourse to arbitration. It is therefore important to note that every news company registered with the NMBC has the right to negotiate and, if negotiations are unsuccessful, to seek arbitration. Arbitration was to be of the “final offer” or “baseball” type. Final offer arbitration (FOA) is a form of arbitration that limits the arbitrator’s possible decisions.
Second, there must be a non-differentiation provision. This means that platforms are not allowed to substitute content from NMBC-registered media companies with content from unregistered news companies, which includes international news sources.
Third, the NMBC enabled collective bargaining by media companies. This was an easy provision to include, as Australian competition law already allows it, as mentioned before.
For example, dairy producers often apply to the ACCC for permission to bargain collectively with large processors in order to make bargaining more efficient and achieve a more appropriate outcome. Collective bargaining was deemed necessary because there would be many small news media companies that would struggle to bargain effectively on their own. Fun fact, Facebook argued that this provision made cartels easier, citing a technical interpretation rather than focusing on what competition law really seeks to accomplish. Allowing companies with, say, less than $500,000 in revenue to join together to negotiate with a company valued at over a trillion dollars would encourage competition; it couldn’t hurt him.
The NMBC proved successful on all counts. I welcome the fact that Canada is seeking to follow Canada’s lead by introducing Bill C-18 (Online News Act) to facilitate trade negotiations between dominant platforms and news companies. .
* Rod Sims was Chairman of the Australian Competition and Consumer Commission from 2011 to 2022.
To read tomorrow: “Negotiation between publishers and digital platforms”