Earlier this year, the Indian Newspaper Society (INS) wrote to Google to ‘properly share advertising revenues’. It insisted that Google increase the publisher’s share of advertising revenue to 85%, and ensure transparency in its revenue reports. News Broadcasters Association (NBA), an industry body of news TV channels, has also demanded that news publishers be compensated adequately from the disproportionate share retained by the intermediary technology platforms.
These demands come at a time when many countries are legislating to ensure tech giants adequately pay news publishers. The EU, Britain and the US have made attempts to regulate this relationship. Australia’s News Media and Digital Platforms Mandatory Bargaining Code was approved in February 2021. This code provides a framework of good faith negotiations between the parties and a fair arbitration process to resolve disputes.
The news media industry employs editors, journalists, anchors and thousands of others at a considerable investment, and income from advertisements forms the financial backbone of this enterprise. With the advent of technology platforms, they have seen a steady decline in ad revenues. This has resulted in a drop in circulation, with many having had to down their shutters. Advertisers, especially in the pandemic-hit economy, have preferred to migrate to lower-cost, nimble and better measurable forms of advertising offered by Google and Facebook.
The rewriting of this equation is of vital importance. News media is a public good, and there is a great social value to professional journalism. Digital platforms have a significantly diminished product in the absence of the work of professionals who create reliable and high-quality content.
Gravy Train at Tech Platform
Digital technology platforms have played a key role in the value chain as an intermediary and have significantly amplified the reach of news media organisations. On the other hand, these gatekeepers have dominant market power with a high potential to abuse. Very often, tech companies have tried to evade compliance with local laws by pulling out — or threatening to pull out — their services, as was the case in France, Germany and Australia. India, too, points in the same direction where some tech giants refuse to comply with the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules 2021 under the false pretext of protecting the freedom of expression.
Combined with monopolistic power, the tech platforms have created a high level of opacity in the algorithms they run for advertising. Publishers want greater transparency in the revenue reports provided to them and would like to be notified of changes in the algorithms. In 2019, French regulators penalised and sanctioned Google for ‘opaque and difficult to understand’ operating rules for its ad platform and for applying them in ‘an unfair and random manner’.
Given the pressure brought by various regulators, Google and Facebook have stepped up their efforts to reach licensing deals for news. From Europe to Australia, they have arrived at arrangements with dominant players in the respective markets. The fear, though, is that if these companies are left to their own devices, they will have no reason to partner with smaller and new media organisations. The latter will get crowded out and their financial independence will be compromised, anathema for a thriving press.
European countries have evoked the principle of ‘neighbouring right’ for news, which was transposed into national law following a pan-EU copyright reform, to ensure remuneration by digital platforms for the use of online publications. Neighbouring, or related, rights, for example, allows a newspaper or publishing organisation the right to republish and distribute a piece written by a journalist or author. This gives publishers the right to charge a fee for using snippets of text to point to content.
The copyright rules have strengthened the negotiating position for news media, especially marginal players who don’t have the economic might to achieve balanced agreements with these technology companies who may refuse to negotiate. The latter have invoked the ‘fair use’ legal doctrine, which permits limited use of copyrighted material without having to first acquire permission. Another argument is the transfer of value to publishers by directing traffic to the publisher who can convert the visiting reader into a paid subscriber.
Then there is the apprehension that MNCs like Google and Facebook may not employ their practice of better compensation for publishers universally. Google, for instance, has agreed to better compensate publishers in France, the EU and Australia.
No Such Thing as Free Lunch
While the Europeans dealt with the issue via copyright and the Australians through the principle of fair market practices, India will have to find its own solution. GoI should facilitate a platform where all stakeholders can debate and discuss to arrive at a fair arrangement for the larger good of the nation. The experience in Australia and Europe clearly shows the need to have binding rules that tackle the inherent disequilibrium in this relationship between tech gatekeepers and publishers.
India has the required market heft, and it has been an exemplar of using technology for governance. Hence, the world will be watching how it tackles this conundrum. No unelected, for-profit foreign organisation that has zero accountability to the people of India should be allowed to challenge the Indian sovereign.