Before the election, National Party spokesperson Melissa Lee condemned Labour’s Fair Digital News Bargaining Bill. At first reading, she referred to it as a ‘shakedown’.
It seemed obvious that a National-led government would kill the Bill. So some who might have provided warnings at Select Committee did not submit.
The News Publishers’ Association’s Andrew Holden noted at Select Committee that “this type of legislation is not new” and that there are “live examples in Australia and Canada”. Those examples should have served as warnings as our bill shares features with Canada’s.
The legislation could require platforms facilitating access to news to register with the Broadcasting Standards Authority. Facilitation would include linking directly to news stories and otherwise allowing users to link to news.
Media companies could initiate compulsory bargaining with registered platforms for payment.
If no agreement were reached, an arbitrator would decide which offer “fairly compensates the news media entity party for that party’s news content being made available.”
The Internet was built on a set of simple principles. Websites can link to each other freely and without permission. If a site’s owner wants to set a paywall, or to block search engines, it is perfectly free to do so.
New Zealand’s proposed regime, like Canada’s current one, amounts to a tax on links – which is offensive enough to those of us who were around when the internet was first getting going.
But this is worse than a tax. A tax is predictable. You know what the charge will be. Canada’s framework resulted in massive uncertainty for platforms about what an arbitrator might decide.
Meta concluded that facilitating access to news in Canada simply wasn’t worth the hassle. When users click on a news link, they leave Meta’s walled garden. They see ads on the newspaper’s website rather than on Meta. So rather than deal with Canada’s system and its massive uncertainty, Meta simply stopped allowing users to link to news.
Then, all hell broke loose.
Small independent publishers depended on Meta for distribution. They saw substantial drops in traffic and consequent drops in advertising revenue.
It turned out that Meta hadn’t been stealing from news companies. Instead, it had been driving traffic to news sites, to the benefit of those sites, as a commissioned report for New Zealand’s Ministry of Culture and Heritage had previously suggested.
Google did not pull out of the Canadian market but came to a different arrangement. It had previously partnered with media companies, providing various forms of support through Google’s Showcase program – as it does in other countries. Those payments shifted instead into a government-run fund supporting journalism. Media companies would then need to apply to the government for that support – not the best outcome for perceived media independence.
Canadian media companies that had lobbied to shake-down Meta pivoted to lobbying for larger government subsidies to compensate for lost revenue. And the Canadian government signalled, in the Fall 2023 economic statement, that it would boost the tax credit it provides to news companies: a bailout costed at an additional $129 million over five years.
Minister Goldsmith announced earlier this month that he would be taking Labour’s Bill forward, with Labour MPs as support partners following the ACT Party’s sensible decision to decline support. The one signalled change was that the Minister will designate platforms for regulation rather than the Authority.
That isn’t a change for the better. Even a scrupulous Minister could face accusations that decisions were based on whether platforms provided cosy deals to outlets that were friendly to the Minister.
If the Bill goes ahead with only that change, some things are predictable.
Meta will exit news in New Zealand, as it is set to do in Australia. Australia’s government has been mulling over whether it ought to compel Meta to continue providing news in Australia – which is a bit odd. This all started from a notion that Meta was stealing news. One normally doesn’t encourage thieves to keep at it because of the benefits of the fines assessed against them.
When Meta leaves, outlets where Meta provides a lot of free distribution and links will take a substantial hit. They will appear at the Minister’s door asking why he has done this to them. They will be right to do so. He will have to come up with an answer despite the fiscal situation and explain to his cabinet colleagues why he needs to boost media subsidies.
Moreover, New Zealand’s reputation among tech investors will decline. What should they think about places that shake down the tech sector to subsidise other industries?
There is a completely defensible case for public support for journalism. This Bill fails to help and causes substantial additional problems.
I wish Minister Goldsmith luck.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
The legislation could require platforms facilitating access to news to register with the Broadcasting Standards Authority. Facilitation would include linking directly to news stories and otherwise allowing users to link to news.
Media companies could initiate compulsory bargaining with registered platforms for payment.
If no agreement were reached, an arbitrator would decide which offer “fairly compensates the news media entity party for that party’s news content being made available.”
The Internet was built on a set of simple principles. Websites can link to each other freely and without permission. If a site’s owner wants to set a paywall, or to block search engines, it is perfectly free to do so.
New Zealand’s proposed regime, like Canada’s current one, amounts to a tax on links – which is offensive enough to those of us who were around when the internet was first getting going.
But this is worse than a tax. A tax is predictable. You know what the charge will be. Canada’s framework resulted in massive uncertainty for platforms about what an arbitrator might decide.
Meta concluded that facilitating access to news in Canada simply wasn’t worth the hassle. When users click on a news link, they leave Meta’s walled garden. They see ads on the newspaper’s website rather than on Meta. So rather than deal with Canada’s system and its massive uncertainty, Meta simply stopped allowing users to link to news.
Then, all hell broke loose.
Small independent publishers depended on Meta for distribution. They saw substantial drops in traffic and consequent drops in advertising revenue.
It turned out that Meta hadn’t been stealing from news companies. Instead, it had been driving traffic to news sites, to the benefit of those sites, as a commissioned report for New Zealand’s Ministry of Culture and Heritage had previously suggested.
Google did not pull out of the Canadian market but came to a different arrangement. It had previously partnered with media companies, providing various forms of support through Google’s Showcase program – as it does in other countries. Those payments shifted instead into a government-run fund supporting journalism. Media companies would then need to apply to the government for that support – not the best outcome for perceived media independence.
Canadian media companies that had lobbied to shake-down Meta pivoted to lobbying for larger government subsidies to compensate for lost revenue. And the Canadian government signalled, in the Fall 2023 economic statement, that it would boost the tax credit it provides to news companies: a bailout costed at an additional $129 million over five years.
Minister Goldsmith announced earlier this month that he would be taking Labour’s Bill forward, with Labour MPs as support partners following the ACT Party’s sensible decision to decline support. The one signalled change was that the Minister will designate platforms for regulation rather than the Authority.
That isn’t a change for the better. Even a scrupulous Minister could face accusations that decisions were based on whether platforms provided cosy deals to outlets that were friendly to the Minister.
If the Bill goes ahead with only that change, some things are predictable.
Meta will exit news in New Zealand, as it is set to do in Australia. Australia’s government has been mulling over whether it ought to compel Meta to continue providing news in Australia – which is a bit odd. This all started from a notion that Meta was stealing news. One normally doesn’t encourage thieves to keep at it because of the benefits of the fines assessed against them.
When Meta leaves, outlets where Meta provides a lot of free distribution and links will take a substantial hit. They will appear at the Minister’s door asking why he has done this to them. They will be right to do so. He will have to come up with an answer despite the fiscal situation and explain to his cabinet colleagues why he needs to boost media subsidies.
Moreover, New Zealand’s reputation among tech investors will decline. What should they think about places that shake down the tech sector to subsidise other industries?
There is a completely defensible case for public support for journalism. This Bill fails to help and causes substantial additional problems.
I wish Minister Goldsmith luck.
Dr Eric Crampton is Chief Economist at the New Zealand Initiative. This article was first published HERE
3 comments:
Minister Goldsmith is proposing Labour's Bill with a minor change.... and has Labour's support for this.
Minister Lee - who is a journalist - never seemed to be able to advance her own proposals on this subject between November 2023 and May 2024.
Finally she was relieved of this portfolio and demoted from Cabinet.
This seemed odd.
This whole thing it to be expected. Labour had the media's full support. So would do anything to help them.
National has no support and is scared of the media, so will do anything to appease them.
Meanwhile in Germany, the Federal Ministry of the Interior banned the well-known #COMPACT magazine, which is critical of the government.
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