Forcing Facebook To Pay For Journalism Won’t Solve Structural Challenges – They Can And Will Walk Away

Forcing Facebook To Pay For Journalism Won’t Solve Structural Challenges – They Can And Will Walk Away

This is probably going to be the most unpopular comment piece I have ever written, but punishing Meta won’t help the ailing business model of journalism.

I owe News Corp a lot. When I was a cub hack in the early Noughties, it was at News Corp titles like the Liverpool Leader that trained me to be tough, fierce and inquisitive about crime, politics and sport. 

Fast forward 24 years and News Corp, led by its executive chair Michael Miller – a media exec I really respect – is going hard at Meta because the US company doesn’t want to pay for Aussie news that is posted on its site.

Meta has walked away from annual deals with large publishers, which I understand is well above the $70 million figure being bandied about because it believes that the value exchange is not worth it.

In other words, the content that publishers post doesn’t generate the attention of users on the platform, which Meta claims is 3 per cent of the overall pie. 

I’m not sure I believe it is that low, but that misses the point.

Newspapers have used social media platforms like Facebook and Instagram for years to drive traffic to their websites. If they did not find this valuable, they wouldn’t post on Facebook, Twitter and LinkedIn. Posting on social media has become an annoying extra duty that many journos get stuck with.

Facebook is the second largest advertising-driven business in the world behind Google. This has essentially eroded revenue that media companies – everywhere – once controlled.

But this structural issue with advertising-led media business models won’t get solved because Facebook chooses to chuck in a few bucks to some of the largest players in Australia. People who work in the media industry know this.

In fact, it can be argued that the big players who benefit from Meta’s news content bargaining deals have the least to lose, they aren’t the ones that will become extinct if Facebook pulls the plug on news.

Perhaps a better way forward is that companies like Meta and Google actually pay a fair share of tax on the revenue these businesses make over here (rather than offshoring it to Singapore and Ireland). The government can then use that extra income to help out public interest journalism.

The Australian Financial Review reported that Facebook Australia “not including stablemates Instagram or WhatsApp” only paid $42 million in income tax on $1.4 billion in turnover paid by Australian customers. Most of that revenue, the AFR‘s media reporter Sam Buckingham-Jones said, was counted as the “cost of sales”, or advertising space it bought from related Facebook entities.

It’s likely that Facebook booked more revenue over here than that amount, but is very adept at shifting it to low tax regimes; loads of multinationals use the same tricks, including News Corp.

That said, there is nothing that will compel Meta to pay media companies for journalism; it’s a Pandora’s Box that they don’t want (or need) to open. They will pull out and walk away from news altogether, as they did in Canada. 

I don’t think forcing them to do this is the right mechanism to bring value back to an industry that failed to understand the online world and adapt, until it was too late.

So, maybe, instead of pushing some indies towards extinction, there is a better conversation about how we fund journalism that doesn’t orbit around the whims and algorithm tweaks of a Silicon Valley companies. Did Facebook or Google ever have this foundation of serving journalism at the heart of their existence?

Those in the industry know the reality of it – let’s work on fixing the real problem, not shoving band-aids over gaping wounds.

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