3454

At these traffic volumes, the value will be be trivial to calculate by both sides. The media know how much traffic they receive from the tech companies, and the tech companies know how much traffic they send to the media. Both sides know how many ads the page has, what the average of those ads CPM is, and then the total value of the traffic is just a multiplication. (The value to the tech companies is harder to compute, but Facebook is finding out now, and Google reportedly ran an experiment of not serving news to 1% of Australian users last year. So they’ll know, but it’s hard for anyone to verify it.)

But hold that thought about who profits for one more paragraph…

I don’t see how to reconcile this parable with your views from the previous section. There, you argued that the tech companies benefit a lot from the links, while the media companies don’t benefit from the traffic. Here you say that the tech companies are the only way that the media companies can eke out a subsistence survival.

If your beliefs from the previous section held, surely the power imbalance would be the other way around. The media companies would hold all the power, since they could stop their content being linked to, at no cost to themselves but a large cost to the tech companies.

(I agree with your assumption that local media has value. But what is proposed in the law is an absolutely awful way of strengthening it.)

For eligible news orgs, the definitions are pretty clear. For tech companies, there really is no objective definition, and the way companies get added is “the minister decides that they should be added”. For non-eligible news orgs I remember the definition being vague as fuck. And it matters, because if the platforms don’t serve link to a eligible news org, they are forbidden from linking to any kind of news at all.

I don’t think it is the same, since it’ll now appear as a line item in the budget, and it’s clear to the public that they money that is being sent off to Murdoch could be e.g. lowering their own tax burden or being spent on public services (haha, I know), and decide whether it’s worth it or not. Stealth taxes like this are a nasty way for governments to funnel what should be public money into the pockets of their cronies without backlash.

I think ads are exactly what you’d want to tax if you’re doing this, since showing ads is the one thing you know Google and Facebook will for sure not stop doing. The French Digital Services Tax would be a good template (based on revenue rather than profit to avoid accounting tricks, revenue thresholds to avoid too much red tape for small companies, covers a couple of other key areas other than ads, and utterly predictable).

The main part I find distasteful is the inclusion of the global revenue threshold, just to allow large companies operating only in France to avoid the tax. But at least the rules are clear and the same for everyone.

And note: when the DST and various copycat laws in other countries happened, the tech companies did not threaten to leave or start paring down the services. The Australian law is uniquely ill-conceived and badly drafted. It seems kind of obvious which one to go for, if the actual goal is effective public policy.

It’s completely unworkable, unfair, and useless in the long run. Anything revealed to the media companies would be ruthlessly exploited by them to gain an SEO edge over the competition. Then the details would leak, and every blackhat SEO expert in the world would be applying the appropriate techniques to their spam sites as well. The only saving grace is that an increasing proportion of the ranking changes are unexplainable anyway, since they’re based on machine learning systems. All this would do is accelerate that trend.

And if the traffic is worthless, why would the media companies care about their ranking? :-P

3455

Unless the positions have shifted considerably since I last looked at the proposed Australian law, I believe Google’s proposal is to include Australia into the European News payment scheme that they’ve worked out as a result of EU litigation - NOT to actually comply with the proposed law.

As @jsnell noted, the details of the law around algo discloures makes it unappealing to fully comply with given all the resources that publishers already put into trying to game SEO as it is. If it’s passed, I doubt Google will go as Nuclear as FB but they’ll probably find some creative ways to send as little traffic to Australian pubs as possible

3456

Ah, but what social media presents is not just the link, it’s also the title and a small blurb… that are specifically written to be clickbait in the first place.
Whoever wins, society loses; it’s not like newspapers are small, independent operations who value journalistic integrity. It exists within them, but it’s not why they exist, it’s not what they’re worried about, it’s incidental.

3457

That’s configurable by the publisher on if they want to allow it or not on a page-by-page basis via tagging - so any news publisher can currently opt out of it if they wanted to.

3458

Hmm, two things:

  1. I said that you were overestimating the value that media companies get from having their news distributed through social media. Of course there’s value, it’s how they get most of their influx of visitors. Does the poor labourer in my analogy value the subsistence wage? Of course he does, it’s everything to him, but it is not the remuneration he would receive if he had any bargaining power.

  2. I think the news content is very important to these big tech companies, but these two parties are operating at different geographical scales. We’re talking about a law that affects negotiations between Australian media companies and global tech firms. If the tech firms were only trying to maximise profit in Australia they would relent and sign deals asap, but they are trying to maximise global profit which is to withold services to the Australian market for trying to introduce a law they don’t like and thus disincentive the rest of the world from trying something similar (yes there are related laws in some other countries I am aware).

Yet this ‘shadow tax’ would not meaningfully affect consumer prices, nor is any public money going to Murdoch. Indirectly it may affect consumer prices (tech firms pay media companies -> cost of advertising goes up a bit -> companies increase prices a little to compensate for their larger marketing budget), but local media companies suddenly becoming a more profitable operation also has economic benefits to wider society.

This was in your previous post, but I wanted to mention that since the first draft ABC and SBS has been added to the list of media companies to benefit.

3459

But see, I think the analogy is actually not the poor labourer (media) being exploited by the factory owner (Facebook). It is more like there’s a bakery in town (Facebook) who gives loaves of bread for free to all the townspeople (media). The bakery can afford to give out the bread for free, because they’re making their money selling cakes. Then the townspeople start demanding that they should not only get the free bread, but the baker should pay them to take the bread. “It is only fair. They must be ton of money off of this free bread, look at how much cake they sell!”

Obviously the baker doesn’t agree to this, it’s an absurd demand. There’s indeed there’s a bargaining imbalance here. But it’s not because the baker is rich or has more resources or whatever. It’s because the townspeople are by far the bigger beneficiaries of the current arrangement. We all know that given the choice of getting free bread or not, they’ll take it, so they have no leverage to demand anything in excess of that.

Yes, but that’s only because they’ve arranged for something that functionally works like a tax but never enters the government’s books. So the public never realizes they’ve been had.

We have ample evidence that these laws to force search engines etc. to pay for linking do not work. We also have evidence that you can define reasonable taxation systems for this use case that do work. Why would any responsible government go for the first option?

3460

It costs money to do journalism and produce news articles, and if in this analogy the bread is eyeballs, before facebook it is not as if these eyeballs didn’t exist and would never consume news in their day.

The majority of people don’t read full articles, they want to get the gist and then discuss it with friends. Back when newspapers were a thing, media outlets didn’t care because the person who just wanted to breeze through bought the paper at the same price as the hardcore ‘front to back’ reader. With TV news they had control over the ads, and in the brief time when news websites were a thing before social media, people would peruse the homepage but most often only read 10% or less of the articles. Again, in that situation the media companies profited from the eyeballs of people who only read headlines as the ads were all over the homepage.

Now, media headlines, blurbs, single images, and a place to discuss the news item is all housed on the social media platform and the media agencies don’t see a single cent unless someone clicks on that link and goes through to the webpage. Now media outlets don’t get a cent from those who only like to read the blurb and discuss with friends, and that is the first time in their history (unless they scabbed papers or whatever). Instead, social media companies profit from them exclusively.

There’s alot of these people, e.g.:
https://www.washingtonpost.com/news/the-intersect/wp/2016/06/16/six-in-10-of-you-will-share-this-link-without-reading-it-according-to-a-new-and-depressing-study/

But, you might say, the media companies could just withold their content from social media companies. Here’s the thing, though, the media industry is highly competitive. If, say, the Guardian decided to black out facebook most of the people who get their news from facebook and click through to the actual articles will just be looking at another media company’s articles instead. So they would objectively lose from doing this, they aren’t in the position of power. Whereas facebook could ban news all together, ban only certain news, ban mentions of how Zuck is a massive tool and nothing else, change the way that people see news on their feed without informing the media companies or the consumers, and still keep their behemoth status.

A government telling Company A to negotiate in good faith with Company B to compensate them for some advantage they receive is not a tax in any sense of the word.

You’ve read the legislation back to front, does it say they have to pay media companies everytime someone clicks? Because I thought all it meant was that they have to negotiate in good faith for due compensation. Google isn’t signing up media companies for their ‘News Showcase’ product just for the fun of it.

3461

IIRC the Australian law allows each publisher to set a price and force Google and Facebook to figure out how they want to comply.

The negotiate in Good faith is the EU version of the law, which is what Google is proposing as a compromise

3462

Not really. There is no question of “how to comply” on a per-company basis. The media companies can demand whatever they want in bad faith and no limits, and get it resolved in binding arbitration by a panel that has been explicitly set up as biased in favor of the media companies.

The only alternative is to serve no news of any kind. I.e. what Facebook is doing, and getting ripped apart for.

It says that any qualifying news org can demand that, and almost certainly be granted it. And more. Why limit yourself to just being paid when somebody clicks? Might as well be paid when somebody doesn’t click too.

Google is signing up companies for the Showcase as PR, to prevent the law from being passed in the current form. (And let’s be clear, this is PR. Google will not derive any kind of economic benefit from these payments, because it doesn’t show ads in News, and because nobody will use this app anyway). It is preferrable to law in multiple ways:

  • It is clear up front what the cost is, unlike the unlimited downside of the law.
  • It is actually negotiated, in that both parties can actually refuse the deal rather than being forced into it.
  • It does not set the precedent that Google is willing to pay to anyone for showing links in search results.

But the thing is, these deals will not in any way protect them from the effectively unlimited downside of serving news in search results if the law does pass. All it takes is for one company to demand the moon and be granted it, and they’ll be forced to shut down Search and Google News in Australia. (I bet that the Showcase deals are contingent on this not happening.)

3463

Datapoint:

And in particular:

Unfortunately, Facebook’s disappearance has resulted in a hit to publishers’ traffic numbers: when Facebook traffic dropped off, overall Australian traffic did not shift to other platforms.

3464

20% seems low to me. If they weren’t expecting at least that, they’re very dumb.

3465

I think it’s inevitable that big tech will eventually band together on some law and go nuclear on a country, or the entire EU, to try and stop these laws.

3466

This is the short-run elasticity, what will be more interesting is what happens to traffic numbers after awhile. I would be surprised if it was anything less than a 10% drop (e.g. someone I know who shall remain nameless has gone from getting their news only through facebook to asking me to summarise the news for them each day now that it isn’t on there!).

3467

Well, Google News already left Spain in 2014 in response to their regulations so Australia won’t be the first.

3468

Google News will be the least of our worries:

3469

Yeah, that’s because of Australia’s law is much more expansive than just news itself but also its algo details. I guess we’ll see what happens!

3470
3471

Take the money and run or lay low because the Feds are coming?

3472

Won’t someone please, please think of the Nazis?

3473

It’s a little bit surprising, becuase in the past when the Facebook app has been down, the total news traffic didn’t actually drop but was just replaced by other traffic sources, as per the following link. The data should be comparable, they’re measurements from the same analytics company:

(Holy crap, I didn’t realize that losing search traffic would be quite that apocalyptic to the publishers.)

There a big difference between Facebook being down vs. Facebook just not having any links to news sites. In the former case, people have to do something else with their time which apparently includes also reading some news. Until now, we didn’t know what would happen in the latter case. Would people stay engaged in the app, or stop reading updates since they weren’t seeing any news articles.

Agreed. It’ll change, but I’ll take what numbers we can get for now :)