Facebook this month hit back at an Australian proposal to share advertising revenue with publishers, joining Google in rejecting the idea. Neither company needs news outlets to survive, and publishers
will emerge from the pandemic recession much stronger by developing other ways to earn revenue.
“We … don’t view it as healthy or justifiable to require one or a
few private companies to subsidize the news industry in unsustainable ways," the company said in a written response to the Australian Competition and Consumer Commission (ACCC).
The agency is
developing a code of conduct to address what it described as the "power
imbalances between Australian news media businesses and … Google and Facebook."
Australia's effort to develop a cross-subsidization scheme for publishers is unlikely to
be mimicked in the U.S., where antitrust efforts are focused on other ways to curb possible anti-competitive behavior. Unfortunately, Australia's plans would only make publishers in the country more
reliant on Google and Facebook. That's a perilous dependency, like any state government that has come to rely on cigarette taxes to fund general spending instead of anti-tobacco campaigns.
Both companies can effectively argue that publishers derive enormous value from the referral traffic that they generate. Google helps to find news and information, while Facebook is
among the social-media companies that lets people share articles in various ways.
Facebook has built a business on capturing the attention of people who use the social network
to stay in touch with others, who basically provide content for free. Last year, the company started to pay publishers for content that appears in its Facebook News section, but the money is unlikely
to replace all the ad revenue they've lost over the years.
Facebook's key strength has been its requirement that people use their real identities to set up an account, and
collecting vast amounts of information about their activities to help with ad targeting.
However, its biggest weakness is that user-generated content can be inflammatory, hurtful and divisive.
The company has a mixed record of removing objectionable content, while also wavering between espousing free speech or blocking it.
Publishers have enormous advantages in
providing brand-safe, value-added content to self-selecting audiences, and it's those characteristics that need to be central in their marketing efforts. Instead of seeking state-ordered subsidies,
publishers need to respond to the threat of digital ad giants by gathering more information about their readers.
That's most likely done through their paid circulation campaigns -- to
demonstrate their effectiveness in reaching target audiences.