News publishers in Australia have heralded a new law that will require Google and Facebook to pay for news as a major victory. Amid calls to emulate
the Australian plan in other countries, U.S. lawmakers should avoid the temptation.
Australia's media code forces technology companies and publishers that can't reach agree on
payment terms to submit to binding arbitration. Following last-minute negotiations with Facebook, the final version of the law allows for an additional round of negotiation before arbitration and
recognizes when Facebook reaches agreements with publishers separately.
Facebook successfully argued for the change after cutting off access to Australian publishers
and preventing people in the
country from sharing links to news. Following the move, total traffic to Australian news sites fell by 13%, while referral traffic from outside the country plunged by 30%, according to analytics firm
Critics blasted Facebook's move as sudden and heavy-handed. They reiterated the company has too much power over what people see online, meriting a breakup. But
that doesn't tell the whole story. Internet users could still visit news sites outside of Facebook or share links through email or messaging apps.
While Facebook doesn't
necessarily need links to news content to keep people engaged, there remains a key issue of how publishers exchange value with the social network. Facebook last year generated about 5.1 billion
referrals to Australian publishers, claiming the traffic was valued at $407 million Australian dollars ($324 million U.S.), Nick Clegg, Facebook's vice president of global affairs, said in a blog post.
He also said Facebook will spend $1 billion on news content over the next
Publishers argue that Facebook suppresses traffic by letting people post comments on linked headlines or images without visiting the news site. It benefits from the
increased engagement with its platform and monetizes user attention with advertising. The value of that engagement isn't clear, though Facebook claims news content makes up a tiny slice of what people
share on its social network.
Australia's media code could help to establish a value for that content through negotiations between the company and publishers, but that
framework is subject to the country's political whims. Australian publishers will end up dependent on government cross-subsidization schemes.
Instead of following that model,
publishers in the U.S. would be better served through a temporary exemption to antitrust laws that would let them collectively bargain the terms for online publication of their content.
The Journalism Competition and Preservation Act,
a bipartisan proposal to allow such an exemption, would
provide a framework for negotiations and has been endorsed by the News Media Alliance, a trade group representing 2,000 new organizations. The law would allow for more cooperation among news
publishers to set better terms for how their content appears online, or to create a digital ad network that lessens their dependence on Google and Facebook. Best of all, publishers could do that
without more burdensome regulation.