Labor plan forces tech giants to pay for news content
Although full details of commercial deals entered into under the news bargaining law are not made public, a 2022 review of the scheme found that more than 30 commercial deals were entered into by Google and Meta worth approximately $200 million to $250 million annually.
“Due to strict confidentiality provisions, it is not possible to verify these estimates, but to date the Treasury has not received any information to suggest they are incorrect,” the discussion document says.
“The total annual value of these deals is widely reported to be approximately $200 to $250 million in news industry terms; the annual value of Meta’s deals is estimated to be approximately $70 million.”
The deals represented around 1.5 per cent of the companies’ gross annual revenue in Australia, according to Treasury modeling of these figures and publicly available information on technology platform revenue.
The Albanian government wants its new plan to have a similar effect. Given that it plans to make penalties 50 per cent more expensive than reaching a deal, Treasury modeling suggests tech companies should face penalties of 2.25 per cent of Australian revenues.
They would avoid this fee by striking deals with Australian media companies equivalent to 1.5 percent of their revenue, matching the value of previous deals.
Payments made by tech companies to media companies will also be tax-deductible, but any penalties they pay will not be deductible, giving them more incentive to sign deals.
“The purpose of the news bargaining incentive is that the government does not collect any revenue from it,” the Treasury discussion paper says.
“Major digital platforms that choose not to enter into or renew commercial agreements that support Australian journalism will pay incentives, while platforms that provide commercial agreements and support will be able to reduce their liability to a cut, ideally to zero.”
Any money collected by the government would be distributed directly to media companies.
The new rules will apply to social media platforms and search engines with annual gross revenues in Australia above $250 million. The Albanian government had stated that it wanted the plan to be updated to January 1 of this year but is now awaiting feedback on the start date.
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In the statement made by Communications Minister Anika Wells and Deputy Treasurer Daniel Mulino, it was stated that the charges apply to all major social media and search companies and that these accusations cannot be circumvented if a technology company pulls news content from its platform, as Meta did in Canada.
“The incentive enables major digital platforms to contribute to the sustainability of news and journalism in Australia,” they said.
If successful, it would be a huge boon for Australian media companies, including Nine, which owns the imprint, and Seven West Media, which is struggling in a tough advertising market.
Rules to ensure fair distribution of payments between small and large media companies are still being worked out, but options include caps commensurate with deals or greater discounts for deals with smaller businesses. The consultation ends on December 19.
Nine Entertainment CEO Matt Stanton and News Corp CEO Michael Miller said they were pleased to see the momentum returning.
“Journalism is important to Australians because our democracy is important to all of us,” Stanton said. “The basis of this is setting rules for the big tech and social platforms that say they have both a commercial and a societal role in all of this.”
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