August 30, 2022

Could Media Companies Soon Collectively Negotiate Against Platforms?

One inherent disadvantage of media companies when talking about platforms is their size. Compared to Facebook or Google, a publisher will never be able to negotiate with any sort of heft. That might actually change.

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Now let’s jump in…

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Last week, Congress announced the “Journalism Competition and Preservation Act of 2021.” Should it pass and appear to have bipartisan support, it would be a legitimate win for news organizations. According to the bill:

An eligible digital journalism provider shall provide public notice to announce the opportunity for other eligible digital journalism providers to join a joint negotiation entity for the purpose of engaging in joint negotiations with a covered platform under this section, regarding the terms and conditions by which the covered platform may access the content of the eligible digital journalism providers that are members of the joint negotiation entity.

Okay, so let me break this down because legislators like to sound annoying when they write. Multiple media companies can join together to negotiate with “covered platforms.” What’s a covered platform? According to the bill, it needs to have three primary requirements:

  1. At least 50,000,000 U.S.-based monthly active users
  2. Has net annual sales or a market cap of greater than $550,000,000
  3. Has no fewer than 1 billion worldwide monthly active users

This bill should be called the “Journalism Companies Can Negotiate With Facebook and Google Act of 2021.” But alas, we can only be so obvious with our laws.

But there are only certain media companies that qualify. You have to be large—generate $100k+ in revenue a year and have an editorial process that publishes content regularly—but not too large. If you have more than 1,500 full-time employees, you do not qualify. Many of the most significant news companies—Times, Washington Post, WSJ—would be negatively impacted.

What remains unknown is how strict they are with this being for “news” companies. It says that this is for companies that:

…distribute original content concerning local, regional, national, or international matters of public interest through activities, including interviews, observing current events, or analyzing documents and other information.

What if I analyze a celebrity’s tweets and post about them? What if I watch Game of Thrones and then write a post? What if I run a medical site and my writers ask a doctor before writing a piece? Does that qualify? If so, the list could also include Dotdash Meredith, Buzzfeed, Vox, and Condé Nast. And I know I am forgetting many others.

But that’s the point. This is meant to help the small players have a level playing field when negotiating with the major platforms. Any publication can decide it wants to work out a deal with a platform. The company’s CEO can then call all her friends and have them join the negotiation. Suddenly, you go from one site to ten sites. Or one hundred sites. Then, there is legitimate scale when you sit down across from the platform.

And it could have a material impact on things.

According to a PressGazette story back in February 2022:

He [Rod Sims] is the chief architect of legislation that he estimates has resulted in content licensing deals worth more than AU$200m (£106m/$145m) for the Australian media.

So, how big could it be for the United States? According to the CIA, Australia’s real GDP was $1.25 trillion in 2020 (using 2017 dollars). The U.S. GDP was $19.85 trillion in the same year. That’s 15.88 times larger. Could this be worth upwards of $2.22 billion for news companies in the United States?

It’s hard to say. But if the law has the same power as the Australian one, you have to imagine there will be some legitimate cash infusions available. But here’s the question. How many companies will this help? Is it 1,000? 10,000? At 10,000, that’s only $222,000 in cash per publication. And that assumes an equal distribution. It’ll still likely be based on how much content is created.

I’ve long been resistant to these laws, if only because they didn’t make sense from a logical perspective. Google sends me free traffic. Of course, you could argue that they can only make money because they show snippets of my articles on their search results pages. But this feels like a swap to me. I give them the snippets, and they give me free traffic in exchange.

Otherwise, we’re talking about being paid to receive free traffic. No publisher would ever give an advertiser free promotion, so why should Facebook or Google? Because they’re bigger? This is where the logic struggles for me. On the other hand, maybe everything is illogical regarding laws, and everyone has to figure out how to get their dollar.

Here’s how I think about it. First, there should be no negotiation for a regular result in the SERPs. That is literally a one-for-one exchange. Google brings traffic; you bring a link. However, for things like Rich Snippets, I do believe Google should have to pay. For example, when it takes the rating of a restaurant from Yelp and shows it on the results, it should have to pay for that. Or, if it takes a piece of your article and displays it at the top of the SERP for specific search queries, it should also have to pay for those.

Essentially, when Google starts to take certain pieces of your site and move that information to its platform with the goal of not having the user click, it should then have to pay. This feels logical to me. Google is trying to increase its revenue by keeping users on its platform versus sending those users to your site. That should be compensated.

But I do not believe publishers should receive cold, hard cash simply for existing. That makes zero sense to me. And I get it; I am supposed to be pro publisher. I am. There just has to be some logic to all of this. If Google is not providing some sort of value in exchange for content, it should pay. Otherwise, it makes no sense.

Much of this could very well be moot, though. Congress just announced the bill last week, the midterms are in a little over two months, and it’s very likely nothing comes from this. So, as with most things, we’ll have to wait and see.

Thanks for reading today’s AMO. I am going to be on vacation for the next week and a half, so there will be no AMO this Friday, next Tuesday, or the following Friday. I will be back on Tuesday, September 13th.

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