A recent working paper estimates the potential impact of proposed legislation on the payments Google and Meta (Facebook’s parent company) would owe US publishers. The Journalism Competition and Preservation Act (JCPA) is one such law that aims to address the issue of platforms profiting from news content without adequately compensating publishers. The findings suggest that greater transparency is needed to ensure a fair and equitable standard for payments between platforms and publishers.
The proposed legislation is inspired the 2021 Australian News Media Bargaining Code, which mandates that platforms like Google and Facebook pay news publishers for their content. This code has had a positive impact on the industry increasing revenue and journalist employment. As a result, other countries, including Canada and Switzerland, are considering similar laws.
One of the challenges in determining fair payments is the lack of transparency surrounding existing payment agreements between platforms and publishers. Non-disclosure agreements often hide the exact amounts and calculations, making it difficult to assess the fairness of these arrangements. The working paper suggests that these calculations should be made more transparent to enable a broad and inclusive discussion on the topic.
The study estimates that Google owes news publishers an annual payment of $10-12 billion, while Facebook owes approximately $1.9 billion. These figures represent a 50-50 split of the revenue generated news content on their platforms. By using game theory and cooperative bargaining insights, the authors argue that current payments fall far below a “fair payment” benchmark.
The proposed legislation, like the Australian code, would allow for collective bargaining between news publishers and platforms. Critics have raised concerns about favoritism toward larger outlets, such as Murdoch-owned ones, and neglect of smaller independent publishers. However, the success of the Australian code in increasing payments to both small and large outlets suggests that revenue sharing can benefit the industry as a whole.
The study’s calculations highlight the importance of news content to platforms. Users spend a significant amount of time on platforms like Facebook consuming or interacting with news content, and this contributes to the platforms’ advertising revenue. Equitably determining the share of this revenue between platforms and publishers requires a careful analysis of user impressions and historical benchmarks.
In conclusion, the proposed legislation could reshape the relationship between platforms and news publishers ensuring fairer revenue sharing. Transparency and collective bargaining would play crucial roles in achieving this goal and supporting the sustainability of the news industry.
What is the Journalism Competition and Preservation Act (JCPA)?
The JCPA is proposed legislation in the United States that aims to enable collective bargaining between news publishers and platforms like Google and Facebook. It seeks to address the issue of platforms profiting from news content without adequately compensating publishers.
What is the Australian News Media Bargaining Code?
The Australian News Media Bargaining Code is a law that requires platforms like Google and Facebook to pay news publishers for the use of their content. It was implemented in 2021 and has resulted in increased revenue and journalist employment in the Australian news industry.
Why is transparency important in platform-publisher payment agreements?
Transparency is vital in platform-publisher payment agreements to ensure fairness and equity in revenue sharing. Transparent calculations enable a broader discussion on the topic and make it easier to determine if publishers are receiving a fair payment for their content.
How much do Google and Facebook owe news publishers?
According to the working paper, Google owes news publishers an estimated $10-12 billion annually, while Facebook owes approximately $1.9 billion. These figures are based on a 50-50 split of the revenue generated news content on the platforms.
How does news content contribute to platform revenue?
News content plays a significant role in driving user engagement and advertising revenue for platforms. Users spend a considerable amount of time consuming or interacting with news content on platforms like Facebook. This engagement contributes to the advertising revenue generated the platforms.