It’s the media vs. online platforms in the internet battle of the century

By | August 8, 2023

Since the earliest days of online networks like AOL and Prodigy, there has been a tension between the media (print and electronic press) and online platforms. This is because they compete for advertisers’ spending and because online platforms unilaterally offer (or do not offer) consumers access to media content simply by clicking on a link.

This tension has been simmering for the past few years and is now at full boil in the conflict between Google and Meta on one side and Canadian media on the other.

In the 2010s, many advertisers gradually concluded that advertising through major Internet platforms was more effective than direct advertising in specific media, primarily because such platforms can identify the consumer and target ads to consumers with the greatest potential. This shift occurred during the period when online classified advertising services overtook print media’s classified advertising services, putting additional financial pressure on advertising-dependent media.

The result has been greater reliance by many media companies on subscription revenue as well as greater attention to managing expenses and consolidations. Some media have migrated to non-profit models and some have sought government support.

From my experience, the media’s perspective has been that the media creates content and value on significant expenses; consumers seek this content and benefit from it; society benefits from the content created by the media; and online/internet platforms do not create such content but are merely conduits for it.

Unsurprisingly, the general sentiment among people in the media is that internet platforms owe a large part of their financial success to the content the media creates, and that it is only fair that the financial success of the platforms is shared.

Historically, people on internet platforms have a completely different relationship: the platforms’ consumers depend on the platform to provide consumers with a very wide range of content, of which media-created content is only a modest part.

As a result, at great expense, Internet platforms create and operate complex facilities that sometimes deliver to media consumers who would not otherwise have used that media’s content. And any consumer who wants to subscribe to a media’s content is free to do so. Few platform managers believe that media-created content is fundamental to their business.

It is not unusual when two competing perspectives clash over justice and societal benefits that one side seeks support from governments. So, over the past few years, media organizations around the world have sought government support in their efforts to get internet platforms to share in their financial successes. Outside of the US, few officials also miss the point that their media tend to be local in each country, while the biggest internet platforms tend to be American.

The first major initiative probably took place in Europe, where the European Union (EU) adopted a set of rules in 2019 requiring major internet platforms to enter into revenue-sharing arrangements with the media whose content the platforms refer to.

In 2021, Australia passed its own law requiring major internet platforms to negotiate revenue sharing arrangements with Australia’s main media outlets that the platforms refer to. During the development of the final terms of Australia’s Media Bargaining Code, attention was drawn to Facebook’s staunch opposition to the proposed terms and its temporary blocking of all Facebook press links from Australia.

Importantly, legal experts note that both the EU and the Australian revenue-sharing mandates provide flexibility in the selection of both eligible platforms and media, and both rely primarily on private negotiations between the parties to resolve any financial arrangements. Partly as a result, revenue-sharing arrangements have been negotiated in several European countries and Australia, although few details have been disclosed; and similar laws are being considered in several other countries. Conflicts have arisen in France over platform revenue sharing from Google and, more recently, Twitter.

The current boil-over is in Canada, which in June passed the Online News Act, which requires major Internet platforms to enter into revenue-sharing agreements with qualified Canadian media by 2024, subject to approval by Canadian regulators. Both Google and Meta/Facebook have indicated that the law is unfair and unenforceable; and that as a result they will stop providing access to Canadian media content.

In response, the Canadian government has announced that it will fully enforce the law as approved and will stop its own advertising on Facebook/Meta (and possibly Google in the future). Some Canadian political figures have even called on Canadians to use other internet platforms and boycott the objectionable internet platforms.

Aside from lawsuits, which take place in a structured environment, this is as close to open confrontation as we’ve seen involving major internet platforms and governments in Western countries. It leaves everyone unsure of what is going to happen. Both sides have been quite public, and each seems to believe the stakes are high, all of which leaves less room for quiet negotiations.

It will be difficult to square this circle. Many of the media, especially local and smaller media, are under financial pressure, and reliable revenue sharing arrangements (which cannot be dropped) are seen by some as a possible lifeline.

Alternatives such as public funding are widely seen as opening the door to government control, and conversion to a non-profit model leaves huge unanswered questions. Many internet platform executives fear that detailed government control of media revenue sharing is not only a step towards price regulation, but that it will immediately open the door to a host of other non-media content and infrastructure providers, such as similarly would argue that justice and social services require revenue sharing with them. Quiet negotiations are probably the best hope for both groups.

Roger Cochetti is an award-winning executive in the technology and commercial aerospace industries and a former US government official. He served as a senior executive at COMSAT, IBM, VeriSign and CompTIA. He has co-founded a number of non-profit organizations in the technology sector and is the author of textbooks on the history of satellite communications.

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#media #online #platforms #internet #battle #century

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