news corp – Techdirt (original) (raw)

Taxing The Internet To Bail Out Media Won’t Solve The Fundamental Problems Of The Media Business

from the not-the-way-to-do-this dept

Hey Google, can you spare a few hundred million to keep Rupert Murdoch’s yacht afloat? That’s essentially what some legislators are demanding with their harebrained schemes to force tech companies to fund journalism.

It is no secret that the journalism business is in trouble these days. News organizations are failing and journalists are being laid off in record numbers. There have been precious few attempts at carefully thinking through this situation and exploring alternative business models. The current state of the art thinking seems to be either (1) a secretive hedge fund buying up newspapers, selling off the pieces and sucking out any remaining cash, (2) replacing competent journalists with terrible AI-written content or (3) putting all the good reporting behind a paywall so that disinformation peddlers get to spread nonsense to the vast majority of the public for free.

Then, there’s the legislative side. Some legislators have (rightly!) determined that the death of journalism isn’t great for the future of democracy. But, so far, their solutions have been incredibly problematic and dangerous. Pushed by the likes of Rupert Murdoch, whose loud and proud support for “free market capitalism” crumbled to dust the second his own news business started failing, leading him to demand government handouts for his own failures in the market. The private equity folks buying up newspapers (mainly Alden Capital) jumped into the game as well, demanding that the government force Google and Meta to subsidize their strip-mining of the journalism field.

The end result has mostly been disastrous link taxes, which were pioneered in Europe a decade ago. They failed massively before being revived more recently in Australia and Canada, where they have also failed (despite people pretending they have succeeded).

For no good reason, the US Congress and California’s legislature are still considering their own versions of this disastrous policy that has proven (1) terrible for journalism and (2) even worse for the open web.

Recently, California Senator Steve Glazer offered up an alternative approach, SB 1327 that is getting a fair bit of attention. Instead of taxing links like all those other proposals, it would directly tax the digital advertising business model and use that tax to create a fund for journalism. Specifically, it would apply a tax on what it refers to (in a dystopian Orwellian way) as a “data extraction transaction.” It refers to the tax as a “data extraction mitigation fee” and that tax would be used to provide credits for “qualified” media entities.

I’ve seen very mixed opinions on this. It’s not surprising that some folks are embracing this as a potential path to funding journalism. Casey Newton described it as a “better way for platforms to fund journalism.”

Unlike the bargaining codes, this bill starts with the right question, which is how to fund more jobs in journalism. Its answer is to use tax credits, a time-tested form of public-private partnership. It structures those credits to incentivize small publishers and even freelance journalism just as much as it helps to support large, existing media companies.

And it does all of that without breaking the principles of the open internet.

And, I mean, when compared to link taxes, it is potentially marginally better (but also, with some very scary potential side effects). The always thoughtful Brandon Silverman (who created CrowdTangle and has worked to increase transparency from tech companies) also endorses the bill as “a potential path forward.”

It’s a simple bill designed to help revive local journalism. Instead of complicated usage-based mechanisms, this approach is very straightforward. It’s an online advertising tax that funds tax credits to support education and journalism. In this case, it’s a 7.25% ad tax (matching the state’s sales and use tax rate) on companies with more than $2.5 billion in revenue.

And here’s the rub: it would raise more than $500 million.

That’s every year.

To put it in context, the single largest philanthropic commitment to local news in the U.S. was the MacArthur announcement I mentioned in the first of this post. That funding represents $100 million a year and is spread across the entire country. This would be 5x that number, would grow over time, has no end date, and is just for California. Of course, as I understand it, some of this money would have to go to the general fund and be directed towards education in the state…that’s also a great use of the funds and there would still an enormous amount left for news (we’ll know more on these exact numbers as more official analysis is completed).

But that is a staggering amount of money and a game-changing amount of potential funding for news in the state. And it’s something that could easily replicated across the country.

But I tend to agree much more with journalism professor Jeff Jarvis who highlights the fundamental problems of the bill and the framework it creates. As I’ve pointed out with link taxes, the oft-ignored point of a tax on something is to get less of it. You tax something bad because that tax decreases how much of it is out there. And, as Jarvis points out here, this is basically a tax on information:

Data are information and information is knowledge. To demonize and tax the collection of information should be abhorrent in an enlightened society. His rhetoric at moral-panic pitch sets a perilous precedent.

Furthermore, Jarvis rightly points out that Glazer’s bill is positioned as something unique when users give their attention to internet companies, but explicitly carves out when users give their attention to other types of media companies. This sets up a problematically tiered system for when attention gets taxed and when it doesn’t:

He argues that he is taxing a barter exchange users make when they give data to internet platforms and receive free content in return. Well then, shouldn’t that tax apply to the exchange we all make when we give our valuable attention to TV and radio and much of the web in exchange for free content? But the bill exempts news media.

Indeed, the entire framing of the bill seems to suggest that data and advertising is a sort of “pollution,” that needs to be taxed in order to minimize it. And that seems particularly troublesome.

As Jarvis also notes, the true beneficiaries of a law like this would still be those rapacious hedge funds that have bought up a bunch of news orgs:

The hedge funds that now own 18 of the state’s top 25 newspapers — the hedge funds that are ruining journalism in California and across America — will benefit. They should not receive a penny. If anyone’s cash flow should be taxed, if anyone should be punished for the state of news today, it is them. Though the money is intended to go to supporting reporters, money is fungible and it will doubtless support hedge funds’ bottom lines more than journalists.

Indeed, the structure of the bill is one that will continue to benefit the failed news organizations, rather than incentivizing newer, better news organizations. That is the problem with all of these approaches, which assume that the answer must be to prop up the businesses that failed to innovate, rather than creating better incentives for more innovative approaches.

Google has warned that, if the bill passed, it would likely stop funding a bunch of other news initiatives that it has funded for years. This shouldn’t be surprising. If Google has already been funneling a ton of money into news initiatives, and then the California government is forcing them to direct hundreds of millions of dollars to its preferred news initiative, it would make sense that the company would drop its other programs and redirect the money to this one.

And, again, that highlights the problematic nature of this whole setup. It’s based on having the government decide who should be taxed and who gets funded. And when it comes to journalism, we should be pretty worried about the government picking and choosing winners and losers. Because that raises serious First Amendment issues and is very prone to just supporting news organizations that treat the deciding politicians nicely, rather than those that do deep investigative reporting and expose corruption and malfeasance.

Not surprisingly, Glazer did not take Google’s announcement well. He obnoxiously declared, “When people asks [sic] who is in charge of protecting our democracy and independent news— now you know.”

Image

But, if the alternative is that the California legislature gets to pick and choose who “protects independent news,” I’m not sure that’s any better.

Honestly, if Glazer didn’t think that his plan would lead Google (and Meta) to pull the money they already put into funding journalists as duplicative, what was he even thinking?

And I say this as someone who could conceivably benefit from this bill. But I don’t trust the California legislature not to play favorites.

A few years back, I visited some elected California legislators to talk about a bunch of policy-related issues. My first meeting with a California state senator set the tone. He asked me if I had heard about a new committee he had set up, and I told him I had. He then said he noticed that I had not reported on that committee. I pointed out that the mere creation of a committee didn’t seem all that newsworthy, but when the committee did something that I thought was worth covering, I would then write about it.

His response was kind of chilling and has stuck with me for years: “well, if you’re not willing to write about what I’m doing, why should I even listen to you?”

It was a demand for political quid pro quo, which is not something we do here at Techdirt.

But I fear that a bill like Glazer’s effectively makes this mandatory. Journalism orgs will need to scratch the California government’s back to get access to these funds.

There are all sorts of reasons why tech companies should consider funding journalism. I think their desire for high-quality data for training AI is a good one, for example. But having the state step in and set the rules seems prone to all sorts of corruption.

Journalism needs new business models. We’re all experimenting all the time with different ideas (and if you’d like to help, there are lots of ways to support us). But we should be pretty wary of governments stepping in with half-baked solutions that could distort the overall world of journalism and the open internet.

Filed Under: business models, california, data extraction tax, data tax, innovation, journalism, sb 1327, steve glazer
Companies: google, meta, news corp

I Am Rupert Murdoch's Total Lack Of Shame: Now Demanding Intermediary Liability Protections For News Corp.

from the hypocrisy dept

Let’s talk a bit about Rupert Murdoch. To his slight credit, in the early 2000s, he seemed to realize that the internet would be big for media. He also realized that he might be missing out. He went on an internet buying spree. It got to the point where Newsweek was praising Murdoch’s “smart bets” on the internet. The cornerstone of Murdoch’s digital empire was MySpace; a site that was once so dominant, the media insisted that no one could ever surpass it — not even a dumpy little startup like Facebook.

We all know how that all turned out. Within a few years, people realized that nearly every one of Murdoch’s internet ventures was a total and complete flop (often embarrassingly so).

Since then, it has seemed that Murdoch has been at war with the internet. The man who spent years using his various media properties to insist that we needed “less” government, and more “free market” wasted no opportunity to demand that the government step in and regulate, breakup, or tax the internet companies which out innovated Murdoch’s News Corp. He’s even been occasionally successful in getting governments to burden his competitors with ridiculous regulations.

Over the last few years, Murdoch and News Corp. have been one of the leading voices attacking Section 230. Murdoch seems consistently angry at anything deemed good for the internet. News Corp. has been lobbying against Section 230. Fox News’ most popular host, Tucker Carlson, regularly (if consistently ignorantly) rails against Section 230. Trump’s attacks on Section 230 in 2020 were completely consistent with Murdoch’s views.

That’s why we found it grimly ironic last week when an Australian court ruled that media companies could now be held liable for 3rd party comments on social media. This was an upside down version of Section 230 Down Under, that reached way beyond social media sites being liable. Instead, it made the news organizations that posted links on social media liable for the comments that came under them.

I joked that perhaps Murdoch would finally realize why Section 230 was important, and it did not take long for News Corp. to demand that the law be changed to protect… organizations like News Corp. from some 3rd party liability:

The ruling was “significant for anyone who maintains a public social media page by finding they can be liable for comments posted by others on that page even when they are unaware of those comments,” News Corp Australia executive chairman Michael Miller said in a statement.

“This highlights the need for urgent legislative reform and I call on Australia’s attorneys general to address this anomaly and bring Australian law into line with comparable western democracies,” Miller added.

You don’t say? You mean, it might be helpful if there were some sort of law? One that made it clear that intermediaries and media organizations should not be held liable for comments from random commenters? Someone should tell Tucker Carlson…

Filed Under: australia, intermediary liability, michael miller, rupert murdoch
Companies: news corp

from the exactly-as-we-warned dept

Ever since the giant news organizations, led by Rupert Murdoch’s News Corp., began pushing the ridiculous idea of forcing Google and Facebook (and often just Google and Facebook) to pay a “link tax,” we’ve been pointing out that while this might be a windfall of free money for the news giants, small news organizations (like, um, us) would likely get totally screwed over. With Australia leading the charge of silliness and passing its link tax, we’re discovering that our predictions were exactly correct.

The big Australian publishers, News Corp. and NINE, are making out like bandits, while the smaller publications? Not so much.

A long-term commercial deal between Facebook and Google and Guardian Australia is expected to be completed in a matter of days, adding to a raft of agreements struck between large tech companies and major media outlets since February. While companies like Nine Entertainment Co, News Corp Australia and Seven West Media are already implementing plans off the back of the deals, there is increasing concern among smaller companies that they still have not been remunerated fairly.

Of course, this isn’t really surprising. In fact, the real worry should be that the administrative costs for the internet companies to have to figure out how to compensate smaller publishers is so unworthy of the hassle, that those smaller publications will just start to be excluded en masse from Google and Facebook, once again serving the interests of the largest publishers, and not actually helping the cause of journalism at all.

Filed Under: australia, link tax, rupert murdoch, wealth transfer
Companies: facebook, google, news corp

from the did-he-just-say-that-out-loud? dept

Earlier this year, we wrote a lot about the ridiculous anti-open internet Australian link tax that is now being pushed elsewhere around the globe. Anyone paying attention to the details knew that it was extreme crony capitalism at work, with the government forcing one set of massive companies (namely, Facebook and Google) to pay another set of massive companies, led by Rupert Murdoch’s News Corp and Nine. For all the talk of how big tech companies are “monopolies,” if you look at Australia’s news companies, it’s considered among the most concentrated in the world, and has been quite profitable for the likes of Murodch.

And while defenders of the bill insist (incorrectly) that the bill is not a link tax, but is merely a “competition bill” to help those few giant newspaper companies “better negotiate” with the giant internet companies, that’s bullshit for two reasons. First, it’s a “negotiation” to pay for links, and no one should ever have to pay to link to some other site. That’s just fundamentally against the concept of an open internet. Second, it’s no real negotiation because if Facebook and Google fail to agree to a deal that satisfies the Aussie media bosses, the government can step in and force an agreement on them.

Lots of people — including those in Australia — noted that this all seemed like a scheme to make Rupert Murdoch richer. And now the Australian competition official, Rod Sims, who “oversaw drafting of the law” has flat out admitted that the whole thing was Murdoch’s idea in the first place, though he insists it’s “extremely strange” that anyone thinks it’s a favor to Murdoch.

Australian Competition and Consumer Commission (ACCC) chair Rod Sims, who oversaw drafting of the law, acknowledged the negotiating system was proposed by the Rupert Murdoch-controlled publisher but said all major media operators in the country supported it.

I mean, yeah, of course they supported it. Because it’s the government forcing other companies to give them free money in response to their own failures to innovate. Why wouldn’t they support it?

It is true that Google and Facebook are bigger than News Corp., which is the point that Sims really really wants to focus on. But that doesn’t even touch on whether or not it’s appropriate to force one set of companies to pay for something that should be free (linking), to another set of companies that are still making a shit ton of money on their own.

“News Corp is 1% the size of Google. News Corp is one of four main media companies (in Australia). It’s very likely not the one with the biggest reach. I just think this is a line put out by Google,” Sims added.

“There were many people giving us ideas. News Corp was but one. This whole notion that this is about News Corp is extremely strange.”

You literally just admitted that the idea came from News Corp! It wasn’t “a line put out by Google.” It was you, who just admitted what was obvious to anyone who’s been paying attention to Murdoch for years. After all, Murdoch has been publishing op-eds (in his own company’s publications, of course), demanding Facebook and Google pay him for years. It’s not like he made it a secret.

Can you make an argument that Google and Facebook are too powerful? Sure, absolutely. But, can you then make the argument that these companies which found a way to build internet services billions of people like… should be forced to pay for Murdoch’s brand of propaganda, despite there being no fundamental reason that he deserves any of that money? Not unless you want people to think you’re in Murdoch’s pocket.

Filed Under: australia, competition, link tax, news organizations, rod sims, rupert murdoch
Companies: facebook, google, news corp, nine

Hypocrisy: Rupert Murdoch Has Always Hated Antitrust; But Now He Wants It Used Against Internet Companies Who Out Innovated Him

from the the-cronyiest-of-capitalists dept

It’s no secret that Rupert Murdoch is an extreme hypocrite. He spent decades railing against any kind of regulatory powers to hold back companies, but as soon as his own attempts to build an internet empire flopped dramatically, he’s come around to being a major booster of regulatory crackdowns. Just only against the companies who out-innovated him. For years now he’s been demanding that governments force the internet companies to pay him money — a move that has been successful in his home country of Australia.

The latest is that Murdoch, who built his business empire by buying up competitors and doing everything possible to avoid antitrust authorities, is now a major force behind supporting antitrust efforts — so long as they’re aimed at the internet companies. When the Democrats released their 5 antitrust proposals last week, each one (perhaps somewhat surprisingly) had a Republican co-sponsor. That appears to have been thanks to Murdoch:

Fox Corp. and News Corp. lobbyists have been urging GOP members to support the bills this week, according to people familiar with the efforts, with two sources saying there could be as many as 3 to 4 GOP co-sponsors on each bill. Talks are ongoing….

Say what you want about Rupert Murdoch, but the idea that he’s a free marketer and against regulations is nonsense. That was only true when the regulations involved his companies. Now that he’s failed to innovate, he’s spent the last decade demanding that governments punish the companies who actually competed better than he did. He’s the cronyist of the crony capitalists.

Filed Under: antitrust, competition, congress, innovation, rupert murdoch
Companies: news corp

Thanks To Crappy Cable Channel Bundles, Non-Watchers Hugely Subsidize Tucker Carlson And Fox News

from the fossilized-business-models dept

Thu, Apr 29th 2021 05:13am - Karl Bode

We’ve talked about the problem with bloated, expensive cable TV channel bundles for a long time. You might recall the push for “a la carte” TV channels (being able to buy cable TV channels individually) was even a pet project of the late John McCain, though his legislative efforts on that front never really went anywhere. And while the rise of streaming competition helped mitigate the problem somewhat, the tactic of forcing US cable TV consumers to buy massive bundles filled with channels they don’t watch remains a very real annoyance.

The latest case in point: many folks are realizing that the attempt to drive advertisers away from white supremacy apologists like Tucker Carlson aren’t really working, in part thanks to the traditional cable TV bundle. In short, because Fox News is included in most cable TV lineups, millions of Americans are throwing money at Fox News despite never watching the channel:

Lots of people asking about Tucker Carlson?s advertisers and, well, he doesn?t have any left. Like almost zero.

Fox News operates his show at a loss when it comes to ad revenue.

They pay for him through carriage fees, which we all pay into through our basic cable packages. https://t.co/yvwrcEGatO

— Sleeping Giants (@slpng_giants) April 21, 2021

I spent much of February talking to as many media scholars as I could for a piece trying to find a solution for the Fox News disinformation problem. The reality is there are very few policy proposals that wouldn’t run afoul of the First Amendment, especially with a rightward-lurching Supreme Court. One that might actually help work remains pushing actively to eliminate the bloated cable TV bundle:

“You?d kill those stations in a heartbeat if they didn?t get bundled in every cable package,? said Christopher Terry, assistant professor of media law at the University of Minnesota. ?All of those outlets thrive in the delivery to the audience they get by being included in every package, but in an a la carte cable package, only a handful of the true believer crowd would be willing to pay extra for them.”

?Imagine if they had to survive in an actual market-based scenario where the number of viewers they could have was limited by the people who would pay to have access to that specific content,? he added. ?You?d cut them off at the knees and use their own rhetoric to do so while making cable companies more accountable to the local customer base.”

Actually competing for attention, imagine that! Again, this was something that was supposed to be addressed by market forces via the streaming revolution, though many of the same failures in traditional cable simply wandered over to the streaming sector (not surprising since the same broadcasters and telecom giants dominated both arenas). And while streaming does provide greater choice, cable TV remains the dominant platform. As a result, Fox News still hauls in massive subsidies from a dated business model that involves tens of millions of Americans paying for a channel they never watch:

“Fox News makes $1.8 billion from the carriage fees it charges cable TV providers to include the channel in bloated, increasingly expensive cable TV bundles. But just 3 million of the nation?s 90 million cable TV subscribers actively watch the channel. In other words, 87 million Americans pay their cable company for and thus subsidize Fox News?despite rarely if ever actually watching the channel.”

“According to a survey conducted late last year, about 14% of cable TV subscribers watch Fox News regularly. But every cable TV subscriber pays an average of 1.72amonthtoreceiveFoxNews.Incontrast,311.72 a month to receive Fox News. In contrast, 31% of cable TV subscribers regularly watch FX (owned by Disney) but the channel adds just 1.72amonthtoreceiveFoxNews.Incontrast,310.81 to an average cable bill.

Judd Legum recently crunched the numbers further, showing how a lot of Fox News’ income comes utterly unearned, from people who may have zero interest in the racist tirades of a frozen TV dinner empire heir:

“According to a survey conducted late last year, about 14% of cable TV subscribers watch Fox News regularly. But every cable TV subscriber pays an average of 1.72amonthtoreceiveFoxNews.Incontrast,311.72 a month to receive Fox News. In contrast, 31% of cable TV subscribers regularly watch FX (owned by Disney) but the channel adds just 1.72amonthtoreceiveFoxNews.Incontrast,310.81 to an average cable bill.

This means, for every actual viewer, Fox News receives a 7.75subsidyfrompeoplewhoneverwatchFoxNews.Thisisahighersubsidythanothernon−sportschannels,likeFX(7.75 subsidy from people who never watch Fox News. This is a higher subsidy than other non-sports channels, like FX (7.75subsidyfrompeoplewhoneverwatchFoxNews.Thisisahighersubsidythanothernon−sportschannels,likeFX(1.79), CNN ($3.18), and TBS ($2.79), receive. And none of those channels regularly spreads white nationalist talking points to millions of viewers.”

But again, as John McCain showed, breaking this logjam is easier said than done. Maine, for example, recently tried to pass a law forcing cable giants to sell channels individually, but found itself quickly sued by Comcast, which claimed the law violated the company’s free speech rights (Comcast’s winning that battle so far). The cable and broadcast industry has lobbied relentlessly to ensure this shift to individual channels never happens, claiming that moving to an a la carte model would kill niche channels and raise consumer prices (both things that repeatedly happened anyway).

Granted this isn’t just about not liking the channel or disagreeing with the channels politics. There’s clear evidence, especially on the COVID front, that the bullshit pouring out of the Rupert Murdoch empire is actively harming human health:

“A media watchdog found over 250 cases of COVID-19 misinformation on Fox News in just one five-day period, and economists demonstrated that Fox News had a demonstrable impact on non-compliance with public health guidelines,? the lawmakers wrote.”

If you can’t rely on the wisdom of the courts, free market competition, or regulators to disrupt the Fox News disinformation parade, that leaves activists like Media Matters, which have increasingly been trying to target the problem with it’s Unfox My Cable Box campaign. But even if we’re to simply wait for the purely organic death of the traditional cable TV channel bundle at the hands of the streaming television and pissed consumers, it’s not entirely clear, based on the popularity of many bigoted influencers, that dangerous dipshittery won’t just find a new form to inhabit.

Bullshit is more profitable than truth under the engagement-driven, ad-based business models we’re building, and that’s simply a fact. Policies that change this reality won’t be easy to come by. The world’s top media policy experts are glacially pondering practical solutions to the toxic sludge of disinformation pouring out of the face of trolls like Tucker Carlson, but you may want to go read a book, because it’s gonna be a long wait.

Filed Under: bundles, cable bundles, fox news, subsidization, tucker carlson
Companies: news corp

from the still-not-great dept

Facebook is restoring news links in Australia after the government agreed to amend the proposed link tax law. We’ll explain the details down below, but at the very least, this shows part of the reason Facebook did what it did, when it did. The end result still sucks, and I wish Facebook had stood its ground here because this portends a significant closing off of the open internet.

Many of the people who were annoyed over my support of Facebook’s decision last week to block all news links in Australia kept saying “but the law hasn’t passed yet — why would they do this now?” Except… that ignored the reality of the situation. Facebook had announced last summer that it would remove links to all news if the law wasn’t changed. And the Australian Parliament mocked Facebook and refused to make any changes to the law — which was set to pass this week.

So, Facebook showed that it was serious about what it said last September, and it did so days before the law was supposed to pass… and now the Australian government has agreed to make changes. So, Facebook did get something out of making the move last week. Unfortunately, they didn’t get nearly enough, and the end result is a disaster for the open web, but good for Rupert Murdoch.

The law is still really bad. The only major difference is that Facebook gets a little more time to cut a deal with Murdoch and other Australian news org owners:

But on Monday, the Australian government added amendments to the proposed code. That included a two-month mediation period, giving the two sides more time to negotiate commercial deals that could help Facebook avoid having to work under the code?s provisions.

In exchange, Facebook agreed to restore news links and articles for Australian users ?in the coming days,? according to a statement from Josh Frydenberg, Australia?s treasurer, and Paul Fletcher, the minister for communications, infrastructure, cities and the arts.

?Importantly, the amendments will strengthen the hand of regional and small publishers in obtaining appropriate remuneration for the use of their content by the digital platforms,? the statement added.

Campbell Brown, Facebook?s vice president of global news partnerships, said in a statement, ?We?re restoring news on Facebook in Australia in the coming days. Going forward, the government has clarified we will retain the ability to decide if news appears on Facebook so that we won?t automatically be subject to a forced negotiation.?

I honestly don’t know what this actually means for the future of the law, but it still looks like a mess. Having Facebook pay for any links to news articles should be a non-starter. It is fundamentally against the idea of an open web. People who keep insisting that this is not a “tax” or that it’s somehow about “competition” are wrong and fundamentally misrepresenting what is happening here. Yes, Facebook and Google are big. Yes, if there were negotiating a deal they would have leverage. But — and here’s the important part — there’s nothing to negotiate over here, because there’s no requirement anywhere to pay for links, because that’s fundamentally stupid and against the idea of an open internet.

So, those who keep saying this is necessary because without it the media organizations in Australia “don’t have bargaining power” against Google and Facebook are simply missing the point. I mean, those same media organizations do have bargaining power with a site like, let’s say, Techdirt. I link to them sometimes. They’re a hell of a lot bigger than me. So, does this mean that I should be able to go to the Australian Competition authority and demand they make News Corp pay me when I link to them? That makes no sense at all. There should never need to be any negotiation or any discussion about bargaining power over links because links are fundamentally free.

And, yet, the end result of this deal is that it sounds like Facebook is effectively caving and agreeing to pay for links. The “compromise” appears to be just that Facebook gets a few more months to negotiate what it will pay (and if those negotiations fail, Australian arbitrators will simply choose how much it pays). This remains a very bad and dangerous idea, that is going to lead to a big mess around the globe. Lots of other industries are going to start demanding payments for links as well, and it puts the fundamental nature of the open internet under attack.

Filed Under: australia, competition, link tax, links, negotiations, news, rupert murdoch
Companies: facebook, news corp

Australian News Sites Shocked & Upset To Learn They Don't Need To Rely On Facebook For Traffic!

from the wait,-that's-possible?!? dept

I am still perplexed and confounded at how many people seem to think that Facebook is the one at fault for blocking links to news in Australia. Again, the law (that was about to be approved by the Australian Parliament despite Facebook warning them months ago that it would be forced to block news links if it went forward in its current form) would have been a disaster for the open web. And that’s even if you believe that Facebook itself has been a disaster for the open web. You can say that Facebook is the worst company in the world… and still recognize that this was the right move.

The law mandated that if Facebook had any links to news, then it had to negotiate a deal to pay certain news organizations (mainly Australia’s largest news organizations, where Rupert Murdoch is the dominant owner in a news industry that is one of the most consolidated in the world). If Facebook and Murdoch couldn’t reach an agreement, then they had to go to binding arbitration in which an arbitrator would simply tell Facebook how much it had to give Murdoch and other major media owners. Some have argued that this is not a tax, but… having the government step in to force a company to pay money for doing business is, by any normal definition, a tax. Though, this is actually worse than a tax, because it’s not putting the money into the hands of the government to be invested in public works. It’s going to one of the richest people in the world. For what? For failing to adapt to a changing market.

As we noted a few years ago, it’s truly stunning that Murdoch, who has spent much of his life going around the world preaching the gospel of “free market” and deregulation, completely changed his tune when he completely misunderstood the internet, and saw multiple internet investments disappear. So he turns around and demands that the companies who actually innovated simply have to give him money? That doesn’t sound like a free market. It sounds like welfare for a billionaire who’s upset he’s not even richer.

Even so, the most bizarre thing about last week’s story is how many Facebook haters who have insisted for years that Facebook “killed” the news business were absolutely apoplectic that Facebook was getting out of the news business entirely. You’d think they’d celebrate. Facebook can’t keep killing the journalism business if it’s not in that business any more.

The other bizarre reaction — which filled my Twitter feed to a point of ridiculousness for days — was the claim that Facebook was somehow “blocking important news” in Australia, including news about the pandemic and vaccines. Except… it wasn’t. No news was “blocked.” Just links to news on Facebook. All of these news organizations have websites. And many have apps. And they all still exist.

Indeed, the most amusing thing in all of this is that people in Australia are suddenly discovering that they don’t need Facebook for news. The Australian Broadcasting Company (ABC) saw its own news app shoot to the top of the Apple App Store charts in Australia. Ironically, the original draft of this stupid law was so biased towards Murdoch that it originally excluded ABC from getting any money, and was only added later, after some folks pointed out how blatantly corrupt it was to leave them out and just funnel more money to Murdoch. But it’s not just ABC that has benefited. In a Reuters story, News Corp’s executive chairman in Australia, Michael Miller, admitted that direct traffic to their websites was way up as referrals from Facebook disappeared:

?Definitely referral traffic was nonexistent … while at the same time direct traffic to our websites was up in double digits,? he told the inquiry.

That… seems like a good thing? But, of course, this was never actually about helping news organizations like this. It was always about the cash transfers. Because immediately after Miller admits that direct traffic to their websites is way up, he demands that the Australian Competition and Consumer Commission (ACCC) “scrutinize Facebook’s move.”

I mean… what the fuck is going on here?

Rather than having Facebook mitigate your traffic, which is what you’ve been complaining about for years, the company has exited the space, leading to a massive jump in direct traffic. The reaction here shows pretty clearly that the problem is not Facebook. The problem is that News Corp. and other Australian news organizations are too lazy to actually do anything with all of this direct interest. Facebook just dumped a direct connection to users right in these news organizations’ laps — removing Facebook as a middleman — and the news organizations’ response is… to blame Facebook and try to get the Competition authority to go after them. For what? Helping them? This whole thing is so bizarre.

The same Reuters report notes that traffic from Facebook to Australian news sites plummeted after the ban, as you’d expect. But, again, isn’t that what all the Facebook haters wanted in the first place? To get Facebook out of the news intermediary business?

It seems the truth is pretty self-evident: this was all a greed play. They just want Facebook’s money, but they don’t want to actually do the work to earn it.

Filed Under: australia, direct traffic, link tax, news tax, tax, traffic
Companies: abc, facebook, news corp

The Bizarre Reaction To Facebook's Decision To Get Out Of The News Business In Australia

from the it's-quite-reasonable dept

None of this should have been a surprise. Back in September we wrote about Facebook publicly saying that if Australia went forward with its ridiculous attack on the open internet, and instituted a “news link tax” on Facebook and Google, that it would block news links on Facebook in Australia… and basically everyone ignored it. So, yesterday, when Facebook announced that it was no longer allowing news to be shared in Australia (and relatedly, no longer allowing the sharing of Australian news services on Facebook), it should not have been a surprise.

And yet… it seemed to make tons of people freak out for all the wrong reasons. Almost everyone started blaming and attacking Facebook. And, look, I get it, Facebook is a terrible, terrible company and deserves lots of blame for lots of bad things that it does. But this ain’t it. There are a lot of examples of this, but because he’s the top member of the House of Representatives working on antitrust issues, I’ll specifically call out Rep. David Cicilline’s response:

If it is not already clear, Facebook is not compatible with democracy.

Threatening to bring an entire country to its knees to agree to Facebook?s terms is the ultimate admission of monopoly power. https://t.co/0JjTqtQhku

— David Cicilline (@davidcicilline) February 17, 2021

That says:

If it is not already clear, Facebook is not compatible with democracy.

Threatening to bring an entire country to its knees to agree to Facebook?s terms is the ultimate admission of monopoly power.

But that’s completely nonsensical. We can argue about whether or not Facebook is “compatible with democracy” but the simple facts of the situation are that Australia — pushed heavily by Rupert Murdoch — has decided to put in place a plan to tax Google and Facebook for any links to news. The bill has all sorts of problems, but there are two huge ones that should concern basically anyone who supports a free and open internet.

First is the link tax. This is fundamentally against the principles of an open internet. The government saying that you can’t link to a news site unless you pay a tax should be seen as inherently problematic for a long list of reasons. At a most basic level, it’s demanding payment for traffic. There are two entire industries out there based entirely around trying to get more traffic from these companies: “search engine optimization” and “social media management.” The reasons there are those industries is because everyone else in the world has figured out that having prominent links on search engines and social media is valuable in its own right and that it’s up to the sites that get those links, and the corresponding traffic, to make use of it.

But here, a bunch of lazy newspaper execs who failed to adapt and to figure out better internet business models not only want the traffic, they also want to get paid for it.

This is like saying that not only should NBC have to run an advertisement for Techdirt, but it should have to pay me for it. If that seems totally nonsensical, that’s because it is. The link tax makes no sense.

And, most importantly, as any economist will tell you, taxing something doesn’t just bring in revenue, it decreases whatever you tax. This is why we have things like cigarette taxes and pollution taxes. It’s a tool to get less of something. So, in this case, Australia is saying it wants to tax links to news on Facebook, and Facebook responds in the exact way any reasonable economist would predict: it says that’s just not worth it and bans links. That’s not incompatible with democracy. It’s not bringing a country to its knees. The country said “this is how much news links cost” and Facebook said “oh, that’s too expensive, so we’ll stop.”

Contrary to the idea that this is an “attack” on journalism or news in Australia, it’s not. The news still exists in Australia. News companies still have websites. People can still visit those websites.

Indeed, the people who are saying that this move by Facebook is somehow an “attack” on news or an attack on Australian sovereignty seem to be admitting more than they’d really like: that they think Facebook must be a dominant source of news in the country.

I mean, if Facebook is really such a problem, shouldn’t they all be celebrating? This is Facebook saying “okay, okay, we’ll completely remove ourselves from the news business.” Since everyone was complaining that Facebook was too much of a presence in the news business… isn’t that… a victory?

And we haven’t even gotten to the other problematic part of the law — which is that it requires Facebook and Google to give newspapers heads up to algorithmic changes. This is completely disconnected from reality. Facebook and Google may make multiple algorithm changes every day, just to keep their services running. Having to tell newspapers (and them alone) about those changes with a few weeks notice is basically giving those news organizations the keys to the kingdom: it’s telling them how to game the algorithms. If you think bogus clickbait is a problem now, just imagine what it’s like when all of the Australian press get to know the secrets behind the algorithm, and get to prepare for any changes.

The whole story is absolutely ridiculous. And the most incredible thing is that no matter what Facebook did here it would have gotten yelled at. And the proof is not hard to find. Because just an hour or two before Facebook made this announcement, Google went the other way — coming to an agreement to pay Rupert Murdoch for featuring Murdoch-owned news organizations content on Google. And people freaked out, complaining about Google helping fund Rupert Murdoch’s disinformation empire. Except… that’s the whole point of the law? So it’s a bit bizarre that the same people are mad about both Facebook’s decision to not give free money to Rupert and Google caving to do exactly that:


So… it’s bad to pay Murdoch. And it’s bad not to pay Murdoch. There is no consistency or principle behind all this other than people so focused on “Facebook and Google must be evil, so even when they do the exact opposite of each other, both are more evidence of evil.”

This fight was not “Facebook v. Australia.” Or “Facebook v. journalism” even though some ignorant or dishonest people are making it out to be the case. This was always “Rupert Murdoch v. the open web.” We may not like Facebook in the role of the defender of the open web (and it’s far from the best representative for the open web). But Facebook saying that it won’t pay a link tax is a defense of the open web and against Rupert Murdoch. It’s the right move, and whatever else you may think of Facebook, the company deserves credit for taking the right stand here.

Filed Under: australia, link tax, links, news, open internet, rupert murdoch
Companies: facebook, google, news corp

Australian Court Says Raid Of Journalist's Home Was Illegal… But Allows Federal Police To Keep The Evidence They Seized

from the wrong-but-not-wrong-enough-I-guess dept

Last year, the Australian government decided journalists just weren’t feeling chilly enough. In response to the publication of leaked documents detailing the government’s plan to allow more domestic surveillance, the Australian Federal Police started raiding journalists’ homes.

They started with News Corp. journalist Annika Smethurst’s home. Hours later, police raided broadcaster Ben Fordham’s home. A third raid was broadcast live, as the AFP swarmed ABC’s offices seeking documents that might reveal who leaked sensitive documents to journalists.

Australia’s prime minister, Scott Morrison, had no problem with this cop-based threat to the country’s free speech protections.

Asked if the news troubled him, he said: “It never troubles me that our laws are being upheld.”

The laws aren’t being upheld. That’s the determination of the country’s highest court. In fact, they’re being broken.

News Corp. journalist Annika Smethurst went to the High Court to overturn the warrant that was executed on her Canberra home in June last year and triggered a national campaign for greater press freedom.

The seven judges unanimously agreed that the warrant was invalid, partly because it failed to state the offense suspected with sufficient precision.

Unfortunately, the court didn’t go so far as to uphold protections for journalists that should shield them from law enforcement raids seeking to uncover their sources.

But the majority of judges rejected her application for the material seized to be destroyed, meaning police could still use it as evidence against her.

This ruling only raises further questions. If the warrant is invalid, what is this evidence being used for? The charges are unclear, according to this court, but somehow the evidence of… whatever… is still valid and can be used to engage in an investigation, if not a prosecution?

For the moment, the AFP says it won’t be looking at the evidence it took from Smethurst’s home.

Australian Federal Police Commissioner Reece Kershaw said the evidence taken from Smethurst had been “quarantined” from the investigation for the moment.

“So what we’ll do carefully and correctly is take legal advice … on what we do with that particular material,” Kershaw told reporters. “Investigators are not able to look at that.”

That may be, but that statement doesn’t say anything about any “looking at” that may have been occurred before court proceedings made it potentially unwise to keep sifting through possibly-tainted evidence.

With this still unsettled, this statement — from the head of News Corp. — seems a bit overconfident.

“The High Court ruling sends an indisputable message, that the Federal Police must obey the law and that their raid on Annika Smethurst’s home was illegal,” Miller said in a statement. “Annika Smethurst should not be prosecuted for simply doing her job as a journalist to rightly inform Australians on serious matters of public interest.”

Michael Miller is right: Smethurst should not have been targeted — much less raided — for publishing leaked documents. The government’s supposed allegiance to protecting free speech rights should have prevented a journalist from being the subject of a law enforcement investigation. But he’s somewhat wrong about the message the court sent. It did say the warrant was invalid. But it refused to force the AFP to destroy the illegally obtained evidence. That’s not an “indisputable message.” That’s a mess that still needs to be properly sorted out. All it really says is the AFP needs to be a bit more careful crafting warrants before disregarding the protections Australian journalists are supposed to have.

Filed Under: annika smethurst, australia, free press, free speech, journalism, leaks, raiding journalists, warrant
Companies: news corp