The Digital Divide - Part 2: The Flawed Fix & Why the News Media Bargaining Code Sucks
Yesterday, we delved into the origins of the media funding crisis and how the News Media Bargaining Code (NMBC) was introduced to address the imbalance between tech giants and news publishers. We explored how the NMBC, despite its well-intentioned goals, has fallen short—particularly for independent outlets—by focusing on direct payments that mostly benefit large, legacy media companies. We also explored the concept of a Tech Tax Levy as a potential long-term solution to ensure tech platforms contribute their fair share to support journalism. If you missed it, Part 1 sheds light on how we got here and why the current system isn’t working.
An Update on Part 1 which you can read here.
Since the publishing of Part 1 yesterday, Ricky Sutton, the author of Future Media, has published his latest article, "Google's Cash Cow is Headed to Pasture," which adds valuable context to the issues we explored in Part 1 of The Digital Divide. His article highlights how Google generates over US$31 billion annually from publishers while charging them around 36% in fees for access to its ad tech services. To put this into perspective, credit card companies typically charge only 2-3%, and stock traders take less than a penny. This significant difference underscores the financial challenges publishers face in an ecosystem where tech platforms are taking a much larger cut of the revenue.
Sutton also notes that Google has been increasingly keeping users within its ecosystem through mechanisms like zero-click searches, Featured Snippets, and, more recently, AI Overviews. These tools provide answers directly on Google’s search pages, reducing the need for users to click through to publisher sites and thereby allowing Google to retain a larger share of a search query’s value and advertising revenue. Over time, the trend has been shifting towards more ads being served on Google’s owned platforms, which means publishers are losing out on their share of the ad revenue.
This echoes the issues we’ve been highlighting regarding the News Media Bargaining Code and its inability to fully address these underlying structural challenges. It also mirrors our call for greater accountability from tech giants, ensuring they contribute fairly to the publishing industry they rely on for content and data. This fairness is key to ensuring a sustainable future for journalism, media companies and the public's free access to news and information.
The Digital Divide: Australia's Fight for Fair Media Funding
Part 2: The Flawed Fix & Why the News Media Bargaining Code Sucks
In Part 2 of The Digital Divide, we take a closer look at why the News Media Bargaining Code (NMBC)—once hailed as a revolutionary tool to level the playing field between tech giants and news publishers—has ultimately failed to deliver on its promises. When it was first introduced, the NMBC aimed to rebalance the power dynamics by ensuring that media companies, especially traditional ones, were fairly compensated for the news content shared on platforms like Google and Meta. However, beneath the surface, the Code has created more problems than it solved, entrenching media monopolies and pushing smaller, independent publishers further to the margins.
This article will unpack the inherent flaws in the Code’s design, including its failure to account for the reciprocal value exchange between platforms and publishers, the complete lack of transparency surrounding deals, and how the Code has inadvertently made news outlets more dependent on the very platforms it was supposed to regulate. If you’re curious about the NMBC's real impact or why it’s done more to entrench Big Tech’s dominance than to curb it, this deep dive will shed light on the untold story behind the Code.
The NMBC was introduced in Australia to address the significant imbalance in bargaining power between digital platforms like Google and Meta and news media companies. It aimed to ensure that media outlets, particularly traditional ones, were fairly compensated for the news content shared on these digital platforms. While many praised it for its ambitious goals, the NMBC has faced substantial criticism and revealed many key flaws in practice.
The ACCC's 2019 Digital Platforms Inquiry highlighted the significant market power of Google and Facebook in online search, social media, and digital advertising, as well as issues like information asymmetry, transparency in digital advertising, and the impact on journalism. The ACCC made 23 recommendations, including reforms to competition laws, digital advertising transparency, media regulation, and privacy protections. They also advocated for better funding for journalism, enhanced privacy laws, and the establishment of an ombudsman for digital platform complaints. The Australian Government responded in December 2019 with a roadmap to implement these reforms.?
A NMBC Timeline:
Former Australian Competition and Consumer Commission (ACCC) chairman Rod Sims has been a strong proponent of the NMBC, describing it as world-leading. He claims that it has achieved its primary objective, with over A$200 million paid annually by Google and Facebook to Australian media companies. Sims argues that the Code effectively balanced bargaining power, allowing for commercial deals between digital platforms and news media outlets. However, as I’ll argue below, the very premise of the code is flawed and fails to address some of the deeper issues in the media ecosystem that we’ve discussed earlier.
For example, I find it ironic that the legislation crafted by the ACCC, whose aim is to foster and encourage competition, may have actually lessened it. As noted by Rod Sims, the Code was meant to correct a "market failure"—the imbalance of power between platforms and media companies, but has it really succeeded when Meta is now threatening to leave the market entirely? Rod Sims argues that platforms like Meta financially benefit from news content, but this overlooks the larger reality. Rather, I’d argue the benefits that news companies derive from social media platforms or search engines far outweigh what the platforms gain, showing a severe lack of understanding on the part of Sims of how these digital platforms actually operate, how they surface and distribute content, generate engagement and earn revenue.
Social media and search engines offer critical pathways for news consumption, and their absence from these spaces risks leaving a vacuum that unreliable sources will quickly fill. By limiting access to trusted outlets, the audience’s news experience can become more fragmented, ultimately weakening the diversity and quality of the information they receive.
Moreover, it is essential to recognise the broader societal role that trustworthy news sources play across digital platforms. The public's need for access to credible and authoritative information has never been greater, particularly in the face of growing misinformation online. Maintaining reputable news sources on platforms serves the public good, as these outlets provide fact-checked, reliable reporting that upholds democratic discourse and informed decision-making. As noted in recent studies, when such reliable sources are removed or deprioritised, the resulting echo chambers not only polarise discourse but also degrade the overall quality of public knowledge. Thus, ensuring the presence of credible news outlets on platforms like social media and search engines is not just about business or competition; it’s about safeguarding an informed and engaged society.
Furthermore, the NMBC was only passed after Google and Meta made several demands that the government accepted. For instance, Meta went as far as temporarily blocking all news content in Australia when the Code was first introduced, demonstrating the extent of their control. This event highlights the flaws in relying on voluntary commercial agreements when the platforms wield such significant power over the distribution of news.
A Flawed Premise
I have to admit I never agreed with the premise of the NMBC in the first place. The Code, in its current state, is inherently flawed for a few key reasons. First and foremost, its fundamental premise is misguided. The idea that digital platforms, like Google and Meta, should pay for content shared on their platforms is questionable, especially considering that news publishers voluntarily provide this content and even embed sharing buttons on their websites to encourage the dissemination and sharing of their articles. Ultimately, publishers benefit from this with increased visibility and traffic generated through referral clicks back to their website, which essentially is a form of marketing that works in news outlets' favour.
The NMBC overlooks this reciprocal value exchange, focusing instead on forcing platforms to pay for content shared across their platforms that they do not directly control, and which wrongly assumes that tech companies are "taking" content. I can tell you with authority that if news publishers were so concerned about social platforms “stealing” their content and the negative implications of that, then they could easily block it from Google Search with a simple no-index tag or simply stop sharing their content to their Instagram or Facebook pages. However, they don’t—demonstrating the value they derive from this arrangement.
But wait, shouldn't publishers still be funded by these platforms for AI scraping of their content to train the platform's Large-Language-Models? The answer is yes, but I’d also argue that AI scraping is a completely separate matter, which I’ll touch on in future editions.?
Zero Transparency on Spending
One of the key issues with the News Media Bargaining Code (NMBC) is the lack of transparency surrounding the deals and funding. While Rod Sims argues that the Code was designed as a framework to support negotiation between tech platforms and news companies, I would argue—as?supported by an academic study tracking over 6,000 grants from Google and Meta—that Google and Meta may have been motivated primarily to reap reputational and political gains rather than genuinely support journalism.
Once the initial deals were secured, political pressure faded, and media coverage of the negotiations diminished, meaning the public and stakeholders had no visibility into several crucial aspects of the agreements:
As Sims points out, "Transparency was not an objective of Australia's NMBC. Not only would the commercial deals not be transparent if the bargaining power had been equal in the first place, but any arbitrated outcomes under the NMBC were required under the legislation to be kept confidential." He argues that confidentiality was intentional to prevent different deals from being done to the detriment of the news businesses, but I’m not even sure how or why that would be the case? I’d argue that it’s, in fact, more in favour of digital platforms, as the majority of media entities in Australia remain unaware of the amounts or details limiting their bargaining power.?
However, this lack of transparency extends further. There are no obligations for news companies to report how the money is being spent, whether it is:
This ambiguity makes it difficult to assess whether the NMBC has achieved its intended goals of supporting public interest journalism and sustaining the media industry.
Short-Term Solutions to a Long-Term Problem
Even if the NMBC facilitates short-term deals, the agreements are temporary and can be rescinded at any time. For example, Meta recently withdrew its funding for news in Australia, illustrating the fragility of these arrangements. Without a long-term, sustainable solution, media outlets remain vulnerable to the whims of tech platforms.
Instead of curbing big tech's influence, the law may have inadvertently increased their power by making news media more financially dependent on these platforms as has been experienced in the resultant redundancies discussed above.?
The NMBC is a band-aid solution to a much larger bullet wound. It doesn’t address the structural problems facing the news industry, such as the overall decline in advertising revenue or the dominance of tech platforms in the digital economy. We should be properly funding journalism through public investment, or a tax levy, rather than relying on the goodwill of tech platforms.
Meta Flexing their Muscles - A Power Play by Platforms
When Meta briefly blocked all news content in response to the NMBC February 2021, it demonstrated just how much control tech platforms have over news distribution. This action underscored the risks of relying on platforms to distribute news content—they can “turn off” access whenever it suits them, with little regard for the consequences to public access to information.
During the news ban in, Facebook inadvertently blocked access to several critical government and emergency services pages. The ban prevented these essential services from sharing vital public safety information through their Facebook pages, potentially putting lives at risk during emergencies or natural disasters.Many government agencies and public service organisations also rely on Facebook to disseminate important information quickly to large audiences. The NMBC, while intended to curb Big Tech’s power, inadvertently reinforced the control these platforms hold over news dissemination and advertising.
By making platforms like Google and Meta central to the negotiation process, actually reinforces their dominance. Instead of breaking up their control over digital advertising revenue (or taxing it), the Code essentially formalises their power as key players in the media ecosystem. Many of the deals struck under the NMBC are voluntary rather than mandated by the Code, leading to inconsistent outcomes for media outlets, with powerful platforms retaining significant control over who they negotiate with. This dependency could lead to potential conflicts of interest or pressure on media companies to cater to the preferences of platforms rather than prioritising editorial independence.
Stifling Innovation and New Media Models
One major flaw of the News Media Bargaining Code (NMBC) is its focus on traditional, legacy media models, which may discourage innovation and the emergence of digital-first media platforms. Critics argue that the Code prioritises established players, such as large news organisations, over fostering a diverse and innovative media landscape. By doing so, the NMBC fails to account for the decentralisation occurring in the media space, where new media entities built around personalities and non-traditional formats are thriving.
Additionally, the NMBC largely ignores newer content-sharing platforms like TikTok and X (Twitter), which have become key players in content distribution. These platforms are not included in the regulatory framework, limiting the Code's relevance in the current digital ecosystem. As media continues to evolve, with successful ventures like the "All-In" podcast and their conferences proving the potential for non-traditional media to flourish, the NMBC’s narrow focus risks stifling the growth of diverse, innovative media models that don't fit into the traditional journalism framework.
Labelled a Success but Ineffective in Practice
While the News Media Bargaining Code (NMBC) was heralded as a world-leading success, its implementation has proven to be ineffective in practice, especially for smaller, independent publishers. The process of registering on the ACMA (Australian Communications and Media Authority) register was time-consuming and burdensome for many outlets, including ours. Despite being registered, there has been little to no difference in negotiating leverage or engagement with major platforms like Google and Meta.
A major flaw in the NMBC is the lack of clarity on how it would be enforced if a company is designated under the Code (which is still yet to happen). Key questions remain unanswered:
These uncertainties make it difficult for smaller publishers to rely on the NMBC as a viable framework for negotiation. The opacity surrounding these processes creates confusion and diminishes the potential for smaller media outlets to benefit from the Code.
Moreover, the NMBC has set a poor precedent for other countries, as it may inspire them to introduce their own versions of media bargaining codes. This could lead to a fragmented and inconsistent regulatory environment for global tech companies, with different rules and standards in each country. The risk is that instead of fostering a fairer digital ecosystem, the NMBC could result in a patchwork of conflicting regulations, making it harder for tech platforms to comply and, ultimately, leading to less effective support for journalism across the globe.
Deals in the Dark: How the NMBC is Shaping Australia's Newsrooms
Since the introduction of the NMBC, a reported 34 commercial agreements were struck between major digital platforms, such as Google and Meta, and Australian news businesses. These agreements have provided approximately anywhere between $70 million to $200 million per annum, according to Sims, funding initiatives to support local journalism, including the creation of 60 new regional news jobs by the ABC and 40 new hires at Guardian Australia. As a result, newsrooms across the country have expanded, bolstering the capacity for reporting and enhancing the media landscape.
The total value of these deals has been estimated at around A$200 million from the ACCC. However, the transparency of these agreements remains a point of contention, as many deal amounts are undisclosed due to confidentiality clauses. Agreements between Google and major outlets such as Nine Entertainment and Seven West Media typically span five years, while Meta's deals generally lasted three years. Despite the significant financial injections, the lack of clarity on the specific terms of these deals raises questions about the full impact of the NMBC.
To put these NMBC deals into perspective, it's important to consider the financial scale of the media companies involved. In FY24, Nine Entertainment reported revenue of $2.6 billion and a net profit after tax of $134.9 million. Seven West Media, with a three-year deal, recorded group revenue of $1.415 billion, down 5% on FY23, and a statutory net profit after tax of $45 million, a 69% decline from the previous year. After excluding significant items, its underlying net profit after tax was $78 million, down 46%. News Corp, which entered deals under the NMBC, saw fourth-quarter revenues of $2.58 billion in Q4 2024, a 6% year-on-year increase and net income of $71 million for the quarter.?
For even further context, consider the number of employees and the revenue generated by these media giants. News Corp employs 1,559 people in Australia, while Seven West Media has around 3,200 employees, and Nine Entertainment has approximately 3,350 employees. In contrast, the Digital Publishers Alliance (DPA), representing independent publishers, consists of over 60 member publishers and 180 individual titles, collectively employing nearly 2,500 people in full-time or contractor roles. Despite its smaller scale, the DPA generates just $250 million in revenue annually highlighting the need for further support within this sector of the media industry.?
Am I against these news entities receiving funding? Absolutely not. As I’ve discussed in Part 1, I do think digital giants have a social obligation to give back to producers of news for the public’s interest, but I just don’t think the NMBC is the right or fair way to do it for many of the reasons already mentioned. We’ve already lobbied the government to argue for inclusive negotiation mechanisms aiming to address the current challenges and ensure a more equitable, sustainable, and diverse media environment in Australia (see our submission from 12 April 2022 here). As part of this, we suggested reforming the NMBC to ensure that all ACMA-registered news organisations can engage in fair and mandatory negotiations with digital platforms, promoting a more democratic media ecosystem.
A Question of Media Concentration
Australia's media sector is one of the most concentrated in the world, with a few key players dominating the industry. News Corp Australia, owned by Rupert Murdoch, controls about 60% of the daily newspaper circulation, and the top four companies generate over 70% of the industry revenue in newspaper publishing. There is also significant cross-ownership across various platforms, including newspapers, radio, and television, reducing the diversity of media sources. Comparatively, a 2016 study ranked Australia as having the most concentrated newspaper industry out of 26 countries, far surpassing democracies like the UK, USA, and Canada in terms of media ownership concentration.
The Australian media landscape is primarily controlled by a few large conglomerates, such as News Corp Australia, Nine Entertainment, Seven West Media, and the Australian Broadcasting Corporation (ABC), which dominate newspapers, TV stations, radio networks, and digital platforms. This high level of concentration raises concerns about reduced diversity in news coverage, potential political influence by media owners, and the challenges faced by new entrants trying to compete. Digitally, these dominant players extend their influence across online platforms, further limiting the variety of perspectives and making it increasingly difficult for smaller or independent outlets to establish a foothold in the market, ultimately impacting the sustainability of public interest journalism.
As Sims himself acknowledges, the NMBC has been criticised for favouring the incumbents and not promoting media diversity. In light of the above, let’s consider this quote from Sims: “In relation to diversity, the objective of the NMBC was to allow commercial negotiations for payment for existing content; how could the platforms be required to pay for content not yet created?” While he argues for other measures to support media diversity (including government grants and allowing tax deductibility for donations to the media), this statement completely misses the point. The whole premise of any funding should be to support the continuation of creating new content, perhaps amongst smaller publishers and ensuring the sustainability of the broader media industry well into the future. It doesn't necessitate the need to establish new publications to support increased media diversity. The fact that Sims focuses on “payment for existing content” shows a clear lack of understanding of how the digital media ecosystem actually operates.
Simply paying for “existing content” is a short-term fix that doesn't address the long-term needs of the media industry and demonstrates a lack of understanding of the relationship between news and digital platforms. What the NMBC should have done is ensure that the funding goes toward future content creation with transparent rules, ensuring that publishers can continue to operate and adapt in an evolving digital landscape. Instead, the code’s focus on compensating for past work undermines its potential to future-proof the media sector and support increased diversity.?
Definition Ambiguity
The News Media Bargaining Code lacks clear definitions, particularly regarding what constitutes "news." The Code defines "core news content" as content that reports, investigates, or explains current issues or events of public significance for Australians. However, the term "public significance" is not clearly defined within the context of the Code, creating a grey area that leaves room for diverse interpretations. While the term "public significance" is defined in the context of Australian Radio legislation, it is notably absent from the definition for digital and print media, leading to confusion and challenges for publications like Man of Many. Despite being a lifestyle publication, Man of Many covers topics that often intersect with current events and industry news, which we believe are of significant interest to the public, as demonstrated in our application to ACMA, which we'll be discussing in future editions of this series.
David vs Goliath: How the NMBC is Stacking the Odds Against Indie Publishers
Though designed to create a fairer distribution of revenue between digital platforms and news publishers, the NMBC has disproportionately benefited large legacy media players at the expense of smaller, independent publishers, like us, Man of Many. As Nick Shelton the Founder of Broadsheet has stated, it’s had "unfortunate unintended consequences of well-intentioned legislation”. Here's how the NMBC has worsened the divide:
?As we’ve explored, the NMBC’s implementation has raised more questions than answers. While the intent behind the legislation was to support journalism and balance the scales, in reality, it has only reinforced the dominance of large, legacy media players, leaving smaller publishers to fend for themselves. The lack of transparency in these deals, the short-term nature of the agreements, and the exclusion of newer, digital-first platforms from the conversation have made it clear that the NMBC does not address the deeper problems plaguing the media landscape, particularly in light of the recent redundancies across the industry (as discussed in Part 1).
In Part 3, we’ll delve into an even more pressing question: should lifestyle and digital-first publications even be included in the NMBC’s scope? We’ll explore who is eligible for funding, the challenges smaller outlets face in getting onto the ACMA register, and whether being a Registered News Business even matters when no one seems to benefit equally and no platforms are yet to be "designated" under the code. We’ll also examine the implications of being left out, the potential ramifications if the platforms are designated by the Government, as well as why a Tech Tax Levy could offer a more sustainable way to support journalism in an age of algorithmic dominance. Join us as we continue to unravel the complexities of media funding and the future of news.
Stay tuned!
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About the Author: Scott Purcell, CFA, the Co-Founder of Man of Many and a CFA Charterholder, is a renowned figure in the media industry. His entrepreneurial spirit was recognised in 2017 when he was a Finalist for Young Entrepreneur at the NSW Business Chamber Awards. With a special focus on technology, finance, whisky, and general lifestyle content, Scott has collaborated with leading international brands like Apple, Samsung, IWC, and TAG Heuer. In 2023, his leadership and innovation were further acknowledged as he, alongside Frank Arthur, ranked #47 on the MediaWeek Power 100 List by MediaWeek. Under his guidance, Man of Many triumphed as the Best Media Platform at the B&T Awards, 2023, and clinched the titles for Best Engagement Strategy, Website of the Year, and Publish Leader of the Year at the Mumbrella Publish Awards, 2023, showcasing his unparalleled expertise and influence in the media sector. In 2024, he was recognised in MediaWeek's Next of the Best Awards for Publishing.
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