An extraordinary demand from a publishing powerhouse
23 Jan, 2018THEVERGE.COM
Rupert Murdoch, the executive chairman of publishing empire News Corporation, issued a statement today proposing a new licensing deal between media organizations and platform-owning tech companies. His goal: get entities like Facebook and Google to pay money to publishers, effectively in exchange for the value news outlets bring to those platforms.
Citing the popularization of “scurrilous news sources through algorithms that are profitable for these platforms but inherently unreliable,” Murdoch says Facebook and Google should pay money in an arrangement similar to so-called carriage fees. These fees are the money paid by cable and satellite television providers to local, over-the-air broadcast stations for the right to carry local transmissions. In the US, this is an industry norm, with the fees being baked into what’s known as retransmission consent. That arrived back in 1992 in an agreement that became legally mandated between cable operators and stations with the United States Cable Television Consumer Protection and Competition Act.
MURDOCH WANTS FACEBOOK AND GOOGLE TO PAY PUBLISHERS TO PREVENT NEWS MONOPOLIZATION
“If Facebook wants to recognize ‘trusted’ publishers then it should pay those publishers a carriage fee similar to the model adopted by cable companies,” Murdoch writes. “The publishers are obviously enhancing the value and integrity of Facebook through their news and content, but are not being adequately rewarded for those services. Carriage payments would have a minor impact on Facebook’s profits but a major impact on the prospects for publishers and journalists.”
Murdoch has a point that Facebook and Google, which control a lion’s share of the online advertising business, now have an outsize stake in the journalism business, all while dodging classification as media companies. Google has remained relatively quiet about the issue, though it’s addressed structural failures in its search engine and other ad-supported product related to Russian propaganda and weathered significant controversy lately over YouTube’s questionable role in the media ecosystem.
The topic is a particularly thorny for Facebook, whose CEO Mark Zuckerberg took much of 2017 to come to terms with his company’s influential role in the spread of misinformation, the mental and emotional well-being of its user base, and the functioning of Western democracies. Recently, Facebook said it would alter the News Feed algorithm to favor posts between friends and family over news sources that may seek to game its algorithm, while the company announced plans last week to survey users about news sources’ reliability to help weed out those bad actors. Just earlier today, Facebook acknowledged further that its impact on democracy may be a net negative.
Still, Murdoch calling for a carriage fee arrangement between tech and media companies is particularly unprecedented. European regulators, whose more aggressive stance on antitrust has put Silicon Valley in its crosshairs, have been calling for similar arrangements between Google in the EU, given Google News’ impact on newspapers in countries like Spain with struggling news businesses. If anything, Murdoch’s stance here signals a new fracture in what was once seen as a symbiotic relationship between a news media that largely hands its content out for free and the social media ecosystem that has profited handsomely from its dominance of the ad business. It’s also what may be the first monumental step toward a call for Silicon Valley to subsidize the news business, a rather radical but increasingly more attractive option for struggling publishers that see the tech industry as more of a corporate leech with purely financial motives, rather a liberating force for the spread of information.
Here’s Murdoch’s full statement:
Facebook and Google have popularized scurrilous news sources through algorithms that are profitable for these platforms but inherently unreliable. Recognition of a problem is one step on the pathway to cure, but the remedial measures that both companies have so far proposed are inadequate, commercially, socially and journalistically.
There has been much discussion about subscription models but I have yet to see a proposal that truly recognizes the investment in and the social value of professional journalism. We will closely follow the latest shift in Facebook’s strategy, and I have no doubt that Mark Zuckerberg is a sincere person, but there is still a serious lack of transparency that should concern publishers and those wary of political bias at these powerful platforms.
The time has come to consider a different route. If Facebook wants to recognize ‘trusted’ publishers then it should pay those publishers a carriage fee similar to the model adopted by cable companies. The publishers are obviously enhancing the value and integrity of Facebook through their news and content but are not being adequately rewarded for those services. Carriage payments would have a minor impact on Facebook’s profits but a major impact on the prospects for publishers and journalists.