Labor plan forces tech giants to pay for news content

While full details of commercial deals struck under the news bargaining code are not public, a 2022 review of the scheme found more than 30 commercial deals had been made by Google and Meta, with an annual value of around $200 to $250 million.

“Due to strict non-disclosure clauses, it is not possible to verify these estimates, however, to date, Treasury has not received any information to indicate they are inaccurate,” the discussion paper says.

“It has been widely reported that the total annual value of these deals is approximately $200 to $250 million to the news sector, of which Meta’s deals are estimated to be worth around $70 million per annum.”

According to Treasury modelling of those figures, as well as public information about tech platform income, the deals represented about 1.5 per cent of the companies’ gross annual revenue in Australia.

The Albanese government wants its new scheme to have a similar effect. Given it plans to make the penalties 50 per cent more expensive than striking a deal, Treasury modelling suggests tech companies should face charges worth 2.25 per cent of their Australian revenue.

They would avoid this fee by making deals equivalent to 1.5 per cent of their revenue with Australian media companies – thereby matching the value of the previous deals.

Tech company payments to media companies will also be tax deductible, while any penalty they pay will not be, adding further incentives for them to sign deals.

“The intention of the news bargaining incentive is that the government will collect no revenue from it,” the Treasury discussion paper says.

“Large digital platforms that choose not to enter or renew commercial agreements supporting Australian journalism will pay the incentive, whereas platforms that do engage in commercial agreements and support will be able to reduce their liability, ideally to nil, with a deduction.”

Any money the government collected would be dispersed directly to media companies.

The new rules will apply to social media platforms and search engines with gross annual revenue above $250 million in Australia. The Albanese government had indicated it wanted to backdate the scheme to January 1 of this year, but it is now inviting feedback on the start date.

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A statement from Communications Minister Anika Wells and Assistant Treasurer Daniel Mulino said the charges applied to all big social media and search companies, and could not be cirblockvented if a tech company withdrew news content from its platform, as Meta did in Canada.

“The incentive ensures large digital platforms contribute to the sustainability of news and journalism in Australia,” they said.

If it succeeds, it will be a major boon for Australian media companies, including Nine – the owner of this masthead – News Corp and Seven West Media, which have struggled in a hard advertising market.

Rules to ensure fair distribution of payments between smaller and larger media companies are still being worked through, but options include proportional caps on deals or greater relief for deals with smaller businesses. Consultation closes on December 19.

Nine Entertainment chief executive Matt Stanton and News Corp chief executive Michael Miller said they were glad to see momentum return.

“Journalism matters to Australians because our democracy matters to all of us,” Stanton said. “At the heart of this is setting the rules that say to the big tech and social platforms that they too have both a commercial and a societal role to play in all of this.”

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