Back at the end of June, Canada passed C-18, aka “The Online News Act,” a law designed to make Google and Facebook negotiate with news providers for linking to news. In theory, C-18 is based on the Australia News Media Bargaining Code, which Australia adopted in 2021. It also follows the EU adoption of Article 15 as part of its 2019 Copyright Directive — although supporters of this approach don’t seem to want to talk about Article 15 much. Supporters of the “free market” approach adopted by C-18, which requires Google and Facebook to enter into negotiations with news providers (defined in various ways) argue that the NMBC has been a huge success, forcing Goog and FB to pay $200 million AU and that this money has been spent on reporters and other news-producing stuff not just gone into the pockets of big news conglomerates as critics such as my employer Public Knowledge keep warning will happen. There is a fair amount of evidence to refute this rosy tale of success, but let us set that aside for the moment.
The supposed success of the AU NMBC is one of the biggest arguments in support of the Journalism Competition and Preservation Act and the California version. It was a major reason why supporters of Canada’s C-18 assured everyone that FB and Goog were bluffing when they said they would simply stop linking to news if Canada passed C-18. After all, they made the same threat in Australia and, other than a brief weekend when FB stopped linking to news in Australia, they ultimately went along with the AU NMBC. So hang in there, supporters of this approach keep telling Canada! Trust us, they’ll cave, because the AU NMBC is a huge success!
My employer Public Knowledge has an entire resource page devoted to what’s wrong with this approach in general and JCPA in particular. I’ve written about this a couple of times as well. So I won’t rehash the problems with JCPA too much below. Instead, I want to focus on one this argument that C-18 (and JCPA) are just like the amazingly awesomely successful Australia approach. After a bit of digging, I found two things:
- C-18 is not like the NMBC in some really critical ways. Which is why Goog and FB are not reacting the way they did to NMBC. Notably, the NMBC lets Goog and FB negotiate private deals not subject to any sort of review or mandatory arbitration. C-18 fixes these loopholes by requiring mandatory arbitration and transparency. Hence the very different reaction from Goog and FB.
- The claim that NMBC was a “success” comes from two primary sources: the officially mandated study by the Australian Government one year after adoption of the NMBC (available here) and a follow up report by Rod Sims, the guy who wrote the NMBC and pushed it through. As I will explain in a separate post, and as others have noticed before me (see here and here), the biggest beneficiary was News Corp, whose subsidiaries took in the bulk of the money (Crikey! I’m shocked!), followed by Nine Entertainment, the next largest media conglomerate. Next came AU’s major public broadcaster, which is the primary source of the “the money went to news production — really!” anecdote. After that, you got increasingly smaller deals for smaller outlets, with most outlets cut out altogether and no transparency into this because it relies on private deals.
So if your definition of success was “Goog and FB pay off the major outlets like they were basically doing, but with bigger buckets of loot going to Rupert Murdoch & friends,” then this worked totally great! In fact, this scheme works so much like the way the cable cartel and the broadcaster cartel negotiate with each other (including providing things like C-Span so they can threaten to take it away and squeezing out independent minority-owned networks in favor of vertically integrated ones) that it makes me want to weep tears of Cassandrafreude. Heck, it even includes an official report with unverified industry posting that only true believers can take seriously — just like the old FCC cable competition report!
As a result, as reported by Michael Geist, the Canadian government is now apparently trying to use its rulemaking to implement the act to bring this inline with what the AU NMBC actually does, make it possible for Goog and FB to make private payments to the politically powerful media to make this issue go away. Whether that will end up being enough at this point remains to be seen. I would hope that this serves as a valuable lesson in life for those trying to replicate the “success” of NMBC (like, maybe read the source material with a jaundiced eye that comes from 20+ years of reading similar FCC reports). More importantly, the idea that you can pass a law that actually fixes the problems with the NMBC and not have Goog and FB flip out is a delusion because it fails to understand the economics of any of this. Yes, there is a real problem with how online advertising works, but that requires real solutions that identify the real problems and addresses them. (There are some already out there, you can see Public Knowledge’s “Superfund for the Internet” here, FAQ here).
I will pick apart the claim that the Australia NMBC worked– if by “worked” we mean actually fed money to small news organizations that dedicated the money to news production rather than simply funneled money to the biggest news media — in my next blog post. For now, I will focus on why Google and Facebook are reacting in such a radically different way to C-18 and why this isn’t just a bargaining tactic. Unlike the NMBC, the law actually designates Google and FB as entities subject to the law and therefore obligated to participate in the government supervised arbitration process. The NMBC — as explained below — does not designate Goog or FB to actually do anything, as long as they keep the big news producers happy.
More below . . .
