[STUDENT ESSAY] Bridging the Bargaining Power Gap: Protecting News Media in the Digital Age 

By Milan Wiertz

The Digital, Governance and Sovereignty Chair now publishes, on a regular basis, the finest essays and papers written by Sciences Po students in the course of their studies.

This blogpost features the essay written by a second-year student at Sciences Po (Reims campus), as part of the course taught by Rachel Griffin and entitled ‘The Law & Politics of Social Media’.

How governments can correct the power imbalance between publishers and digital enterprises

With the rise of social media as one of the primary forms of news consumption, platforms such as Facebook, Google and Twitter have gradually established themselves as vital sources of traffic for traditional news outlets. According to a recent report, the internet represents the most commonly used mode to access news, ahead of television and print, in all surveyed countries across all regions of the world. As the influence of traditional news channels fades, digital platforms have become increasingly powerful vis-à-vis news media outlets, having become both their primary means of outreach, as they hold a key position of control over publisher’s ability to reach audiences, as well as a crucial source of revenue, since they also account for the vast majority of the digital advertising industry. This has resulted in the gradual decrease of revenues collected by news outlets, and has forced many smaller publishers to close altogether. These changes have left traditional publications ever more financially precarious and vulnerable to outside influence, be it from authoritarian regimes seeking to strengthen their grip on information or from platforms eager to squeeze out their value and dodge negative coverage.

The issue of publisher fragility is particularly pressing given the centrality of independent news media in holding elected officials accountable, and reducing corruption in the public and private sector, and the weakening of the fourth estate has the potential of endangering the broader democratic system it helped shape. The existential nature of this policy challenge has prompted governments around the world to take action to empower publishers to demand more significant compensation from platforms for benefiting from their content, most notably in Australia, the EU and Canada, but these efforts have so far fallen short of addressing the issue in its entirety, since they often lack enforcement or fail to take into account differences in scale between publications.

So what then should governments do to strengthen journalism in the age of social media? To answer this, I will outline a concrete, coherent and comprehensive policy strategy aiming to reduce the bargaining gap between platforms and publishers in order to strengthen independent media (and democracy as a result), through policy mechanisms that are not afraid of reining in a sector long characterized by a lack of regulatory attention. More specifically, I will recommend a three-pronged approach suggesting that governments ought to (I) force platforms to negotiate compensation with publications, (II) strengthen the position of smaller outlets, and (III) empower regulators to act against unfair bargaining practices. 

I. Forcing platforms to negotiate compensation

An important first step already taken by several governments around the world is forcing tech giants to negotiate in good faith with publishers for compensation for revenue stemming from the use of news items. This involves forcing platforms to engage with publishers to reach licensing agreements and can involve third party mediation to bridge the divide. The introduction of such legislation promises to allow publishers to benefit from fair compensation for revenue generated by use of their content, providing them with additional financial resources to reinvest in the quality of their journalism.

Early results look promising. In Australia, for instance, the introduction of the News Media Bargaining Code has been widely considered a success, and its efforts should be regarded as an excellent starting point for governments worldwide. As of May 2022, agreements reached under the code were estimated to amount to AU$200 million (around €130 million), the equivalent of 8% of the industry’s total 2020 revenue, a remarkable feat. Yet although there is reason to believe these measures are effective, outside Australia, Canada and the EU, few countries have engaged in meaningful action in this direction, and more will need to join these efforts to ensure the protection of journalism across the world. Thus far, platforms have been able to marginalize small States willing to act against big tech by blocking news content in such regions as a warning sign to larger markets, but the opportunity cost of such measure would be immeasurably higher if legislation were achieved at the international scale.

Although some might argue that platforms’ willingness to stop providing their services altogether signals that these policies are not sustainable, we have reason to believe they are bluffing. Upon the introduction of bargaining legislation in Australia, Google and Facebook both threatened to pull out of the Australian market, yet as the date of entry into force neared, the two companies caved and agreed to sign licensing deals with major Australian news corporations to avoid a shutdown of their services, suggesting their threats were a fearmongering effort rather than an expression of the feasibility of such course of action. Not giving in to intimidation by platforms is perhaps most relevant within the microcosm of the EU. In 2014 Google suspended its news site in Spain following the passing of legislation forcing it to pay a collective licensing fee, but with the development of EU wide legislation striving for similar outcomes, the company agreed to reopen its news site in Spain, and has so far heeded French efforts to enforce similar obligations in the EU’s 2019 Copyright Directive.

These existing examples highlight that in spite of their posturing, platforms are willing and able to negotiate with publishers to establish fair compensation for the use of content so long as there is sufficient legislative pressure to do so, and that agreements reached under such frameworks are likely to produce significant amounts of additional revenue for news corporations. The results are clear: if governments want to protect journalism from financial fragility and influence, forcing platforms to bargain with publishers is an important and proven first step to reduce the bargaining power gap between parties and increase revenues for news media companies.

II. Protecting smaller outlets

Bargaining legislation outlined above is an important step, but it is not a silver bullet, and any legislative effort should seek to compensate for the imbalance between larger and smaller news outlets to achieve a comprehensive policy solution to the decline of independent news media. Looking again at the example of Australia, the code has received much criticism for favoring large media enterprises which can count on more bargaining power and can therefore claim an outsized share of platform investments into journalism. This could result in a further consolidation of the industry and thus a reduction of effectiveness of its accountability function.

Much can be done, however, to counter such externalities and ensure small outlets are not left behind. For one, any such legislation should allow news media to organize into collective bargaining groupings without fearing antitrust action. Under existing regulation, companies are held to be in breach of competition law if they work together to set pricing, and for good reason, but we should not forget the objective of such legislation: protecting the weaker party. If traditionally, such weaker party is the consumer, in the case of platforms v publishers, it is the publishers, particularly smaller ones, that need protecting, and in such context collective bargaining by media outlets is much more akin to workers unionizing for better pay rather than an effort to distort the market. By allowing a collective bargaining exception to antitrust law, governments can promote collaboration between (small) news organizations to improve the strength of their negotiating position and receive fair compensation for their contribution to platform revenue.

Additionally, governments should provide for a minimum standard of renumeration to be applicable to all news outlets in lieu of a specific agreement between parties. This would involve setting a baseline renumeration value for use of media content by registered publishers that platforms would pay out to the government and could then be transferred to said publications through tax credits. This would serve a dual objective. On the one hand, it makes it easier to set up funding flows towards small news outlets since the administrative cost for platforms to handle small individual payments would involve a large-scale bureaucratic operation, one which governments are already set up to address. On the other hand, it would provide a baseline for negotiations allowing publications to push for a deal that is “at least as good” as the government baseline as opposed to the “anything we can get” approach applied so far, which left significantly more power with the platform. News companies would still have an incentive to negotiate to get a more compelling deal, whether requiring a higher rate or even just benefiting from direct compensation as opposed to a tax reduction. Platforms, similarly, would be incentivized to negotiate for lower rates or more advantageous terms, but their ability to bully outlets into accepting unfavorable agreements would be nullified.

Overall, governments need to make sure that any legislation seeking to address the power imbalance between platforms and publications consider the importance of keeping small and local media alive and avoid encouraging further consolidation of the industry as a result.

III. Empowering regulators to oversee bargaining discrepancies

Finally, governments ought to ensure a for strong regulatory power exist to oversee bargaining legislation. An important measure of the impact of any regulation is its implementation, and in the case of media bargaining, it will come down to the willingness of governments to grant regulators sufficient power to enforce new platform obligations vis-à-vis publishers, as this could make or break the effectiveness of the policy.

Perhaps the best example of this is the differing application of the 2019 EU Copyright Directive by France compared to other EU States. If the former eagerly transposed a strict interpretation of the legislation and has allowed its regulator to forge ahead with an aggressive implementation policy, forcing Google into negotiating with publishers and slamming hefty fines for failure to comply, other States have been more hesitant to enforce renumeration obligations. 

Governments looking to protect journalism should follow France’s example and give their regulators concrete powers and leeway to enforce the requirement of bona fide negotiations, not least the ability to fine companies for refusing to negotiate. But it should not stop there. One of the most frequent criticisms of current implementations of bargaining laws is the lack of transparency, as this creates an asymmetry of information between platforms, which have access to the value created by the content and previous agreements, and publishers, which can at best estimate how much they ought to claim for licensing their content, with detrimental effects to the party lacking information. At the same time, having terms be public could face strong resistance from both sides. In this dilemma, regulators could function as an intermediary solution, by requiring platforms to share information with regulators regarding the extent of the use and the value generated by a given publishers’ content. In this way, regulators could establish a reasonable rate to apply for content not covered by licensing agreements as part of the aforementioned tax credit scheme and propose informed mediation recommendations. Regulators could strike a balance between transparency and secrecy that would be hard to match with any other means. 

Additionally, regulators could be permitted to publish aggregate reports on the functioning of legislation to provide some additional transparency and checks on regulatory effectiveness. Regulators ought also to be empowered to prevent platforms from treating publishers unevenly based on the terms of their agreements, particularly between outlets participating in the tax credit system as opposed to those having concluded licensing contracts. Failure to do so could allow platforms to secretly highlight “cheap” content over content covered by a more subsistent licensing fee, damaging the level playing field. Although some might object to giving regulators such broad influence given their technocratic nature and the risk of regulatory capture, the scale of tech giants makes it difficult to rely solely on enforcement through judiciary proceedings. In lieu of a regulator, publishers, especially small outlets, are unlikely to independently pursue the dragged-out legal proceedings which characterize big tech lawsuits, since they are unlikely to be able to afford the cost (and the potential fallout of “biting the hand that feeds you”). An outsized role of regulators therefore seems an unavoidable evil needed to ensure legislation is complied with.

The nature of the sector and the imbalance between parties therefore highlights the need for powerful regulators in charge of ensuring negotiations occur in good faith, and that platforms are unable to retaliate against outlets unwilling to heed their demands, whilst also providing a unique opportunity for a relative level of transparency in the sector.

Concluding remarks

The continuous weakening of publishers vis-à-vis platforms has revealed a fundamental challenge to journalism, and democracy more broadly, as outlets have become increasingly dependent on tech giants for outreach and monetization. In this context, it is vital that governments around the world engage in legislation strengthening the negotiating position of publishers to defend their financial viability and independence. In particular, I have argued for governments to create a bargaining framework which promotes the conclusion of licensing agreements whilst taking into consideration the particular weakness of smaller outlets and including a strong regulatory authority able to take steps to implement this much needed legislation. 

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Milan Wiertz is a dual Bachelor of Arts student at the Sciences Po & UBC BA program (Reims Campus). Milan’s main interests are EU policymaking and journalism, and he enjoys looking at the ways in which governance & regulation interact with the digital sphere and technological advancement.