The Australian government's exposure draft legislation for the news bargaining incentive (NBI) has been released, marking a significant step in ensuring media companies are compensated when their content is used by search and social media platforms. Without such intervention, companies like Google and Meta profit from news content without paying for it. The NBI introduces a world-first approach, applying to search and social media companies regardless of whether they display news stories.
Background and Need for a New Approach
The original news media bargaining code (NMBC), which the NBI replaces, was highly successful, resulting in three- to five-year deals with Google and Meta that paid around $1 billion to publishers. However, these deals have expired, and Meta has indicated it will not renew them, with remaining deals expiring by mid-2026. The NMBC only applied to platforms carrying news, and Meta has reportedly stated it would remove news from Facebook if designated under the NMBC. This necessitated the NBI, which imposes a charge on covered companies regardless of news carriage.
It remains unclear why the NMBC was not simply amended to apply to designated companies irrespective of news carriage, which would have ensured continuity. The NBI imposes a 2.25% charge on Australian revenue for covered search and social media companies, which can be avoided if they enter into deals with media companies worth 1.5% of revenue. This creates a strong incentive for platforms to negotiate, as non-compliance results in a 50% higher cost.
Timeline and AI Concerns
Significant delays have occurred since the government first recognized the need for action over 18 months ago. Some media companies have considered laying off staff funded by previous payments if new contracts are not in place by mid-year. The government is now moving quickly, backdating the NBI to January 1, 2025. However, the long delay has allowed generative AI to rise, and the NBI currently only applies to search and social media services. AI companies, which often draw on news articles as "answer engines," are not covered. It is hoped that the NBI will be extended to AI or that the threat of extension will prompt AI companies to negotiate deals with media outlets.
Distribution and Bargaining Power
A key issue is ensuring balanced distribution of support among news businesses. The NBI caps any single deal at 25% of the charge, requiring deals with at least four different media businesses to fully offset the charge. This could leave many medium and small businesses without deals, giving platforms too much bargaining power. If platforms opt to pay the charge to the government instead of negotiating, funds are distributed based on the number of journalists employed by each eligible media organization. This could lead to unequal outcomes, where larger businesses benefit from both deals and per-journalist payments, while smaller ones receive only modest distributions.
During the consultation period, these issues must be addressed to ensure the scheme is equitable and effective. The NBI needs to be operational by mid-year to support journalism and democracy. Further work is required to balance bargaining power and address the rise of AI, ensuring that all media businesses benefit fairly.
