Facebook Rejects Extortion Attempt While Google Acquiesces

Update: While this newsletter was preparing to send, news broke that Facebook would once again allow Australians to share news articles after reaching a deal with the government.

According to a statement by Campbell Brown, VP, Global News Partnerships at Facebook:

After further discussions with the Australian government, we have come to an agreement that will allow us to support the publishers we choose to, including small and local publishers. We’re restoring news on Facebook in Australia in the coming days. Going forward, the government has clarified we will retain the ability to decide if news appears on Facebook so that we won’t automatically be subject to a forced negotiation. It’s always been our intention to support journalism in Australia and around the world, and we’ll continue to invest in news globally and resist efforts by media conglomerates to advance regulatory frameworks that do not take account of the true value exchange between publishers and platforms like Facebook.

I’m glad that smaller publishers will no longer bear the brunt of a bad policy put forth by the Australian government, at least for the next few months.

Continue reading for my original commentary…

It has been over a year since I started writing about media companies trying to convince (extort) major platforms to pay for the right to send traffic to publisher websites. I have not hidden my frustration with the entitlement felt by some in our industry.

And yet, in Australia, media companies were able to convince the government to push forward a law that would require Facebook and Google to pay publishers for the right to link to those websites. In other words, Facebook and Google have to pay to send traffic to publishers.

If that doesn’t sound nonsensical, I don’t know what else in the world would. Imagine if you, the media operator, had to run an advertisement and you had to pay the company for the right to run that ad. Sounds pretty insane, right?

With this impending bill coming to the Australian parliament floor, Facebook and Google opted to take two very different approaches.

Google came to an agreement with various Australian media companies rather than deal with the law. According to Axios:

Google has agreed to pay News Corp an undisclosed amount for content to be featured in a new product called the Google News Showcase.

Among the News Corp publications joining will be The Wall Street Journal, Barron’s, MarketWatch, and the New York Post in the U.S.; The Times and The Sunday Times, and The Sun in the U.K; The Australian, news.com.au, Sky News, and multiple metropolitan and local titles in Australia.

Over the past week, Google has struck deals with several Australian publishers, including Nine Entertainment, Junkee Media and Seven West Media.

Nine Entertainment, Junkee Media, Sven West Media, and News Corp are the largest media companies in Australia. They are all going to get paid by Google in some way. Great for them.

Do you know who isn’t going to get anything? The publishers that are simply too small to matter. For many of them, they will obviously get no money, which is why this argument has always been nonsense. It was never about protecting democracy or anything like that; instead, the goal was for the largest publishers to get money out of the platforms and Google agreed to it.

Facebook didn’t, though. According to Axios:

Facebook on Wednesday said it would restrict publishers and people in Australia from sharing or viewing Australian and international news content in response to a new law requiring tech platforms to reimburse news publishers.

Why it matters: The move sets a precedent for how Facebook may handle other global efforts to force it to pay news publishers for their content.

Details: The tech giant says that the changes affecting news content “will not otherwise change Facebook’s products and services in Australia,” and specifically points to Facebook’s Groups feature as one that it hopes users in Australia specifically continue to use.

Effectively what Facebook has said is that no person on this planet will be allowed to share anything from an Australian publisher. Additionally, no one in Australia will be allowed to share a news article from anywhere in the world.

Here’s Ben May (the guy who built A Media Operator) trying to share one of my articles on Facebook:

I did not pay him to say it was a great article, but alas, no one in Australia will be able to discover my content on Facebook.

I digress…

The impact of this change has been rather monumental for publishers. To see it in action, I encourage you to take a look at the graphs over on Nieman Lab referencing data from Chartbeat, an analytics provider with access to actual data. However, for context:

The first half of the chart looks pretty normal — a nice hearty plateau of Facebook traffic in the afternoon and evening Wednesday, followed by a normal overnight dip as Australians go to sleep. The next morning, traffic started to creep up as it would on a typical day — until Facebook turns off the tap around 5:30 a.m. local time.

From that point, daytime traffic looks like the dead of night. In the 6 p.m. hour on Wednesday, Facebook sent 201,000 pageviews to Australian publishers. Twenty-four hours later, it sent just 14,000 — a 93 percent drop.

The same can be said for readers outside of Australia trying to access news sites. According to Nieman, “the last 24 hours here moved from 43,000 hourly pageviews to 3,000.”

To be clear, this is just traffic to sites that have Chartbeat. For the vast majority of publishers that use the free Google Analytics, we have no insights into how much traffic has been lost to these publications.

Naturally, the optics of all of this are downright abysmal. Google walks away looking like a bruised victor, having to pay its extortionists, but receiving no negative press. Facebook, on the other hand, stands up to this illogical bill and is now being labeled the destroyer of democracy. Of course, I’m not terribly sympathetic to Facebook considering, well, basically everything else.

Then you’ve got Microsoft trying to pretend that it actually cares about media, saying that platforms should pay for the right to send traffic to publishers. Of course, its search engine is basically only used by people who haven’t figured out how to change their default browser when they get a new Windows PC. Alas…

How will this all play out?

I’m by no means an international business politics expert, so I’d be guessing as much as the next media operator. However, I would not be surprised if there were some fines levied toward Facebook for something coupled with the creation of a more robust journalism fund in exchange for the removal of this bill.

The bigger thing governments are going to have to figure out is how they want to handle the platforms. I don’t believe this roundabout way of taxing the platforms is the right way to do it. If governments believe the platforms have too much power—a statement I actually very much agree with—then they need to tackle it head-on.

All this sort of thing does is hurt the very companies that most need access to the traffic that Facebook and Google drive for free.

Additionally, publishers need to look at this as a rude awakening for what can happen when you depend on another entity for your business. We need to develop ways of owning the community with the audience. That means building loyalty with readers.

I was recently part of an event for Australian publishers and the majority of them still don’t spend much time thinking about simple things like newsletters. And I don’t mean to single Australian media out. Many media companies here in the United States are also still unsure what to do, remaining addicted to the free traffic that comes from the platforms.

None of this is to say that we shouldn’t try to get traffic from Facebook or Google. Of course, we should.

But it is our responsibility to turn those people into loyal customers of our media companies. If we don’t do that, Facebook and Google will continue to have a disproportionate amount of power over our businesses.

There’s no denying media has struggled over the past couple of decades. But we need to be very intentional with the ways in which we revive our businesses. These bizarre attempts at getting platforms to pay us for the right to send us traffic are not the way to do it. It’s a waste of time and will likely do more harm than good.