The tech-lash is so March 2020

The ACCC just can’t help themselves – to be fair they have been relaxing a lot of their anti-business regulations – they are still stuck with the notion that so-called big-tech is a problem.

 ACCC chairman Rod Sims has vowed to intervene and force tech giants to share revenue with media companies struggling under commercial pressures exacerbated by COVID-19 if a deal can’t be negotiated in good faith.

This is the notion that Facebook and Google should pay media companies for the privilege of directing readers to those media company websites.  Simply astonishing. If anything the legacy media should be paying the tech companies.

Here is the story:

A contagion has threatened the very existence of mainstream commercial media for more than a decade and the COVID-19 pandemic has intensified its effect. Jobs are being shed already; 60 local and regional News Corp mastheads will suspend print ­editions after this week, iconic ­independent mastheads such as The Gawler Bunyip, Mildura’s Sunraysia Daily and Broken Hill’s Barrier Daily Truth have closed, job losses and pay cuts are hitting Seven West Media, Nine Entertainment, the Ten Network and elsewhere, and many media operations will struggle to survive the next 12 months.

The contagion has been the digital giants — especially but not limited to Google and Facebook — spreading media content more rapidly and widely than ever before but exacting a fatal parasitic price; sucking up most of the ­advertising revenue that used to sustain that same media.

Now I’m sure The Gawler Bunyip is a fine newspaper with a long and proud history and tradition and what-not. But time to call it a day. Call it an epoch if you will. I used to be served by two local newspapers. I am now well-served by two Facebook groups that provide me with all the local gossip and news that I require. To be blunt that isn’t even the model the ACCC is crapping on about.

But the argument being driven by NewsCorp – a large foreign multinational corporation – is weaker than they think. Here is Chris Kenny:

The ill-effects are widespread: a substantial public good is undermined as independent media voices are reduced; local, regional and national news and views are replaced by global and public sector perspectives; Australian jobs and businesses are destroyed; less tax is paid on our shores; and a grave injustice is perpetrated when global digital giants are enriched and empowered through raw material they have taken from Australian workers without compensation.

Understanding the scale of these companies is important. Google’s parent, Alphabet, has a market capitalisation of about $US750bn ($1.27 trillion). The ­entire federal budget could buy less than half the company, and before the latest market turmoil its value roughly equalled our GDP. Facebook is about two-thirds the size of Google. When these giants bargain with most media firms, Orcas negotiate with minnows.

One hesitates to point out that this is a well-known economic problem, with a well-known economic solution.

When different parties to a dispute have very different legal resources available to them (to be clear this is not obvious in this particular case) the argument goes that the stronger party will always win irrespective of the merits in each instance. The usual “solution” to this problem is either greater regulation or government ownership.

If we were truly worried about the ‘public good’ of an independent media then the government should establish a public entity for that purpose … oh wait.

As it turns out that ‘solution’ is itself problematic and Chris Kenny is one of the most consistent voices pointing out those problems.

It is very sad when old and venerable institutions die. But we shouldn’t stand in the way of evolution – even when it is disruptive. Local newspapers are dying – not because the tech giants are stealing their content – because social media is providing opportunities for people to enlarge the scope of their conversation from hearing distance to reading distance. Citizen journalists are displacing professional journalists.

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20 Responses to The tech-lash is so March 2020

  1. feelthebern

    Citizen journalists are displacing professional journalists.

    & long may that continue.

  2. duncanm

    cry me a river.

    local media needs to adapt and go digital.

    If they maintain local content, they will survive.

    When they just pull news off the wire, then what is their purpose?

  3. feelthebern

    Where is the accountability regarding Rod Sims legal spend?
    Does he have final say on:
    What cases are brought?
    Which law firms to us?
    Which barristers are then engaged by those law firms?
    All I can see is Sims lining the pockets of the legal fraternity with a bunch of failed cases of the past 2 years.
    PS, he uses tax payer money for that.

  4. a happy little debunker

    I am not sure anyone should be perusing a Bunyip’s growler, but if anything – that is why the interweb’s thingy got so large to begin with?

  5. Alan

    Thanks Sinclair for the read.
    We all know the ACCC Digital Platforms Inquiry arose from pressure applied by Nick Xenophon in return for assisting Liberal-National Party media reform legislation passed late-2017.
    I was more than amused by the published (and submitted) detailed rebuttal from a team of US Legal experts who probably enjoyed thoroughly debunking all ACCC sweaks and protestations.

  6. Howard Hill

    Funny stuff, NFA. Them complaining about going broke and demanding a cut of the loot from the big guys. On your link there’s three links to the very companies they’re winging about. When did you ever see an add for a Ford on a Holden, or an add for Victoria Bitter on a Tooheys Can.
    This country is so fucked, it’s breathtaking!

  7. NoFixedAddress

    I didn’t check the Broken Hill’s Barrier Daily Truth but the above 2 papers have ceased publication because their Revenue base is stuffed by Government action in closing down the local economies.

    Both have websites, facebook sites and the Mildura even has a digital edition

    Check out their reason for stopping https://sunraysiadaily.pressreader.com/sunraysia-daily

    In terms of uselessness, Rod Sims and the ACCC are 5 Stars out of 5 in The Book of Useless Government Departments and Legislation/Regulation.

  8. FelixKruell

    I tend to agree. Especially in the case of local or regional papers – they are the least impacted by google news and the like.

  9. Tim Neilson

    In terms of uselessness, Rod Sims and the ACCC are 5 Stars out of 5 in The Book of Useless Government Departments and Legislation/Regulation

    Yes. Remember how for years they were sermonising about the need for lower petrol prices for consumers, and racing around like Inspector Chisholm to the petrol companies’ Arthur Daley over alleged cartel pricing?
    Then when a supermarket and a petrol company started to give lower prices, the ACCC came down on them like a ton of bricks to force them to put the prices back up.
    Clown show extraordinaire.

  10. Cynic of Ayr

    Anyone who thinks Facebook is going to provide reliable and truthful local news is fucked in the head!
    A moron puts some opinion on Facebook, and all his “friends” take it as gospel?
    Works really well for the lefty morons, but you’d think the morons on the right would be a bit moire picky.
    Now, the National papers are a different story. Their news is as reliable as the moron on Facebook!
    I think there’s more to this story than is obvious. Sinc is a City Dweller. He has no clue what goes on in a town of less than 200,000 people.
    The local Grocery Shop, Mechanic etc isn’t going to pay the top dollar that that vampire Zuckerberg wants, to run an ad on Facebook, so only 10% of the population sees it. They want a local ad. what’s more likely is that News Corp just can’t be bothered to provide a “service” anymore.
    So what if it runs at a loss. Many businesses have a loss making part, that is just part of being in business. After all, donating to the local footy club or whatever local charity they want. is a loss, isn’t it?

  11. NoFixedAddress

    From da Mildura wiki thingy

    Media

    Local newspapers include the Sunraysia Daily, Mildura Midweek and Mildura Weekly. Online news sources include the Mildura Independent Star and RIVER1467AM News. Local radio stations include ABC Local Radio (National), RIVER1467AM (3ML)(Commercial), 97.9 Sun FM Sunraysia (Commercial), 99.5 Star FM (Commercial), and Hot FM (Community).

    Local TV stations include ABC Television (ABC1), SBS Television (SBS ONE), Prime7, WIN Television, Mildura Digital Television, 7Two, 7mate, GO!, GEM, ABC2, ABC3, ABC News 24, SBS HD, SBS Two, One HD and Eleven.

    Of the three main commercial networks, Prime7 produces short local news and weather updates throughout the day, broadcast from its Canberra studios. WIN Mildura produced half-hour WIN News bulletins for the Sunraysia region until May 2015.

    The Sunraysia region, including the city of Mildura, was the first region in Australia to switch off analogue TV broadcast in the implementation of the country’s DTV transition process.[54]

  12. Sinclair Davidson

    Anyone who thinks Facebook is going to provide reliable and truthful local news is fucked in the head!

    … the MSM does?

    Facebook not only provides me with all the local information, it provides me with information from the town I grew up in. There are Facebook groups for everything these days. Soon we won’t need generalist newspapers at all.

  13. Petros

    In my experience, people who get their news mainly from Facebook are seriously misinformed. No doubt you use many different sources for news, Prof.

  14. Iampeter

    This is a great post. Thanks for the write-up.

    It is very sad when old and venerable institutions die. But we shouldn’t stand in the way of evolution – even when it is disruptive. Local newspapers are dying – not because the tech giants are stealing their content – because social media is providing opportunities for people to enlarge the scope of their conversation from hearing distance to reading distance. Citizen journalists are displacing professional journalists.

    Same goes for manufacturing and other legacy industries.

  15. JC

    Not so fast, Plodes. We have some of the highest electricity prices in the world when we should be the cheapest. We have extremely restrictive green and red tape. We have one of the highest corp tax rates in world. We have restricted oil&gas exploration and we have inappropriate deprecation tax write-off for tax purposes. Our labor market restrictions are a joke. Until these are dealt with, you can’t say manufacturing is a legacy industry.

    This is a perfect illustration why I continually suggest you’re very weak with economics although you try to disguise it by putting to everyone else they don’t understand… or “politics”.

  16. Procrustes

    Rod Sims is what Arnold Kling calls an “expert but idiot”.

    They just have no clue about how little they actually know about real economies and can’t stop themselves from intervening.

  17. Squirrel

    The big-tech vs. the little Aussie (media) battlers debate is highly likely to be deployed in the inevitable debate, later this year, about making the de-facto (sort of) living wage/universal basic income a permanent entitlement – paid for (supposedly) by the “big end of town”.

  18. Iampeter

    Not so fast, Plodes. We have some of the highest electricity prices in the world when we should be the cheapest. We have extremely restrictive green and red tape. We have one of the highest corp tax rates in world. We have restricted oil&gas exploration and we have inappropriate deprecation tax write-off for tax purposes. Our labor market restrictions are a joke. Until these are dealt with, you can’t say manufacturing is a legacy industry.

    Yes. Mostly a consequence of the leftist Howard government which most of you supported.
    But this doesn’t have anything to do with anything I’ve said.

    This is a perfect illustration why I continually suggest you’re very weak with economics although you try to disguise it by putting to everyone else they don’t understand… or “politics”.

    Nothing I’ve said here shows any such thing. On the other hand you’ve recently called for central banks to print more money in a crisis, have previously demonstrated you don’t understand concepts like inflation and interest rates and many other simplistic blunders that show you know as little about economics as you do about politics.

    Projecting your own failings onto me, following me from thread to thread, isn’t going to change this or save any face for you.

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