Facebook has made multi-million-dollar deals with Australia’s two biggest commercial media companies to pay for using their content on its site.
The social media platform has signed and three-year deal with Rupert Murdoch‘s News Corp and a letter of intent with Nine Entertainment.
It comes after a world-first new law forcing Google and Facebook to pay for news content passed the Australian Parliament last month.
Facebook has made multi-million-dollar deals with Australia’s two biggest commercial media companies to pay for using content on its site. Pictured: CEO Marck Zuckerberg
News Corp’s deal only applies to its Australian titles. The company, which also operates in the US and UK, already has a US deal in place to let Facebook News display its journalism.
Sky News Australia, a subsidiary of News Corp, has also extended an existing deal with Facebook.
News Corp chief executive Robert Thomson did not disclose the value of the deal but said the outcome was ‘more than a decade in the making’.
‘The agreement with Facebook is a landmark in transforming the terms of trade for journalism, and will have a material and meaningful impact on our Australian news businesses,’ he said in a statement.
A Nine spokesman said: ‘We continue having constructive and fruitful discussions with the Facebook. When we have anything to announce we will do so to the ASX, as is appropriate.’
Facebook last month signed a letter of intent with Seven West Media and is negotiating with other publishers.
Andrew Hunter, Facebook’s head of news partnerships Australia and New Zealand said the company was ‘committed to bringing Facebook News to Australia’.
Google has already negotiated multi-million dollar content licensing deals for its ‘Showcase’ product with a host of Australian companies.
Last month Facebook temporarily banned news content for 25 million Australians after the new law – known as the news media bargaining code – passed the lower house of parliament.
The government watered down the bill, allowing Facebook and Google to be exempt if they make a ‘significant contribution’ to Australian news companies and giving them more time to make deals.
Under the law, designed to tackle a bargaining power imbalance between big tech and publishers, Facebook and Google can be forced into arbitration if they fail to reach deals.
The UK, EU and US are all considering whether to pass similar rules.
Australian ministers (Prime Minister Scott Morrison, right, Treasurer Josh Frydenberg, left, and Communication Minister Paul Fletcher, rear) agreed to concessions to the law which will made it more beneficial to Facebook
Mr Frydenberg and Communications Minister Paul Fletcher drew up Australia’s law after a three-year inquiry by Australia’s competition regulator, the ACCC, which found Google and Facebook have ‘an imbalance in bargaining power’ when dealing with news companies.
The code was intended to apply to Facebook NewsFeed and Google Search – but other services such as Instagram and YouTube can be added if a bargaining power imbalance arises.
In addition to payment for content, the code requires a designated tech company to give publishers 14 days notice of any algorithm changes that are likely to have a significant impact on their traffic.
Under a two-way value model, the payment for content takes into account the value that Google and Facebook provide to news organisations by driving traffic to their sites.
Facebook and Google had initially strongly opposed the legislation, arguing that their display of news stories was beneficial to the companies that produced the content as it drove traffic to their sites.
The social media platform was condemned by politicians and users around the world after it blocked 25million Australians from viewing and sharing news articles amid a dispute about the terms of the code.
Facebook last month blocked all news content in Australia in protest at the new laws, sparking international outcry and calls for tougher regulations
Other community-based organisations and businesses becoming collateral damage as they were also blocked in the process.
‘There was understandable outrage across the broader community as to what Facebook did,’ Treasurer Josh Frydenberg said.
‘But since that time there’s been extensive discussions with the company and we’ve reached a solution and a way forward.’
Critics had said the legislation was significantly watered down due to Facebook and Google’s opposition, but Australian Competition and Consumer Commission chairman Rod Sims said it would still curtail the immense market power of digital platforms.
‘Google and Facebook need media but they don’t need any particular company and that (previously) meant media companies couldn’t do commercial deals with Facebook or Google,’ he told ABC radio.
‘The purpose of the code is to give them the potential for arbitration, which helps their bargaining position, and therefore helps them reach fair commercial deals.’
There had also been criticism that piecemeal agreements with major news organisations and not with smaller news sites was consolidating the dominance of the most powerful media conglomerates.
‘In any situation like this you would expect deals to be done with the bigger players first and then work down the list,’ Mr Sims said.
‘Given this is supporting journalism, it’s naturally going to see more money going to those who’ve got the most journalists but I don’t see any reason why anybody should doubt that all journalism will benefit.’
Google threatened to pull its search engine from Australian users but after significant changes were made to the legislation, it agreed multiple deals with Australia’s biggest media companies including News Corp, Nine Entertainment, Guardian Australia and Seven West Media.
What is the bargaining code and why is it needed?
WHY IS IT NEEDED?
Google and Facebook derive a benefit from the ability to make Australian news content available to their users.
Australian news businesses have had to accept commercial deals with the platforms that are less favourable than they would otherwise agree to.
Intervention is needed to address this imbalance because of the public benefit of news and the importance of a strong independent media in a well-functioning democracy.
For every $100 spent by Australian advertisers online today, $49 goes to Google and $24 to Facebook, according to the country’s competition watchdog.
WHAT IS THE CODE?
The government wants good faith commercial deals to be struck outside the code.
But if the platforms and news organisations are unable or unwilling to reach an agreement ‘final offer arbitration’ will take place.
The arbiters will take into account the benefits traditional news media businesses get by having eyeballs on their product.
The digital platforms will also need to adhere to a series of minimum standards.
WHO IS INCLUDED?
* Facebook and Google.
* ABC, SBS and Australian commercial news media organisations.