Strict Regulation on Social Media might Weaken Content Economy

Business Manager
Mon Mar 01, 2021

The dispute between Facebook and the Australian government regarding a newly proposed Media Bargaining law was resolved on February 22, 2021, when the authorities made a compromise not to charge digital platforms for using third-party content at full cost - instead agreeing to charge at at a partial cost. Before that, Australian and international news were blocked from Facebook’s Australian news feed for almost a week. The Media Bargaining law serves to require any digital platforms to pay the local news outlets and publishers in Australia for showing their content; whether displaying the content link, or showing the heading and feature photo as search results, the platforms are considered to be consuming the content and should pay for such use. Not surprisingly, Facebook who has integrated news reading in its feed and invested millions of dollars to combat news disinformation, shows the biggest contempt towards this new law. Now Facebook and the Australian government have reached a deal that the digital platform is required to pay a sufficient amount of money, not at full cost, for the contributions. 

The Australian government argued the legislation is to protect the local media and secure their incomes. However, I would argue that if the law is not amended from the current version, the local media might suffer instead. The beneficiaries of a less regulated content market are not just the traditional newspaper outlets and publishers, most of which have been working hard on digital transformation and online ad sales have shown promising returns, but also the budding content platforms and citizen journalism platforms.

Digitalization of the content economy is happening; and as a World Economic Forum’s blog post said, “the consumption gap between digital and traditional channels has widened” in 2020, especially through the impact of stay-home orders brought by the pandemic. Accenture forecasted the communication, media, and platform sectors will bring higher GDP contribution than the aggregated metric for all sectors, and the contribution by digital channels will continue to grow while the negative rate by traditional channels can hardly bounce back. Digital platforms are the dominating source of content. If local media avoids the platforms like Facebook and Google to extend the reach of their content, staying in an online closet, it is not profitable for the media industry in the long run.

The wave of content digitization has created a trillion-dollar industry, and Facebook, Twitter, and YouTube are undeniably the biggest beneficiaries. Such kind of laws are believed to target these social media giants in the first place, but the lawmakers might overlook their harmful effects on the smaller-scaled or growing social platforms like Clubhouse (a recently hit audio-chat app), Fark (a platform accepts user comments on news article), and XING (a career-oriented social media app that can share industry news). Clubhouse has almost 10 million users at the moment, and it is valued at 100 million dollars, but as a very young start-up founded last year it is not making a profit yet. If some news anchors want to host invite-only exclusive sessions on Clubhouse, the platform might earn money from business partnerships, but then has to pay back the media for their contribution as the new law requires. Also, note that Clubhouse might already be the example with the brightest future among all small platforms.

Considering the free market as our global economic principle, the content economy should also follow this ideal. To share or to be shared, it is an agreement between the digital platforms and the media outlets. If any media outlets do not see the agreement reasonable, fair, or profitable, they could ban the platform from showing their content. The authority should not be very involved in the activities of the free content market. For example, CNN recently moved their “Go There” live daily news show from Facebook Watch to the self-owned and operated platform in order to maximize viewership and to sell more ads. The content market can regulate itself without government intervention.

Although I support limited regulations on digital platforms, I still want to see more diversity in the media sphere, and all stakeholders are fairly treated and benefit from the fruits of the booming content economy. Rather than content creators being paid or not, the existing problems are oligopolies, limited monitoring on antitrust activities among the tech giants, and compliance issues. If the governments request the digital giants to file all the records of content use, it might pose a hindrance to limit the exploitation of the unbalanced relationship between digital platforms and the local media. If governments monitor any collaborations between one and another digital giant for sharing the use of content sources, it might instead be more effective.



Appears in
2021 - Spring - Issue 5