Australia and Canada Tackle the Issue of Requiring Financial Support for Traditional Media from Online Platforms: Will the US Follow?

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As first Australia, and now Canada (and the UK) implement legislation to stanch the bleeding of revenues from the traditional media sector to the major online platforms, a development that has resulted in the hollowing out of journalism as the platforms use the aggregation of media content produced by others to help attract and retain viewers, the US continues to evaluate its own approach to this issue. Recently the US Copyright Office concluded a study on whether any changes are needed to US copyright law to protect publishers’ rights, as had recently been done in Europe. The conclusion that no changes are warranted will be disappointing to some content creators, although this now clearly shifts the focus to the area of competition law as a needed remedy to the market imbalance that exists.

Australia’s News Media Bargaining Code has been hailed as the instrument that brought the big internet platforms (read Google and Facebook/Meta) to heel when it comes to “sharing the wealth” with the news outlets they in part draw upon to gain and hold audiences by aggregating their content. Australia has been successful to the extent that the threat of intervention and arbitration by the government has “encouraged” the platforms and media enterprises to reach deals, reportedly on the scale of about AUD200 million annually, allowing print and broadcast outlets, large and small, to hire and retain more journalists to produce the news. At least that is the supposition. No-one knows for sure because the details are clouded in secrecy, with no-one other than the platforms and the news entities themselves knowing exactly how much each received. Nor is there any detail on how this extra funding will be used. It is a fair assumption that it will be invested in journalism but, in fact, there is nothing to stop it from being used to pad the bottom line or increase payouts for executives. It is also not clear why some outlets (such as Australian public service ethnic broadcaster SBS) were excluded from the deals. The Code was never actually invoked; merely the threat of it seems to have been sufficient to ensure bargaining between the platforms and most Australian media. As a result, to date, neither Google nor Meta have been named as targeted entities under the Code. That is the way they like it.

Canada is currently in the process of enacting its own version of the Australian law, although with modifications to make it more transparent. The Canadian draft law has run into the same criticisms that came up during the debate in Australia. For example, will this favour big media over the little guys? Who qualifies as media, i.e. should some small online publication just recently launched qualify? (The answer is yes, if they employ at least two journalists and qualify for the journalism tax credit). Will government decide who qualifies? (see above). If so, is this a suitable role for government given the role of the media as a watchdog on government activities? Will siphoning from the purse of the platforms potentially compromise journalistic coverage of these gigantic businesses? And so on.

Perhaps not surprisingly, the organization that represents many media outlets in Canada, News Media Canada, is fully behind the legislation. The statistics are compelling in terms of the migration of ad revenues to the online platforms and the consequent negative impact on journalism generally, from employment to news coverage to revenues available to be invested in upgraded technology. Whether the output of traditional journalism is in the form of daily or weekly newspapers, online digital editions of the same, news broadcasts on cable, over the air or online, it still requires an investment to produce. And the platforms produce nothing when it comes to content. All they do is ride on the back of content produced by others, searching it, indexing it, highlighting it, and distributing it, in short, aggregating it, attracting the lion’s share of eyeballs, and thus ad revenues. As a result, content producers argue the big platforms should contribute to the production of the material from which they benefit, whether they are compliant with copyright law or not.

And the platforms do contribute in some countries—but on their terms. As the pressure has mounted, both Facebook and Google have been quick to rollout their own programs to subsidize journalism. Critics would call it too little, too late, a band-aid solution when the patient is bleeding to death. But that has not stopped some media enterprises from being very grateful for the limited largesse they receive from the platforms. The organizations pushing for legislation point to the potential hammer of government intervention as one reason for the sudden interest of the platforms in maintaining a viable journalism sector; they also criticize the terms of the “handouts”. It is argued that recipients are more beholden to the platforms as a result of the voluntary agreements than they would be if the agreements were reached as a result of a legislated requirement (or a threatened requirement). In the latter case, more leverage rests with the media outlet, it is argued, as there is potential recourse given the government’s role as the final arbiter.

Both Canada and Australia have approached this question as a competition rather than a copyright issue. France has also used its Competition Authority to require the platforms to reach compensation deals with publishers, although the EU itself has taken a copyright-based approach to dealing with the issue. Do news publishers require additional rights to enable them to bargain with the platforms for compensation for aggregation of their works? The EU identified such a need and brought in a requirement for member states to create an ancillary press publishers’ right, a “neighbouring right” that gives publishers a right of reproduction and a right of making available covering online uses of their press publications by internet platforms for two years from the date of publication of news stories. The question of whether copyright law is deficient and needs updating has also been examined in the US.

The US Copyright Office (USCO) has just concluded its own study, which I referred to in a couple of blog posts last year, (“Paying for Use of News Content? The US Launches Study on Free-Riding by News Aggregators”) and (“How Can News Publishers Best Protect Their Content? The US Copyright Office Explores Options”). While it does not deny the dimensions of the financial problem from the perspective of news outlets, the USCO has now determined that no copyright fix is required. According to the concluding report from its study, there is no imperfection in US copyright law of which the platforms are taking advantage, and which needs to be addressed. As outlined by Copyright Alliance blogger Rachel Kim in a recent post that very effectively summarizes the USCO study;

“The Office first notes that press publishers own the copyright in their textual news content (1) as a collective work or (2) through the work-made-for-hire doctrine, assignments of rights, or exclusive licenses. The report later relies on the existence of these rights to conclude that no U.S. ancillary right is needed since the justification for passage of the EU ancillary right was to grant press publishers similar ownership rights that they didn’t previously enjoy.”

So if the USCO has concluded that addressing the issue through copyright law is not the answer, then what is? It is actually not a great surprise that the Copyright Office did not recommend any changes to US copyright law as even the main protagonists of the need to bring about some form of revenue sharing with the platforms, the US News Media Alliance, did not strongly endorse this remedy in its submission to the USCO. While it would not object to having the EU ancillary rights extended to US news providers in Europe (this will only happen if the US enacts a reciprocal law or if a national treatment commitment is negotiated under a trade agreement between the EU and US), it prefers to have the issue dealt with through competition law, and by passage of legislation that would allow US news media to bargain collectively without violating anti-trust laws.

While rejecting the need for any changes to US copyright law to deal with the effects of online news aggregation on traditional journalism, the USCO notes the competition approach taken by Australia and others but declines to endorse it, simply punting the issue to other agencies to deal with. Given the mandates of respective agencies, and noting how jealously they guard their turf, this is not a surprise. Still, if advocates of pushing the platforms and publishers together to negotiate terms were hoping the USCO study would provide a way forward, they must be disappointed. One area where it clearly does have a role, that of interpreting fair use (although the exact dimensions of fair use are decided by the courts), the Office takes a “two-handed approach”, ie. “on the one hand, and on the other”. In other words, it waffles, reflecting the range of conflicting inputs it received plus the uncertainty over whether a given use is fair or not, a determination that can only be decided on a case-by-case basis by a court.

Kim points out that there is one area where the USCO could have been more helpful to content creators, by addressing the lack of a registration option for dynamic web content. In the US, while registration is not required to assert copyright, it is required if an infringement action is to be brought in court and to recover statutory damages. However, nowadays much content is produced only digitally, and frequently updated, never appearing in a physical version, yet the USCO is stuck back in the last century requiring the deposit of a static copy of an edition as proof of copyright. (The Office currently only accepts deposit copies that show the static form of a website and does not allow copyright owners to deposit copies of the updated versions of that same website for the same registration, which is a problem because almost no website— particularly a press publisher’s website— looks the same as it did five minutes earlier). Rather than offer solutions, the study simply says that the Office hopes to address the issue through its modernization efforts.

Overall, the outcome of the study clearly indicates that the Copyright Office will not be taking the lead in addressing the platform aggregation issue, as much as it is willing to acknowledge the problem. Instead, the onus will be on Congress, where the Journalism Competition and Preservation Act (JCPA), legislation that would allow the news media to combine to negotiate collectively with the platforms, has languished. In terms of the balance of political power in the US, it would seem the platforms (despite increasing scrutiny of their activities by Congress) have more clout than the media. So far they have been able to forestall any meaningful action in the US to deal with the issue of revenue-sharing with content providers. The platforms have been less successful elsewhere, and assuming the Canadian legislation is passed, there will be yet another example of how the internet intermediaries can be induced to come to the table. Will the US eventually follow the example being set in other countries.? It is evident the US Copyright Office is not going to lead the way, but I suspect that in the end, the US will get there.

© Hugh Stephens 2022. All Rights Reserved.

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