As New Zealand becomes the latest country to mandate companies like Meta and Google to pay news publishers, the issue still is unaddressed in India.
On December 6, the New Zealand government announced that it is planning to introduce a law that will require tech giants like Google, Meta, among others, to pay a fair price to local media platforms that host their news content. With this, the country will be forcing the likes of Google and Meta to enter into negotiations with publishers for fair payments.
The island nation's neighbour, Australia, implemented a similar law back in February 2021. Since implementation of the law, over 30 commercial agreements have been struck between news publishers and news aggregators, that is, Google, Meta, etc. Reports suggest that $200 million of platform money will be pumped into Australian digital media, as a result of this. France also pushed these tech giants to ink deals with local publishers last year.
The Indian news ecosystem is not above this topic of discussion. In fact, the Digital News Publishers Association, the Indian Newspaper Society, and the News Broadcasters & Digital Association have registered three complaints with the Competition Commission of India over the past couple of years.
Their primary concern is that these platforms source news content from their platforms and the users don't have to directly visit their websites to get traffic. Also, there is no way of knowing the ad revenues that these publishers generate from news content.
"From an estimated total digital advertising spend of Rs 30,000 crore in India, the news publishers only get about Rs 1,000-1,200 crore. This number is quite small. If we look at scalability and sustainability from a pure ad perspective, then the publishers have a long way to go. The money we currently make from digital advertising is pretty low and the industry can’t sustain on this," shares Bharat Gupta, CEO, Jagran New Media.
Gupta adds that while online media has experimented with subscription models, there aren’t many success stories. Hence, the dependency on ad revenues is essential for the survival of digital companies.
"We have just started our digital journey and have to scale to a great degree. So, is it the time to fight Google and Facebook? One should know the implications of this. What is essential is that everyone in the ecosystem works together. Clearly, the both Publishers & Tech Companies need to work together to solve for Discovery, Monetisation and India's Digital Eco System at Large. Simply aping the west via a Legal recourse will hamper the journey to scalability & sustainability."
Meta has already announced the discontinuation of news content on its platforms in India. The reason for this, the company says, that news only contributes 3% in their total engagement.
"If I need to build a following today, I need the platforms for organic growth. In the absence of a common ecosystem to measure advertising, we will see big platforms continue to hold the monopoly." Ad revenues will also see a sharp decline, given that new startups and the creator economy can ensure a significant, verified reach for advertisers.
Moving back to the western world, in the United States, a bill has been drafted by senators, including Democratic Amy Klobuchar, Republican John Kennedy and others. It could force Internet platforms to pay publishers for featuring news stories on social media feeds.
In response to this, Meta released a statement that it will also disband news on its US platform. "We will be forced to consider removing news from our platform, altogether, rather than submit to government-mandated negotiations that unfairly disregard any value we provide to news outlets through increased traffic and subscriptions," the statement read.
This is yet another blow for publishers worldwide.
A C-suite executive of a leading newspaper shares with afaqs! the case was much different a few years back, when platforms were initially expanding. He explained the tech majors needed publishers in the beginning to come on their platforms for their content. Since then, the major qualm of the industry has been that there has been no transparency maintained by platforms since revenue estimates aren't shared. The primary argument given by the tech companies is that the companies don't buy this content, it is only shared on their platforms which in turn brings the publishers traffic. This has led to a "dramatic abuse" of the newspaper's content, e-papers, etc., which are shared on the platform without an oversight.
The source also shared that the ad revenue from digital medium is less than 10 percent of their total revenue. Interestingly, readership on digital platforms is over six times more than sales for the physical copy of the newspapers.
"Unfortunately, publishers made some strategic mistakes in the beginning of their interactions with these platforms. Now, since the world is moving rapidly towards the digital space, that's where most of the money is going. Now, publishers are not able to make enough money because that money is controlled by tech majors. Between Google and Meta and other platforms, these platforms are controlling 85 percent of the market. This is an absolute case of monopoly," he said.
The source also informs that Google has entered deals with about thirty news publishers in India. The negotiations, however, are biased, according to the source, leaning in favour of the companies. "We are getting paltry numbers to what they are paying in other markets like Canada, Australia, Europe, etc. Further, they are not open to share the numbers, which continues to be the biggest problem," he shares.
In lieu of the issues with the revenue share from platforms, many news outlets have started utilised paid subscriptions as a way to make ends meet. However, the business model is in a very early stage at the moment. EY FICCI M&E Report 'Tuning into Consumer' report 2022, released in March found out that the revenue generated by these subscription models- mainly for exclusive and premium content - generated Rs 90 crores in 2021.
Interestingly, senior journalist Abhinandan Sekhri, who co-founded Newslaundry, focuses on building it as a subscription-driven website. The logic of ad-funded model doesn't work as you get dependent on ads coming in from brands. "They don't pay anyone anything in India. The idea, however, is good for the platforms as well as it will help their general economics as well," he said.