The last few weeks have left many Australian businesses worried that their investment in online marketing could go to waste after the negative reaction by Google and Facebook to the impending media bargaining code.
The code is the Morrison government’s attempt to see media giants compensate local media companies for their news content that shows up on news feeds and search results. According to Treasurer Josh Frydenberg, the bill will be considered by Parliament this week. He added that the laws would see media businesses fairly remunerated for content that digital platforms were benefitting from.
Currently, these media businesses make money off of advertising revenues when online users click through links provided by digital platforms. However, how these links are presented to online users is highly detailed. The previews often include the heading, part of the introduction, and sometimes an image.
For many users, these previews reduce the desire to click through. Media houses are finding that this reduction in click-through also means readers are not getting the full picture. They take previews at face value, and sometimes out of context, often leading to misinformation. This has resulted in media houses suffering a decline in ad revenues and credibility.
For small and medium businesses, the problem lies in how Google initially reacted to the news of the media bargaining code being made into law. They did threaten to remove their Search function from Australia. IBISWorld’s Liam Harrison confirmed that a Google exit would worsen conditions for already struggling Australian industries.
Many SMEs heavily rely on Google functions like Search and Maps to make their businesses visible to customers. Harrison indicated that Search is a vital way for small businesses to attract clientele and has a strong impact on growth. Due to the pandemic, industries like hospitality have suffered serious decline, with the restaurant business revenues alone predicted to fall by 15% in the 2019-20 financial year. It is expected to recover some ground in the 2020-21 period with a rise of 5.1%, and a further 2.1% over the subsequent five years.
Google does however seem to have backpedalled on this threat and has signed several multimillion-dollar content deals with major and smaller media businesses in recent days. This includes Nine Entertainment and Seven West Media that have signed $30 million a year deals with Google Showcase. Other deals are also in the pipeline with outlets like Guardian Australia and ABC.
The new laws would compel an independent arbiter to be appointed and decide what Google would pay media businesses for their content. Media experts believe that such deals would help Google avoid designation and this arbitration process.
Facebook has however opted to restrict Australian content from being viewed or shared on its platform. The company claims media businesses enjoy greater value from their relationship and the gains the company made were minimal.