Social media giants Facebook and Google will be forced to pay Australian media companies for sharing their content or face sanctions under a landmark decision by the Morrison government.
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The move comes as the media industry reels from tumbling advertising revenue, already in decline before the Covid 19 coronavirus outbreak collapsed the market.
Last week New Zealand media companies implored the Government to redirect its advertising from the likes of Facebook and Google to provide immediate cash relief, while special tax status and different ownership models should be considered as longer-term solutions.
But Prime Minister Jacinda Ardern said that the Government will continue to advertise with Google and Facebook because that's where New Zealanders are.
Academic and former New Zealand Herald editor Gavin Ellis told the Epidemic Response Committee the media were facing an existential crisis as advertising revenues plummet due to the coronavirus pandemic.
MediaWorks earlier this month asked its staff to take a 15 per cent pay cut, while Radio Sport and all Bauer's New Zealand magazine titles - including The Listener and North and South - have closed.
Bauer's closure also meant the loss of more than 200 jobs - though Ardern has noted that Bauer had refused to take the Government's wage subsidy.
Last Tuesday NZME, which owns the Herald and Newstalk ZB, announced it was making 200 positions redundant and asking higher-paid staff to take a 15 per cent pay cut for 12 weeks.
The Government has said it will make an announcement in the next week to help media.
Australia will become the first government to impose a legal regime including financial penalties for digital platforms that profit from content produced by the news media.
The federal Government has instructed competition watchdog, the ACCC, to develop a mandatory code of conduct for the digital giants to adhere to.
Writing in the Australian newspaper this morning, treasurer Josh Frydenberg said it was "only fair" that the search engines and social media giants pay for the original news content that they use to drive traffic to their sites.
For every $100 spent by advertisers in Australia on online advertising, excluding classifieds, $47 goes to Google, $24 to Facebook and $29 to other participants, he noted.
"In Australia, this market is worth almost $9 billion a year and has grown more than eight-fold since 2005.
An ACCC report found that more than 98 per cent of online searches on mobile devices are with Google, while Facebook has approximately 17 million users who are connected to its platform for at least half an hour a day.
"This has created a level of market concentration and power that was never envisaged by our regulatory system," Frydenberg said.
The mandatory code would force the tech companies to pay for the content they siphon from news media companies, share their consumer data and be subject to rules on the rankings of news on their platforms, the Australian reported.
Late last year New Zealand deputy Prime Minister Winston Peters cited Facebook and Google as reasons for the media industry's financial challenges.
In support of a proposal for NZME to purchase rival news agency Stuff, Peters said such a deal is in the "national interest" and that social media giants were making large profits by "suffocating" New Zealand media companies.