BOTW: On The Beach, in the lift, at one minute to midnight for media

BY Tim Burrowes

March 1, 2024 11:30

Welcome to Best of the Week, mostly written on board JQ749 home to Tasmania after three days in Sydney that began at the IAB Audio Summit and ended riding a freight elevator to the 21st floor of the Commonwealth Parliamentary Offices for a last minute ministerial press conference on Meta’s portentous decision to pull out of the news ecosystem. Yes, in the perfect metaphor, the politicians have the journalists arrive via the tradesman’s entrance.

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It finally happens

There haven’t been many weeks like it.

We started the week talking about whether AI is creating an extinction level event for media, and then things got worse.

The only week I can recall being more dramatic was June 2012 when in the space of two days Greg Hywood announced he was making 1,900 Fairfax Media staff redundant and Kim Williams chopped 1,600 News Limited jobs.

For the last few weeks, it’s all been a bit On The Beach. Media’s troubles in America – the end of Vice as a website, Buzzfeed’s layoffs, a series of cuts at publishers like Vox Media, NowThis and The Intercept – have been a hemisphere away. The UK-based Press Gazette estimated nearly 8,000 journalism job cuts across the UK, US and Canada during 2023.

This week, the radioactive fallout blew into the Antipodes. Warner Bros Discovery, the US-headquartered owner of channel Three in NZ, announced it was axing its entire NewsHub operation with the likely loss of 200 jobs.

Three and government-funded rival TVNZ are both loss making. Australia’s main three commercial TV players have seen profits sink, but in the most recent set of numbers (up to the end of 2023 for Nine and Seven, and 2021 for Paramount’s Ten Network Holdings) all three are still making money.

Still, it was close enough to home for the parallels for Australia to be top of mind. And there’s an argument that the smaller New Zealand market is a lead indicator for Australia. In Southern Cross Austereo’s conference call for analysts after its half year results announcement on Thursday, a sky-is-falling Roger Colman wanted to know what the plan was for the SCA regional signal if Ten’s US-based owner Paramount pulled the plug.

Meanwhile, the revelation that Southern Cross Austereo has quietly reduced its headcount by 100 as part of $20m of savings caused barely created a ripple.

The most significant moment of the week came at lunchtime on Friday. Meta published a blog post announcing the end of Facebook’s news tab next month. That might at first sound like not a particularly big deal – like most consumers, I bet you’ve rarely or never used the Facebook News Tab. That’s the plan. The move initiates a chain of events of which the most likely outcome – not certain, but more likely than any other – will be Meta’s exit from Australia. No Facebook, no Instagram, no WhatsApp, not even Threads. Imagine the impact. Like I say, we’ll remember this week.

At the hastily convened press conference, communications minister Michelle Rowland looked quite well considering she was straight off a 24 hour flight from her trip to Europe for the Mobile World Congress in Barcelona. She and treasury minister Stephen Jones, the key ministerial player in all things News Media Bargaining Code, emphasised that they had been planning for this moment.

Rowland and Jones front the media in Sydney Pic: Tim Burrowes

Back in 2021, when legislation for the News Media Bargaining Code cleared Parliament, the threat of being designated under the code was enough to persuade Meta and Google’s parent company Alphabet to shower largesse upon Australia’s big and medium sized media owners. It was grubby realpolitik, with the government acting as standover man for the media owners.

It was worth something like $200m to the publishers, with perhaps $70m of that coming from Facebook.

Although the agreements with the media owners were confidential, it’s widely understood that Facebook’s deals were for three years and Google’s four. It was also widely understood that Google is minded to renew and – as has now been confirmed – Facebook is not.

Facebook’s argument that it derives little value from news content is a self-serving one. Over the last two years, it has been downgrading news content in its algorithm in readiness for this moment.

As Jones said in the press conference: “If you run a restaurant and then close the front door, it really doesn’t make a lot of sense that a few months later you complain that you’re not getting any visitors into your restaurant, and something similar has happened here.”

Meta has decided that because of the News Media Bargaining Code, it wants out of the news ecosystem. However, unlike the previous battle of early 2021, when Facebook booted all news off its platform, this time it says it will allow publishers to keep their pages.

The calculation the company seems to be making is that if it is designated under the code, and forced into binding arbitration with publishers about the value of their content, it could win the argument that it’s no longer getting any value, therefore should not have to pay.

That, however, would not be the end of the matter.

The Australian Competition and Consumer Commission – the organisation the devised the News Media Bargaining Code in the first place – would then step in.

I asked chair Gina Cass-Gottlieb about that when she spoke at the Victorian Country Press Association back in November. She was clear that Facebook exiting the news ecosystem could in itself be seen as an abuse of market power under general competition legislation. Her prescient reply at the time:

“The very big question as that process stepped through would be whether there would be a set of further agreements entered into. Or whether – possibly, as has been the Meta reaction in Canada – to remove news content from Meta services.
“What that would reflect would be quite a significant step in exercising market power which would raise other questions for the ACCC under other parts of our powers.
“There are a set of steps that could be taken.”

This is where there are branching possibilities. One is that the ACCC prosecutes Meta for abusing its market position and loses the legal battle. In that circumstance, the company stays in Australia, but with no news on the platform

Another possibility would be that the company loses, and has to pay some sort of fine, effectively as a speeding ticket.

But the ACCC and government would be unlikely to leave it there. More likely would be ongoing enforcement until the company stops, in their argument, abusing its market power. It it becomes an ongoing fine, that would trigger a likely exit from the market altogether.

That would mean no Facebook, no Instagram, no WhatsApp, no Threads.

Let. That. Sink. In.

It would upturn a significant part of the marketing ecosystem. Consider the consequences for anyone involved in managing brand pages or selling on the platform. It will be absolute chaos, particularly for small businesses who rely on Facebook. Still, the absence of Facebook Marketplace would be good for the other local classified players. Finally some good news for Gumtree.

Until now, the biggest unknown was whether the government had the appetite for this confrontation. It was, after all, legislation devised and championed by the Coalition. Yesterday Rowland and Jones were unequivocal. They will take on Meta.

My question to Jones at the press conference:

Both sides have bought into the fight. In Meta’s case, it’s not so much about the ongoing cost in Australia; it’s the risk of the same thing happening in other markets around the world . Meta has calculated that, if it comes down to it, it will be better to lose its entire Australian business than see adoption of News Media Bargaining Code legislation globally.

There are still off ramps. But it’s hard to work out how either side can now take them.

On the publisher side, what the three years of Meta money did was win them time to work on sustainable business models. Now the tide is going out, we’ll find out whether those publishers actually did that hard work, or merely banked the money to deliver a better short term number to shareholders.

The world has got tougher for publishers since then. AI is likely to drive zero click search, which in turn means a significant decline in monetisable traffic for publishers. That’s why the phrase “extinction level event” is being bandied around.

The only silver lining I can offer is that this is at least the third extinction level event I’ve had a front row seat for, in my 35-year career as a journo. And yet, some of us are still here. Extinction ain’t what it used to be.

What is now a certainty is that in 120 days time, on July 1, the Facebook money will stop. That Doomsday Clock sure is getting close to midnight.

No justice in media and a Napster for news

Wednesday afternoon found me at the IAB Audio Summit in Surry Hills. What with Commercial Radio + Audio’s event last month, the audio industry sure has been enjoying a lot of face time of late.

One of the most thought provoking panels was around true crime podcasts.

Harvey, second from left, scratches the crime itch | Pic: Tim Burrowes

The Australian’s Clare Harvey bemoaned the popularity of a sub genre: low effort crime podcasts doing little more than reheating Wikipedia posts. From a member of the Teacher’s Trial team, that’s an understandable gripe. When it comes to rewarding effort, there’s little justice in media.

Given the ongoing success of Casefile True Crime in the Australian Podcast Ranker – it had the second most monthly listeners in January – I gave it a listen. Its popularity is an absolute puzzle: monotone narration, minimalist production, and uninspired storytelling from secondary sources. Its success seems to be derived from incumbency, having started early.

Commercial success does not always align with effort. Advertisers go where the eyeballs and eardrums are, not to the most nutritious content.

Still, as media faces its latest existential crisis, a moment is arriving when big brands may have to recognise that it’s in their own best interests for premium content players to continue to exist. In which case they will need to stop incentivising their media agencies to deliver the cheapest CPM.

It’s about more than low effort crimecasts, AI is delivering a new impetus in the creating of the genre of Made For Advertising sites, recycling existing content. The memorable description is “slime”. According to AWS AI Labs research, more than half the content on the web is now machine generated.

This week, it emerged that Google News Initiative is trialling a new tool with publishers designed to help them take commoditised data sources like press releases, financial disclosures and the like, and turn them into articles. Call it “Fast News” if you like.

According to AdWeek, the tool goes further, allowing publishers to repurpose content from other news sites.

“To produce articles, publishers first compile a list of external websites that regularly produce news and reports relevant to their readership. These sources of original material are not asked for their consent to have their content scraped or notified of their participation in the process.
“When any of these indexed websites produce a new article, it appears on the platform dashboard. The publisher can then apply the gen AI tool to summarize the article, altering the language and style of the report to read like a news story. “

The well meaning justification being that it frees up staff to write high value content instead.

The risk, as Casey Newton pointed out in Platformer, is that the tool becomes a means of scraping other outlets’ journalism and disguising it well enough to avoid copyright challenges. And of course, a means of employing fewer journalists. It’s reminiscent of the role Napster played in destroying business models for the music industry quarter of a century ago.

A new indignity

In a bad week for media, Seven West Media hit a couple of milestones this week.

SWM was pushed down to Australia’s sixth largest ASX-listed media company by market capitalisation, after being overtaken by print and catalogue specialists IVE Group.

And if that wasn’t enough of an indignity, the company’s $340m market cap fell far enough for it to be booted off the ASX 300. That blow came yesterday night when S&P Dow Jones announced its quarterly rebalancing. That’s likely to push the SWM share price down even further, as some index trackers will need to remove SWM from their portfolios when the updated indice kicks in on March 18.

The theory of the week – Seven to merge with ARN Media after the SCA takeover – is making more and more sense.

Unmade Index falls further below 600

The Unmade Index finished the week by losing another 1%, taking it down to 579.3 points.

Nine lost 2.33% yesterday, taking its share price back down to its low point for the year of $1.68. That gives the company a market capitalisation of $2.7bn.

Seven West Media had a better day, improving 4.76%, although its price is still down for the week, the month and the year.

Southern Cross Austereo improved by 2.17% after pointing out in an ASX update that a threat by shareholder Spheria Asset Management to call an extraordinary general meeting to try to speed up the proposed merger with ARN Media had not been formalised. SCA’s market update also went further in spelling out they information it believes ARN Media has failed to share on the details of the proposal.

Meanwhile in the latest twist of the messy Market Herald saga, director Gavin Argyle resigned yesterday. More on that in future weeks. Shares in The Market Limited slumped 22%.