I expect this article won’t make me popular amongst many in media and marketing circles.

But I have to call it out: the Media Bargaining Code. As an industry that prides itself on creativity and engaging with actual people, we should be rejecting it.

Let’s start with the facts of how this poor legislation works.

There are two sets of companies: tech and media.

Both profit off each other. Tech sends vast amounts of traffic to digital properties of publishers. Publishers create content that fuels social media technology.

Tech makes money placing ads next to publishers' content. Publishers make ad and subscription revenue off the audiences tech sends to them.

Both benefit from the relationship. They perhaps have been less adept at extracting the benefit. Tech companies have been obsessed with building profits. Publishers have simply been waiting for the glory days of profitability to turn back on.

The Media Bargaining Code is the publishers' way to achieve this through lobbying rather than their business model.

It works like this:

1. Treasurer designates the tech companies.
2. Initial bargaining period conducted in good faith.
3. Mediation with neutral third party.
4. ‘Baseball’ offers - or final offers where only one will be selected.

In essence, publishers demand a fee from the tech companies and haggle over how much is paid. Results are enforced by regulation that forces resolutions, typically in the publisher’s favour. What’s worse is that we’re getting the government to get one private corporation to pay another.

It’s the definition of market distortion.

Objectively there is no doubt that tech companies do profit, perhaps too much, off Australian audiences. They likely should pay more tax to reflect these profits. Complex corporate arrangements allow companies to legally manage tax across a range of activities. Tech is no exception to this.

But should this concern — that tech isn’t paying enough tax — cause us to compel them to pay other private media companies?

Let’s flip this to another industry. In mining, many companies profit off Australian resources. We want to keep some of that to prop up Australian industries, communities and the country as a whole. But we don’t get Vale to pay Rio Tinto to do that. We charge them a royalty to operate here and use those funds to give the government funds to make society better.

In short – we don’t make companies pay other companies to solve societal problems.

This is especially important in media. Media companies need to profit off audiences and people’s willingness to pay, in both attention and subscription, for their content. Setting their business model to profit from regulation encourages them to ignore responding to the market.

We have a term for this kind of behaviour: Rent-seeking.

Where companies seek to gain wealth without reciprocal contributions of productivity. Often enforced by government regulators backed by powerful lobbying.

Is this sounding familiar?

It should.

Funding local content is important. Ensuring companies pay their fair share of tax is important. Making the Australian content ecosystem well-supported is important. None of these things are well achieved by the Media Bargaining Code.

It’s time to reject it and rent seek something new.