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Deep Dive 12 Apr 2022 - 9 min read

Unreasonably veracious: Can Australia’s richest man, Andrew Forrest, save indie media’s contextually diverse audiences frozen out by Facebook and Google?

By Paul McIntyre - Executive Editor
Andrew "Twiggy" Forrest

The Pilbara's billionaire commodity king v Silicon Valley's cool coders: Andrew "Twiggy" Forrest has entered the fray between Big Tech and independent publishers.

Big Tech’s $200m pay-off last year has silenced Big Australian Media. That’s what more than 40 independent publishers think after attempting to negotiate with Facebook and Google in the afterglow of huge payouts to leading Australian media groups when landmark federal legislation was passed. On 21 March, dozens of local publishers synchronised a freeze of their news feeds for 24 hours and launched a public awareness campaign protesting Facebook and Google’s dismissive and arrogant approach to small and medium-sized, independent media companies under the Federal Government’s internationally regarded media bargaining laws. Ultimately it pitches Silicon Valley’s cool coders against the Pilbara’s commodity king, Fortescue Metals founder Andrew “Twiggy” Forrest.

 

It's really nothing less than the future of independent publishing and media in Australia. We're going to see the cost of operating increase and the independents just not able to compete…

Nick Shelton, Publisher & Director, Broadsheet Media

 

What you need to know:

  • Australia’s #1 rich lister, Andrew Forrest is in a legal stoush with Facebook over the use of crypto currency scams using his image which he alleges the social media giant failed to stop.

  • Facebook has argued Forrest waived all his rights when signing up to a Facebook account and that it's protected by a controversial US law, Section 230 of the Communications Act.

  • Forrest’s philanthropic Minderoo Foundation and its Frontier Technology initiative has intervened to help 40-plus independent publishers collectively bargain under the Federal Government’s Media Bargaining code legislation.

  • Independent publishers says Facebook and Google are stalling negotiations after doing deals with Australia’s big media groups, estimated at $200m per year.

  • Google and Facebook fear setting an international precedent from Australia for payouts to small and medium-sized publishers.

  • They say Big Media is now cashed-up and using Big Tech money to take them on.

  • Treasury is conducting a review on the impact of the media bargaining code with submissions due by May 6. Independent publishers praised  the new laws but say the review will show that big tech has been dismissive and arrogant in treating independent media differently to large media groups. 

  • Within three years, the sustainability of independent media and diverse audiences will be crunched unless the tech duopoly is forced into negotiations. 
  • Google is close to striking a collective bargaining deal after indie publishers stepped up pressure with their “WaitingForZuck” awareness campaign and protest via a 24 hour news feed freeze last month. 

  • Large media buying agencies say media and audience diversity is on the rise after decades of media consolidation. Per GroupM CEO Aimee Buchanan on an Mi3 podcast in February: “How can you talk about diversity inclusion if you're not using the channels that those audiences consume – and they're not going to be necessarily mainstream channels."

     

Big digger

The arrival of Australia’s $20bn man, Andrew “Twiggy” Forrest into the fray of a battle between Big Tech and its dismissive treatment of smaller local publishers under new government revenue sharing laws is laden with intrigue. 

Forrest has argued Facebook should be regulated as a publisher and liable for the content it publishes after the social media giant failed to stop crypto currency scam ads using his image which proliferated on the platform.

In various legal suits, Forrest alleges Facebook negligence while Facebook has argued that by Forrest signing up to a Facebook account, he waived all his rights. Regardless, Facebook says it is protected by a controversial US law, Section 230 of the US Communications Decency Act, which protects platforms from liability of third party content. The US law was introduced in 1996, before social media platforms existed.   

Combine that Meta versus miner stoush with the intervention by Forrest’s philanthropic Minderoo Foundation to lead a collective bargaining agreement with 40 independent Australian publishers against Big Tech and the stage is set for a popcorn munching skirmish.

Minderoo’s Frontier Technology initiative and local publishers are currently attempting to force big tech companies to halt their dismissive, stalling tactics on payments due to them for news content and public interest journalism. The dog fight is all thanks to the Federal government’s audacious media-tech bargaining laws, along with a series of government-backed ACCC digital platform inquiries which have garnered heavy international interest. At stake in Australia is a global precedent for Google and Facebook for payouts to thousands of media organisations around the globe. What Facebook and Google acquiesce to here will be a baseline for other countries.  

Facebook and Google don’t give a rats about the deals they might be making here. They just don’t want to be doing that 100-fold right across the globe … We’re looking for systemic change.

Ebony Gaylor, Managing Partner, Decade Of Action

As the alliance of Forrest’s Minderoo and Australia’s minnow media battle the tech duopoly on one front, a smaller group of 25 publishers last month mounted a public awareness campaign badged “WaitingOnZuck”. Some have dismissed it as futile. But it may, combined with the collective bargaining negotiations with the ACCC, just have shifted the winds for policymakers and policy wonks. 

It might also deliver blue chip brands a lesson in what to do when their audiences, and tech stacks, are all but monopolised by global platforms.

The current crusade by independent publishers comes as media diversity is on the rise among some of the biggest media buying consortiums.

GroupM CEO Aimee Buchanan told Mi3 in February: “Never before have I had so many conversations around what is our approach to more diverse representation on our media plan; what is our capability; what are we doing from a private marketplace perspective to target specific cultural groups; what is our approach to matching a client’s corporate social responsibility plan around diversity inclusion to investment strategy? How can you talk about diversity inclusion if you're not using the channels that those audiences consume – and they're not going to be necessarily mainstream channels."

Broadsheet is Big Tech’s smallsheet

Broadsheet’s publisher Nick Shelton is cranky. As Australia’s second biggest independent publisher behind Mamamia, Shelton has been chewed up and gamed by Big Tech’s enormous resources to avoid a global precedent from Australia to allocate funds to smaller independent media like they did with Australia’s big media groups; namely Nine, News Corp and Seven West Media. The Guardian Australia and the ABC were also leading beneficiaries of the $200m-plus that federal legislation forced Facebook and Google to distribute early last year in a bid to ensure the sustainability of news and public interest journalism. 

Mamamia, Anthony Catalano’s ACM, Eric Beecher’s Private Media and a handful of others received undisclosed payments from Google and Facebook but the public war against the platforms has since largely abated after the big, and a few not-so-big media groups, got their money. Some of those smaller publishers that did land cash in the early rounds last year ahead of the big media groups were also gamed by the duopoly. But that’s a different story on why and how. Ironically, all of the media companies that received three-year funding deals in early 2021 will soon be going back cap-in-hand to the tech players for another round. 

Little is known about how and where the big media groups have spent their tech honey money – Nine, News Corp and Seven are estimated to have each received well north of $30m a year for three years (the terms of Seven’s deal is widely debated) but Broadsheet’s Shelton is already seeing the impact. 

Big media raiding the small 

He says the big players are coming after his prized audiences around culture and the younger set by hiring journalists – and poaching his – while making publishing investments that escalate the difficulties for Broadsheet Media to compete efficiently in an open market against his bigger media rivals now cashed up on Big Tech money. Broadsheet is lucky – it’s widely regarded and well traded by large media agency groups who buy most of the advertising and audiences for blue chip brands. Typically, independent publishers struggle for that sort of access and attention, per Pro Bono Media’s Karen Mahlab, a leading community publisher who is also at the centre of these negotiations for an alliance of independent media operators:

“We find it so hard to get into agencies and yet we’ve got a 3 million strong [audience] reach,” she says. 

Ebony Gaylor, Nick Shelton, Karen Mahlab

“They’ll respond to an email or a phone call and they’ll do it with smiles…but then these things don’t get anywhere. You just go round and round." L-R: Decade of Action's Eb Gaylor; Broadsheet's Nick Shelton; Pro Bono Australia's Karen Mahlab

To date we’ve had no joy with Facebook and we are having some joy with Google. Nothing is finalised but we’re seeing some light on that front.

Karen Mahlab, CEO, Pro Bono Australia

Still, even with Broadsheet’s easier access to large media buying networks, Shelton warns of a looming commercial crisis for his 12 year-old business as media groups that have got Big Tech funding raid the unfunded indie media villages for new spoils.     

“Those bigger publishers say ‘we’ve got another $10m, $20m, $30m to spend, let's go take on Broadsheet – they're doing pretty well; they're getting a good share of market. Let's go gobble them up’,” says Shelton.

“And it's not just Broadsheet, it's all the independents. We're not going to see this happen today or tomorrow, but over the next two to three years we're going to see the cost of operating increase and the independents just not able to compete at the same level. So it's really nothing less than the future of independent publishing and media in Australia.”

And it’s precisely this point that was not meant to happen under the Federal Government’s audacious and internationally recognised media bargaining laws. It was intended that the entire media sector – small and large – would benefit. Instead, many smaller players have been left, in the case of Facebook, with a small grants program via the esteemed Walkley Foundation for journalism. The program has left that venerable institution subject to perceptions it has helped ‘greenwash' Facebook’s indignant position - remember when the social media giant turned the lights out in February last year on Australian news feeds to remind all of its power? Ironically, what Facebook ended up showing everybody is that its much vaunted algorithms could not actually distinguish news sites from local services and not-for-profits, which were turned off along with other bystanders.

Same shark, different fins

Perversely, Facebook’s blunt shut-out of smaller media groups makes Google’s approach seem positively endearing, although Shelton says both are ultimately the same shark with different fins. 

“They’re each a little bit different but the outcome is the same,” he argues. “Facebook is much more closed: ‘We’re done; doors are closed; the shop is closed; go away, don’t talk to us; don’t bother emailing us because you’re not going to get a response. Just leave us alone’.”  

Google on the other hand, has been “much more engaged” but equally unproductive in Shelton’s experience. “They’ll respond to an email or a phone call and they’ll do it with smiles … but then these things don’t get anywhere. You just go round and round in circles. The point of this code was to provide value for publishers for content we were already producing that they were benefitting from. [Google] will make a lowball offer, take your time and they’ll answer every phone call so they can then say to their liaisons in government and the ACCC that ‘we’re doing our best, we’ve tried to work with Broadsheet but they’re just not accepting a deal’. The point is we have no leverage without the code. Without designation, there’s no leverage for us other than jump up and down.”

“Designation” from the Feds, by the way, is what the duopoly wants to avoid at all costs – that means they are forced into negotiation through independently controlled arbitration which would be disclosed and set international benchmarks for other countries now eyeing Australia’s regulatory shirtfront to Big Tech. Google and Facebook have so far avoided being designated because of the deals they selectively struck with the bigger media groups. Big media got the cash and the Federal Treasurer Josh Frydenberg was happy enough.

“To sign a deal with a small indie publisher in Australia is no skin off their nose,” says Ebony Gaylor, Managing Partner at Decade of Action (DOA), the firm which created the WaitingforZuck strategy and campaign (at no charge). DOA is partly backed by Thinkerbell’s Adam Ferrier. 

Systemic change

“To put it bluntly, [Facebook and Google] don’t give a rats about the deals they might be making here,” says Gaylor. “They just don’t want to be doing that 100-fold right across the globe … this is not a splash campaign. We’re looking for systemic change on this really important issue.”  

While designation from treasury would likely force Google and Facebook to properly negotiate with Broadsheet, Shelton says it’s not an end game for large and small media groups.

“Rocking up with your hand out to Facebook and Google every three years is not a way to run a sustainable business, no matter what your size,” says Shelton. “There needs to be an established, ongoing, sustainable way for these platforms to transfer the enormous power and value they are amassing from the media.” 

Still, Pro Bono’s Media’s CEO Karen Mahlab is a little kinder than Shelton on Google, thanks to the intervention of Andrew Forrest’s Minderoo Foundation. Led by Minderoo’s Senior Policy Advisor for its Frontier Technology initiative, Emma McDonald, the philanthropic organisation spearheaded a charge, along with the Public Interest Publishers Alliance [PIPA], for the ACCC to grant 23 smaller publishers collective bargaining rights to negotiate with Facebook and Google for funding under the Media Bargaining Code (Broadsheet Media is not one of them, opting to push for its own deal).

“There’s some good work being done by Minderoo,” Mahlab says. “To date we’ve had no joy with Facebook and we are having some joy with Google. Nothing is finalised but we’re seeing some light on that front.” 

Mahlab thinks there will be a deal but would not be drawn on speculation it might be worth circa $10 million annually. “I hope so, it certainly seems so,” she says on the likelihood that collective bargaining negotiations will land. “As Nick says, [Google] is much easier to deal with. They’re much more accessible and open. 

"But I also feel like this [WaitingOnZuck] campaign that Decade Of Action did was good to push Google towards the negotiating table. A little bit of pressure is not a bad thing.” 

Calculated timing

The timing of the pressure and campaign by the indies was calculated. On 6 May, Treasury’s deadline for submissions to its review on the effectiveness of the media bargaining code ends – with recommendations likely released by September.

Shelton, Mahlab and Gaylor say Google and Facebook are testing how far they can push before designation looks a certainty from the Feds. Treasury’s review will likely trigger a wave of submissions containing the sentiment in this piece and today’s podcast. But it could also stretch to other platforms too, like Twitter, Snap, TikTok and LinkedIn, which hitherto have avoided what the duopoly hasn't. 

How the government will respond, and which government will be in power to respond, remains the big unknown. “We don’t know Labor’s position on this yet. We’ve started discussions with the Opposition," says Mahlab.

"[Treasury’s review] is an opportunity to criticise the code that’s been set up and to point out its flaws. We’ve got no code. We’ve got no transparency about the substance of the deals made. The $200 million that’s been estimated to have been given out has just been people cobbling figures together of talks done behind the scenes. There’s a number of different issues that we think need to be addressed in the nature of the code and what’s happened since the code. As Eb [Gaylor] said, policy is not perfect and we want small publishers to be given an easier ride with the negotiations. And those negotiations to support public interest journalism might not just apply to Facebook. There might be other platforms who are likewise using the content of media organisations on their platforms for free when media organisations are paying. So this is a discussion that goes way into the future as well.”

The hit for brands

And finally, there are implications and lessons for brands and advertisers out of the media mash-up with Big Tech – beyond the loss of their access to audiences and environments outside the Big Tech hoover.

“None of them like Facebook or Google either because they have the same situation where they’ve got to negotiate and everything happens on Google and Facebook’s terms,” says Shelton of advertisers. “Whether they want diversity of contextual environments, audience types, demographics, psychographics … they want to be able to build campaigns and reach audiences in all kinds of different and interesting places. It’s healthy for their industry if the publishing and media industry is healthy too. If it’s a duopoly and they get to make up all the rules, it’s bad for everyone.”

Gaylor concurs: “Nick’s right. Advertisers and brands are at the mercy of Facebook and Google at the moment. Brands need to reach people through emotion and through their sense of social identity which is exactly what smaller and medium-sized publishers bring to the table.”

For Mahlab, the recent formation of the Digital Publishers Alliance could be a circuit-breaker to crack the $13 billion that now pours into online advertising in Australia – the lion’s share is now controlled by the duopoly. 

“There’s a sense that if we can organise in a way that advertisers might find it easier to get to the diverse audiences that we represent, that it would be a very good thing for all of our businesses, including advertisers,” she says. “The advertising industry can be a very blunt instrument in terms of buying a share of market voice. The sense of a collective of smaller publishers pulling together is going to be very powerful for that in the future.” 

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