What you need to know:

• Nine says TikTok should fall under the News Media Bargaining Code, which compels social and digital platforms to negotiate with publishers to pay for content. Last year that was worth $35m to Nine alone.
• The code came into effect in March last year, but there are increasing signs Meta, parent company of Facebook and Instagram, is pulling away from new deals – and out of news more broadly. Nine explicitly states Facebook may not renew existing contracts.
• Penelope Hobart, Nine’s Executive Counsel, says there is a significant and ongoing threat to publishers as TikTok, Facebook, Instagram, and Google’s YouTube are all “unavoidable business partners”.
• The call puts pressure on YouTube, and its estimated $2bn walled garden, as the ACCC mulls whether to break open the video marketplace via regulation.

Money talks

Nine fears a rug pull on $35m in annual revenue. Australia’s biggest media company has called on the government to make TikTok pay for news content under the News Media Bargaining Code, warning it is building “unfair market power” and urged the Federal Treasurer to take explicit action.

In newly published submissions to the ACCC's Digital Platforms Services inquiry, Nine said TikTok has become an “unavoidable business partner” alongside Meta’s Facebook and Instagram and Google’s YouTube.

The network wants the Federal Treasurer to make a “statement of expectation” that all social platforms will continue to abide by the code, with Meta boycotting Treasury and ACCC meetings – and effectively pulling the plug on news.

Publishers have negotiated north of $200 million from the big platforms, but most believe it is highly unlikely Meta will renew any of those deals struck 18 months ago, let alone strike more. If Google is left as the only game in town, fears that it aims to "lowball" publishers may deepen. 

Bringing TikTok into play would materially strengthen publishers' hand – and the platform continues to make significant progress in loosening Facebook's grip on ad budgets. 

In its ACCC submission, published on the same day as TikTok held its first upfront pitch to Australia’s $19bn ad industry, Nine’s Executive Counsel, Penelope Hobart, suggested Australia's incumbents had no choice but to work with TikTok, and urged government to force the platform to pay for leveraging its content.

“I am instructed that TikTok does not currently participate in the fair remuneration for news content from Australian news media companies. In circumstances where there is clear data supporting the surging popularity of TikTok (especially) amongst younger users accessing news content, it is vital that the rapidly growing and unfair market power of TikTok is recognised by the ACCC… as an unavoidable business partner of Australian news media businesses and that TikTok is designated under the News Media Bargaining Code,” Hobart wrote.

Mi3 approached TikTok to ask whether it would consider negotiating with local publishers, but did not hear back before publishing. 

Don’t let Meta pull out: Nine

While Facebook's July engineering update has been interpreted as a signal that it is preparing to pull away from news, Nine wants the treasurer to ensure it fulfils its obligations under the code – especially as current contracts run down.

Meta did not attend several bargaining code meetings in Sydney and Melbourne earlier this year, and publishers believe it is unlikely to renew deals struck at the beginning of last year. SBS and The Conversation, which qualify under regulator definitions, are yet to agree any deals with the social platform. Other independents say while Google has engaged - though offered risible amounts – there has been zero communication from Meta.

Which makes TikTok's inclusion all the more important to publishers now reliant on the bargaining code cash to sustain significant investments in product and staff, as well as healthier bottom lines.

“Nine submits that despite new entrants coming into the social media market, there is no easing of pressure in terms of the power imbalance between those social media platforms and Australian news media companies,” per Hobart's statement.

“If anything, the market imbalance Australian news media businesses are facing is getting worse – with even more gatekeepers to our news content to overcome before it can reach our audiences… Nine submits that social media services are a truly essential part of distributing news content – and therefore a must have for Australian news media businesses, and also for a large proportion of Australians who rely on these social media platforms for their news content. For all of these reasons, Meta (Facebook and Instagram), YouTube and TikTok are all currently unavoidable business partners for Nine.”

Nine called for Treasurer Jim Chalmers to crack the whip or effectively undermine three years' worth of regulator heavy lifting and unravel the legislation by default.

“Without designation of social media services (or a statement of expectation made by the Treasurer) under the news media bargaining code, there is no incentive for social media platforms to enter into commercial negotiations with Australian media companies for the monetisation of news content or to continue existing arrangements following the end of existing terms,” she stated.

"It does not make sense that other powerful and omnipresent social media platforms that rely on disseminating trusted news content do not have to pay for that content. Nine maintains that social media is a fast-paced environment which is not the same as it was in 2019," added Hobart.

"It is critical that other powerful players such as TikTok and YouTube are included in any designation, or statement of expectations, under the News Media Bargaining Code... TikTok has so far refused to engage in any commercial conversations with Nine about the fair remuneration for Nine news content appearing on its social media platform.”

YouTube squeeze

Calling for YouTube to be designated piles pressure on the Google-owned video content platform. At its recent Brandcast event, YouTube told hundreds of marketing and agency execs that 17 million Australians watched its content in May 2022 and they consumed that it “on every screen – desktop, mobile and increasingly the largest screen in the house.”

"In our view this makes YouTube one of the most significant social media platforms for advertising," Nine's counsel wrote. 

The entire broadcast video on demand (BVOD) market - platforms like 9Now, 7plus and 10 Play - banked about $426m in the 2022 financial year, Nine wrote, compared to estimates of $2bn in ad revenue for YouTube. 

"That makes the advertising spend on YouTube 4X more than the entire BVOD market," Hobart said. 

Pincer movement

The demand from Nine comes as regulators mull breaking open its video walled garden as the networks struggle to bring their own BVOD equivalent to life. Google restricts access to YouTube exclusively via its own demand side platform (DSP), DV360, which former ACCC chair Rod Sims flagged could be forced open to encourage more competition. Sims predicted it would take a year for YouTube to be opened up. Google itself made a similar offer in Europe, per Reuters. 

Nine states the current monopoly extends Google's market power and means the tech giant "can then control the allocation of advertisers’ budgets across YouTube and third party inventory supply – giving them both the ability and the incentive to self preference their own inventory". 

At the same time, Australia's major networks are grappling with a play to counter YouTube's might by building a BVOD marketplace, though are struggling to align agendas. They claim the initiative would create a more transparent premium video ecosystem with frequency-capped reach gains and better measurement. Media buyers and adtech platforms, however, have voiced concerns that it could lead to price inflation and blunter targeting. 

Nine may be implying that YouTube could buy itself time by negotiating its own deals with publishers under the framework of the bargaining code – or face a more vigorous campaign to break its stranglehold on the $2bn YouTube cash cow.