Facebook signs deals with three more Australian media firms

Australia’s parliament passed landmark legislation on Thursday requiring global tech giants to pay for news content.

Facebook Inc says it has signed preliminary deals with three Australian media firms, a day after the country’s Parliament passed a law forcing it to pay media companies for using content on its platform.

Facebook said it signed partnership agreements with Private Media, which owns online magazines, Schwartz Media and Solstice Media. Commercial agreements will become effective within 60 days if full deals are signed.

“These agreements will bring a new slate of premium journalism, including some previously paywalled content, to Facebook,” the social media company said in a statement.

It did not disclose the financial details of the deal.

Facebook on Tuesday struck a similar agreement with Seven West Media, which owns a free-to-air television network and the main metropolitan newspaper in the city of Perth.

Australia on Thursday became the first nation to pass a law in which a government arbitrator can set the price. Alphabet Inc’s Google and Facebook would pay domestic media for using their content if private talks fail.

Facebook blocked all news content in Australia a week ago, citing concerns with the rules but on Thursday restored all news feeds after reaching an agreement with the government.

For months, Facebook and Google threatened to pull core services from Australia if the law took effect but Google struck some deals with publishers in the days before the vote.

The law was passed after a last-gasp deal that watered down binding rules Facebook and Google had fiercely opposed.

“The code will ensure that news media businesses are fairly remunerated for the content they generate, helping to sustain public-interest journalism in Australia,” Treasurer Josh Frydenberg and Communications Minister Paul Fletcher said in a joint statement on Thursday. The rules will be reviewed after a year.

Google has said it will pay for news content that appears on its Showcase product [File: Dado Ruvic/Reuters]

Google will now pay for news content that appears on its Showcase product and Facebook is expected to pay providers who appear on its News product, which is to be rolled out in Australia later this year.

Regulators had accused the companies, who dominate online advertising, of draining cash away from traditional news organisations while using their content for free.

Business models threatened

The law was developed after extensive analysis from Australia’s anti-trust regulator and almost three years of public consultation and could offer encouragement to countries such as the United Kingdom and Canada which are planning similar laws.

Big technology firms had fiercely opposed the legislation, fearing it would threaten their business models.

In particular, the companies objected to rules that made negotiations with media companies mandatory and gave an independent Australian arbiter the right to impose a monetary settlement.

That prospect was dramatically reduced by the last-minute amendments.

“Importantly, the code encourages parties to undertake commercial negotiations outside the code and the government is pleased to see progress by Google and more recently Facebook in reaching commercial arrangements with Australian news media businesses,” Frydenberg said.

Google has already brokered deals worth millions of dollars with local media companies, including the two largest: Rupert Murdoch’s News Corp and Nine Entertainment.

Thousands of journalism jobs and dozens of news outlets have been lost in Australia alone over the past 10 years as advertising revenue went digital.

For every $100 spent by Australian advertisers today, $49 goes to Google and $24 to Facebook, according to the country’s competition watchdog.