[News] The Online News Act doesn’t solve the long-term problem for news

[FazzNoth]

We increasingly live in enclaves. We live our lives inside digital ecosystems configured by the collection and analysis of our personal data. Most of us, in one way or another, rely on Facebook, Apple, Google, Amazon and other digital platforms to live our lives nowadays. 

The business models of the tech firms that run these platforms are designed to lock us into their enclaves, to rely upon their services and products and to hand over our personal data to build their algorithms.  Consequently, they want us to stay in their enclaves. If we do leave, they’ve found ways to digitally stalk us around the rest of the web through cookies, application programming interfaces and other plugins.

 

And this is where the federal government’s new Online News Act comes in. The act is an attempt to address the consequences of this individual retreat into our respective enclaves. The growth of platforms like Facebook and Twitter has led to a precipitous fall in the news media’s advertising revenues. 

The big tech firms that run sites like Facebook and Google receive 75 to 80 per cent of online advertising revenues and 50 per cent of total advertising revenues in Canada. This market concentration has seen a corresponding shrinking in the advertising income received by Canada’s news media, threatening their survival, as pointed out by Bob Cox, former president of News Media Canada. 

 

Big tech has seized control of the “assets” that used to underpin advertising in news media: the viewers, readers and users. Google and Facebook, for example, are now key intermediaries in online advertising, able to charge significant “middlemen” fees when auctioning off online advertising space, thereby reducing the money that news media get from ads. Moreover, big tech’s market power has had a significant impact on referrals to news media sites, since small changes in the algorithms of search engines or news feeds can significantly change online traffic.

 

Some commentators, like Michael Geist from Ottawa University, argue that the Online News Act represents a self-serving approach to dealing with big tech. For Geist, news media simply want a greater share of the digital advertising revenues they lost over the last decade or so, but it’s not clear what unintended and negative consequences could result.

So, does it make sense for news media to get a bigger slice of the big tech advertising pie?

Perhaps, but it might not solve anything. The biggest issue is that the big tech digital advertising model is not particularly healthy. News media may simply be setting themselves up for more grief in the medium and long term. 

To understand this requires an appreciation of how digital advertising works. And, increasingly, how it’s not working – in fact it’s creating a whole series of problems of its own.

https://policyoptions.irpp.org/magazines/may-2022/big-tech-news-ad-troubles/