If they want to support local journalism, Google and Facebook must fund AAP

The tussle between the digital platforms and local media owners has been messy, without a clear resolution. But, as Ben Shepherd argues, perhaps the sensible next step involves Facebook and Google funding AAP. It will cost a fraction of what the big publishers are demanding, and indicate genuine support of local journalism.

In the bluster around the Australian Competition and Consumer Commission’s (ACCC) recommended and impending legislation that Facebook and Google pay selected local news organisations to deliver them traffic, it has been somewhat lost that probably the most important journalism institution in Australia is in the ICU [intensive care unit], in what appears to be a terminal state.

AAP is the service that the entire nation has relied on for the better part of the last century – covering the sort of news that the ACCC code is all about protecting. Court reporting, crime, local news, business, health, culture, public policy, finance, international news, government … from the capital cities to the smallest regional centres. Pretty much every local publication relies heavily on AAP, and has for decades. When news breaks, it’s generally taken from AAP wires.

At the end of 2019, it was reported that AAP was back in black after a loss-making year in 2018. A $929,000 profit was reported for the service, based on revenues of just over $65m. After a bleak 2018, AAP was bullish in 2019. It told the Sydney Morning Herald that it was heading into 2020 with a fairly stable outlook. Until it wasn’t.

News Corp and Nine decided they wanted to reduce reliance on AAP. They argued AAP wasn’t sustainable – and its entire survival had been destroyed by the digital platforms.

Reports were News Corp and Nine put in $10m and $5 respectively. Basically with AAP, both organisations decided they didn’t feel the service was important enough to continue contributing to.

Based on some back-of-napkin math, AAP costs about $64m a year to run. Reduce News Corp and Nine’s component and there’s $49m that is covered by other parties. The problem is – if News and Nine back away from the service, it basically turns a $1m profit into a $14m loss for the organisation.

This may not impact News Corp or Nine – which already have journalists and can push that money back into hiring reporters. But it does harm everyone else who relies on the content. Local news organisations, local TV affiliates, independent websites, radio stations regionally and in the cities – hundreds of organisations that cover news every hour of every day will be impacted. The hit on regional Australia – home to 30% of the population and already gutted media wise – is massive.

At the same time, Peter Costello from Nine has asked for $500m a year from the platforms. Michael Miller at News one-upped him – he wants $1bn a year as payment from Google and Facebook.

At its current pace, AAP won’t be around this time next year. It’s had to use crowdfunding websites to try and plug cash flow holes, and the government has handed over a pretty measly $5m to help it. This is not going to fix anything long term.

The obvious move is for Google and Facebook to fund AAP and for the business to run in a way similar to The Guardian in the UK. The Guardian has an endowment it draws down on, and this funding structure allows it to run as an independent concern.

AAP needs that level of independence. It’s important for the citizens of Australia. If we can all admit journalism is vitally important to democracy, then we can acknowledge the importance of AAP in that.

Facebook and Google should fund AAP in a way that News and Nine were not prepared to before they walked away. Allow it to run at cost, and provide Australians with a healthy voice that is free from political or commercial influence.

If we look at AAP’s cost to run, it’s at $65-$70m per year. It broke even in 2019. At its worst, it lost $10m. For two businesses that together generate around $6-7bn from Australia, this is a tiny expense item.

Google could run AAP across Google News, providing users with news without the payments being demanded at present. Google has the largest platform in Australia – this would provide journalists and journalism the largest audiences possible.

Facebook could amplify its usage of AAP for fact checking – which is more important than ever. It could also look to include AAP content across Watch.

This is a win/win/win. AAP is provided a lifeline to rejuvenate, evolve its operations and champion reporting and journalism. It also makes AAP an even stronger voice and alternative for Australian news seekers. Google has access to a news service it doesn’t own that provides its users with independent reporting. And Facebook shows a higher commitment to fact checking and policing truth on the platform.

And the cost? At best, 5-10% of the $1bn Michael Miller is asking for.

For Google and Facebook’s local managing directors, Mel Silva and Will Easton, respectively, this has to be something to consider.

It would be challenging to accuse tech giants of killing journalism if they’re the ones that step up and save the most important journalism institution in Australia when no other media company wants to.

Ben Shepherd is general manager of media at Thinkerbell


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