Federal government concession sends tech giants scrambling

However, industry sources, who requested anonymity to speak about the confidential discussions, said the government had indicated it was prepared to hold off on the designation process to give the tech giants more time to sign commercial agreements through their respective products: Google News Showcase and Facebook News. Google and Facebook would prefer these products to be allocated instead of search and newsfeed.

That undertaking could be enough to prevent the tech giants from pulling services from the market but could affect how much the tech giants pay.

Kerry Stokes’ Seven West Media is expected to announce a deal with Google for its News Showcase product in the coming days.

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Google launched News Showcase two weeks ago with participation from Crikey, The Saturday Paper, The Conversation and Australian Community Media, which publishes titles including the Newcastle Herald. Industry sources familiar with the talks stressed no contract had been signed but Seven, which owns The West Australian, had been offered an amount of money that is was willing to agree to and was close to signing a deal. Seven was approached for comment.

Seven is one of several media companies including Nine, News Corp, Guardian Australia and Daily Mail Australia to enter last ditch negotiations by tech giants Google and Facebook. However, most offers have explicit provisions allowing the tech giants to terminate deals if the government’s proposed digital media regulation is not revised. Industry sources said large publishers are open to striking deals for the right price, but were seeking payment in the order of tens of millions of dollars each from Google and Facebook.

News Showcase is a newly launched product available through Google’s news app. Google pays publishers for certain behind-the-paywall articles which then appear on the platform. Facebook News functions in a similar way.

Brad Bender, global vice president of Google news product management said local outlets were pleased with the launch, as the search advertising giant claimed more than 1 million views of the content had occurred in the first 8 days. Google has signed deals with outlets in Argentina, the UK and France.

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“Publishers are really clearly on board with what’s on offer here and that’s because while the value showcase does include a significant monetary component, it really is about more than that,” Mr Bender told The Sydney Morning Herald and The Age. ”One of the things that we do with the product is pay for select pay walled content in order to provide free access to users so that publishers can really give users the experience their writing…and turn readers into loyal subscribers.“

Google and Facebook claim the code, which requires them to pay news outlets for use of their content, is “unworkable” in its current form and have threatened to cut off key parts of their services including search. Major media companies such as Nine, News Corp and Guardian Australia are pushing for the code to be legislated immediately so they can be remunerated.

”Without this legislation, digital platforms will continue to refuse to pay for the content they’ve used to secure their monopolies or live up to the responsibilities that come with such power,” Nine’s publishing boss Chris Janz said in his evidence to the Senate hearing last month.

Google’s head of news, web and publishing product partnerships Kate Beddoe said publishers that had agreed to use the product and politicians that had seen it were impressed.

“Local politicians have looked at Showcase or they’ve had an experience of Showcase and that feedback been positive,” she said. “I think it’s been really constructive for us … to launch and so people have been able to see it and experience it.

“We believe we have a viable solution…that can operate under the code which pays publishers and meets, frankly, the objectives of the code.”