Seven West Media inks $30 million-a-year Google deal

The flurry of deals comes as the Federal Parliament prepares to debate the Morrison government’s media bargaining code legislation this week, which would force the Google and Facebook into mandatory arbitration with news publishers for payment for value they obtain from having news content in news feeds and search results.

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While the deals would allow Google to avoid a risky arbitration process, media executives still believe the legislation is crucial to ensure tech companies pay for news content and contribute to funding public interest journalism.

Treasurer Josh Frydenberg confirmed the federal government had agreed to make some technical amendments to the bill following discussions with Facebook chief Mark Zuckerberg and Google boss Sundar Pichai over the weekend.

“These are improvements to the bill, these are technical in nature but they also clarify the position of the government and I think they provide comfort to the players that we’ve got a workable code,” Mr Frydenberg told Sky News. “We’ll make those technical amendments public over the course of the next few days.

Mr Frydenberg also confirmed he would wait for more deals to be made before deciding whether to enforce the code against Google’s search engine and Facebook newsfeed, or through their respective news licencing products: Google News Showcase and Facebook News.

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

“With respect to the designation of Search or Facebook, they are decisions that I would make after receiving the advice of the ACCC. But if there are commercial deals in place, then that becomes a different equation,” Mr Frydenberg said.

Google has already struck commercial deals with a number of smaller Australian publishers for its Showcase product, including Crikey, The Saturday Paper and Australian Community Media, publisher of The Canberra Times.

Google and Facebook have been trying to quickly sign deals ahead of the introduction of the code, which could be legislated by the end of the week. The discussions were accelerated after high-level talks took place between Prime Minister Scott Morrison, Treasurer Josh Frydenberg, Facebook chief executive Mark Zuckerberg and Google chief executive Sundar Pichai.

Talks with other outlets such as Daily Mail Australia and News Corp Australia are ongoing. News Corp, which owns a string of papers in Australia as well as The Wall Street Journal and The Times of London, is expected to sign a global deal for its content.

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The agreements with Google Australia are likely to vary between different companies. Seven sources indicated their deal was worth more than $30 million a year, but it isn’t clear how this money is being allocated. Draft versions of contracts seen by The Sydney Morning Herald and The Age show that most of the money Google is willing to pay is for licensing content on YouTube under a revenue-sharing deal rather than its Showcase product. This means that a company may receive a large amount of cash upfront but it could be in exchange for any advertising revenue generated from their content.

Seven’s deal will include News Showcase but could also include content on other Google-owned products such as YouTube and Subscribe with Google, a platform that helps news outlets engage with their subscribers. The company’s chief executive James Warburton would not comment directly on the cost of the deal but said the money would be used to invest in journalism.

“It will improve the business, there’s no doubt about that,” Mr Warburton told The Sydney Morning Herald and The Age. ”With The West Australian, we’re one of the only publishers that’s continued to invest in regional and community newspapers. What it does is it gives them a digital future and gives us some sustainability and a lot of that will drop to the bottom line and help us repay debt.“

Mr Frydenberg said Mr Pichai had made clear in the discussion that Google wanted to remain operating in Australia.