[Representational image sourced from Canva.com]
This blog argues that the Indian government should focus on deregulating the news industry rather than implementing a News Media Bargaining Code. As the experiences of Australia and Canada have shown, frameworks like News Media Bargaining Codes are ineffective as large tech companies simply de-list news links to avoid payouts. Instead, the Indian Government may consider lifting restrictions on bundling TV channels and allowing private radio broadcasters to air news. Such deregulation would foster a more competitive and dynamic media landscape, benefiting news publishers by enhancing their financial viability and providing consumers with a broader range of news options.
A newspaper report earlier this month indicated that India's Ministry of Information and Broadcasting (MIB) is considering introduction of a law to ensure that news publishers earn more revenues from tech giants like Google and Meta for their content. This initiative follows similar laws in countries such as Australia and Canada, which empower news businesses to negotiate with large digital platforms for content deals.
While, Australia introduced the Treasury Laws Amendment (News Media and Digital Platforms Bargaining Code) in 2021, Canada enacted the Online News Act in 2023.
Individuals can access news online in two ways: distributed discovery and direct discovery. Distributed discovery allows them to find and access news through various digital services, while direct discovery is direct access to news via a media organisation's website or app.
The ubiquity of social media means distributed discovery is more prevalent around the world. That is, most people access news through social media and other content aggregator apps that serve as conduits of information or intermediaries.
This has led to news publishers arguing that such services free-ride on their professional content, since they earn advertising revenues without paying a fair share for it.
Despite what may seem like a skewed dynamic, the government may need to reconsider the introduction of a law to balance the scales between news publishers and intermediaries for the following reasons.
First, there is no evidence that economic regulations actually work. Large intermediary apps tend to respond to such state-interventions by delisting news from their feeds.
For instance, when the Online News Act was introduced in Canada, Meta, the company behind Facebook and Instagram, banned news content.
Reports indicate that it is considering a similar move in Australia. Such actions negate any negotiations with publishers for fees and eliminate the benefits publishers gain from distributed discovery.
A 2019 study by Deloitte found that referral traffic to news websites in France, Germany, Spain, and the UK contributed to revenues worth €1.01 billion in 2018.
Second, an economic regulation on payments for news content is essentially an intellectual property matter, falling outside the purview of the MIB. Commentators may argue that the law focusses on empowering news organisations that are much smaller in size than big social media players.
However, the demand for compensation by news publishers for the “use” of their content is akin to asking for a royalty.
Intellectual property issues fall within the domain of the Department for the Promotion of Industry and Internal Trade (DPIIT) under the Allocation of Business Rules, 1961. As such, the MIB is not in a position to introduce such a law.
Finally, if the MIB wants to enhance the revenues of news publishers it may consider deregulation of news distribution, starting with the cable and satellite broadcasting industry. The Telecom Regulatory Authority of India (TRAI), the nodal regulator for broadcasting, imposes restrictions on bundling channels.
These include a restriction on bundling pay channels with free-to-air channels. A free-to-air channel has no subscription fee and depends entirely on advertising.
Now, approximately 71 per cent of news channels rely solely on advertising for income. These channels must focus on maximising reach to generate revenues.
To maximize reach, news channels would ideally want to be part of two channel bundles: one with a high-demand channel, like sports, and the other as part of the free-to-air bundle offered by distributors like Tata Sky.
However, because of the TRAI’s restrictions on bundling, only the latter option is available to a majority of channels, as broadcasters would not want to forgo the subscription fees they can collect on high-demand channels like sports.
Consequently, most news channels have no choice but to be free-to-air and remain entirely dependent on advertisements, and concomitantly, distributor free-to-air bundles, for revenue.
The necessity for news channels to be included in free-to-air bundles also allows distributors to exploit them by demanding fees from channels that seek placement in their bundles.
While TV news broadcasters have limited means to monetisation, private radio broadcasters are prohibited from airing their own news. The prohibition has been in effect since 1999, when the Phase-I policy for FM Radio broadcast was introduced.
When the Government was asked by the Supreme Court why the ban remained in effect in 2017, it stated that news broadcasts on radio may pose a possible security risk as there is no mechanism to monitor the content of every station.
However, introducing a licensing regime for broadcasting news on private radio stations would obviate such concerns.
If the MIB is looking for a short-term solution to improve the prospects of news publishers in India, it must introduce reforms in broadcasting.
The MIB should urge the TRAI to eliminate bundling restrictions on TV broadcasters and permit private radio stations to produce and air their own news through licensing.
By embracing such reforms, the government can foster a more dynamic and resilient media landscape that benefits both news publishers and consumers.
As the saying goes, "Charity begins at home." The MIB should perhaps first address the regulatory constraints on news revenues within its own domain before attempting to usher in frameworks that are yielding undesirable consequences globally.
[This article was first published on The Secretariat website Here.]