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Analysis: Malaysian publishers next to demand FB and Google share revenue

Analysis: Malaysian publishers next to demand FB and Google share revenue

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The Malaysian Newspaper Publishers Association (MNPA) has taken a page out of the Australian government’s book by sending a letter to the Malaysia Competition Commission (MyCC) regarding the issue of Facebook and Google sharing their revenue with publishers in the country.

In a letter seen by A+M, MNPA’s chairman Mustapha Kamil Mohd Janor said for the longest time, a source of potential income rests with digital platforms such as Google and Facebook, which have been using publishers’ content and generating revenue. 

“Unfortunately, they have not been sharing this revenue with news publishers. Not here, not globally. But things are changing with a recent development in Australia,” Mustapha, who is also the CEO of New Straits Times Press, said. 

He referenced the Australian Competition and Consumer Commission (ACCC) as an example, saying that it drew up a new mandatory code to compel such digital platforms to compensate news media companies for using their content. He said MNPA looks to MyCC to help the industry as it has the leverage that it does not.

“While revenue from our digital publications are growing, it is still small by comparison. As such, an alternative and sustained income from our businesses has never been more important,” Mustapha explained. He added that MNPA sees this as an opportunity for the same to happen in Malaysia and that “this is the lifeline that can save [the] industry”. MNPA’s members include New Straits Times, The Star, The Sun, Borneo Post, The Edge, Berita Harian, Sinar Harian, Sin Chew Daily, China Press, Nanyang Siang Pau, and Oriental Daily News.

Last week, Australia's treasurer Josh Frydenberg said the move to require digital platforms to pay for content they use came after discussions with the duopoly "failed to yield a voluntary code" to touch on complaints by Australian media companies that tech companies have "too tight a grip" on advertising, Reuters reported. Frydenberg explained that the mandatory code drawn up by the ACCC will comprise the sharing of revenue generated from news, ranking and display of news content, and the sharing of data, Reuters added.

In response, Facebook told Reuters it is "disappointed" by the announcement and that it has invested "millions of dollars" to support Australian publishers via partnerships, content arrangement and industry training. Meanwhile, Google said it plans to work with the government, ACCC and the industry to develop the code of conduct, Reuters said. Separately, France has somewhat made headway with Google. French magazine Marianne reported earlier this month that the French Competition Authority ordered Google to conduct "negotiations in good faith" with news agencies and publishers regarding the renumeration of using their content. Marianne added that the negotiations are to be conducted within three months and the news means that Google is now required to pay for titles, photos and article extracts.

According to Facebook's recent financial results for the first quarter of 2020 (Q1 2020), the company made US$17.7 billion in revenue, with US$17.4 billion coming from digital advertising. The company witnessed a "significant reduction" in demand for advertising, as well as a related decline in the pricing of its ads, over the last three weeks of Q1 2020. That said, after the initial steep decrease in advertising revenue in March, Facebook said it has seen signs of stability reflected in the first three weeks of April, where advertising revenue has been approximately flat compared to the same period a year ago, down from the 17% year-over-year growth in Q1 2020.

Meanwhile in a statement to A+M, Facebook said it believes strong innovation and more transparency around the distribution of news content is important and it will continue to support the global news industry during this incredibly difficult time to help build sustainable business models.

In light of the pandemic, Facebook recently announced that it is investing US$100 million to support the news industry as well as an additional US$2 million in grant funding, coaching and training to back news organisations in Asia Pacific. "These initiatives build on our longstanding investments supporting a sustainable news ecosystem, including last year’s US$300 million investment for journalists around the world," Facebook said.

Meanwhile, Google's latest financials revealed that YouTube ads raked in US$4.04 billion in revenue compared to US$3.03 billion during the same period in 2019, while Google Advertising saw a revenue of US33.76 billion compared to US$30.59 billion last year. Alphabet CEO Sundar Pichai said the first two months of the quarter were strong for its advertising business. However, the company experienced "a significant and sudden slowdown" in ad revenues in March, correlated to the locations and sectors impacted by the virus and related shutdown orders. 

Google also delayed some ad launches and prioritised supporting its customers as many adjusted their strategies, Pichai said, adding that recovery in ad spend will depend on a return to economic activity. A+M has reached out to Google for comment.

Yap Chee Weng, president of the Malaysian Media Specialist Association and head of media brands at Dentsu Aegis Network Malaysia, told A+M that he reached out to Mustapha recently via a letter urging MNPA to leverage this development to engage in discussions with the MyCC if a similar approach was applicable to help improve the sustainability of the local media landscape. “The MSA would be glad to support MNPA if required for this exercise,” Yap added.

The intention of this exercise is keep the sustainability of the Malaysian journalism and so that the local media can continue to produce quality and credible news content.

Also throwing its weight behind this initiative was 4As Malaysia, whose CEO Khairudin Rahim said Google and Facebook have become the dominant players in the advertising marketplace. Much of this is on the back of news content and intellectual property (IP) generated by publishers and media companies at their own cost - painstakingly gathering, analysing, writing, and publishing the news, he said.

"It is an indisputable truth that when you use someone's IP, fair compensation should follow. Does it then not follow that these tech giants should either pay the news content publisher or share their advertising revenue, for the use of this IP?" Khairudin said. 

By sucking up the majority of advertising revenue across all platforms, Google and Facebook are also jeopardising the precarious sustainability of the news reporting ecosystem.

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Unfair for aggregators to enjoy lion's share

Publishers need more resources to invest in R&D and human capital such as reporters and writers, Eugene Wong, executive director and group CEO of Sin Chew Media Corporation, told A+M, adding that it is vital that the share generated from content is being reinvested fairly for the betterment of journalism.

"We deserve a better share and more transparent sharing mechanics. And it has to be a mutual agreement and better understanding as now tech giants determine the rules," he said, adding:

As original content creators, our cost of news production is hefty. It is unfair for aggregators and republishers to enjoy the lion's share.

This also includes the data obtained and resold for "a much greater profit", Wong explained. He added that Google and Facebook have been dominating the advertising ecosystem over the years and are controlling both supply and demand side platforms.

"Most importantly, they set the matrix of ad performance - analytics. It is like they are both players and referee. It is time for the industry to review and look into this seriously while seeking a better solution for both parties," Wong added.

Agreeing with him is Star Media Group's Andreas Vogiatzakis who told A+M that it was only fair for media sources to be compensated accordingly and appropriately when the news generated by them were used by third parties for profits, especially in an era where IP is of top concern. While the initiative requires government intervention and proper legislation in Malaysia, Vogiatzakis explained that time is needed when it comes to drawing up legislation for such issues. 

“Ideally, there should be self-regulation in matters like this. In any case, the fact that this issue is now, finally, making its way to the spotlight to create awareness is good progress,” he said, adding:

If any party enjoying the profits based on the work done by another, in any way or form, it is only appropriate that the revenue be shared.

That said, Vogiatzakis noted that the discussion pressing tech giants to pay for news content was not something new as industry players have previously raised the issue. Nonetheless, the Australian government has become a catalyst by casting the spotlight on this issue once again, thus accelerating its progress.

Another individual who has been vocal about the impact the duopoly has on publishers is CEO and publisher of The Edge Media Group Ho Kay Tat. In a statement to A+M, Ho said the MNPA is finally doing something about it. "This move should have been made two to three years ago when it was obvious what Facebook and Google were doing to take away ad revenue from local media companies," he said.

"We hope the government will also wake up to what is happening here the way governments elsewhere in Australia, France and Germany have realised and are trying to do something about. This is the new colonialism - the digital colonialism," Ho added. He explained that if nothing is done, more newspapers in Malaysia will shut and "this is bad for society". Recently, the company ceased operations of The Edge Financial Daily 13 years after it was first launched in 22 May 2007. Ho said the publication was unable to survive the double onslaught of the shift to digital news and the current lockdown of the economy due to the COVID-19 pandemic.

(Related article: The Edge CEO: The rise of the digital duopoly has 'destroyed' the news business)

Likewise, Malay Mail's editor-in-chief Wong Sai Wan said this has been a long time coming. "Our business has been disrupted doubly even before COVID-19. The pandemic is like a triple blow to the media and publishing industry," he said.

Both Google and Facebook have paid lip service about helping out during this period with some cash contributions but we in Asia have not seen any of the aid being offered.

He added that the likes of Facebook and Google "must pay" for publishers' content which spends money to create them. However, Malaysia's publishing industry has yet to see a formula that will be a win-win for publishers and digital giants.

In December 2018, Malay Mail ceased its print edition and went fully digital as a result of a change of business direction. Wong told A+M previously that the company is "going into the full gamut of the digital business from content to marketing". “The old way of doing the newspaper business of advertising subsidising the circulation, editorial and printing costs is no longer viable," Wong said. 

A+M's Content 360 conference is going virtual, and will bring together industry leaders to discuss challenges and share insights on future content marketing trends, as well as successful strategies to help tackle the complex marketing landscape. Sign up here!

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