Aussie rules

Ultimately, has Google averted an international precedent for media in other markets plundering its mother of all cash cows, search, by not having it as a designated service under the Federal Government’s media bargaining legislation? The latter is likely in the affirmative. 

Google’s Showcase product has a global rate card and it’s much lower than the dollars Australian media groups have extracted from the tech giant, evidenced by the deal Google struck with French publishers. At US$76m over three years, the French deal is worth perhaps a fifth on an annualised basis. 

Google has indeed paid up big to buy off Australian publishers and avoid having search made a “designated service” under the Feds new legislation. A massive risk for Google was having the terms of its deals with Australian media tabled and made public if it ever went to arbitration, handing international media a leg-up on deal terms. 

Instead, Google is paying crazy money to Australian media for its Showcase news feed, which appears mostly to be a jazz hands mechanism to divert regulators and media groups from tapping the billions it makes from search.  

A little evidence? Good luck trying to find Showcase somewhere on the outskirts of Cyberia. “It’s 100% a regulatory product,” says one senior media exec familiar with negotiations. “It demonstrates the farce this whole thing is. The licensing money we’re paid for Showcase is so much higher than publishers deserve.” That’s simply because Showcase has a tiny audience and is tucked away somewhere in a Google corner, where it may well stay.

But as numerous media execs said yesterday, the Federal Government’s media bargaining code is doing its job. It’s forced Big Tech to the table, or in the case of Facebook, to pull.  

Zucked off

So what next? News Corp overnight announced a global deal with Google and we’ll see how media goes now with the audience and subscription hit from Facebook’s exit. Given the Federal Treasurer Josh Frydenberg has been feisty in calling Big Tech’s bluff, it will be interesting to see how the Feds deal with Facebook’s Incredible Hulk response today.

Maybe the Federal Government could start with instructing its media agency, New York-owned UM, to pull all Australian government ad spend from the social beast? Or does Facebook know the Feds need it too much?

A government Facebook spending freeze would certainly give other big advertisers in Australia something to ponder – for about a minute. 

Standby for the next round.