This time, i think big tech may be right

The problem with the code

This legislation is like the publishers telling the newsagent that they could still sell newspapers, but in recognition of the fact that they lured people into their shop by displaying the front pages of newspapers, they should pay the newspapers for the privilege of display.

In that situation, you'd think many newsagents would decide to stop selling newspapers and just retail scratchies, bus passes, and stationery with a few cold drinks on the side.

This is essentially what Meta is proposing to do. They say only 3 percent of their traffic is people looking for news, that it dropped by 80 percent last year and they'd make more money without it because of the cost of paying royalty fees.

I don't think Meta has much choice.

Australia started a small cascade of countries on the same path including Canada, the UK, Germany, and France. If it became the whole world Meta would be in financial trouble.

Social media works based on spending the absolute minimum on running the site, commodifying the users, and delivering them to advertisers.

It is curated and maintained by algorithms and users with a minimum of human staff input. While the platform's profits look huge, they are actually wafer-thin given the volume of traffic involved. It would not take too much for them to be tipped into a loss.

The numbers also do not stack up

Meta has paid $250 million in Australia alone, a market which represents around 0.4 percent of its market. With around 11.5 million Facebook users in Australia, the revenue deal was costing Meta around $7.25 per person per year.

That doesn't sound a lot, certainly a lot less than Meta's profit in 2023 of US$39.1 billion. But when you divide that global profit by 3.1 billion monthly users and calculate it in Australian dollars you get approximately $20 per user.

The amount of $7.25 is just more than a third of $20. Who'd be crazy to give that much away per customer when only 3 percent of them used the feature you were paying for!?

News media continue dawdling in the digital age

The problem is that legacy media did not innovate when the internet arrived. News has always been a philanthropic business in the sense that large print news organisations used to cross-subsidise their prestige news from their advertising.

When sites like Craig's List, and realestate.com.au came along offering advertisers a better deal, but owners thinner profits, they spurned the idea of replicating their models in favour of protecting their existing assets.