IEA Head of Public Policy Matthew Lesh has written in CapX, discussing his new paper opposing governments forcing tech platforms to pay publishers for hosting their content.

Matthew wrote:

“Indeed, according to some studies, as much as half of news publisher traffic comes from search and social media. That’s why publishers obsessively optimise their websites for search engines and post content throughout the day on social media. Digital platforms are particularly beneficial to smaller, innovative outfits because they provide an opportunity to reach a larger audience. The idea that digital publishers benefit from news publishers gets things entirely the wrong way round.

“This speaks to the power of competition to drive innovation. A news media bargaining system that provided free revenue to news providers risks reversing this trend. It would help the incumbents with larger resources over innovative upstarts — as has been the case in Australia, where around two-thirds of the payments have gone to the two largest publishers. It would also incentivise platforms to demote news content to minimise their payments. This was the case in Spain when Google News was shut down in response to a law that would force payments. This led to a more than 6% decline in web traffic, impacting 84 Spanish online newspapers, with some smaller publishers facing declines as high as 14%.

“The digital age has fundamentally changed has the nature of the industry and its business model. Rather than appealing for a government-sanctioned Big Tech bailout, the industry should carry on evolving – and embracing the huge opportunities that platforms offer them to engage with audience and deliver great content.”

Read the full piece here.