The Google settlement is a signal that the media sector cannot survive without domestic support.
Google’s agreement to pay the South African media industry a combined R688 million over the next five years is a significant development. It will be a short-term saving grace for many publishers.
The biggest surprise is the speed at which it happened. The Media and Digital Platforms Market Inquiry’s (MDPMI) investigation into the impact of Google and other digital platforms’ dominance took more than two years, and there were expectations that the eventual findings would be challenged in court for many years, as has happened in other countries.
The speed of the settlement is fantastic news; the settlement amount, perhaps less so.
R688 million over five years amounts to just R137.6 million a year. It is a far cry from the recommendation in the MDPMI’s provisional report that Google pay the South African media between R300 million and R500 million a year for three to five years. This broad recommendation ranges from R900 million (R300 million over three years) to R2.5 billion (R500 million over five years). The midpoint is about R1.7 billion – more than double the R688 million settlement.
Compare the R688 million to Google’s agreement with the Canadian press. That settlement amounts to an annual payment of R1.3 billion ($74 million) for five years. The total is R6.6 billion ($370 million) – 10 times the South African settlement.
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According to the World Bank, South Africa’s economy is around $400 billion, while Canada’s is $2.24 trillion – 5.6 times larger. This is a simplistic comparison to a complex situation, so I leave it to readers to judge whether the South African outcome is fair relative to the Canadian one.
One of the reasons for the significantly reduced settlement in South Africa is that Google approached the industry while the MDPMI was ongoing, stating it wanted to settle amicably to avoid a drawn-out case.
The industry side, of which Moneyweb was a part, accepted this proposal. My understanding is that the decision was primarily driven by a desire to avoid a prolonged and costly legal process.
A fair question is whether the reduced settlement amount was driven by desperation or pragmatism. The answer is probably a bit of both.
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Financial position of publishers
Perhaps one of the most revealing discoveries of the MDPMI process emerged during the public hearings, where several publishers – including some of the largest in the country – presented details about their financial positions. They painted a desperate picture of South Africa’s media landscape.
Many were startlingly frank about their financial distress, revealing not only significant losses over the past few years, but also the impact on newsroom size and the quality of journalists.
This is the point at which a larger truth must be acknowledged. The digital age – and Google’s dominance in it – has forced news organisations to adopt new business models. But very few have succeeded in developing digital models that work. Only a handful of global media groups attract the hundreds of thousands of paying subscribers needed to sustain robust journalism.
Technology indeed disrupts every industry, and those that fail to adapt eventually disappear. But this logic collapses when applied to the media, and especially news media.
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The failure of the media industry would mean the failure of broad public-interest journalism. There would be no mainstream business model capable of sustaining a large number of independent publishers with meaningful newsrooms.
Journalism is a critical pillar of a healthy constitutional democracy, and if it fails, it will not be replaced by a stronger industry.
Instead, it will be replaced by an environment dominated by individual ‘influencers’ on social media, pretending to be journalists and distributing unverified, unresearched and often dangerous information.
Independent and well-researched journalism will become rare – and when that happens, every single industry in South Africa will suffer because one of the most critical gatekeepers is not at its post.
The most important message of this settlement is therefore not the R688 million. It is a bold signal that the local media is in trouble, and corporate South Africa should pay close attention.
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Symbiosis
The leadership of South Africa’s top corporates must understand that their advertising and marketing spend supports journalism.
This very institution has done more to expose corruption, fraud, state capture and corporate wrongdoing than any other entity in this country.
This work has protected South Africa from an even deeper political and economic collapse.
A healthier media sector strengthens the economy, improves business confidence and supports the environment in which companies operate and earn profits.
I become visibly angry each time I visit an international website and see an advertisement for a South African company on that page. The reason is simple: the ad has been purchased through Google or another programmatic platform. Google makes money and pays no tax in South Africa.
The company could have reached the same audience by supporting a local publisher. The only reason companies use Google is because it is cheap.
Even worse is when these programmatically served ads appear on websites that promote fabricated news, emotional propaganda, unverified political content or fraudulent investment schemes. The brand damage alone should alarm marketing executives.
South African companies should reflect deeply on this.
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Buying cheap social-media advertising while ignoring the collapse of the local media ecosystem is not only short-sighted – it is a direct threat to the long-term stability of the economy.
Without strong journalism, corruption grows. And when corruption grows, every business suffers.
The Google settlement is a welcome development. But it will not rescue the industry. Only South African companies can do that.
I’ll say it plainly: if corporate South Africa does not support local media, titles will close, one by one. And when they do, our democracy will be poorer, our public debate narrower, and our economy weaker.
You decide whether that is a price worth paying.
This article was republished from Moneyweb. Read the original here.
