Regulating digital platforms for content

The tech giants simply have to pay their fair share. If we are worried about the proliferation of fake news, scams and unverified social media “news”, protecting the value of the traditional media’s newsroom is paramount.

BEING pro-market and pro-business would likely mean preferring minimal regulation. The more regulation, the more it impedes market forces. It goes against the theory of the free market and survival of the fittest.

Hence, highly regulated markets are not the preferred approach when it comes to growing an economy.

We have seen how highly regulated markets stifle competition and discourage entrepreneurial endeavours.

It also creates a monopoly or oligopoly which benefits only the incumbent or the elite segment of society, ultimately at the expense of consumers and the majority of the common people.

However, if there is one area which I am all in terms of introducing a new regulatory framework, it would be to regulate digital platforms owned by technological giants.

It is imperative to make it compulsory for them to pay the media its fair share of revenue for using their content.

For a long time, under the guise of advancing technology, we have seen traditional media suffering the full brunt of losing revenue and journalists being retrenched globally.

Journalists who painstakingly source for news to put together informative content have been taken for granted, as digital platforms use or re-share the contents without any due payment at all.

In return, advertisers have largely switched from traditional media platforms to digital platforms on the basis that digital platforms are the ones that generate the “views” via their reach.

But my simple question is, without the good media content in the first place, how can digital platforms derive their value?

Steep decline in the past decade

The share price of notable listed media companies such as Media Prima Bhd and Media Chinese International Ltd (MCIL) over the last decade is worrying.

Media Prima has fallen a staggering 82% from RM2.60 in December 2013 to 46 sen as at Feb 22, 2024. In the same period, MCIL has fallen in an almost identical quantum of 97% from RM1 to 13 sen.

The situation is getting dire by the day as analysts and fund managers alike are no longer assessing the value of these media companies on their own accord except in the light of a potential real estate play.

Many of the media companies own valuable real estate in prime locations which once served as their corporate or regional offices, printing factories and warehouses, among others.

These assets have not been revalued for decades. The irony of the investment thesis for these media companies is solely based on the potential corporate exercise for the unlocking of value of their prime real estate rather than the value attributed to the heritage, content quality and reputation of the newspaper.

Back in December 2021, the major corporate exercise undertaken by Singapore Press Holdings Ltd (SPHL) where it transferred its media-related businesses to a non-profit entity, SPH Media Trust, was completed as a last-ditch effort to protect the Singapore media industry from the continuous disruption of the sector.

“With the completion of the transfer, all relevant media-related assets and 2,500 employees have been transferred to SPH Media Trust, including the News Centre and Print Centre leasehold properties, as well as related intellectual property and information technology assets,” Khaw Boon Wan, chairman of SPH Media Trust, said in a statement.

They capitalised the corporate exercise via its successful property ventures over the years relying on the recurring income of the assets in SPH-REIT to make up for the shortfall in income from the media businesses.

If anything, local listed media companies may take a leaf out of the playbook of SPH should the situation continue to deteriorate.

Regulatory reform top priority

Indonesia recently announced a major regulatory move where president Joko Widodo, also known as Jokowi, introduced a new law that requires digital platforms like Facebook, Google and other aggregators to pay for the media content that they use.

In his own words, “The spirit of the regulation is to ensure a fair cooperation between media and digital platforms, provide a clearer cooperation framework between them.”

This law, which took three years since its proposal, will come into force in six months. The digital platforms will be required to share revenue with media companies via paying licences or sharing data of news users.

This is a breakthrough which can be a good reference point for our government.

In the past, we have only seen the Australian and Canadian governments taking firm action against tech giants like Meta and Alphabet but not South-east Asian countries until now.

Of late, we have seen the Communications Ministry getting some flak when it introduced a “new and improved” code of ethics for journalism in the face of proliferation of fake news and the advent of social media.

While the intent may be good, it is my humble view that rather than working on such initiatives which are not the most pressing, channeling efforts towards introducing a new regulatory framework to arrest the continuous decline of income for the media industry should take precedence above all else.

Understandably, there will be pushback from the tech giants, but if not now, when?

Credit for content creators

Despite a bout of “buyers’ remorse” at some point, the deal where Elon Musk acquired Twitter at an inflated valuation of Us$44bil (Rm210bil), successfully concluded on Oct 27, 2022.

This marked the start of a series of changes which he implemented to the digital platform.

To the aghast of many, after spending a fortune for the iconic blue bird logo, he rebranded the platform as X, started giving out the highly sought-after blue tick status for a subscription fee and meddled with the backend algorithm to promote free speech with limited moderation by administrators.

The community feedback which appeared to be livid led to Mark Zuckerberg, the founder of Facebook, jumping on the opportunity to launch a competing digital platform, Thread, in a bid to wrestle the user base from X.

Yet, one of the most respectable initiatives taken by Musk was to recognise the efforts of content creators and paying creators their due amount.

Such action is severely lacking among the tech giants which continue to monetise the traffic to their digital platforms using other media’s content with only a minimal payment quantum while they rake in the bulk of the advertising dollars.

Paying its due

The closure of Malaysian Insight where 43 journalists were owed unpaid wages due to operational difficulties, is a stark reminder of the media industry’s daily challenge.

While it is commendable that the Minister of Communications is trying to assist those affected, addressing the root cause would be the best solution for the long term.

The tech giants simply have to pay their fair share.

If we are worried about the proliferation of fake news, scams and unverified social media “news”, protecting the value of the traditional media’s newsroom is paramount.

The only way that can happen is for a regulation framework to be in place as soon as possible.

Ng zhu Hann is the chief executive officer of tradeview Capital. He is also a lawyer and the author of “Once Upon a time in Bursa”. the views expressed here are the writer’s own.