National Post (Latest Edition)

GOOGLE STRIKES A DEAL TO PAY FOR NEWS IN AUSTRALIA.

Seven West in australia

- Byron Kaye

SYDNEY • Australia’s Seven West Media Ltd. became the country’s first major news outlet to strike a licensing deal with Google, as the government pushes ahead with a law that would force the internet giant to pay media companies for content.

At an earnings announceme­nt on Tuesday, Seven, which owns a free-to-air television network and the main metro newspaper in the city of Perth, said it would supply content for Google’s News Showcase platform. It did not disclose terms.

The deal shows Seven splitting from rivals News Corp and Nine Entertainm­ent Co Holdings Ltd which have failed to reach agreements with Google and instead backed laws, set to be passed this week, in which the government sets the online giant’s content fees in the absence of a private deal.

So far in Australia, only specialist online publishers and one regional newspaper have struck deals to receive payment for their content appearing on the new Google platform which went live in the country this month. Outside Australia, Reuters is among news outlets with similar Google deals.

“The negotiatio­ns with Google recognize the value of quality and original journalism throughout the country and, in particular, in regional areas,” said Seven West Chairman Kerry Stokes in a statement.

Google’s Australia CEO Mel Silva said the U.S. company was “proud to support original, trusted, and quality journalism” by featuring Seven on its platform. Last month, Silva told a parliament­ary hearing Google would pull its search engine from Australia if the so-called News Media Bargaining Code became law. A Google representa­tive declined to comment on the effect of the Seven deal.

Hours before Seven revealed its plans, Treasurer Josh Frydenberg told the Australian Broadcasti­ng Corp he still planned to introduce the laws, but added: “I think we’re very close to some significan­t commercial deals … that will the transform the domestic media landscape.”

While new u.s. President Joe biden will try to curb this move with the tax system, he will not be able to reverse it — which will come with obvious social implicatio­ns because permanent labour displaceme­nt has become a defining feature of this crisis.

This pattern is set to accelerate as companies look to further automate business processes, taking advantage of new technologi­es to boost margins and to mitigate future pandemic risks (robots don’t get infectious diseases). This process is already in motion, with the most recent example coming from the Pennsylvan­ia Turnpike moving up its mass automation campaign.

Short bursts of rising output per worker are quite common after recessions. This phenomenon is a byproduct of the fact that the more productive firms tend to be the ones that survive downturns and more productive workers are those who remain employed. but what’s important here is all of these short-term productivi­ty boosts have happened in the context of a broader trend of less labour compensati­on.

Over the past 40 years, labour’s share of income (a measure of how much is paid out to workers as a share of everything that is produced) has been on a secular decline. However, what started out as a gradual drawdown from the 1960s through the 1990s turned into a complete collapse after the tech-induced productivi­ty boom of the 1990s. Since the internet revolution, companies have adopted business strategies and technologi­es that have allowed them to capture record shares of the value-add generated by the economy.

This process never did abate, not even during the tech wreck, and is now in the process of reaccelera­ting. Of the near-10 million lowskilled u.s. workers still out of a job during the pandemic, we believe at least half of them will end up being displaced by technology going forward. The one thing most businesses, especially in the service sector, realized this past year is how to do the same or more with less.

The 3.4-percentage-point decline in labour’s share of income (the average after the past two recessions) is likely to be repeated yet again and we don’t believe the democrats can alter that reality — the most they can do is use fiscal policy to attempt to reduce existing extreme inequaliti­es via income redistribu­tion.

As we emerge from this crisis, we know there will be further bouts of productivi­ty gains, but we also know that the future will not be one where the burden of automation is evenly shared across industries. The brookings Institute already conducted an analysis in 2019, using occupation­al level data, to determine which industries were most prone to automation. Top of the list, the accommodat­ion and food services sector that has been battered by massive shutdowns with employment down three million in the u.s. since the onset of the pandemic (an epic 21-per-cent year-over-year contractio­n).

The cruel fact is that the most affected industry featuring some of the lowest-paid workers in the economy is also likely to be the one most affected by automation due to the ease of robots and other machines in replicatin­g their tasks and because businesses are seeking to mitigate future pandemic risks, let alone save on the labour cost bill (key for low-margin businesses).

The bottom line: labour’s share of income is going to continue its downward trend after the current crisis ends. Aside from the profit incentive that has always existed to motivate automation, this crisis has highlighte­d the pandemic risks associated with relying on labour availabili­ty. Industries that employed millions of people pre-pandemic, such as accommodat­ion and food service, as well as retailers, will take advantage of the technologi­cal advances in the coming years, suggesting that the socalled “jobless recovery” we saw after the Great Financial Crisis might end up proving to have been an absolute bonanza in retrospect.

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