SubmissioninresponsetoACCCDigitalPlatformsInquiryIssuesPaper

TheAustralianSocietyofAuthors(ASA)isthepeaknationalorganisationrepresentingAustralianwritersandillustrators.WearepleasedtohavetheopportunitytorespondtotheIssuesPaperreleasedbytheACCC.ThisInquiryismostdirectlyrelevanttothoseofourmemberswhoarefreelancewritersandjournalists.Whilethevastmajority(87%)ofourmemberspublishinprint(andmainlyundertraditionalpublishingcontracts),almosthalfofourmembers(45%)havepublishedonline.1Therefore,whileweencouragetheACCCtolooktotheMediaEntertainmentandArtsAlliance(MEAA)asthemostrelevantbodytorepresentjournalists,wewishtomakeabriefsubmissiononbehalfofwritersandillustratorsmoregenerally.ScopeoftheInquiryQuestion1.1:WhichdigitalplatformsdoyouconsidertoberelevanttothisInquiry?Question1.2:ShouldtheInquiryconsiderdigitalplatformsthatdonotcurrentlyprovideaccesstonewsandjournalisticcontentinAustraliabutmayeitherprovidenewsandjournalisticcontentinthefutureand/orhaveanimpactinrelevantmarkets(egAmazon,instantmessagingapplications)?TheASAurgestheACCCtoincludeAmazoninthisInquiry,forthefollowingreasons:

1. Voiceactivateddigitalassistant

Amazonoperatesasadigitalsearchengineforproducts,and,inourview,thesuiteofservicesitoffersqualifiesitforinclusionasacontentaggregatorplatform2.Itsactivitieswillimpactthesupplyofnews/journalisticcontentinAustralia.AmazonhaslaunchedAlexainAustralia,avoice-activatedvirtualassistant,withthecapacitytodelivernewsandnewsheadlines.NewsfeedsarealreadyavailablethroughthisdeviceviaSBS(Amazon’slaunchpartner),TenNews,SkyNewsAustraliaandFoxSports.

1ASAMembershipSurveyMay2017.Inaddition,118of231memberswhohaveuploadedportfoliosonourwebsitehaveInaddition,118of231memberswhohaveuploadedportfoliosonourwebsitehaveindicatedcopyrightandjournalismasareasofworkforwhichtheyareavailable.2Atpage11ofits2016annualreport,Amazon.comInc.identifieditscompetitorsashailingfrommanydifferentindustrysectors,including“publishers,producersanddistributorsofphysical,digitalandinteractivemediaofalltypesandalldistributionchannels”:http://phx.corporate-ir.net/phoenix.zhtml?c=97664&p=irol-reportsannual

VoicetechnologyispredictedtobecomeincreasinglywidespreadinAustralianhomesinthenextdecade,withAmazon,GoogleandApplecompetinginthehome-basedsmartspeakermarket.PenetrationofsmartspeakersintheUSmarkethasbeenfastanddeep.OneinsixAmericans(approximately39millionpeople)nowownsasmartspeaker,accordingtoastudybyNPRandEdisonResearchreleasedinJanuary20183whichindicatedthat11percentoftheUSpopulationownsanAmazonAlexadevice.Thestudyfoundthatusingasmartspeakertoaccessnewscontentisakeyactivity,andonethatisgrowing.

Inourview,thisInquiryshouldincludeaconsiderationofthewaysmartspeakersdelivernewsandconstituteanadditionaladvertisingplatform.It’sclearthatsmartspeakerswilloffercontentdesignedtoappealtoconsumer’spersonalisedpreferences.Googlehasalreadyreportedonitscustomers’interestinbrandedcontent,informationaboutdeals,salesandpromotionsandpersonalisedtipsandinformation.4

Inadditiontoconcernsaboutresultingsiloor“filterbubble”effects,homebasedsmartspeakersalsoposesignificantprivacyconcernsastheyarealways“listening”forvoiceprompts.

2. MarketpowerofAmazon

Inourview,nocompetitionreviewofdigitalplatformsiscompletewithouttheinclusionofAmazon.Itisanimmenseecommerceplatform,cloudservicesprovider,contentaggregatorandisintheprocessofrollingoutadeliverynetworkinAustralia.FromtheperspectiveoftheASA,Amazon’scompleteverticalintegrationraisescompetitionissues.Amazonisabookpublisher,publishingservicesprovider,distributorandretailer.Itsverticalintegrationyieldssignificantadvantages:itcanpreferenceitsownproductsinsearchinquiries,itcancollectvastdataonconsumers(whatthey’researchingfor,whattheybuy,whattheyreadonKindledevices,whentheystopreadingetc)andcanusetheseinsightstoimproveotheraspectsofitsbusiness,includingtocompetewithpublishersandbooksellers.AsrecognisedbytheIssuesPaper,digitalplatformsinpossessionoflargeamountsofdatacanusethisdatatoentrenchtheirmarketdominance,makingitdifficultfornewentrantstocompetebutalsodifficultforexistingcompetitorswithoutaccesstothesamedata.

3TheSmartAudioReport,NPRandEdisonResearch,January2018https://www.nationalpublicmedia.com/wp-content/uploads/2018/01/The-Smart-Audio-Report-from-NPR-and-Edison-Research-Fall-Winter-2017.pdf4https://www.thinkwithgoogle.com/consumer-insights/voice-assistance-consumer-experience/

Publishersareinthedifficultpositionofbothcompetingwith,andrelyingon,Amazon’splatformtomarketebooksandprintbooks.ItisnotfeasibleforpublisherstorefusetosupplythemarketthroughAmazonduetoAmazon’smarketpenetration.

Fromitsinception,Amazonhasemployedapricingstrategythatwentwellbeyondloss-leadingtactics,intendedtoestablishlongtermmarketdominanceattheexpenseofshorttermprofits.Indeed,Amazon’sprofitshavebeenniltoslimformuchofitsexistence.In2014,researchconductedbytheCodexGroupfoundthatAmazon’ssalesrepresent65%ofallnewonlinebookpurchases(print&digital),67%oftheebookmarketand64%ofprintbooksaleson-line.5In2017,anexaminationofthebiggestEnglishspeakingmarkets:US,UK,Canada,AustraliaandNewZealand,foundthatAmazonaccountsforover80%ofebookpurchases.6Havingachievedmarketdominance,Amazoncanusethispowertoextractfavourabletermswithpublishers.Unchecked,thisbargainingpowerisdangerousforAustralianbooksellersandpublishers,alreadyoperatingontightmargins,thesurvivalofwhichisessentialforthediversityandqualityofAustralianpublications.

Consumerwelfaremustnotbejudgedonlyonpricebutalsoincludeaconsiderationofdiversity,theexpressionofAustralianstoriesandidentityandopportunitiesforlocaltalent.

GiventheoverallarchitectureofAmazon’sbusiness,straddlingthesupplychain,anditsambitiontosupplyavastrangeofgoodstoAustralianconsumerswhichnowincludesaccesstoinformation,wesubmititshouldbeincludedinthescopeofthisreview.

IndustryOverview

Question3.6:Describethenatureofanyimpacts(positiveandnegative)thatdigitalplatformsarehavingonmediacontentcreators?Whatcausestheseimpacts?Aretheseimpactstemporaryorongoing?TheIssuesPaperrecognisestheshiftinadvertisingrevenueawayfromtraditionalmediacompaniesandtowardsdigitalplatforms.Thelossofadvertisingrevenuefortraditionalmediacompanieshasmeantareductionofpayforwriters,fewerjournalistpositions,andincreasedpressureonwriterstosupplycontentforfree.

5https://www.theatlantic.com/business/archive/2014/05/amazon-has-basically-no-competition-among-online-booksellers/3719176http://authorearnings.com/report/february-2017/

TheASApublishesrecommendedratesofpayforfreelancewritersonourwebsite.Feedbackfromourmembersisthatwhiletheseguidelinesarehelpfulinconductingnegotiationsforpaymentforsuchwork,overthelastfewyearsthebreadthofratesbeingpaidhasgrownandwehavereceivedincreasinganecdotalfeedbackthatmanypublicationsarenowofferingworkwellbelowtheratesrecommendedbyusandtheMEAA.Inour2017membershipsurvey,werequestedinformationonwriters’incomefromfreelancewritingfrombothourmembersandmembersofStateWriters’Centresandsetouttheresultsbelow.7Pleasealsobeawarethatrespondentswhoworkedforfreehavebeenremovedfrom thisanalysis, inorder to show faireraverage rates for those respondentswhowerebeingpaid.

PaymentBasis

ASArecommended

rate

ASAsurveyrate Writers’Centresurveyrate

PerWord 0.89 Minimum0.11Maximum$1.91Mean70.50centsMedian71cents

Minimum0.11Maximum$1.31Mean55.5centsMedian51cents

PerHour $219.00 Minimum$21.00Maximum$200Mean$85.90Median$76.00

Minimum$11.00Maximum$200Mean$74.50Median$71.00

PerDay $878.00 Minimum$50

Max$1,840Mean$597Median$500

Minimum$50Max$1,200Mean$424Median$385

InMakingArtWork,AnEconomicStudyofProfessionalArtistsinAustralia8,publishedin2017,surveyedincomeforwritersinthefinancialyear2014–15wasasfollows:

• Meangrosscreativeincomeforwriters:$19,900

7Samplesizeof1,102respondents:622respondentswereASAmembers,410respondentsweremembersofaStateWriters’Centre,39respondentsweremembersofSCWBI(SocietyofChildren’sBookWritersandIllustrators)and31respondentsweremembersofCopyrightAgency8MakingArtWork;AnEconomicStudyofProfessionalArtistsinAustralia;DavidThrosbyandKatyaPetetskaya,DepartmentofEconomics,MacquarieUniversity2017

• Mediangrosscreativeincomeforwriters:$4,500Wenotethatmeanincomescangiveaninflatedsenseoftheoverallpositionbecauseofaverysmallnumberofoutlyinghighearners.Medianincomesarethemid-pointofthedistributionandarethereforenotsoskewedbyoutliers.Wesubmitthatwritersareparticularlyvulnerabletoshrinkingbudgetscausedbyashiftofadvertisingrevenuetodigitalplatforms.Inoursubmission,thefinanciallosstowritersisakeyimpactofthetransitiontodigitalandmustbeconsideredinthisreview.Financialsecurityisalsoanissue.Inthesamestudy9,only9%ofthewriterssurveyedworkforasalaryorwages;theremainingarefreelanceorself-employed.Withtraditionalmediacompaniesreducingtheirstaffnumbers,therearefeweropportunitiesforwriters.Whiledigitalplatformshaveenjoyedgreateradvertisingrevenue,theyhavenotcorrespondinglyofferednewemploymentforAustralianwriters.Socialmediaplatformsareessentiallyrunonuser-generatedcontent.Digitalplatformsbenefitenormouslyfromthesharingofcontentbutarenotresponsibleforthecostofitsgeneration.Thedeclineinfundsforqualityjournalismandtheproblemofmisinformationisrecognisedbythedigitalplatformsthemselves,evidentinGoogle’slaunchofitsGoogleNewsInitiative.Inhisblogpublishedon20March2018,PhilippSchindler,ChiefBusinessOfficerforGoogle,stated:

“PeoplecometoGooglelookingforinformationtheycantrust,andthatinformationoftencomesfromthereportingofjournalistsandnewsorganizationsaroundtheworld.Andwhilethedemandforqualityjournalismisashighasit’severbeen,thebusinessofjournalismisunderpressure,aspublicationsaroundtheworldfacechallengesfromanindustry-widetransitiontodigital.…PlatformslikeSearchandYouTubedependonahealthyecosystemofpublishersproducinggreatdigitalcontent.That’swhyit’ssoimportanttousthatwehelpyoudrivesustainablerevenueandbusinesses.

…It’sbecomingincreasinglydifficulttodistinguishwhat’strue(andnottrue)online.Businessmodelsforjournalismcontinuetochange

9MakingArtWork;AnEconomicStudyofProfessionalArtistsinAustralia;DavidThrosbyandKatyaPetetskaya,DepartmentofEconomics,MacquarieUniversity2017

drastically.Therapidevolutionoftechnologyischallengingallinstitutions,includingthenewsindustry—tokeeppace.” 10

TheresultsofarecentMITstudyintoTwitter,publishedon9March2018inScienceJournal,11foundthatfalsenewsspreadsfasteranddeeperthantruth.Theeffectofreducedfunding,the24hournewscycleandintroductionofsocialmediahasplacedhugepressuresonwritersandtheirabilitytofactcheck,investigateandreportcomprehensively.WerefertotheMEAAforsubmissionsontheseissues.WelookforwardtoreadingtheACCC’sreportontheseimportantissues.Pleasedonothesitatetocontactusifwecanprovideanyfurtherinformationorassistance.JulietRogers OliviaLanchesterCEO LegalServicesManager

10https://www.blog.google/topics/google-news-initiative/announcing-google-news-initiative/11http://science.sciencemag.org/content/359/6380/1146