Some ideas are popular enough to be given another chance. First proposed by the previous Labour government of New Zealand, the Fair Digital News Bargaining Bill has found a new lease on life among members of the new ruling coalition. On the second of July, Minister of Media and Communications and member of the National Party Paul Goldsmith announced that the government would advance this law that would force tech platforms to pay traditional media companies for digital news content. In response, the National Party and New Zealand declared their public support for the bill. The sole dissenter is the ACT Party, which has invoked the “agree to disagree” provision in the coalition’s rules, meaning that the government will have to seek the approval of opposition parties to pass the bill. That approval looks achievable, with the original proponents in the Labour Party keen to give the bill their blessing.

By its own standards, the bill will make things worse for the New Zealand media and tech landscape.

We need only look at similar bills in Australia and Canada to realize this fact. Like New Zealand’s law, Australia’s News Media Bargaining Code and Canada’s Online News Act aim to address what they depict as unfair competition – digital platforms are supposedly feeding off the attention of traditional sources, linking to various opinion and news pieces and driving traffic online to their benefit without offering any compensation in return. Therefore, authorities believe they must force tech companies to the bargaining table to even the odds and give the ailing old-fashioned industry a chance.

But Canada and Australia have achieved the exact opposite of their aim. Both governments have inadvertently created costs for digital platforms that incentivize the latter to stop collaborating with news outlets. That is exactly what happened with Meta, which decided on August 2nd, 2023, to discontinue news availability for all Canadian users of Facebook and Instagram and is mulling a similar possibility in Australia.

Goldsmith is aware of falling into an identical trap. In a conversation with Newstalk ZB, Goldsmith has openly admitted that Facebook and Google would also want to exit the New Zealand news market due to the Fair Digital News Bargaining Bill. Yet his allusions to amendments and the threat of further legislation as a bargaining chip during that conversation are neither reassuring nor a solution to the problem – threats of additional regulations only add to costs, and ad-hoc changes undermine competition by making the rules of the game unpredictable for tech and media players.  

Worse, such regulations ultimately damage local outlets that depend most on social media for outreach. Studies examining Canadian social media users found that their digital consumer habits remained unchanged – 33% continued getting their news from Facebook and Instagram. What changed was a dramatic drop of 85% in engagement for regional sources. The situation worsened to the point where almost half of all local Canadian media decided to stop posting on Facebook entirely.

An identical bill in New Zealand would spell disaster for local news sources. The physical sector was already undergoing significant downsizing, with many of the largest stakeholders choosing to focus more on national content. Stuff closed down The Northern News and the Whangarei Leader (two local Northland community newspapers), while NZME shut down the Wairoa Star (a Hawke’s Bay community paper that had run for 103 years). At the same time, New Zeelanders are still interested in local affairs but 64.4% of them (2.7 million) prefer to get their information online, even more than their Canadian counterparts. Many of these sources are local papers or independent journalists who rely on digital engagement and subscriptions to stay afloat. If the law ever passed, online traffic would dry up altogether, and most local outlets and journalists would lose their livelihoods overnight.

One can only conclude, as my colleagues Yaël Ossowski and David Clement have pointed out, based on solid evidence, that the largest establishment media players have the most to win from the deal. That is not the fairness that was promised.

The question then is: why continue to promote the law? Policymakers are repeating the age-old mistake of demonizing intermediaries, a politically popular position at a time when big tech is becoming unpopular. Yet the move fatally misreads the relationship between tech and media. The examples of Canada and Australia show how, far from sucking the oxygen out of the room, digital platforms allow local providers to reach more people than ever before. By scaring online platforms away, New Zealand’s government would cause irreparable damage to the very people and businesses that politicians claim to want to help the most.

If it genuinely wants good news, New Zealand’s government should stay out of the business of picking economic winners and losers and let consumers decide. Bad ideas should remain dead.