Editorial: For sake of democracy, internet giants must make fair deals for news content –

The Japan Fair Trade Commission (JFTC) has recently compiled a report examining the deals between news portal websites that aggregate and distribute articles, like Japan’s Yahoo News, and the newspapers and broadcasters that provide the content. Looking at the hard numbers, there are deep concerns.

People are increasingly getting their news via portal sites and, the report notes, this may give those companies an advantage over news organizations. If the license fees paid to news organizations for their articles are extremely low, they could be violating Japan’s antimonopoly law.

The JFTC also took a closer look at the site operators’ profit structures, as the commission recognizes that access to high-quality news is “indispensable for a thriving democracy.”

The profusion of free news on the internet is causing a string of bankruptcies in the news sector overseas. If news companies cannot get fair compensation for their articles, they will not be able to stay in business. And if they have to close their doors, this can weaken journalism’s role in monitoring those in power. The supply of impartial and accurate information, which is necessary for the public to consider social issues, will also be undermined.

According to checks with six news portal operators, licensing fees they pay to news firms for content clock in at an average of 23.5% of the income the portals reap in advertising revenue. The average license fee per 1,000 page views was 124 yen ($0.83) and, depending on the site, ad revenue outstripped content fees by as much as five times.

These platforms have tremendous influence over online news distribution, but their structures are very difficult to grasp. The algorithms that determine article publication priorities are a black box, leading the JFTC to request that the firms fully disclose the data that determines the licensing fees.

The commission also stated that news organizations banding together to demand the platforms release this data was not an antimonopoly law violation — a recognition that news firms should be allowed to make these requests jointly to increase their bargaining power and prevent platforms from potentially exploiting their individual weaknesses.

Fairness cannot be ensured in a lightless space where platforms use their overwhelming power to monopolize transaction data. Canada and Australia have passed laws mandating internet giants enter good-faith negotiations with news providers and submit to arbitration procedures.

In response to the JFTC report, Yahoo Japan Corp. has announced that it will review its contracts. Reliable news coverage is a foundation stone of a democratic society. We hope that internet platforms and news organizations will engage in talks to improve the quality of the online discourse space.