MEAA opening remarks to Senate select committee inquiry into Future of Public Interest Journalism

Opening remarks made by MEAA CEO Paul Murphy appearing at a public hearing in Sydney of the Senate Select Committee inquiry into the Future of Public Interest Journalism in Sydney, May 17 2017.

See the complete Hansard transcript here.

[09:44am]

CHAIR: Welcome. I understand that information on parliamentary privilege and the protection of witnesses and evidence given to the Senate committee has been provided to you. Is that correct?
Mr Murphy: That is correct.
CHAIR: Mr Murphy, I now ask you to make an opening statement. I know there are quite a few questions here for you here today.

Mr Murphy: I will be in the hands of the committee. I have a fairly lengthy opening statement. I will not go through all of it to allow appropriate time for questioning.

CHAIR: What I would suggest, Mr Murphy, is that, if you want to start going through it, we can table the full opening statement for the Hansard record. Then, if there is anything that our questions do not address that is in there, we can also come back to it.

Mr Murphy: Certainly. MEAA commends the Senate for taking the initiative in establishing this inquiry and appreciates the opportunity to assist you so early in your deliberations. Whilst we have not yet had the chance to prepare a full and detailed submission, we will obviously be doing that. In that process we invite all 5½ thousand of our journalist members to put their views in to shape that submission. In the way of membership-based organisations, our final formal submission will be endorsed by our national section committee.

Senator XENOPHON: Not 5½ thousand submissions?

Mr Murphy: Not 5½ thousand submissions, but 5½ thousand working journalists shaping what we put to you, based on their experience. Today we will not be able to address all of the issues that have been raised in the inquiry’s terms of reference. However, we do wish to state, very clearly, that we really are at a crossroads for public interest journalism in this country. That has been underlined by the recent announcement from Fairfax Media of yet more savage cuts. The prospect of a foreign private equity takeover of our oldest, and one of our most respected, media organisations should fill anyone who is concerned about the future of public interest journalism in this country with dread.
MEAA believes the important starting point in this process is one that has been absent from all recent efforts by governments of various persuasions to pursue media reform. That is the essential public policy goal that we should be looking at here, which, surely, is the public interest of having a strong and diverse media landscape in Australia to provide a wide range of reporting, analysis and opinion. That is the starting point.
From there, the question then is: what can, or should, government do to support that outcome? What are the appropriate regulatory settings to achieve that? And, frankly, as we have said before, tinkering around the edges of current media ownership rules is going to do absolutely nothing to achieve that outcome. Today we would like to set out some of our observations of the effects of disruption in the industry over the last six years and the impacts on journalists on their ability to do their job, and offer some preliminary views to you about what the problem is and the types of things the committee might want to look at in the course of its deliberations. We believe, through our monitoring of redundancy rounds at media organisations, that, since 2011, at least 2½ thousand journalist positions have disappeared at newspapers and broadcasters across the country—probably more. That follows on from about 700 job losses during the global financial crisis. Those numbers I emphasise are only based on actual—

Senator XENOPHON: Since when, 2007 or—

Mr Murphy: The more-than-2½-thousand figure was since 2011.

CHAIR: Is that just—

Senator SINGH: Jobs? Is it jobs?

Mr Murphy: They are just editorial. They are just generalist positions.

CHAIR: So 2½ thousand journalists positions have been cut since 2011.

Mr Murphy: That is correct.

Mr Chesher: The industry itself has suffered losses probably upwards of 4,000 employees, if you take into account print positions, administrative culls, et cetera.

CHAIR: So you think 2½ thousand journalists, as we define journalists—

Mr Murphy: Journalists, artists and photographers. That is right.

CHAIR: Does that include subeditors or not?

Mr Murphy: Yes.

CHAIR: People who are involved in writing the paper or putting together publications.

Mr Murphy: People who are filling editorial positions.

CHAIR: And then the other 1½ thousand, Mr Chesher, are accounts managers, back office, IT?

Mr Chesher: Yes, at least. That is a conservative estimate.

Senator LUDLAM: You folks are quoted—I am not sure if it is from the same study that you are reading from—as saying that that would represent, since 2011, around a quarter of the journalists working in Australia.

Mr Murphy: That is an estimate that we share. We would agree with that.

CHAIR: There are one-quarter fewer journalists now than there were five years ago?

Mr Murphy: Yes.

CHAIR: It is incredible, because there is a lot less happening in the news!

Mr Murphy: It is impossible to guess what that number would be in total if you also took into account people who have simply left the industry and not been replaced. That would make the figure even higher. The losses initially came in great waves, commencing with subeditors. Subeditors were the first part of the profession that was really heavily targeted in redundancy rounds, but since then we virtually have seen annual redundancy rounds in major media organisations across the country. And it is important to remember that, as a result of the budget cuts to our public broadcaster, we have also seen significant redundancies taking place there as well. Departing staff are not being replaced. Remaining staff have to work harder. Previously core activities are being abandoned.
Everyone just appears to be trying to keep their heads above water and, as we have seen in recent weeks, they are not always succeeding at that.
Outsourcing is also occurring. Work for every media platform is increasingly being outsourced to third parties. Previous employees are now working freelance as independent contractors on lower pay rates, with no job security and fewer benefits than before. As redundancies have increased, the marketplace of these freelance workers has become more crowded and, as costs have been cut, the editorial budgets available to pay for outsourcing have been sliced into smaller and smaller pieces, meaning that freelancers are competing among themselves for increasingly declining rates of pay. I would say that in an increasing number of cases the arrangements we are seeing being put in place amount, in our view, to little more than sham contracting. These people are in a very exposed position. As so-called independent contractors they do not have the benefit under our legal framework of being able to collectively bargain. They are heavily exposed in an increasingly crowded marketplace, and it is a major issue for us as a union and a professional association.
Newsrooms have shrunk. Specialisation has been replaced by multiskilling. Research, investigation, depth and accuracy are being lost. In short, I think the media industry is really creaking at the seams trying to fulfil its important public role as part of a healthy, functioning democracy.
That is the story at established media houses but, of course, the disruption that has been brought about by technology in traditional media has also created opportunities for new entrants, and it is important to remember that. In Australia, established news brands like The Guardian, the Huffington Post and the Daily Mail have local digital editions produced by Australian journalists, and they have recently been joined by The New York Times. They provide a welcome boost, as do BuzzFeed and new local entrants like The New Daily and the academic website The Conversation. These add important elements to the local media landscape and have contributed, in some cases, extraordinarily valuable additional depth to particular areas of reporting, but none of them have the resources to replace the journalism at scale that we are losing.
In all of this picture I think it is important to remember that the audience is growing. Subscriber numbers are growing. Readership is growing. If you look at the most recent survey by Roy Morgan Research, you see the number of Australians who read or accessed the newspapers’ content via print, web or app in an average seven-day period in March 2013 was 19.9 million. Four years later the same basket of mastheads was recording a total audience of 22 million. While print use is declining, digital, web and app readership has been growing and boosting the local audience.
At the same time, of course, advertising revenue for media organisations is in decline. The print media industry’s measurement, News Media Index, reported $2.28 billion in advertising revenue for calendar year 2016, down from $2.466 billion in 2015, a 7½ per cent decline. But this advertising revenue is not just disappearing completely, as we know. It is important to remember there are some organisations that are booming in terms of advertising revenue. The Pew Research Centre found that, of the $59.6 billion spent on all digital advertising in 2015, $38.5 billion of that went to Google, Facebook, Yahoo, Microsoft and Twitter. At the same time, of course, many of these corporations are paying virtually no tax at all. In Australia, internet advertising revenues are
scheduled to grow from $3.93 billion in 2013 to $7.25 billion in 2018, but that revenue is not going direct to news organisations that produce journalistic and other content. In increasing amounts, it is going to intermediaries.
Morgan Stanley in Australia says that Facebook and Google are taking all of the ad market growth and then some. They estimated last year that Google and Facebook will collectively extract $4 billion to $5 billion worth of ad revenue, representing 35 to 40 per cent of total ad revenue.

Senator SINGH: Is that in one year?

Mr Murphy: Yes. That is correct. That was Morgan Stanley. While Google News does not contain advertising, Google as a company earns about 90 per cent of its revenue from advertising. When you look at Google, the figures are absolutely mind-boggling. Their ad revenues have increased by 17 per cent—17 per cent!—year on year, comparing the final quarters of 2015 and 2016, from $17.08 billion to $22.4 billion. While there were global revenues of US$74.54 billion in 2015, this year it is expected to break through US$100 billion. In Australia, there was an estimated $2 billion in ad sales in 2014-15 and it is up to $3½ billion this year.
Facebook’s profit last year was $10.2 billion. Their ad revenues hit $8.6 billion in the last three months of 2016.
So we have to be gravely concerned at the impact that aggregators and content vehicles like Google and Facebook are having on our media landscape in Australia. These non-paying entities strip advertising and other revenue from regulated media entities that provide important public interest editorial and entertainment Australian content for Australian audiences. To date, they have made little effort to acknowledge the funding problem and even less to contribute to funding the content from which they benefit enormously.
MEAA believes that, with the right spread of revenues from a levy on these aggregators—perhaps through contestable bidding by existing and new media organisations, profit and non-profit—the plurality of news sources may increase across all platforms. While there are questions about how such a system might work, we believe it is important for this committee to look at this as an option and as a possible solution to the circumstances that we find ourselves in. As some starting points, we have identified the following. Companies that financially benefit by
reproducing but not creating news content should contribute funding towards maintaining and developing journalistic content and endeavours. That is a basic principle that we think would be important to apply.
Regulators at national and international levels should act with urgency to establish payment mechanisms, whether by a levy or other means, from intermediaries of scale, such as Google and Facebook, which justly compensate authors and publishers for their creative works. Such funds should ensure that a minimum of one per cent of advertising revenues of organisations of scale are devoted to fund journalistic and related content, as a condition of a company’s access to each market.
The situation we are facing is an incredibly dangerous one, and the danger is increasing. In the absence of action, we face the risk of our media market, already one of the most concentrated in the world, becoming even more so. It is a dangerous fallacy to think that the internet in and of itself will provide diversity. Yes, people have access to more sources of news than ever, but any time you care to look at the Nielsen digital ratings you will find that nearly all of the top 10 positions, the top 10 most visited news sites, are owned by established local media brands. Allowing greater concentration of ownership through mergers will only lead to more job cuts and fewer voices in our media.
I know this inquiry is also looking at the issue of fake news. While I do not want to make extensive comment on that issue now, I would point out that the endless cost cutting we are experiencing is having a real impact on quality at the worst possible time. At a time when we are facing the challenge of malicious parties seeking to distribute fake news, public trust in our media becomes more important than ever. And that public trust is only going to be challenged further by the endless rounds of cost cutting and the resulting impact on quality that people
see.
Just briefly, I will touch on a few other areas that we think would be important to look at, for this committee, in terms of the future of public-interest journalism in Australia. I think we need to look at various measures, potentially, of government support for the media, particularly in the area of tax relief and tax incentives. We believe that the system of indirect and direct subsidies that operate in different parts of the world is something that the committee should look at, although we would say up front that the issue of direct government subsidies for private media presents a major ethical issue for us.