The Harmful Consequences of New Zealand’s Link Tax Proposal
Seemingly taking notes from Canada and Australia, New Zealand is currently considering its own flawed link tax, seeking to establish “a free and independent news media industry by providing a way for news media entities to be viable in a digital marketplace”. Introduced in 2023, the Fair Digital News Bargaining Bill mandates negotiations between digital services and news media entities in the country to compensate publishers just for linking to news articles.
Despite experts and members of the current ruling party previously outlining the critical concerns with this legislation, New Zealand’s Parliament announced this summer it would press ahead with the bill. While the government continues to consider this policy, they must understand the implications this potential law has for community-based publications, the principles of the open web, and investment in the news industry in the country. It is also crucial to weigh the benefit it would have for larger media conglomerates in the country, rather than the smaller outlets that need the most help financially.
The reality is that the basis of this bill (and other link taxes seen at the state, federal, and global levels) is rooted in the false belief that digital services pull revenue away from news sites by linking to them and then sending them traffic. As Queensland University of Technology Professor Axel Bruns said in CCIA’s recent event on link tax failures:
“The idea that news production is unprofitable because Google, Meta, and other platforms have somehow siphoned off online advertising revenue from its ‘rightful place’ on news sites is simply wrong. The business model of news was broken when news publishers decided to give away their content for free on the Internet back in the mid-1990s.”
As seen in many other parts of the world, link taxes uproot free information sharing online, which continues to be a vital facet of the internet. These kinds of policies have also been proven to significantly harm the news industries of these respective countries, causing a serious chill in innovation and a vast reduction in traffic for smaller publications that rely on reaching audiences through social media and search engines.
Canada’s Online News Act (also known as C-18) is an essential example that policymakers must study as they look to propose or implement these kinds of laws in their own country. Since its implementation, C-18’s attempts to increase the sustainability of the industry have done the opposite. Negative consequences have included harming small publications through dismal traffic for local publications, news bans on digital services, and a decrease in funding and investment amid uncertainty in the industry due to the law. These consequences are nearly identical to the potential concerns outlined for New Zealand.
Australia’s News Media Bargaining Code is another crucial consideration for Parliament, especially as there are calls by Communications and Media Minister Paul Goldsmith to align New Zealand’s “approach more closely with the Australian approach.” Following the passage of the law in 2021, the country has seen a deepening divide between urban and regional Australian news outlets, causing news production in regional areas to decline dramatically.
As the agreements look to be renegotiated in early 2025, there are also concerns about bargaining deals prioritizing media conglomerates and hedge funds and mandated sharing by the Australian Competition and Consumer Commission (ACCC) to force companies to hand over sensitive commercial agreements made with media companies.
Ultimately, it is key that New Zealand heed these warnings as they look to mandatory online news payments as the solution. Reconsidering the Fair Digital News Bargaining Bill and seeking alternative paths forward is essential for a sustainable future for journalism in the country and for the open internet.
