Facebook To Invest $1B In News Industry Over 3 Years, Slams Publishers For Demanding “Blank Check” To Help Ailing Business As Australia News Standoff Ends

Facebook said will invest $1 billion in the global news industry over the next three years but came out swinging Wednesday over its news blackout of Australia, which it reversed yesterday after Aussie lawmakers agreed to modify a proposed law.

In a blog post entitled The Real Story of What Happened With News on Facebook in Australia, VP of Global Affairs Nick Clegg blamed media conglomerates for trying to squeeze on Facebook to make up for losses created by the shift of advertising from print to digital that disrupted the economics of the news business. (Facebook, Google and Amazon make up about two-thirds of total U.S. digital ad spending.)

“The [news] industry was forced to adapt. Some have made this transition to the online world successfully, while others have struggled… It is understandable that some media conglomerates see Facebook as a potential source of money to make up for their losses, but does that mean they should be able to demand a blank check?” he said.

“It’s like forcing car makers to fund radio stations because people might listen to them in the car — and letting the stations set the price,” Clegg lashed out.

“It is ironic that some of the biggest publishers that have long advocated for free markets and voluntary commercial undertakings now appear to be in favor of state sponsored price setting. The events in Australia show the danger of camouflaging a bid for cash subsidies behind distortions about how the internet works.”

Many in the industry, however, see a power imbalance. The legislation close to passage in Australia intended to tilt the field towards publishers by forcing Facebook and big Internet services to negotiate with them on financial terms for use of content. The proposal required arbitration if no deal could be reached and, among other features, allowed for collective bargaining by the publishers.

Mark Zuckerberg-led Facebook reversed course on its news blackout and the standoff ended after concessions, including a shift to softer mediation to resolve any disputes with arbitration only a last resort.

Clegg said the blackout might have appeared sudden but that the company had warned of it six months ago and has been in discussions with the Australian government for three years.

He believes there’s a “fundamental misunderstanding” of the relationship between Facebook and news publishers.

“It’s the publishers themselves who choose to share their stories on social media, or make them available to be shared by others, because they get value from doing so. That’s why they have buttons on their sites encouraging readers to share them. And if you click a link that’s shared on Facebook, you are directed off the platform to the publisher’s website. In this way, last year Facebook generated approximately 5.1 billion free referrals to Australian publishers worth an estimated AU$407 million to the news industry.”

“The assertions — repeated widely in recent days — that Facebook steals or takes original journalism for its own benefit always were and remain false. We neither take nor ask for the content for which we were being asked to pay a potentially exorbitant price.”