Competition authorities have begun an investigation into how digital channels are affecting traditional media platforms and advertising revenues.
The Competition Commission has been looking at the effect of streaming services on various sectors such as broadcasting, retail and telecom, recommending many measures to “correct” market structures.
After a separate year-long investigation into the local ecommerce sector the commission recommended a splitting of Takealot’s business, much to the chagrin of parent company Naspers.
On Friday, the commission gazetted the final terms of reference for its latest project, the Media and Digital Platforms Market Inquiry that will “examine the distribution of media content on SA’s digital platforms and the advertising technology (adtech) markets that connect buyers and sellers of digital advertising inventory”.
The authority says the inquiry is based on the view that “there may exist market features in digital platforms that distribute news media content, and associated adtech markets that impede, distort, or restrict competition and that may have adverse implications for the news media sector of SA”.
Estimates by the Wits journalism department show internet giants, including Facebook and Google, have taken as much as 60% of local advertising revenue over the past decade.
In recent years, a number of media houses, such as Primedia and Media24, have announced retrenchments as companies streamline their operations to cope with the loss of advertising revenue, particularly for legacy businesses. This has resulted in media professionals losing their jobs, as well as companies, such as Associated Media Publishing, which ran titles such as Cosmopolitan, shutting their doors.
Much of this has been attributed to SA’s growing shift in the consumption of digital news sources due to the increasing adoption and usage of smartphones and more affordable access to the internet.
Job cuts
In 2020 Kate Skinner from the SA National Editors Forum told Business Day that the economic issues facing the industry had been developing through the 2010s and were worsened by the Covid-19 crisis. At the time, she said the number of journalists in the country had almost halved from about 10,000 about a decade ago to less than 5,000.
These statistics will be made worse by the spate of job cuts now under way, such as those announced by Business Day’s owner, Arena Holdings, last week.
The commission says its investigation follows several similar inquiries and investigations globally on the effect of digital platforms on news media publishers that use these platforms to distribute their content online.
“This includes the generation of advertising revenue and the ability of news media to sustainably provide quality content to the benefit of consumers and democracy. These global inquiries and investigations have found that large digital platforms, such as search engines and social media sites, are important gateways for news content to reach consumers,” it said.
While developments have helped to grow online audiences and adoption, this can create an imbalance in the trading relationship between the news media and digital platforms “that can have implications for the level of referral traffic and fair payment for content”.
The commission is concerned all this may affect the sustainability of independent journalism.
The inquiry will focus only on businesses within the SA news media sector, including news publishers and broadcasters.
The main platforms that the inquiry will focus on include search engines, social media sites, video-sharing platforms, and news aggregation platforms with adtech market participants on the supply side, demand side, and ad exchanges.
The commission says it will also take a forward-looking approach and evaluate new technologies such as generative AI and ChatGPT, and “the impact these may have on the operations of businesses in the SA news media sector”.
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