Culture Secretary Jeremy Wright has said his department will carry out a review into how online advertising is regulated as he set out the Government’s next steps following the publication of the Cairncross Review yesterday.
Speaking in Parliament today, the Conservative MP described the review, which was led by Dame Frances Cairncross, as an “important milestone”.
The review was tasked with looking at the sustainability of high-quality journalism in the face of a rapidly changing marketplace for news publishers that has upended traditional business models.
Wright told MPs the review “sets out a path to help us put our media on a stronger and more sustainable footing”.
He said: “We cannot turn back the clock and there is no magic formula to address the systemic changes faced by the industry.
“But it is the role of any responsible Government to play an active part in supporting public interest journalism.”
He added: “I know that this is an issue that is of great concern to honourable members all across this House. And today’s review is an important milestone.
“At the heart of any thriving civil society is a free and vibrant press.”
In his statement, the MP for Kenilworth and Southam set out how Facebook and Google – known as the Duopoly – capture the largest share of online ad revenue (about half of the UK’s £11.5bn market) and have become an important news distribution channel.
He said: “They also hold an array of data on their users that news publishers cannot possibly hope to replicate, which further strengthens their position in the digital advertising market.
“This combination of market conditions threatens to undermine the future financial sustainability of journalism. Even publications that have only ever been online are struggling. And this should concern us all.”
He said online advertising had also given rise to a “wider set of social and economic challenges” and committed the Department for Digital, Culture, Media and Sport to carrying out an additional review into it, beyond the proposals made by the Cairncross Review.
Wright also said he would urge Professor Jason Furman to treat the Cairncross Review as additional evidence as part of his ongoing inquiry into digital competition in the UK, due to be published in the spring.
The Cairncross Review’s proposals to help build a sustainable future for the UK news industry included setting up a new Institute for Public Interest News, tax reliefs for news publishers, regulating online platforms’ news content and creating an innovation fund, among others.
On its recommendation that the UK competition watchdog should carry out a study into the online ad market, Wright said he had written to the Competition and Markets Authority today “in support of this study”.
On the proposal that Ofcom “should assess whether BBC News Online is striking the right balance” between its own reach and driving traffic to commercial publishers, particularly local ones, Wright said he had written to the broadcast regulator to “look carefully” at the proposal.
He said: “There may be ways in which the BBC could do more to drive traffic to commercial sites, particularly the local press.”
On the review’s proposal to create a tax relief for news publishers by granting them charitable status, Wright said this “could reduce the costs for those producing this essential public interest reporting and pave the way for a new revenue stream through philanthropic donations”.
He added: “I recognise that this avenue has been explored previously, and that some hurdles will have to be cleared, but I believe we should pursue it.” He said he had written to the Charity Commission to explore the option and was waiting to hear how they could help move it forward.
Dame Frances proposed lowering the VAT rate for digital publications to zero, matching that for print. Wright said this was a matter for the Chancellor of the Exchequer and that he would be discussing it further “with industry and my colleagues at the Treasury”.
The proposal that the Government develop a media literacy strategy was said by Wright to be “sensible” and covered similar ground to work already carried out by the Government to combat disinformation.
He said: “Evidence suggests that there is also a correlation between media literacy and greater propensity to pay for news. So, improving media literacy will also have an impact on the sustainability of the press.
“Making sure people have the skills they need to separate fact from fiction is the key to long-term success in tackling this issue and I welcome the focus that Dame Frances has placed on it.”
On the call for new codes of conduct to be created between news publishers and online platforms, overseen by a regulator, in regards to commercial deals and news content, Wright said this deserved the Government’s “full consideration”.
The Government is expected to issue a full response to the findings of the Cairncross Review later this year.