Go away MDA, and leave Singapore’s news startups alone

Update: Edits were made to clarify the fact that Breakfast Network does not yet fall under the new licensing rules. Therefore, it did not need to pay a performance bond.

This week, Breakfast Network, an up-and-coming Singapore news site, shut itself down because of the Media Development Authority’s (MDA) demands for the site to register or cease operations. In contrast, The Independent chose to comply after being given the same ultimatum.

These controversial measures, which occurred after new licensing requirements for online media sites were introduced by the government agency in May earlier this year without industry consultation, have been farcical.

While the requirement for news sites to register is not new, its uneven and high-handed implementation has created a cloud of uncertainty that is impeding the country’s media entrepreneurs in ways that aren’t justified on closer scrutiny.

Head in the sand?

In the first place, it hasn’t convincingly communicated any good reason to implement the new framework or heighten enforcement of the existing regime.

Explaining the new rules, MDA says that it wants to bring new media sites in line with regulations governing traditional news channels by requiring websites with over 50,000 local visitors to get licenses.

The goal is to prevent foreign interests from influencing local politics by making media companies declare that they have not received foreign funding. Nonetheless, ad buys from overseas are allowed.

These justifications are in line with the existing Class Licensing Scheme, which was exercised on Breakfast Network because MDA, in an email to Tech in Asia, says that it has ”assessed that as a corporate entity providing political commentary and news, [Breakfast Network] may be susceptible to foreign influence by way of foreign funding.”

These rules might make sense in the 80s, where local print and broadcast media are the predominant source of news. That has changed since, with the internet and social media disrupting how news is distributed and consumed.

For example, in the recent Little India riot, foreign news media has jumped on it, and there’s nothing stopping them from influencing local politics despite being based abroad.

MDA’s obsession with harmful foreign influence also deserves further scrutiny. We should be more concerned about the United States’ attempt to bulldoze over the intellectual property segment of the Trans-Pacific Partnership Agreement than a hypothetical foreign firm owning a stake in a local news site, which may have negligible impact on content.

And if foreign influence is such a concern, why not limit foreign ownership to say 49 percent, or create a framework shareholder agreement that gives local shareholders and journalists ultimate say in news operations no matter how much equity they own?

Entrepreneurs have enough to worry about

Despite repeated clarifications, MDA has not offered much clarity on how it plans to implement the scheme and how it determines which site qualifies.

For instance, why is it that business broadsheet The Business Times must apply for a license even though it mostly covers business news? And why is it that while the MDA has asked Breakfast Network and The Independent to register, it ignores The Real Singapore, a blog with much higher traffic but sensationalist content?

The irregular implementation casts a pall over news publications that cover politics once in a while despite focusing on other areas like technology, sports, or lifestyle.

This is bad for business. It’s what caused Breakfast Network to shut down as it waits to see how the review of Singapore’s Broadcasting Act will shape up. Investors, too, will be less willing to invest in media startups due to the uncertain headwinds.

These regulations also strain a startup’s limited resources. Instead on focusing on the problem of gaining traction and generating revenue, entrepreneurs now have to worry about red tape, filling in the 17-page form correctly, and fulfilling a required deposit of S$50,000 ($40,000).

Breakfast Network, which hasn’t yet come under individual licensing and so doesn’t need to pay a deposit yet, explains its closure:

Lawyers and business people who have seen the registration forms describe them as “onerous”. We could declare that all revenue came through bona fide commercial transactions, but we would probably need to produce some kind of proof if queried. Does that make it a kind of compliance checklist to ensure we have done due diligence? BN is not even steady on its feet to start thinking about putting in such administrative structures.

Further, when they asked for a month’s extension of the deadline, MDA only gave them a week:

It does not understand that it is not just a question of form-filling but also wrapping our heads around what registration means.

Self-sabotage

It’s a pity that MDA has decided to clamp down on an area that is ripe for innovation. True, journalism is costly and the margins are low, which means it’s not as lucrative as businesses like e-commerce or digital advertising technology.

But there’s a lot of potential in finding ways to scale journalism and develop new business models, which is what companies like Circa, Buzzfeed, and Upworthy are attempting to do.

Ironically, these rules, which ultimately serves to widen the protective moat that mainstream media has by keeping out new players, would eventually cause the water to dry up.

While large enterprises do innovate frequently, they can also end up getting trapped in stagnation. This is why acquisitions of young technology companies are common in Silicon Valley, and rising in frequency in Singapore. To stay nimble, it makes sense to get fresh perspectives from smaller players who are tackling existing problems from a different angle.

By adding unjustified obstacles in operations and fundraising for young companies struggling with cashflow, MDA is reducing the pool of startups which are attempting a different take on journalism.

While regulation has kept mainstream media players like Singapore Press Holdings and MediaCorp dominant in the past decades, its cancerous overreach has begun poisoning local media.

For the government, which relies on mainstream media to disseminate information while treating alternative media as second-class citizens, this is bad news.

(Editing by Vanessa Tan)

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