The News Corporation co-chairman made the comments just weeks after Facebook overhauled its algorithm which demoted pages, including news organisations, in news feeds.
“If Facebook wants to recognise ‘trusted’ publishers then it should pay those publishers a carriage fee similar to the model adopted by cable companies,” said Mr Murdoch.
“The publishers are obviously enhancing the value and integrity of Facebook through their news and content but are not being adequately rewarded for those services. Carriage payments would have a minor impact on Facebook’s profits but a major impact on the prospects for publishers and journalists.”
Carriage fees are a staple of North American cable network syndication in the US. It is a fee paid by cable channels to free-to-air stations to carry their signals.
NewsMediaWorks chief executive Peter Miller said Mr Murdoch had a “cracking idea”.
“Carriage fees for trusted content would seem to describe a ‘new financial model’, but actually paying a reasonable fee for valuable content is not a new concept at all,” he said.
“In any event Rupert is starting a conversation about mighty journalism and how it is funded. It’s a conversation worth having.”
NewsMediaWorks is an industry group that represents the interests of major publishers, including Fairfax Media, News Corp Australia and Seven West Media’s West Australian Newspapers
Compensation for content is becoming increasingly welcomed by the media industry as Facebook and Google continue to challenge news media for digital ad spend, while not supporting news publishers.
New data from Salesforce’s Digital Advertising 2020 found that 66 per cent of digital advertising spend will go to Google Search, YouTube, Facebook, and Instagram, with the number increasing to 67 per cent in the Asia-Pacific market.
The introduction of carriage fees would also help the industry battle the fake news epidemic which is primarily found on Facebook. The new algorithm on the social network will make it harder for fake news content from untrusted sources to be seen in the news feed, hidden beneath users’ personal posts and trusted pages.
Mr Murdoch said publishers would closely follow the latest shift in Facebook’s strategy.
“I have no doubt that (Facebook chief) Mark Zuckerberg is a sincere person, but there is still a serious lack of transparency that should concern publishers and those wary of political bias at these powerful platforms,” he said.
“Facebook and Google have popularised scurrilous news sources through algorithms that are profitable for these platforms but inherently unreliable. Recognition of a problem is one step on the pathway to cure, but the remedial measures that both companies have so far proposed are inadequate, commercially, socially and journalistically.”
“There has been much discussion about subscription models but I have yet to see a proposal that truly recognises the investment in and the social value of professional journalism.”
To identify these “trusted sites”, Facebook has issued a two-question survey which asks users:
When the changes were first announced, News Corp Australia voiced concern over possible partisan leanings of the news feed stating: “We will be looking for any signs that the weighting of news sites is politically motivated.”
Facebook Australia has been contacted for comment.