The U.S. Capitol. Photo (cc) 2013 by Mark Fischer.
The $1.7 trillion omnibus spending bill that’s making its way through Congress reportedly contains nothing to ease the local news crisis. An emailed news bulletin from the trade publication Editor & Publisher, citing unnamed sources, reported this morning that both the Journalism Competition and Preservation Act (JCPA) and the Local Journalism Sustainability Act (LJSA) have been excluded from the bill.
For those of you who don’t follow these issues obsessively, let me unpack this a bit.
The JCPA would allow an antitrust exemption for news organizations so that they could bargain collectively with Google and Facebook for a share of their advertising revenues. You often hear news executives complain that the giant platforms are republishing their content without paying for it. That is a serious distortion. On the other hand, there’s no doubt that Google and Facebook, which control about half the digital advertising market, benefit significantly from linking to and sharing news.
The LJSA would create three tax credits that would benefit local news organizations. The first would allow consumers to write off the cost of subscriptions. The second would provide a tax benefit to businesses for buying ads. The third would grant tax write-offs to publishers for hiring and retaining journalists. That last provision was included in President Biden’s Bill Back Better bill, which Senate Republicans, joined by Democratic Sen. Joe Manchin, killed last year.
The demise of the JCPA is not entirely bad news. I thought it might be worth giving it a try to see what the two sides might come up with. Still, there was a lot of merit to the argument made by critics like Chris Krewson, executive director of LION (Local Independent Online News) Publishers, that most of the revenues would be diverted to large legacy newspaper publishers — including those owned by corporate chain owners and hedge funds — rather than to community-based start-ups.
The LJSA, on the other hand, was more intriguing, even though it would also benefit legacy newspapers. For one thing, the tax credits could provide a real lifeline to small local news projects. For another, the third provision, for publishers, would reward the large chain owners only for good behavior — Gannett and Alden Global Capital could not tap into that credit if they keep laying off journalists.
I’m guessing that this is the end of the road for both proposals given that the Republicans will take over the House in the next few weeks. That’s not entirely a bad thing. As Ellen Clegg and I have found in our research at “What Works,” local news organizations across the country, from for-profit legacy newspapers to nonprofit digital start-ups, are finding innovative ways to continue serving their communities.
The economic challenges facing news organizations is real, but in many cases they can be managed with innovative thinking and committed local ownership.
A controversial measure that could force Google and Facebook to pay for the news they repurpose has suddenly been revived in the last days of the lame-duck Congress. The Journalism Competition and Preservation Act, or JCPA, would allow news organizations to skirt antitrust law and band together so they can negotiate with the two giant platforms over compensation. If negotiations fail, an outside arbitrator would be brought in to impose a settlement.
On the “What Works” podcast, Ellen Clegg and I recently interviewed U.S. Rep. David Cicilline, D-R.I., one of the co-sponsors of the JCPA. Cicilline spoke of the measure in terms of breaking up Google and Facebook’s monopoly on digital advertising, which is certainly real enough. According to Statista, the two tech titans control 52% of the market.
I last wrote about the JCPA in August. And though I described the bill as having lurched back to life, there hadn’t been many signs since then that it was going anywhere. That is, until this week, when the measure was added to a “must pass” defense-funding bill. House Republicans oppose the JCPA, and with Rep. Kevin McCarthy, R-Calif., on the verge of taking the speaker’s gavel, right now is the last chance. Sara Fischer and Ashley Gold have the details at Axios.
In August, I expressed some reservations about the JCPA but thought it was worth passing to see what would come out of it, especially since it was time-limited to four years (since doubled to eight). You often hear simplistic claims by proponents that Google and Facebook are republishing journalistic content without compensation. In fact, they’re not republishing anything. There’s no stealing and no copyright violation taking place. But there’s also no question that Google is far more valuable and useful because users are able to search for news content, and that some not-insignificant portion of Facebook’s traffic comes from users linking to and commenting on news stories. It does not strike me as unfair to insist that the platforms pay something for that value.
And yet the JCPA carries with it the possibility of some real downsides. Greedy corporate owners like Gannett and Alden Global Capital would benefit without any obligation to invest more in journalism. And though the legislation excludes larger news organizations like The New York Times and The Washington Post, a similar law in Australia has served mainly to line the pockets of the press baron Rupert Murdoch.
A better bill, in my view, is the Local Journalism Sustainability Act, or LJSA, which would provide for three tax credits: one for consumers who pay for a local news subscription; one for advertisers; and one for publishers that hire or retain journalists. As Steve Waldman of the Rebuild Local News Coalition told Ellen and me on “What Works,” that last provision, at least, would only benefit the corporate chains if they actually invest in journalism. But the LJSA has been seemingly stuck in congressional limbo for several years. If the JCPA passes, I can’t imagine that the LJSA will do anything other than disappear.
Facebook is threatening to eliminate all news content if the JCPA becomes law, a threat similar to one that it made and backed away from in Australia. The company, formally known as Meta, also ended its program of supporting local journalism recently, which will remove millions of dollars from what is an already shaky revenue stream.
I have to say that I was struck by a letter of opposition to the JCPA issued Monday by a coalition of 26 public-interest and trade organizations including the ACLU, the Internet Archive, LION (Local Independent Online News) Publishers, Common Cause, the Wikimedia Foundation and the United Church of Christ Ministry (!). Among other things, the letter claims that the money will mainly benefit media conglomerates and large broadcasters without setting aside anything for journalists. The coalition puts it this way: “The JCPA will cement and stimulate consolidation in the industry and create new barriers to entry for new and innovative models of truly independent, local journalism.”
We’ll see how it works out. There’s no question that many local news organizations are in difficult straits, and that a guaranteed source of income from Google and Facebook may be the difference between thriving and just barely getting by. If the JCPA is approved, I just hope it doesn’t become one of those government programs that become a permanent part of the landscape. If it works, fine. If there are problems, fix them. And if it’s a disaster, get rid of it.
Congressman David Cicilline. Photo (cc) 2018 by the Brookings Institution.
On the latest “What Works” podcast, Ellen Clegg and I talk with U.S. Rep. David Cicilline, who represents the First District of Rhode Island in Congress. Cicilline, who is a Democrat, is part of a bipartisan group of U.S. representatives and senators sponsoring the Journalism Competition and Preservation Act. Co-sponsors include Democratic Sen. Amy Klobuchar from Minnesota; Republican Sen. John Kennedy from Louisiana; Republican Rep. Ken Buck from Colorado; and Senate and House Judiciary Committee chairs Dick Durbin, an Illinois Democrat, and Jerrold Nadler, a New York Democrat.
The JCPA would remove legal obstacles to news organizations’ ability to negotiate collectively and secure fair terms from gatekeeper platforms that proponents say use news content without paying for it. Critics counter that it’s more complicated than that. The legislation also allows news publishers to demand arbitration if they reach an impasse in those negotiations.
Ellen has a Quick Take on new research being done by the Institute for Nonprofit News. The INN just released 2022 fact sheets on three types of nonprofit newsrooms: local news, state and regional news, and national and global news. While each group shares some similarities, INN found that geography matters in terms of revenue models and audience development.
I take a few more whacks at Gannett because newsrooms are being hit with unpaid furloughs, buyouts, a freeze on their pension benefits and more.
Our faculty at Northeastern University’s School of Journalism recently voted unanimously to support two pieces of legislation aimed at addressing the local news crisis — a bill to make it easier for newspapers to become nonprofit organizations and a resolution that asks Congress to help reverse the decline of community journalism.
The bills were introduced in the House today by U.S. Rep. Mark DeSaulnier, D-Calif., and co-sponsored by Reps. Ed Perlmutter, D-Colo., Jamie Raskin, D-Md., and David Cicilline, D-R.I.
“As local newspapers are being bought up and taken over by large corporations, it is incumbent on Congress to act to protect this public good,” said DeSaulnier in a press release. “My legislation would do just that and ensure newspapers in every community can continue to provide high-quality local coverage that millions of American rely on and deserve.”
Professor Jonathan Kaufman, director of Northeastern’s School of Journalism, said, “The hollowing-out and disappearance of local news organizations imperils journalism, communities and our democracy. These measures provide a financial lifeline and tools for the next generation of journalists to pursue new models and innovation that bring more local news to communities.”
The bills are not related to the Local Journalism Sustainability Act, which would provide tax credits to subscribers, advertisers and publishers. The tax credit that would benefit publishers is part of President Biden’s Build Back Better legislation. DeSaulnier’s bills, by contrast, would address the problem that journalism is not among the activities that qualifies for nonprofit status, even though the IRS has approved such status for many news organizations over the years.
The full press release issued by Rep. DeSaulnier’s office follows.
Congressman DeSaulnier Introduces Legislative Package to Support and Preserve Local Journalism
Washington, D.C. – Today, Congressman Mark DeSaulnier (CA-11), along with his colleagues Congressman Ed Perlmutter (CO-07), Congressman Jamie Raskin (MD-08), and Congressman David Cicilline (RI-01) introduced two pieces of legislation aimed at supporting and protecting local journalism, and honoring its role in bolstering our democracy, holding government accountable, and informing the electorate. The Saving Local News Act (H.R. 6068) would make it easier for newspapers to become non-profits, allowing them the flexibility to focus less on maximizing profits and more on producing quality content. The local news resolution (H.Res. 821) recognizes the importance of local media outlets to society and expresses the urgent need for Congress to help stop the decline of local media outlets.
“Local journalism has been the bedrock of American democracy for centuries. I have seen firsthand how journalists for local newspapers have kept our community informed, educated voters, and held power to account,” said Congressman DeSaulnier. “As local newspapers are being bought up and taken over by large corporations, it is incumbent on Congress to act to protect this public good. My legislation would do just that and ensure newspapers in every community can continue to provide high-quality local coverage that millions of American rely on and deserve.”
“Local and accurate sources of news are becoming more and more important for our community and our country. I believe Congress has a role to play to ensure legitimate media outlets are able to better adapt to the changing media landscape and continue to inform Americans in every community,” said Congressman Perlmutter.
“An informed American public is essential to strong democracy,” said Congressman Raskin. “We cannot allow worldwide propaganda and conspiracy theories to replace hard local news based on local reportage. I’m proud to join Rep. DeSaulnier in introducing this important legislation that will give local news the flexibility it needs to thrive in a dangerously toxic media environment.”
“Over the past 15 years, one in five newspapers have closed, and the number of journalists working for newspapers has been slashed in half. We now live in a country in which at least 200 counties have no local newspapers at all,” said Congressman Cicilline. “This crisis in American journalism has led to the crises we are seeing today in our democracy and civic life. We cannot let this trend continue because if it does, we risk permanently compromising the news organizations that are essential to our communities, holding the government and powerful corporations accountable, and sustaining our democracy. I’m proud to support this resolution and the Saving Local News Act and thank Congressman DeSaulnier for his leadership and partnership in this work.”
“We commend Congressman DeSaulnier for introducing this important piece of legislation that recognizes the importance of nonprofit journalism to the American society. At a time when news deserts are a growing concern, we must ensure that we support all newsrooms in their efforts to provide high-quality journalism to their local communities. This journalism bill that would allow non-profit newsrooms to treat advertising revenue as nontaxable income could be helpful to a number of publishers,” said David Chavern, President and CEO, News Media Alliance.
“Community newspapers are exploring many new models for sustainability. Our newsrooms realize that without us, whole communities will lose their center of gravity. A nonprofit model is one that can work in some communities, but just establishing this status isn’t enough to keep the doors open and journalists at work. The need for revenue from a variety of sources, including local advertisers, remains acute. NNA supports the Saving Local News Act and thanks Congressman DeSaulnier for his work on behalf of local communities,” said Brett Wesner, Chair, National Newspaper Association and Publisher, Wesner Publications, Cordell, OK.
“Honest, truthful reporting is essential to informing our democracy at all levels. Without it, we won’t remain a nation of the people, by the people, for the people. Bills that help sustain local reporting that informs people about what their government representatives are up to, will help keep the citizens in charge of our country,” said George Stanley, President of the News Leaders Association.
“News organizations are looking at multiple ways to fund their organizations while continuing to deliver local journalism that is fundamental to a thriving Democracy. If news organizations want to pursue the nonprofit business model; it should be as accessible for established organizations as it is for news startups. Our members are known and trusted in the communities they serve and removing the hurdles to find philanthropic support would allow newsrooms to focus on serving their communities,” said Brandi Rivera, Publisher, Santa Barbara Independent and Board Member, Association of Alternative Newsmedia.
“Community newspapers are woven into the fabric of American society and provide accurate and trusted information that improves the lives of individuals in the communities they serve. It is no secret that newspapers face an increasing number of existential threats from online competitors which have left them with a decreasing number of revenue opportunities. This measure would provide news organizations with the means to better rise to these challenges and continue to play a vital role in their communities by holding the feet of the powerful to the fire and giving voice to the powerless,” said Jim Ewert, General Counsel, California News Publishers Association.
“Free Press Action supports this important legislation and applauds Congressman DeSaulnier for recognizing the importance of building, supporting and sustaining local nonprofit news operations,” said Craig Aaron, President and co-CEO of Free Press Action. “In too many places, corporate media have shrunk newsrooms or abandoned communities entirely. Nonprofit news has emerged as the future of local journalism, and it’s our best hope for keeping reporters on the beat focused on the needs of local communities, serving communities of color, and reaching so many people who have never been well served by the media. This bill will remove obstacles to nonprofit journalism, help launch more of these outlets, encourage more existing outlets to go nonprofit, and create more of the kind of high-quality journalism we need to inform our communities and keep our democracy thriving.”
“The hollowing-out and disappearance of local news organizations imperils journalism, communities and our democracy. These measures provide a financial lifeline and tools for the next generation of journalists to pursue new models and innovation that bring more local news to communities,” said Professor Jonathan Kaufman, Director of the Northeastern University School of Journalism.
“The health of the news industry is so precarious, all efforts to strengthen an industry so instrumental to democracy are well received. Thanks to Rep. DeSaulnier for stepping up,” said Jody Brannon, Ph.D., Director of the Center for Journalism and Liberty at the Open Markets Institute.
“The U.S. tax code needs this important update to make it easier for nonprofit news organizations to grow across our country. We’ve lost tens of thousands of local journalists over the last decade. That’s meant fewer journalists covering local government meetings, local business and even high school sports. Journalists are essential to holding power to account, watching over our democracy and providing a voice to the voiceless. We applaud Rep. DeSaulnier’s support of journalism. Our country was founded under the principle that a free press was the best way to make sure we have a robust democracy by having an informed electorate. We all have to fight now to save local news,” said Jon Schleuss, President of NewsGuild-CWA.
“The newspaper business model is broken. At a time when local journalism has never been more essential, journalists are losing their jobs across the country, leaving important stories untold. Compelling, original journalism does continue to drive significant advertising revenue—just not for newspapers. Big Tech giants, like Google and Facebook, have used their monopoly power to capture huge swaths of the digital advertising market, making it nearly impossible for many papers to chart a path forward in the digital age. This has allowed hedge fund vulture capitalists to scoop up scores of newspapers across the country—all of whom have been reduced to shadows of their former glory by a short-sighted cut, cut, cut approach. We welcome and applaud efforts to help news outlets continue to cover of the communities they serve. This legislation will create a path that communities can use to save their local papers. Local news is a key piece of American democracy, and while addressing the underlying problems Big Tech has created for journalists is complex, we have to do everything we can to allow for news to thrive,” said the Save Journalism Project.
“PEN America applauds the introduction of the Saving Local News Act – and the accompanying resolution on the importance of local news – as a welcome and needed step to support America’s journalism ecosystem. By making it easier for news organizations to become nonprofits, Congressman DeSaulnier’s legislation will open up a sustainable financial pathway for quality local journalism, recognizing its value as a public good. Enacting this bill will strengthen a fundamental pillar of our democracy, encouraging diverse reporting, civic engagement, and access to essential community information,” said Nadine Farid Johnson, Washington director of PEN America.
Since 2017, estimated daily newspaper circulation fell 11 percent from the previous year (Pew Research Center). Congressman DeSaulnier established a working group of dedicated Members of Congress from areas affected by a drought of high-quality journalism. Together they have been working to highlight this crisis and bring attention to the need to promote local journalism, including by holding a Special Order on the floor of the U.S. House of Representatives and introducing the Journalism Competition and Preservation Act (H.R. 1735), a bill to create a temporary safe harbor from anti-trust laws to allow news organizations to join together and negotiate with dominant online platforms to get a fair share of advertising profits.
Congressman DeSaulnier’s bill and resolution are supported by: News Media Alliance, National Newspaper Association, News Leaders Association, Association of Alternative Newsmedia, California News Publishers Association, Free Press Action, Faculty of the School of Journalism at Northeastern University, Local Independent Online News (LION) Publishers, Save Journalism Project, PEN America, Center for Journalism and Liberty at the Open Markets Institute, and NewsGuild-CWA.
Could Australian-style rules to force Google and Facebook to pay for news be coming to the United States?
U.S. Rep. David Cicilline, D-R.I., told the CNN program “Reliable Sources” over the weekend that the House will soon take up legislation that would give news publishers an antitrust exemption allowing them to bargain collectively with the Big Tech platforms. The purpose would be negotiating a compensation system.
“Local news is on life support in this country,” said Cicilline, who chairs the House Judiciary Antitrust Subcommittee. “The monopoly power of these two platforms is resulting in a significant decline in local journalism.”
More broadly, he said his committee will also take up parts of a 450-page report, compiled over 16 months, to rein in the power of the giant platforms. He told host Brian Stelter that many of the recommendations in the report have bipartisan support and are aimed at breaking up the tech companies’ monopoly power.
The most intriguing of those ideas, according to a recent story by Cat Zakrzewski in The Washington Post, involves “interoperability and data portability, which would make it easier for consumers to move their data to new or competing tech services.”
Facebook has massive market dominance, and it would be difficult for a competitor to get a toehold in the market in any case. But it would be at least somewhat more feasible if users could easily transfer all their data over to a new service and delete it from Facebook, something that is almost impossible to do at the moment.
Regardless of what happens, it seems that Google and Facebook may soon no longer be able to operate with impunity. I’m far from certain that the Australian system is the best way to go given that it privileges entrenched publishers like Rupert Murdoch. But the idea that the platforms should pay something for what they use is long overdue.