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.
When Facebook has announced various initiatives to help news organizations, they have tended to benefit larger newsrooms that are less in need of assistance. For instance, when the News Tab was unveiled a year and a half ago, it was explicitly designed to benefit behemoths like The New York Times, The Washington Post and BuzzFeed.
As I wrote then: “At a time when local news is under unprecedented economic pressure, the News Tab will only widen the gap between relatively well-off, highly visible national news organizations and small local projects. The national sites will get paid; the local sites will be billed monthly.”
On Wednesday, though, LION (Local Independent Online News) Publishers announced a $1 million, two-year initiative funded by the Facebook Journalism Project to help its members develop their revenue models. Anika Anand, deputy director of LION Publishers, writes:
Through an application process, we will select a group of LION member organizations that will receive up to two years of funding to hire someone who will focus primarily on revenue generation with the goal of making their position self-sustaining at the end of the two years. For our first cohort, we will prioritize news businesses pursuing sustainability through a revenue strategy focused on readers, major donors or advertisers. Every LION member will be considered eligible for this program — their tax status will not matter.
In other words, the program is open to for-profit and nonprofit ventures alike.
News organizations that are part of LION are sources of reliable journalism, and they’re providing it on the community level, where the news implosion has hit the hardest. With 262 members, $1 million isn’t going to go a long way. But we do seem to be at a moment at which Facebook and Google understand that they are going to have to pay for the news they’ve been using. The LION program is exceptionally worthy.
At root, the debate over whether Google and Facebook should pay for news is about how their duopoly destroyed the value of digital advertising and then kept most of the revenues for themselves.
News, which is expensive, can’t survive on the pennies brought in by Google’s programmatic ads. That’s why there’s been so much emphasis in recent years on reader revenue — an emphasis that, at least in a few places, is starting to pay off.
Still, it would surely be a positive if news organizations could develop a revenue stream other than digital subscriptions. When readers are empowered, they expect their preferences and prejudices to be catered to. You need a balance. That’s why it’s interesting to see Axios’ recent report that Gannett and McClatchy will combine forces to sell national advertising for their hundreds of local and regional papers.
Can Gannett and McClatchy’s efforts drive up the price of digital ads? That’s the real issue, and without that their effort is not going to have much of an effect. Of course, it also does nothing to boost ad sales at the local level, which have been on the decline for years. Yes, local businesses have gravitated to Facebook just like everyone else. But local newspapers aren’t exactly known for being aggressive and creative about selling to the local hair salons, pizza restaurants and funeral homes, either. It can be done. Just ask Howard Owens, publisher of The Batavian in western New York state.
The partnership shows why I differentiate between Gannett and Alden Global Capital, even though their nuke-the-newsroom approach to the bottom line looks very much the same on the ground. Alden, by all appearances, is trying to squeeze as much money as it can out of the newspapers it’s killing and then get out. Gannett, on the other hand, is hoping to build a community news chain that can be sustainable in the long run.
Gannett’s biggest mistake, carried over from its predecessor company, GateHouse Media, is that its executives think they can build for the future while failing to provide enough journalism to retain readers. No matter how smart your business model, it’s not going to work if all you’re offering your audience is a shell.
Regardless of what really happened, this had the appearance of pure extortion.
In response to Australia’s new law requiring Google and Facebook to hold negotiations with news publishers aimed at compensating publishers for their content, Facebook took down not just news — which would be a proportionate response, I suppose — but all kinds of information.
The newly banned Facebook content comprises, as The Washington Post reports, “dozens of government and charity websites as well, including public health sites containing critical information about the pandemic during the first week of its coronavirus vaccine rollout.”
The information was restored about 12 hours later, and Facebook claimed it was all a mistake. Still, it was a powerful demonstration of what Mark Zuckerberg can do if you refuse to kiss the ring.
I’m hardly the first person to make this observation, but there’s a reason that Google is trying to accommodate Australian news publishers while Facebook is fighting them tooth and nail: Google needs news much more than Facebook does. The New York Times puts it this way:
Facebook and Google ultimately value news differently. Google’s mission statement has long been to organize the world’s information, an ambition that is not achievable without up-to-the-minute news. For Facebook, news is not as central. Instead, the company positions itself as a network of users coming together to share photos, political views, internet memes, videos — and, on occasion, news articles.
Writing at the Columbia Journalism Review, Mathew Ingram notes that news makes up only 5% of the content on Facebook’s News Feed, at least according to the company.
While I have no problem with publishers trying to extract some revenues from the two tech giants, I’m disheartened to see that Google is trying to buy its way out of trouble in Australia by cutting deals with the likes of Rupert Murdoch. This shouldn’t be a matter of buying off critics and then resuming business as usual.
That’s why I prefer an idea put forth by the tech analyst Benedict Evans in a conversation with Ingram: help fund news by taxing Google and Facebook. At least theoretically, that could lead to a more equitable distribution of revenues to large and small publishers alike.
Regardless of what the road ahead looks like, though, it’s clear that Facebook is going to be harder to deal with than Google. The Zuckerborg just doesn’t need journalism as much.
The Overton Window has opened a bit wider for the idea of requiring Google and Facebook to pay for news content. At Axios, Sara Fischer reports that Microsoft president Brad Smith has endorsed the Australian government’s move to do just that — and thinks such a system ought to be considered in the U.S. as well.
What’s taking place in Australia is complicated, but essentially it requires Google and Facebook to bargain with the news business and come up with a compensation system. Both companies have said they would stop offering some of their services if Australian authorities don’t back off.
In the U.S., the News Media Alliance, a lobbying group for news publishers, has been pushing for several years for an antitrust exemption that would allow them the right to bargain collectively with the tech giants — which is exactly what is going to happen in Australia. With the sheen wearing off Big Tech’s once-sterling image, the likelihood of Congress passing such an exemption has increased. A lawsuit brought by a group of West Virginia newspapers that I wrote about for GBH News last week may serve as a further goad.
In a blog post, Microsoft’s Smith cites a News Media Alliance study showing that Google makes an estimated $4.7 billion a year “from crawling and scraping news publishers’ content.” That study came under fire at the time of its release a couple of years ago. But regardless of the actual figure, Google — and Facebook — are surely making a lot of money from other people’s content without paying for any of it.
Smith makes no bones about his own business imperatives, saying that Microsoft is prepared to play by Australia’s rules through its Bing search engine, writing:
Microsoft’s Bing search service has less than 5% market share in Australia, substantially smaller than the 15-20% market share that we have across PC and mobile searches in the United States and the 10-15% share we have in Canada and the United Kingdom. But, with a realistic prospect of gaining usage share, we are confident we can build the service Australians want and need. And, unlike Google, if we can grow, we are prepared to sign up for the new law’s obligations, including sharing revenue as proposed with news organizations. The key would be to create a more competitive market, something the government can facilitate. But, as we made clear, we are comfortable running a high-quality search service at lower economic margins than Google and with more economic returns for the press.
A final thought. If Congress isn’t prepared to act, might it be possible to require Google and Facebook to compensate news publishers at the state level? Jack Nicas reports in today’s New York Times that a proposal has been made in North Dakota to forbid Apple and Google from collecting app-store fees from North Dakota-based businesses.
The legislation strikes me as more than a little half-baked. Yet the principle — that states can impose their own regulations on Big Tech — is one worth pondering.
One afternoon in early 2016, I arrived at The Boston Globe’s former headquarters in Dorchester to talk with John Henry about the state of his newspaper. Before we could begin, though, he wanted to talk about something that was bugging him.
Google, it seemed, had started slapping the word “subscription” on Globe content when it came up in searches, even though few people were likely to run into what was then a relatively porous paywall. It took months to straighten out, he complained — costing the Globe readers and, therefore, advertising revenue.
Henry’s lament illustrates the complicated relationship publishers have long had with Google. On the one hand, they complain bitterly that the dominant search engine is repurposing their journalism without paying for it. On the other hand, they depend on the clicks that Google sends their way.
Now matters may be coming to a head.
Under pressure from the Australian government, Google and Facebook have agreed to start paying for the content they repackage, MediaPost reports.
In the U.S., the News Media Alliance, which represents newspaper publishers, has long sought an exemption from antitrust law so that they could attempt to negotiate a compensation package with the two companies. There are signs that Congress may finally pass legislation to let them try.
And now, a chain of newspapers in West Virginia has filed a lawsuit charging that Google and Facebook violated antitrust laws by forming an alliance aimed at perpetuating their monopoly on digital advertising.
In order to understand exactly what the two companies — especially Google — have done to harm the news business, you need to consider two different but related practices.
First there is the matter of grabbing content, which, as Henry’s complaint shows, is convoluted: Publishers can’t live with Google and can’t live without it. Years ago, before the Google-Facebook lockdown on ad revenue was even on the horizon, publishers would argue that Google should pay them. Google would counter that it was driving traffic to news sites, thus increasing the value of advertising on those sites. There was some logic to Google’s argument, though somehow it never worked out in favor of the publishers.
The problem in recent years is that Google acquired a number of advertising businesses and now controls not just search but also the advertising associated with search. Through the use of an automated auction system, the price of digital ads is being driven ever lower, making it all but worthless. As Nicco Mele, a former deputy publisher of the Los Angeles Times, explained several years ago, a full-page weekday ad in the paper that cost $50,000 had given way to Google ads on its website that brought in less than $20 to reach the same number of readers.
“To a large extent, Facebook and Google are sucking up revenue that publishers of content should be receiving,” Mele told an audience at Harvard.
It’s the ever-shrinking value of digital advertising that’s being targeted in the West Virginia lawsuit, brought by HD Media. The small chain owns seven newspapers, most notably the Charleston Gazette-Mail and The Herald-Dispatch of Huntington. Paul Farrell, the lawyer who represents the papers, told the trade magazine Editor & Publisher that Google is leveraging its control of two entirely different businesses in order to monopolize ad revenues and squeeze out anyone else.
“They have completely monetized and commercialized their search engine, and what they’ve also done is create an advertising marketplace in which they represent and profit from the buyers and the sellers, while also owning the exchange,” Farrell was quoted as saying. “Google is the broker for the buyer and gets a commission. Google is the broker for the seller and gets a commission. Google owns, operates and sets the rules for the ad exchange. And they are also in the market themselves.”
So where does Facebook fit in? According to a lawsuit filed by several state attorneys general that was reported by The Wall Street Journal, Google and Facebook are colluding through an agreement that Google has code-named Jedi Blue. The AGs contend that Google provides Facebook with special considerations so that Facebook won’t set up a competing ad network. (Google and Facebook have denied any wrongdoing, and, in the E&P story, Google reiterated that stance with regard to the HD Media suit.)
For Google, it’s a perfect closed environment: It holds a near-monopoly on search and the programmatic advertising system through which most ads show up on news websites. And it has an agreement with Facebook aimed at staving off competition.
As Washington Post media columnist Margaret Sullivan observed, the collapse of advertising is what has led to the closure of more than 2,000 newspapers over the past 16 years — as well as the shrinkage of surviving papers like the Gazette-Mail, which won a Pulitzer Prize for its coverage of the opioid crisis in 2017.
Back when newspapers were manufactured out of dead trees, advertising was responsible for about 80% of revenue. Once they started moving online, that revenue stream was decimated, first by Craigslist, a mostly free service that scooped up nearly all the classified ads, and then by Google and Facebook.
Ironically, Craigslist founder Craig Newmark today directs much of his considerable philanthropy to the news business, and Google and Facebook spend quite a bit on various journalism initiatives as well. But whereas Newmark’s only sin was to build a better mousetrap, Google and Facebook’s dominance has more in common with the robber barons of the Gilded Age. It’s time that someone brought them to heel.
At least some newspapers have come up with a formula for overcoming the digital-advertising debacle. The New York Times, The Washington Post, The Wall Street Journal and, yes, John Henry’s Boston Globe have all reinvented themselves as successful enterprises by reducing their reliance on ads in favor of digital subscriptions.
But it’s far from clear whether that will work for local and most regional papers, and even those that are doing well run the risk of becoming overreliant on one source. A reliable stream of ad revenue, freed from the depredations of Big Tech, would go a long way toward revitalizing journalism.
There’s a difference between rewriting history and making some of it more difficult to find. Which is why I think The Boston Globe is doing the right thing with its “Fresh Start” initiative, more commonly known as the right to be forgotten. The proposal was announced by Globe editor Brian McGrory last July, and is being formally put into effect today. In a Globe story, McGrory says:
It was never our intent to have a short and relatively inconsequential Globe story affect the futures of the ordinary people who might be the subjects. Our sense, given the criminal justice system, is that this has had a disproportionate impact on people of color. The idea behind the program is to start addressing it.
The idea is that the Globe might have reported on some past embarrassment about you — a minor arrest, or an arrest that led to a conviction that was not reported. You can appeal to the Globe to have the story updated or removed from Google search. The story would still exist. It couldn’t be removed from the print edition, obviously, and many libraries still carry newspaper microfilm archives. It wouldn’t even be removed from the Globe’s servers. But no longer would one of your less stellar moments rise to the top of a Google search about you, interfering with employment prospects and other aspects of your life.
In some ways, Fresh Start is similar to Gannett’s move in 2018 to take down mugshot galleries from its newspaper websites, which it extended to the former GateHouse Media sites in 2020 after that chain was merged with Gannett. “Mugshot galleries presented without context may feed into negative stereotypes and, in our editorial judgment, are of limited news value,” the company said in explaining its reasoning.
The Globe’s Fresh Start is a good step because it solves a problem without going too far. It merely restores the situation that prevailed before the internet, when you had to put some work into finding information that had been published about someone. That tended to separate those with a legitimate interest from the voyeurs.
It’s also a better solution than the mandatory right-to-be-forgotten laws in effect in Western Europe, where Google under some circumstances can be ordered to remove information about certain people. The First Amendment would make that impossible in the United States.
Thus it’s up to the media to take voluntary steps. As the Society of Professional Journalists Code of Ethics puts it, “Ethical journalism treats sources, subjects, colleagues and members of the public as human beings deserving of respect.”
More: Arun Rath of GBH Radio (89.7 FM) and I kicked it around on Friday.
It’s one thing for Apple and Google to throw the right-wing Twitter competitor Parler out if its app stores. It’s another thing altogether for Amazon Web Services to deplatform Parler. Yet that’s what will happen by midnight today, according to BuzzFeed.
Parler deserves no sympathy, obviously. The service proudly takes even less responsibility for the garbage its members post than Twitter and Facebook do, and it was one of the places where planning for the insurrectionist riots took place. But Amazon’s actions raise some important free-speech concerns.
Think of the internet as a pyramid. Twitter and Facebook, as well as Google and Apple’s app stores, are at the top of that pyramid — they are commercial enterprises that may govern themselves as they choose. Donald Trump is far from the first person to be thrown off social networks, and Parler isn’t even remotely the first app to be punished.
But Amazon Web Services, or AWS, exists somewhere below the top of the pyramid. It is foundational; its servers are the floor upon which other things are built. AWS isn’t the bottom layer of the pyramid — it is, in its own way, a commercial enterprise. But it has a responsibility to respecting the free-speech rights of its clients that Twitter and Facebook do not.
You may not use, or encourage, promote, facilitate or instruct others to use, the Services or AWS Site for any illegal, harmful, fraudulent, infringing or offensive use, or to transmit, store, display, distribute or otherwise make available content that is illegal, harmful, fraudulent, infringing or offensive.
For AWS to cut off Parler would be like the phone company blocking all calls from a person or organization it deems dangerous. Yet there’s little doubt that Parler violated AWS’s acceptable-use policy. Look for Parler to re-establish itself on an overseas server. Is that what we want?
Meanwhile, Paul Moriarty, a member of the New Jersey State Assembly, wants Comcast to stop carrying Fox News and Newsmax, according to CNN’s “Reliable Sources” newsletter. And CNN’s Oliver Darcy is cheering him on, writing:
Moriarty has a point. We regularly discuss what the Big Tech companies have done to poison the public conversation by providing large platforms to bad-faith actors who lie, mislead, and promote conspiracy theories. But what about TV companies that provide platforms to networks such as Newsmax, One America News — and, yes, Fox News? [Darcy’s boldface]
Again, Comcast and other cable providers are not obligated to carry any particular service. Just recently we received emails from Verizon warning that it might drop WCVB-TV (Channel 5) over a fee dispute. Several years ago, Al Jazeera America was forced to throw in the towel following its unsuccessful efforts to get widespread distribution on cable.
But the power of giant telecom companies to decide what channels will be carried and what will not is immense, and something we ought to be concerned about.
I have no solutions. But I think it’s worth pointing out that AWS’s action against Parler is considerably more ominous than Google’s and Apple’s, and that for elected officials to call on Comcast to drop certain channels is more ominous still.
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To what extent have Google and Facebook destroyed the digital ad model for news organizations? I came across a telling data point the other day from Josh Marshall, the editor and founder of Talking Points Memo, a liberal political site that’s one of the oldest outposts on the web. In an email to subscribers explaining why he’s raising rates, Marshall wrote:
The high watermark of advertising revenue for TPM was in 2014. That year we had a little over $2.5 million in ad revenue and $165,000 in membership revenue. In 2020, we’re on pace for $538,000 in ad revenue and $2.1 million in membership revenue.
What Marshall describes is a successful business venture that has boosted reader revenue by a factor of 13 over the past six years — but that at the same time has seen its ad income plummet to about a fifth of what it was.
Google’s auction system has destroyed the value of digital ads. Meanwhile, more than 90% of all new spending on digital advertising goes to Google and Facebook, which works out nicely for them because of sheer volume and the fact that most of their operations are automated.
It’s great for TPM that it’s been able to induce so many readers to pay. But with more and more publishers asking for subscription money (including all those individual journalists who’ve decamped for Substack), the ceiling is going to be hit fairly soon.
We need a way to bring digital advertising back for news publishers.
Correction: Post updated to fix several math errors.
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