The question of whether Google should pay for news is about to get a lot more complicated. The Wall Street Journal is reporting that news publishers are freaking out over a new search tool powered by artificial intelligence that Google is working on.
The problem is that current Google search protocols drive a lot of traffic to news websites, and that could change. AI-powered search may very well keep users inside Google, thus denying clicks to the originators of the journalism that users are looking for. As an example, here is what The Atlantic believes it’s up against, according to the Journal’s Keach Hagey, Miles Kruppa and Alexandra Bruell:
About 40% of the magazine’s web traffic comes from Google searches, which turn up links that users click on. A task force at the Atlantic modeled what could happen if Google integrated AI into search. It found that 75% of the time, the AI-powered search would likely provide a full answer to a user’s query and the Atlantic’s site would miss out on traffic it otherwise would have gotten.
That 40% figure is typical for news publications. And though Google executives say that they intend to roll out AI search in such a way that journalism will continue to benefit, the Journal story makes it clear that’s nothing more than a vague promise at the moment.
The AI threat comes at a time when much of the media business is pushing for passage of the Journalism Competition and Preservation Act (JCPA), which would require that Google and Facebook come to the bargaining table and reach a deal to compensate news organizations for repurposing their content. It’s a dicey proposition — Facebook has been moving away from news, and as the Journal story shows, publishers are dependent on traffic from Google even as they insist that Google ought to pay them.
Just this week, Brier Dudley of The Seattle Times wrote that the NewsGuild-CWA, the union that represents 26,000 employees at a number of news outlets, now supports the JCPA as the result of a possible tweak to the legislation that would be more explicit about protecting jobs. Brier also touted a recent study that claims the two tech giants should be paying news organizations some $12 billion a year.
Despite some bipartisan support for the JCPA, finding agreement within our dysfunctional Congress may prove impossible. And the rise of AI-based search isn’t going to make passage any easier.
A new study argues that Google and Facebook should be paying U.S. news publishers between $11.9 billion and $13.9 billion a year for the use of their journalism. Of that total, Facebook owes $1.9 billion and Google between $10 billion and $12 billion. That’s a lot of money. By way of comparison, the recently announced Press Forward philanthropic initiative seeks to raise $500 million to support nonprofit local news over the next five years.
An overview of the study, conducted by researchers at the University of Houston, Columbia University and the Brattle Group, an international consulting firm, was published Monday in The Conversation. “Digital platforms benefit from having varied, credible and timely news content provided by publishers,” write two of the four reseachers, Anya Schiffrin and Haaris Mateen. “This enhances user engagement and makes their platform more attractive to advertisers. News publishers benefit by finding an avenue through which they can distribute their content, thereby reaching more readers.”
The study itself, which is based on “game theoretical insights into cooperative bargaining in cases where value is jointly created,” argues that the platforms and news publishers should split the revenue generated by that mutually beneficial relationship on a 50-50 basis rather than allowing the platforms to keep virtually all of it, as is now the case. “We document that Google and Facebook are making payments to publishers around the world that are vastly below our estimates of a ‘fair payment,’” they write.
The study looks at an Australian law passed several years ago that mandated such revenue sharing. The authors also note that the Journalism Competition and Preservation Act, whose principal sponsor is U.S. Sen. Amy Klobuchar, D-Minn., would establish similar payments by forcing the giant platforms to negotiate with publishers for a share of their revenue.
Ben Smith, writing in Semafor, observes that attempts to extract money from the platforms came about because efforts to support news with digital advertising hit a dead end. “The drive to force digital platforms to pay news publishers came after a decade in which publishers chased online ad revenue generated by traffic from social and search platforms — only to find that clicks simply couldn’t underwrite the cost of quality journalism,” according to Smith, who adds: “The new study will be a cudgel for regulators looking to squeeze Meta and (especially) Google.”
The question is whether anything is likely to happen and, more important, if the push for platform revenues is coming too late. The platforms don’t look quite as powerful today as they did a few years ago. Google is currently on trial in a massive antitrust case over its ubiquitous search engine. Moreover, after Canada passed a revenue-sharing law, Facebook simply withdrew all news content, and Google has threatened to do the same.
I’ve long argued that lawsuits filed by news publishers over Google’s ad tech are a more promising route to getting some money out of the platforms. About 200 newspapers are suing Google, claiming that the platform’s control of all aspects of the digital advertising market has driven ad prices through the floor to Google’s benefit. The publishers are also suing Facebook, claiming that Google and Facebook colluded illegally. Separately, Gannett is suing Google, but not Facebook.
The new study takes an interesting look at the extent of the damage that Google and Facebook have caused the news business, but I don’t see how that translates into actual revenues for news — especially with Facebook and Google signaling that they’re willing to walk away from news altogether rather than pay.
The ad-tech cases, on the other hand, are grounded in well-established law banning monopolistic practices that cause harm. Google and Facebook have made it impossible for anyone to extract more than a pittance from digital advertising. That’s fine with the platforms because of their massive scale — but it doesn’t work for news outlets, especially small, local enterprises, because they need more than pennies to pay for quality journalism in their communities.
The U.S. Capitol. Photo (cc) 2013 by Mark Fischer.
I’ve written quite a bit here about the possibility of government assistance for local news. Though it’s not an idea I’m enthusiastic about, I think the indirect assistance laid out in the Local Journalism Sustainability Act is worth trying. The LJSA, which would provide tax credits for subscribers (or donors), advertisers and publishers, died at the end of the last congressional session despite having some bipartisan support.
Now a new, similar measure has surfaced. The Community News and Small Business Support Act would create five years’ worth of tax credits for advertisers and publishers, but not for subscribers. The bill is being sponsored by Rep. Claudia Tenney, R-N.Y., and co-sponsored by Suzan DelBene, D-Wash. The trade publication Editor & Publisher has gone all out in covering the story, and I emailed a few of my thoughts to E&P’s Gretchen Peck.
As I told Peck, the new bill, like the LJSA, is worth supporting for two reasons: the tax credits are indirect enough not to interfere with the independence that news organizations need to hold government to account; and the publishers’ tax credit for hiring and retaining journalists gives even the giant chain owners like Gannett and Alden Global Capital some incentive to do the right thing.
That said, it’s hard to imagine the bill emerging intact from a House that just this week featured Rep. Marjorie Taylor Greene waving around revenge porn starring Hunter Biden and Robert F. Kennedy Jr., indulged by the Republican leadership, denying that he made the antisemitic and racist comments we had all heard him make.
Steven Waldman, president of the Rebuild Local News coalition, has written an op-ed for E&P endorsing the Tenney-DelBene bill and hailing its emphasis on local news outlets and advertisers. “This will directly help the small businesses, many of which had to cut back on their marketing spending because of COVID and then inflation, to get customers in the doors,” Waldman writes. “It makes sense because saving local news should not be about saving journalism jobs per se. It should be about strengthening communities.”
The bill is also far better than the misguided Journalism Competition and Preservation Act, which would extract revenues from Google and Facebook as compensation for the news content they repurpose.
There is no substitute for news entrepreneurs on the ground, for-profit and nonprofit, doing the hard work of building sustainable local news organizations. But a little bit of indirect assistance from the government wouldn’t hurt.
Since early 2021, Google has faced legal challenges over its control of digital advertising. Essentially, the tech giant stands accused of violating antitrust law by controlling all aspects of the ad market. As Paul Farrell, the lawyer for a group of seven newspapers in West Virginia, told Gretchen A. Peck of the trade publication Editor & Publisher:
They [Google] 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. 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.
The suit filed by Farrell on behalf of the West Virginia papers was later joined by about 200 papers and included Facebook, which was accused of colluding with Google in order to receive preferential treatment. Attorneys general in Texas and several other states filed a separate suit, with BuzzFeed News reporting that the CEOs of Google and Facebook “personally signed off on a secret advertising deal.” The Justice Department got involved, and the European Union is suing Google on similar grounds.
On Tuesday, Google’s legal woes grew that much more complicated as Gannett, the country’s largest newspaper chain, filed its own lawsuit against Google in federal district court. Writing in USA Today, Gannett’s flagship publication, chair and CEO Mike Reed accused Google of “monopolization of advertising technology markets and deceptive commercial practices.” He added:
The core of the case and our position is that Google abuses its control over the ad server monopoly to make it increasingly difficult for rival exchanges to run competitive auctions. Further, Google’s exchange rigs its own auctions so Google’s advertisers can buy ad space at bargain prices. That means less investment in online content and fewer ad slots for publishers to sell and advertisers to buy. Google always wins because it takes a growing share of that shrinking pie.
In addition to USA Today, Gannett owns about 200 daily papers and other publications across the country, including local papers such as the Telegram & Gazette of Worcester, The Patriot Ledger of Quincy, the MetroWest Daily News of Framingham and The Providence Journal.
So why did Reed decide to file his own lawsuit rather than joining antitrust efforts that are already under way? It’s a good question, and it’s one that Editor & Publisher’s Mike and Robin Blinder asked him about in their vodcast, “E&P Reports.” Reed’s answer: “You know, as far as us going by ourselves, we just felt like we had the right size, we had the right legal counsel, and we felt like we didn’t want to wait.”
Jeff Jarvis, a well-known digital media observer and director of the Tow-Knight Center for Entrepreneurial Journalism at the City University of New York Graduate School of Journalism, was critical of the Gannett suit, telling E&P:
It is tragic that once-great Gannett is resorting to protectionism and retribution against its competitors rather than have a strategy for innovation and growth in a changed marketplace. There are legitimate questions to be addressed regarding Google’s power in both sides of the advertising market and authorities in both Europe and the U.S. are investigating them. But for Gannett to blame Google’s alleged monopoly for its present troubles is just sad.
But you can disparage Gannett for decimating its newspapers while still supporting legal efforts to hold Google to account. Few media observers have been more critical of Gannett than my What Works partner Ellen Clegg and I. Greed and crushing debt have led the chain to cut its journalistic capacity far more deeply than would have otherwise been necessary. Yet it’s simply a fact that very little digital advertising money has flowed to the news business, and that lack of innovation on the part of the news business is only partly to blame. If news publishers and government investigators are able to show that situation is either partly or wholly the result of illegal practices on the part of Google (and Facebook), then there’s no reason why Gannett shouldn’t be one of the beneficiaries, regardless of the company’s otherwise loathsome behavior.
Moreover, the antitrust route strikes me as far more promising than congressional efforts to force Google and Facebook to pay for the news they repurpose. Last week, the Senate Judiciary Committee passed the Journalism Competition and Preservation Act on a bipartisan 14-7 vote, according to Ted Johnson of Deadline. The JCPA would allow the news business to bargain collectively with Google and Facebook for a share of their revenues. Even if the JCPA passes the full Senate, though, it seems unlikely to prevail in the Republican-controlled House. A similar law in Australia has served mainly to enrich press baron Rupert Murdoch, and there’s no guarantee that the JCPA would bolster journalism at the local level.
Regulating a monopoly often leads to unintended negative consequences. Breaking one up, as Gannett and its numerous co-plaintiffs would like to do, can spark innovation. Local news today is getting by through a combination of paywalls, low-value programmatic ads and — in the nonprofit sector — foundation grants, membership fees and events. Nothing would be more welcome than to see that bolstered by a reinvigorated ad market.
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.
Finally, here are a couple of “What Works” podcasts that will bring you up to speed.
Well, that didn’t take long. Cristiano Lima of The Washington Post reports that the Journalism Competition and Preservation Act (JCPA) has been dropped from the defense-spending bill. I pointed out on Tuesday that there were some real shortcomings to the proposal but thought that, on balance, it was worth giving a try. Since the JCPA got new life earlier this week, though, it’s been subject to a withering attack by everyone from the ACLU a group of United Church of Christ ministers.
I’m going to guess that that’s the last we’re going to hear about the JCPA because House Republicans oppose it, and time is running out for the Democratic majority to push it through. Maybe this will carve out space for a better bill, the Local Journalism Sustainability Act, which would bolster local news by creating temporary tax credits for subscribers, advertisers and publishers. I’m dubious, though, that House Republicans are going to be willing to do anything for the next two years except investigate Hunter Biden and cower before Marjorie Taylor Greene.
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.
Washington Post columnist Perry Bacon Jr. offered a provocative idea today: a $10 billion fund to pay for non-paywalled, nonprofit local news in each of the country’s 435 congressional districts. The money, he wrote, would provide salaries for 87,000 journalists at 1,300 news organizations.
“Such a massive investment in local news isn’t going to happen next week and probably not next year, either,” he wrote. “But it is also not a pipe dream.” Well, in fact, it is a pipe dream. There is little or no chance of anything like this happening, and it probably shouldn’t.
At a time when Congress can’t seem to pass supposedly bipartisan proposals to let the news industry negotiate with Facebook and Google for a share of their advertising revenues (the Journalism Competition and Preservation Act) or to provide tax credits to subscribers, advertiser and publishers (the Local Journalism Sustainability Act), the idea that the government is going to cough up $10 billion to support local news is absurd.
Fortunately, there is an alternative to Bacon’s top-down approach. Across the country, hundreds of local and regional news startups — nonprofits, for-profits and volunteer efforts — are going about the hard work of covering their communities. We’ve seen a plethora of them debut in Eastern Massachusetts just this year since Gannett began regionalizing and closing its weekly newspapers. And a brand-new one, The Concord Bridge, is slated to launch later this week.
The grassroots, one-community-at-a-time approach to solving the local news crisis is not perfect. It can be purely a matter of luck that one town gets good coverage and another doesn’t. It’s also easier to start such projects in the affluent suburbs than it is in more diverse areas. But the movement is growing, so perhaps the best thing we can do is let it develop.
As you probably know, Ellen Clegg and I are writing a book about a few of these projects that will be called “What Works: The Future of Local News.” Last year we wrote what might be called a “pretort” to Bacon’s column in an essay for Nieman Lab. Please have a look.
I don’t do this very often, but there are a number of important stories in local journalism that are flying by, and I want to put down a marker. No need to go into detail — just click on the links to find out more.
California sets aside $25 million in government money to support local journalism.
The move follows the creation of the New Jersey Civic Information Consortium, which this year will distribute $3 million for specific projects such as a plan to expand news coverage across Jersey City; an online radio program in Creole for the Haitian community; and an oral history on efforts to clean up drinking water in Newark.
Unlike New Jersey, the California initiative will be used to pay reporting fellows from the UC Berkeley Graduate School of Journalism to cover under-represented communities.
The Journalism Competition and Preservation Act, which would set aside antitrust law to allow news organizations to bargain collectively with Google and Facebook for compensation, was dealt a huge setback.
U.S. Sen. Ted Cruz, R-Texas, succeeded in adding an amendment that would make it more difficult for news organizations to moderate comments. The lead sponsor of the bill, Sen. Amy Klobuchar, D-Minn., responded by withdrawing the legislation but said she’ll be back.
LION (Local Independent Online News) Publishers and a number of organizations came out in opposition to the proposal, calling it “ill-advised” and “enormously problematic.” A similar law in Australia has been criticized for lining the pockets of large publishers — mainly Rupert Murdoch — while doing little for smaller players.
Google News Showcase, touted as a source of revenue for news outlets whose content would be featured, has been stalled because the giant platform has been unable to reach agreements with several key publishers.
Gannett, the country’s largest newspaper chain, was offered $6 million a year to feature journalism from its flagship USA Today as well as its local papers, according to The Wall Street Journal. Gannett’s reported counter-demand: $300 million.
Speaking of Gannett, a nauseating development has surfaced in a sexual-abuse lawsuit against the company’s Democrat & Chronicle newspaper in Rochester, New York.
According to the independent Rochester Beacon, the company is arguing that seven former newspaper carriers who say they were molested by a supervisor should have filed for workers’ compensation at the time the alleged abuse took place.
The carriers were 11 and 12 years old at the time of the alleged incidents.
