Government ideas to help ease the local news crisis may be fizzling out

Photo (cc) 2007 by weirdisnothing

Less than a year ago, it looked like the federal government might be ready to pass legislation aimed at addressing the local news crisis. The ideas in play were far from perfect, but they might have provided some needed assistance, at least for the short term. Now those proposals appear to be all but dead.

Rick Edmonds, who analyzes the news business for Poynter, wrote recently that the Local Journalism Sustainability Act, or LJSA, seems likely to fall victim to Washington’s dysfunctional political environment.

The LJSA would create three tax credits for a period of five years. One would allow news consumers to write off the cost of subscriptions on their taxes. Another would be aimed at businesses that advertise in local news outlets, and a third would subsidize publishers who hire or retain journalists.

Late last year, though, the credit for publishers was broken off and added to the Build Back Better bill, which died because of intransigence on the part of all 50 Republicans plus Democratic Sen. Joe Manchin. As Edmonds observes, the LJSA could be revived and considered as a discrete piece of legislation. But, he writes, “separate breakout legislation would need to go through committees and get 60 votes. A subsidy for journalism is probably not so popular as to command those 10 added votes.”

Meanwhile, another Democratic senator, Amy Klobuchar, is pushing a bill that would allow the news business to bargain with Facebook and Google to share some of their ad revenues. That bill, dubbed the Journalism Competition and Preservation Act, or JCPA, is modeled after a law adopted in Australia. But the JCPA may also be dead on arrival, Edmonds reports, as Republican Sen. Mike Lee has trashed it by saying that “the last thing we should do is to accept a cartel — or create one — colluding against a business partner.”

Yet a third bill sponsored by Democratic Rep. Mark DeSaulnier may prove less controversial. The DeSaulnier legislation would make it easier for a for-profit news organization to convert to nonprofit status, something that is currently not covered by the IRS code. But given that the IRS has shown quite a bit of willingness to approve such conversions in recent years, the effect of that particular proposal may be minimal. (Disclosure: I had a hand in drafting the DeSaulnier legislation.)

As I said, these proposals are problematic. The LJSA would reward corporate chain owners along with independent operators, thus subsidizing a model that has failed to provide communities with news and information they need. In Australia, the revenue-sharing scheme with Google and Facebook has mainly served to further enrich Rupert Murdoch.

There is no substitute for innovation and passion at the local level. Still, given the dire straits in which local news finds itself, a helping hand from the government would be welcome. Sadly, it doesn’t look like it’s going to happen.

Getting to the Crux of the matter with a Catholic news project that began at The Boston Globe

John Allen

Inés San Martín and John Allen join the “What Works” podcast to discuss the founding of Crux, a digital site that covers all things Catholic, and the “corporate resurrection” that took place three days after The Boston Globe shut it down.

Crux quickly partnered with the Knights of Columbus, a Catholic service organization, and now is a hybrid business model combining nonprofit support, crowd-funding and advertising. That means Crux has much in common with digital local news startups.

Inés San Martín

In our weekly Quick Takes, Ellen shares an update on a high-impact investigative project by Sahan Journal, and Dan discusses the Journalism Competition and Preservation Act, which has bipartisan support on Capitol Hill but is not a perfect solution to the local news crisis.

You can listen to our conversation here and subscribe through your favorite podcast app — as long as it isn’t Spotify. Like a number of musicians and podcasters, we’ve pulled our content from the service out of concern over vaccine disinformation being promulgated by Spotify podcast host Joe Rogan.

Help local news? Sure. Force Google and Facebook to pay? Probably not.

Sen. Amy Klobuchar meets a fan in Iowa. Photo (cc) 2019 by Gage Skidmore.

For years now, news executives have been complaining bitterly that Google and Facebook repurpose their journalism without paying for it. Now it looks like they might have an opportunity to do something about it.

Earlier this week a Senate subcommittee chaired by Sen. Amy Klobuchar, D-Minn., heard testimony about the Journalism Competition and Preservation Act (JCPA), sponsored by her and Sen. John Kennedy, R-La. The bill would allow representatives of the news business to bargain collectively over a compensation package with Google and Facebook without running afoul of antitrust laws. If they fall short, an arbitrator would impose a settlement.

“These big tech companies are not friends to journalism,” said Klobuchar, according to an account of the hearing by Gretchen Peck of the trade magazine Editor & Publisher. “They are raking in ad dollars while taking news content, feeding it to their users, and refusing to offer fair compensation.”

There’s no question that the local news ecosystem has fallen apart, and that technology has a lot to do with it. (So do the pernicious effects of corporate and hedge-fund ownership, which has imposed cost-cutting that goes far beyond what’s necessary to run a sustainable business.) But is the JCPA the best way to go about it?

The tech giants themselves have been claiming for years that they provide value to news organizations by sending traffic their way. True, except that the revenues brought in by digital advertising have plummeted over the past two decades. A lawsuit brought by newspaper publishers argues that the reason is Google’s illegal monopoly over digital advertising, cemented by a secret deal with Facebook not to compete.

Though Google and Facebook deny any wrongdoing, the lawsuit strikes me as a more promising strategy than the JCPA, which raises some serious questions about who would benefit. A similar law in Australia has mainly served to further enrich Rupert Murdoch.

Writing at Nieman Lab, Joshua Benton argues, among other things, that simply taxing the technology companies and using the money to fund tax subsidies for local news would be a better solution. Benton cites one provision of the Build Back Better legislation — a payroll tax deduction for hiring and retaining journalists.

In fact, though, the payroll provision is just one of three tax credits included in the Local Journalism Sustainability Act; the others would reward subscribers and advertisers. I have some reservations about using tax credits in a way that would indiscriminately reward hedge-fund owners along with independent operators. But I do think it’s worth a try.

Even though local news needs a lot of help, probably in the form of some public assistance, it strikes me that the Klobuchar-Kennedy proposal is the least attractive of the options now on the table.