Law could force Google, Facebook to pay for online news

The newspaper industry, which is grappling with a steep decline in advertising revenue in the digital age, is backing proposed legislation that would force Big Tech to pay publishers for their news stories collected online.

The Journalism Competition and Protection Act seeks to level the playing field by allowing local newspapers, broadcasters and other online publishers to collectively negotiate an annual content fee from Google and Meta/Facebook, which will affect the digital advertising market. dominates.

The full text of the Senate bill, released Monday, cites a power imbalance that has benefited Big Tech at the expense of a shrinking newspaper industry, which has lost thousands of publications and thousands of journalists during the new millennium, making local “news “It’s built. Desert” Across America

The proposed legislation would recoup digital revenue and encourage local news publishers to hire more journalists.

“There’s a ton of revenue the platform generates from our content that isn’t paid back to news publishers,” said Danielle Coffey, executive vice president and general counsel for News Media Alliance, a Washington, DC-based newspaper trade organization. “Once we move forward, we will be able to force payments from the platform, which will be transformative for our entire industry.”

A Meta spokesperson declined to comment, while a Google spokesperson did not respond to a request for comment on the proposed legislation.

The bipartisan legislation would cover thousands of local and regional newspapers, including the Chicago Tribune and other Tribune publishing newspapers, which were acquired by hedge fund Alden Global Capital in May 2021 for $633 million. This does not include national publications such as The New York Times, The New York Times. The Washington Post and The Wall Street Journal, which have more successfully navigated the digital transition through increased subscription revenue.

The bill also covers local TV and radio broadcasters that publish original digital news content and meet other eligibility requirements.

Introduced in the House and Senate last year, the Journalism Competition and Protection Act provides a temporary safe harbor from antitrust laws, enabling news outlets to join together to receive payments from the largest online platforms that local publishers share content. collect or distribute.

Sen. Amy Klobuchar said, “Our bipartisan law ensures that media outlets will be able to negotiate in good faith to receive fair compensation from Big Tech companies that profit from their news content, allowing journalists to inform communities. Allows us to continue our important work of keeping.” D-Min, one of the major co-sponsors of the bill, said in a news release.

The online platform must have at least 50 million US-based users and have a net annual sales or market capitalization of more than $550 billion to be included in the bill. According to Insider Intelligence, the current limit will only include Google and Meta/Facebook, which account for almost half of the US$250 billion digital advertising market.

Eligible news publishers must update their content at least weekly, have less than 1,500 full-time employees, and devote at least 25% of their content to matters of current public interest. For-profit publications must generate at least $100,000 in annual revenue from editorial content, while nonprofits are not required to meet that criterion.

According to the News Media Alliance, the bill includes a non-discrimination provision designed to preserve different viewpoints, meaning publications such as Breitbart or Newsmax cannot be singled out based on their conservative viewpoints.

The annual fee will be distributed to all local publishers who participate in the mass talks, with 65% of the allocation based on how much they spend on journalists as a proportion of their overall budget.

“It not only rewards you for the journalists you have, but it also encourages newspapers to hire journalists,” Coffey said.

The law also allows news publishers to seek baseball-style arbitration — an all-or-nothing process that chooses a party’s offer to settle disputes — as negotiation backstops if a comprehensive settlement is not reached. in the form of.

As lawmakers force social media giants to pay to collect local news content, Facebook, which changed its name to Meta in October to reflect ambitions to expand its social media platform into the virtual reality metaverse Done, moving in the opposite direction.

Facebook in 2019 agree to pay the license fee The Wall Street Journal, The New York Times, The Washington Post and the Chicago Tribune, among others, to run its content. But after posting its first year-over-year revenue decline in the second quarter amid weak advertising demand, the company announced last month that it would no longer pay news publishers to collect curated stories.

“A lot has changed since we signed deals three years ago to test bringing additional news links to Facebook News in the US,” a Meta spokesperson said. “Most people don’t come to Facebook for the news, and as a business it doesn’t make sense to invest more in areas that don’t align with user preferences.”

While Google and Facebook expand online audiences for local publishers, two-thirds of news viewers on social media platforms “live within a garden of walls” and never click on the actual source of the stories, allowing newspapers to go digital. The ads scrutinize the pieces, Coffey said.

Newspaper advertising revenue has fallen more than 80% since peaking at $49.4 billion in 2005, falling to $9.6 billion in 2020, according to the most recent data from the Pew Research Center. The modest subscription revenue gain has not offset the decline in ongoing advertising as the industry transitions from print to digital platforms.

According to Pew, digital advertising accounted for 39% of newspaper advertising revenue in 2020, up from 17% in 2011, but newspapers still account for a fraction of the overall digital advertising market.

According to data from Insider Intelligence, US digital advertising spend has grown from $23.6 billion in 2008 to an estimated $248.8 billion this year. Digital advertising spend represents about 72% of total advertising in the US, including TV, radio, newspapers and other traditional media.

According to Insider Intelligence, Google is estimated to generate about $70.1 billion and Meta/Facebook at $55.5 billion, or more than 50% of total US digital advertising spend.

“The reason digital has evolved so extensively is because it’s largely at the expense of traditional formats,” said Max Willens, a senior analyst at Insider Intelligence. “Print continues to slide and slide and slide. The year-over-year decline stopped in double digits, but that’s because there is so little left.”

As advertising revenue continues to decline, newspapers are shrinking and disappearing, creating a void in local coverage.

A study released in June by Northwestern University’s Medill School of Journalism found that newspapers are folding at an average rate of more than two per week, and the country has lost more than a quarter of its newspapers – overall. Around 2,500 – since 2005. This has created the so-called news desert, where 1 in 5 people in the US have limited access to local news.

The study cited “like a grip on digital advertising by Big Tech” as a key factor in the ongoing decline of the local news ecosystem, which includes 150 large metro or regional dailies and 6,227 smaller community dailies or weeklys. .

Local news publishers “lack the market power” to negotiate with Big Tech for advertising dollars, “leaving newsrooms with fewer resources to do their important work,” said co-sponsor Sen. Dick Durbin, D. -Ill., said in the news release.

According to the Medill study, the consolidation of newspapers has accelerated the shuttering of poorly performing publications, while many surviving newspapers have cut staff and circulation amid declining advertising revenue.

According to the study, local newspapers employ approximately 31,000 journalists across the US, a 60% decrease from 2005.

Last week, Gannett, the nation’s largest newspaper chain, began laying off an undisclosed number of employees after reporting an expected 6.9% revenue decline and a loss of $53.7 million in the second quarter. Gannett, based in McLean, Virginia, publishes USA Today and more than 230 other newspapers.

Gannett spokeswoman Lark-Marie Anton said in a statement: “We have been transparent about the need to evolve our operations and cost structure in line with our growth strategy, while also taking prompt action given the challenging economic environment.” Is.”

Anton did not disclose the scope of the layoffs and declined further comment.

In 2016, Gannett launched the . made a series of Unsolicited bids to buy Tribune Publishingwhich was then known as Tronk, before pulling its final offer.

A New York-based hedge fund with a reputation as one of the industry’s most aggressive cost-cutters, Alden became the second-largest newspaper owner in the US after Gannett when it completed its acquisition of Chicago-based Tribune Publishing in May 2021. The hedge fund saddled and implemented the previously debt-free Tribune Publishing with two loans totaling $278 million. newsroom shopping In the Chicago Tribune and other papers.

The Baltimore Sun in Tribune Publishing’s portfolio; The Hartford Courant; Orlando (Florida) Sentinel; South Florida Sun Sentinel; New York Daily News; Capital Gazette in Annapolis, Maryland; Morning Call in Allentown, Pennsylvania; Daily Press in Newport News, Virginia; and Virginian-pilot in Norfolk, Virginia.

Alden also owns MediaNews Group, whose newspapers include the Denver Post, the San Jose (California) Mercury News and the St. Paul (Minnesota) Pioneer Press.

The proposed US Journalism Act follows unprecedented legislation in Australia that passed the News Media Bargaining Code last year to address the “power imbalance” and ensure news media businesses are “considerably remunerated” for the content they create. .

Australian law paid out $200 million to local news organizations from Facebook and Google in its first year, according to research conducted by Professor Bill Greskin of Columbia University’s Graduate School of Journalism in New York.

Coffey said that without similar government intervention in the US, the balance of power with Big Tech would remain the same.

Formerly known as the Newspaper Association of America, the News Media Alliance last month launched an advertising campaign in local and regional newspapers across the US with the message “Don’t Let Big Tech Cancel Local News”, which was billed as a bill. was seeking to build ground support for ,

“This moment is urgent,” said co-sponsoring representative David Chisilin, DR.I. “At a time when journalism has become more important than ever, the press is facing extinction levels. Congress must act.”

Other co-sponsors of the bill are Sen. John Kennedy, R-La., and Reps. Ken Buck, R-Colo., and Jerrold Nadler, D.N.Y.

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