Something’s badly broken in the relationship between news organizations and the monopolistic tech platforms. A U.S. Senate hearing yesterday offers one path to fixing it, but it’s highly controversial.
At the hearing, senators heard testimony about the Journalism Competition and Preservation Act (JCPA). The bill has a fairly modest goal: allow media companies to collude for a set period of time in negotiations with the platforms, thereby giving them significant and much-needed leverage. A similar bill is being considered by the House of Representatives. The intent is to create more balance in the relationship. It would effectively force platforms to pay for content created by news organizations, from which the platforms generate their billions.
The premise shouldn’t be controversial, but it is. Opponents say the market, not government regulation, should dictate the economics. They distrust the concept of collusion and they distrust the motivations of news organizations. They note that the platforms represent an unmatched distribution channel, one that generates significant revenue for news organizations.
But that’s the wrong way to look at it. The lion’s share of the ad revenue generated from content distributed on the platforms goes to the platforms. And current economics tell a decidedly bleak story.
Except for a few national brands, American journalism is withering. News organizations are declining and going out of business across the country. Vast parts of the U.S. are “news deserts” now, with no local journalism at all. Many of the newspapers that survive are “ghost papers,” unable to competently perform the basic functions of local journalism, like covering school boards and elections, and holding government to account.
Meanwhile, the tech platforms are growing at staggering rates. Google and Facebook report record revenue and profit every year. Google, for example, reported revenue of $257 billion for 2021, a 41% increase over the prior year and nearly triple 2016’s $90 billion. In 2009, Google’s revenue was $24 billion, a huge total in its own right, but 10 times less than 2021.
Facebook parent company Meta reported revenue of $117.9 billion for 2021, a 37% increase over the prior year.
It’s hard to accurately aggregate the total revenue of news organizations. This is particularly true of newspapers, magazines and digital media, because most of the companies aren’t publicly traded and don’t report revenue. The associations that used to aggregate member revenue stopped doing that nearly 10 years ago. But it’s a safe bet to say that newspapers and magazines combined -- literally thousands of brands -- don’t hit a combined revenue of $50 billion.
Something has to change. I noticed that in Joe Mandese’s excellent report of a media-industry roundtable he conducted last week, the legendary journalist and entrepreneur Steve Brill said he was “uncomfortable” with the idea of the government regulating content. A lot of smart people feel the same way, which means the JPCA has an uphill climb to make it into law.
I look at it differently. How is requiring the platforms to pay for the content they exploit, from which they make billions, different from radio stations and other commercial entities having to pay to use musicians’ work? There’s a licensing model, a royalty model, out there somewhere that already has significant precedent and should be explored. The alternative can’t be acceptable in a healthy democratic society.