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Can the Journalism Competition & Preservation Act Really Preserve Local Journalism? Public Knowledge Says “Probably Not.”

June 17, 2021 , , , , ,
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Public Knowledge believes it’s vitally important to protect Americans’ access to trustworthy sources of news. Some of our team can quote from memory the numbers related to news deserts and laid-off reporters in this country. And we are advocating on multiple fronts for policies to sustainably fund newsgathering, mitigate the impact of disinformation on digital platforms, and protect the democratic benefit of a thriving free press. We have a particular passion for the kind of civic journalismmost often provided by local newspapers — that serves to inform communities, create a sense of cohesion, provide a check on corruption and costs, and drive informed civic engagement. We believe the long trend of declining local, independent news is now a national crisis that calls for bold initiatives by policymakers.

One current initiative, the Journalism Competition and Preservation Act (or JCPA, H.R.1735 in the House and S.673 in the Senate) proposes to create a four-year “safe harbor” from antitrust law, allowing print, broadcast, and digital news companies to band together to negotiate compensation terms for their news stories with the largest online platforms. We appreciate that the JCPA’s main sponsors, Representative David Cicilline in the House and Senator Amy Klobuchar in the Senate, are doing so much great work advancing proposals for digital platform accountability, including antitrust enforcement, antitrust reform, and new laws and rules focused on dominant digital platforms.

But the JCPA, unfortunately, is not a proposal we can support in its current form. In addition to the proactive work we are doing to promote other ideas that help preserve journalism, we have been working with other civil society organizations and colleagues on the Hill to address the JCPA’s potential drawbacks. To do so, we draw on Public Knowledge’s 20-year history of public interest advocacy in regard to communications law (including opposition to media mergers and consolidation that may harm consumers and damage competition), antitrust and competition policy, copyright and intellectual property law, and freedom of expression and information. We are concerned the JCPA will entrench existing power relationships and alter the free and open nature of the internet — while doing little to put more reporters on the beat, help the kind of news organizations that represent local journalism’s brightest potential future, or allow news organizations to be compensated fairly for their work.

In this post, I’ll summarize our concerns with the JCPA and note where the bill can — and probably cannot — be fixed.

1. It Could Entrench Existing Power Relationships in Media

As we have noted before, including in Congressional testimony, allowing a news media cartel by statute (as the JCPA explicitly proposes) may actually hurt local publishers by deepening existing power relationships between the largest platforms and largest publishers. News giants with the greatest leverage would dominate the negotiations and small outlets would be unheard if not hurt. Proponents of the bill point to its requirement that negotiations with online content distributors must be nondiscriminatory as to similarly situated news content creators. But that doesn’t change the fact that the larger news outlets stand to grab the lion’s share of any benefits, as they would dominate their side of the negotiations. In fact, the bill may actually encourage further consolidation in the news industry since scale is the primary source of leverage in negotiations. It’s not a coincidence that the largest legacy news organizations, such as News Corp., Gannett, McClatchy, and the LA Times were among the organizations recently traveling to Washington to advocate for the bill.

Since the JCPA was first discussed in 2019, we have been consistent in our view that creating a new statutory antitrust exemption for news content creators is not the way to cure market problems or to improve market conditions. But you don’t have to take our word for it. As others have noted, we’ve been here before. Back in the late 1960’s, when the rise of television served as the existential threat to newspapers, the Newspaper Preservation Act of 1970 provided a special antitrust exemption for geographically co-located newspapers to combine business operations under “joint operating agreements.” It allowed for common advertising and subscription rates across newspapers. And it did little to solve the underlying trends that were already reducing the number of newsrooms across the country. It too had the effect of “insulating politically connected and favored industries” from new competition and innovation — and yet the weaker player in these agreements was usually the first to die.

Can this be fixed? Probably not. The fundamental issue the JCPA is meant to address is one of platform power. Yet it does little to change the power dynamics brought about by the monopolistic nature of the platforms’ core products. There’s a reason federal antitrust laws forbid the formation of cartels and collusion in price-setting: It’s almost always bad for consumers. We believe the platforms’ gatekeeper power over information distribution is what policy should address. We advocate for the full range of tools to reduce that power, including antitrust enforcement, improving the antitrust laws, new laws and rules to promote competition on and against dominant digital platforms, federal privacy legislation, and a dedicated digital regulator with the expertise and agility to regulate the digital platforms.

2. It Could Alter — Including Through Judicial Interpretation — the Free and Open Nature of the Internet

Digital platforms like Google and Facebook do not currently negotiate with news sites for the right to link to their stories, just like regular users don’t need a license to drop a link in a tweet or a Facebook post. That’s because news outlets currently have no legal right to prohibit third parties from linking to their content; linking exists entirely outside the ambit of copyright law. (Any site that doesn’t want its content to be linked to just has to put its content behind a paywall or a login screen.) That is the fundamental, wonderful nature of the internet: It’s built on links, and the fact that you don’t need to ask for permission or negotiate compensation to link to sites has facilitated the free and open flow of information.

It’s true that in Google searches or your Facebook news feed, links are often accompanied by brief excerpts or previews of news stories. Those don’t require permission either, as these sorts of previews, while they do involve copyrighted material, are long-established fair uses of it.

What all this means is that allowing news sites to band together under the JCPA to collectively “negotiate” with platforms still doesn’t give them any rights to restrict links to their content or to the small snippets that accompany those links. In other words, a cartel of news sites is exactly as powerless to prevent Facebook or Google from linking to its members’ content as a small site would be negotiating on its own.

And that leads to our second concern with the JCPA, one that other groups with interest in copyright law share. Some proponents of the bill think that there’s no need to grant news sites a right to prevent their content from being linked — but then it is unclear exactly what leverage news outlets will have in negotiations. Others think that such a new right should be expressly created. This would represent a major shift in copyright law (not to mention the nature of the internet). Still others think the bill implicitly creates a new right that would allow news sites to “withhold” content until or unless they obtain the compensation they seek.

Even if the answer is “none of the above,” courts have a history of interpreting statutes in such a way that allows them to achieve their stated purposes. (This interpretive tool even has a name — “legislative purpose”– and a related “presumption against ineffectiveness.”) Courts also have on occasion interpreted statutes in ways that contradict their legislative history. Because of this, we are concerned that this bill could be interpreted by courts to implicitly change the scope of copyright, expanding the exclusive rights that news publications enjoy in their material beyond what any copyright owner has ever enjoyed. To the extent that this creates a new substantive right to demand that material not be linked to, this is unwise; to the extent that it interferes with fair use rights, particularly of the rights of users of platforms, it is unconstitutional and violates our international obligations. All of these outcomes would alter the nature of the internet and make it more costly and more difficult to access information.

Can this be fixed? Maybe. We’ve suggested that Congress incorporate a savings clause in the JCPA that explains that copyright protections are not being expanded by the law to include linking, or fair use snippets of linked material. If a change in rights pertaining to copyright or intellectual property isn’t being contemplated, there should be no issues with the insertion of such a clause. It’s also crucial to make sure that this new idea for a right to compensation for linking is not explicitly added to the language of this bill or a future bill. By doing so we can help preserve the open and free nature of information on the internet.

3. It May Not Help the Kind of News We Need Most

The JCPA has no requirements and provides no guarantees that the funds gained through collective bargaining will be used to hire or retain journalists. It would be fair game — at least as far as the law is concerned — for news organizations to use the funds to pad profits, pay down debt, or reward shareholders. Financially-motivated owners, such as venture capital firms, hedge funds, and news conglomerates, would be the most likely to do so since they may have reached the end of their ability to cut costs after years of closures and layoffs coupled with acquisitions and debt accumulation.

The original definition of “news content creator” in the JCPA bore a striking resemblance to the “membership eligibility” page of the News Media Alliance website. It now covers any print, broadcast, or digital news organization “marketed through subscriptions, advertising, or sponsorship,” and that meets very broad parameters for the creation and distribution of news. Yet most experts believe that the brightest future for civic journalism lies in non-commercial business models such as community ownership, non-profits, and philanthropy. In our reading of the bill, these are outside the scope of the JCPA, so they would receive no antitrust immunity and no benefits.

It’s also troubling that the JCPA actually deepens news organizations’ dependence on platforms. Most of what we know about gaps in the platforms’ content moderation practices, the risk of bias in their algorithms, and their employment practices have come from investigative journalists. Will we get the next investigative exposé if it will endanger the paychecks of the journalists conducting the investigation? Further tying together the fortunes of newsrooms and publishers with those of Google and Facebook may actually be counterproductive. Their “charitable” contributions to journalism already make Facebook and Google the largest benefactors of journalism in this country, and they do so with little transparency. Worst case, the JCPA deters addressing the need for actual regulatory reform to support local journalism.

Can this be fixed? Maybe. We suggest that Congress include language that defines the allowable uses of funds obtained through negotiation, specifically precluding transfer to other financial or legal entities, use of the funds to conduct financial transactions (including debt payments), or allocating them to shareholders. We also suggest that Congress, at a minimum, include language to expand eligibility from “commercial” news organizations to encompass other business models, such as non-profit, cooperative, public- or community-funded, membership, or a non-profit relying on a donor-funded business model. We would also like to see language that preferences smaller, local, or civic news organizations and those owned by people of color or focused on communities of color; excludes eligibility from news organizations owned by conglomerates, venture capitalists, or hedge funds; or establishes a size limit for news organizations able to bargain collectively. Lastly, we have proposed language that news organizations must adhere to recognized industry standards and codes for editorial integrity and independence.

4. Even Together, News Organizations May Not Be Compensated for the True Value of Their Work

Alone, this bill will likely not succeed at getting large payments from Big Tech to large media companies. That is, allowing collective bargaining for compensation will not solve for the fundamentally different views of the financial value of news between publishers and platforms.

To illustrate the divide: in 2018 News Media Alliance published a study that claimed that Google has increasingly relied on news to drive consumer engagement with its products. NMA claimed the amount of news in Google search results ranges from 16 to 40 percent, and that the platform received an estimated $4.7 billion in revenue in 2018 from crawling and scraping news publishers’ content. (This estimate was later refuted due to methodological issues.) Conversely, in discussing a proposal for an Australian bargaining code (more on that later), Google said that the direct economic value Google gets from news content in search is “very small” since they don’t run ads on Google News or the news results tab on Google Search. They said the indirect economic value Google gets from news in search is “also very small,” with news-related queries accounting for just over 1 percent of total queries on Google Search in the last year.

More recently, the National Association of Broadcasters commissioned a study that estimated the “value that local broadcasters create for tech platforms” but are not able to monetize themselves as equal to over $1.8 billion. Facebook’s News Feed alone was estimated to create almost $500 million in lost value for broadcasters. Conversely, Facebook has said the business gain from news is minimal and that news makes up less than 4 percent of the content people see in their News Feed.

In both situations, it’s hard to know which side is correct. But Facebook and Google can continue to say they don’t experience significant financial harm when they do not provide access to news, and they may choose to go that route instead.

Can this be fixed? Probably not. It may be impossible to agree on the value of news among diverse news organizations and then with digital platforms. What we at Public Knowledge can and do agree on is the collective value of news in a democracy, and that is why we favor a public interest approach to solving the news crisis in America. Such an approach recognizes that journalism is an important public good, that there is a market failure in the provision of that good, and that we should place obligations on those most capable to correct this market failure — dominant digital platforms — by supporting local news production.

5. It May Be Hard to Police…and Hard to End

Past efforts of this nature in the media industry prove it will be very difficult to police the actual behavior of those participating in the collective bargaining, or to ensure the intended outcomes are achieved. Although the bill includes a sunset date, it may be hard to actually move on when the four years lapse. If there is some extraction of value from platforms to publishers, even for only the largest players, the News Media Alliance, National Association of Broadcasters, and others will certainly try to extend it.

Can this be fixed? Maybe. We suggest that, at a minimum, Congress include a reporting requirement in the bill, in which the Federal Trade Commission will submit to the Judiciary Committee of the House and Senate a report on the impact of the legislation. The report would include assessments of the impact of the statute on news content creators, competition, and consolidation, and require evidence that payments negotiated have been invested in creation of news content. The bill could also include an oversight function and require transparency on the outcome of each negotiation. This would not fix the problems, but it would give Congress some basis on which to assess the merits of an extension.

Wait, What About Those Rave Reviews From Australia?

Earlier this year, the Australian Parliament also passed a law which requires “designated” digital platforms to negotiate with news organizations, either individually or collectively. We’ve started to see claims of victory over the platforms by Australian authorities and glowing reports from news organizations on how the funds they negotiated will be used to fill gaps in coverage in small Australian communities. All of this has led to a spate of opinion pieces by editors of US-based news organizations, claiming that the JCPA can help achieve similar ends in the US.

To which we say: not so fast. There are some material differences between the Australian law and the JCPA (not to mention other aspects of the news industry and national law in the two countries). But none of them really matter, because due to a last-minute amendment to the Australian law, the platforms have been able to avoid being “designated” as subject to the law at all. So currently, the Australian law designed to correct for power imbalances between digital platforms and news organizations pertains to…no one.

Instead, Google and Facebook have cut deals with the largest Australian media organizations to license content for News Showcase, a non-revenue-producing sidebar of Google, and Facebook News, a low-traffic curated product consisting of stories from selected publishers. By making what the last-minute amendment refers to as “a significant contribution to the sustainability of the Australian news industry,” the platforms have been able to avoid being designated as subject to the law. As such, the Australian law does literally nothing to change the monopolistic nature of the platforms’ core products: Google’s search and advertising technology and Facebook’s news feed. And proving our point about power relationships, Google has acknowledged its payment structure for News Showcase favors large publishers over local publishers with smaller audiences. Smaller publishers have already complained to regulators they are not being remunerated fairly by Google or Facebook, and regulators have agreed small publishers have found the platforms “difficult to deal with.”

(For more on the bargaining code in Australia, and related developments between the digital platforms and the French Competition Authority under the European Union’s Copyright Directive on digital copyright, see our previous blog post. Germany’s competition authority has also initiated a proceeding to determine if the Google News Showcase allows self-preferencing or closes out certain publishers, which you can see here.)

It’s understandable that in an environment of bipartisan antipathy to Big Tech, there would be momentum for proposals that seek to address the problem of its power over our national discourse. But the JCPA will likely not have its asserted effect: Ensuring that citizens have access to local, credible, independent news.


About Lisa Macpherson

Lisa is a Senior Policy Fellow, focused on countering misinformation on the internet and developing alternative business models for local journalism. Prior to Public Knowledge, Lisa was a consumer marketing executive at Fisher-Price, Timberland, Hallmark, and Custom Ink, and an independent marketing consultant at Pernod Ricard. Her experience driving digital marketing transformation on behalf of brands led to concerns over the broader impacts of digital technology on individual well being, civil society, journalism, and democracy. She applied to the Advanced Leadership Initiative at Harvard University, where she is now a Senior Fellow studying how to mitigate the negative externalities of digital technology. Lisa is a current or past member of the Association of National Advertisers, Marketing 50 (M50), and the Marketing Leadership Council of the Conference Board, and a founding member of the Council of CMOs of the Conference Board. In 2017 she was selected as one of the D.C. Techweek 100, which recognizes excellence in technology and entrepreneurship in the DC area. Lisa received her B.A. from Colgate University and her M.B.A. from the State University of New York at Buffalo. She was raised near Boston, MA, and loves to travel, read, cook, and spend time with her daughter, Kelsey.