By Tirzah Duren, American Consumer Institute
Nostalgia for small-town printed newspapers might be heartwarming, but it doesn’t make good policy. Unfortunately, legislation seeking to prolong a snapshot in time is gaining traction. The California Assembly passed legislation and the Senate Judiciary Committee is scheduled to markup a bill this Thursday, that if enacted could provoke a business response that could ultimately limit the reach of the local press. Rather than prop up failing business models, lawmakers should look to the past to realize that news has been in a constant state of evolution, and today is no different. California should serve as a warning to those hoping to pass similar journalism legislation at the federal level.
The California Journalism Preservation Act (CJPA), would require covered platforms to pay “usage fees” to digital journalism providers as compensation for using their news content. The payment amount would be determined through arbitration with a news provider representative.
In response to the proposed legislation, Meta stated that if passed it would pull news content from Facebook and Instagram. Meta has made similar claims regarding Federal and Australian legislation. Although it is worth noting that Meta currently offers Australian news content following the temporary ban.
The CPJA is not the first piece of legislation that seeks to protect local journalism through forced payments by large platforms. Federally, reintroduction of the Journalism Competition and Preservation Act (JCPA) would allow some new organizations to enter joint negotiations with other news organizations as long as they were negotiating with large platforms.
Effectively this would mean legalizing collusive behavior. Section 5 of the JCPA creates a legal carveout for the prescribed joint negotiations from existing antitrust laws.
Both the text of the CJPA and the JCPA claim that journalism is essential to maintaining democracy and bemoan the recent market disruptions within the industry. However, the journalism industry has changed throughout history and the recent pivot cannot be made easier with legislation.
The California bill specifically references the year 1827 and the context that led to the creation of an African-American press which created a platform for marginalized voices. While historically, journalism has helped give voice to important causes it is a mistake to believe that the press lawmakers are attempting to protect today is the same as the press in the 19thcentury.
From circulated pamphlets to papers hanging on a post in a tavern, where the common use of the phrase post in newspaper titles is derived, journalism has shifted many times before and will continue to shift into the future. In fact, a 2005 article on the history of journalism criticized the model based on advertising due to what was perceived as a loss of a “public service mission.” This is the model that is failing to compete in digital space.
A major problem facing newspapers is that their traditional business model which was reliant on advertising revenue hasn’t been able to adapt to online forums. Digital advertising can better target potential customers which impacts newspapers’ bottom line. The California legislation cites as part of its justification for intervention a decline in advertising revenue and newsroom staff over the last 10 years. This trend was exacerbated by the COVID-19 pandemic, with over 360 U.S. newspapers closing between late 2019 and the end of May 2022. Recent closures can make the decline of the industry seem more urgent than it is.
However, rather than social media being responsible for the demise of journalism, the platforms can help extend its reach. While rates vary by site, as of 2021 67 percent of Americans got at least some of their news from social media, with Facebook being the most popular of these sites. If Meta makes good on its promise to eliminate news from its feed, this will reduce the reach of news and undermine its ability to attract potential advertisers even more.
While well intentioned, neither the CJPA nor the JPCA addresses the core problem facing small newspapers across the country. Forcing companies to share advertising revenues does nothing to encourage news sources to innovate and find a way to be successful and profitable in a new economy. State and federal lawmakers should learn from the risks California is facing and avoid attempts to use public policy to benefit specific industries.
Tirzah Duren is a policy analyst at the American Consumer Institute, a nonprofit educational and research organization. You can follow her on Twitter @ConsumerPal.