Rumor has it that the Senate Judiciary Committee is ready to mark up Sen. Amy Klobuchar’s (D-MN) Journalism Competition and Preservation Act (JCPA). The News/Media Alliance expects the law to force tech companies to give local news publishers billions of dollars. Klobuchar and her cosponsors say the legislation would save these publishers from an existential threat (i.e., competition). In reality, the JCPA poses the greater existential threat to local journalism.
Klobuchar and the bill’s cosponsors are correct that traditional local news business models are doomed. Northwestern University’s Local News Initiative reports that “since 2005, the country has lost more than a fourth of its newspapers (2,500) and is on track to lose a third by 2025.” Nearly 95 percent of the papers lost during COVID-19 “were weeklies, serving communities ranging in size from a few hundred people to tens of thousands.” There is rarely a digital or print replacement.
Why are these businesses closing at such a rapid pace? The senators blame Big Tech. This is wrong: As I have explained before, the problems are these businesses’ refusals to provide what their customers want.
Traditional news providers have an advantage over Big Tech, but they aren’t exploiting it. A 2019 Pew Research Center survey found that 62 percent of US adults prefer traditional sources for local news and another 23 percent use these sources’ websites, while only 15 percent prefer news from social media. So the problem isn’t the desirability of the publishers’ content; rather, it’s their refusal to adapt to digital reality. (Although as my AEI colleague Chris Stirewalt points out, news content could be improved considerably.)
This is why the JCPA poses a greater existential threat than Big Tech. Not only does the bill seek to transfer billions of dollars from companies that users and advertisers actively prefer to companies with out-of-date business models; it also conditions the money on recipients adhering to yesteryear’s journalism mold. The legislation would do this in two ways. First, it gives traditional local news publishers immunity from antitrust laws for collectively negotiating with and withholding content from large tech platforms. So by definition, the legislation is anticompetitive, which means that the JCPA is protecting its beneficiaries from competitive pressure.
The second feature of the bill that holds publishers in yesteryear is that, to be eligible for these antitrust exemptions, beneficiaries have to meet specific definitions, all of which are tied to traditional journalism business models. For example, the legislation defines the types of employees the businesses must have and how often the businesses must update content, along with their use of editorial processes, their range of topics, and their delivery methods. More innovative systems using smart contracts for managing independent content and social media sites for organizing people’s observations on local city council and school board meetings; newsmaker websites such as local schools and governments need not apply.
The antitrust exemptions would allow the traditional publishers to collectively negotiate with large platforms about paying for access to the publishers’ content. The negotiations would not be voluntary on the platforms’ part as there would be penalties for holding back. And if the negotiations fail to reach a resolution, there would be forced arbitration, with the rules tilted to favor the old-school news businesses.
The publishers would get to choose from whom they would seek payments. Whether a platform is subject to the legislation depends on platform size, such as having 50 million US-based monthly active users (MAU) or subscribers, being owned or controlled by an entity with US net annual sales or market capitalization greater than $550 billion, or having not fewer than one billion worldwide MAUs. Nonprofit platforms are not included. This would appear to capture Alphabet (parent company of Google), Meta (parent company of Facebook), and Microsoft, but it noticeably misses their large and fast-growing rivals like TikTok and WeChat.
This isn’t to prejudge publisher lawsuits against Meta and Alphabet for possible copyright infringements and anticompetitive conduct in advertising: If the companies have violated laws, they should pay the penalties. But these lawsuits do not solve publishers’ problems of hanging onto once-successful practices that now weigh the companies down.
What should be done? News organizations can significantly improve their content. And they should learn from Alphabet, Amazon, Meta, and Microsoft how to develop successful ecosystems of content, features, and networks. What these publishers should not do is let governments hold them to failing business practices.
(Disclosure statement: Mark Jamison provided consulting for Google in 2012 regarding whether Google should be considered a public utility.)
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