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December 20, 2021
Managing Director Hal Singer Releases New Study on the Power Imbalance between News Publishers and Big Tech
Facebook and Google reframe newspaper articles in rich previews containing headlines, summaries, and photos. They also curate newspaper content alongside advertisements. Newspapers assert that this reframing and curation decreases the likelihood of a user clicking into the article, thereby depriving news publishers of clicks while enriching the dominant tech platforms. Newspapers also assert that the reframing and curation decreases newspaper subscriptions.
A new study by Managing Director Hal Singer finds that allowing current market forces to dictate the newspapers’ “pay shares”—that is, the portion of platform revenues that redounds to newspaper publishers—ensures that newspapers are compensated at rates significantly below competitive levels. This underpayment, according to the study, results in underemployment of journalists and other news employees, as well as host of social ills associated with local news deserts, including less competent local governments, greater spread of partisanship and misinformation, removal of economic stimulus to local economies, and a reduction in the diversity of viewpoints, particularly among minority populations.
The study, which was commissioned by the News Media Alliance, concludes that the best way to correct this market failure is for the government to permit the news publishers (either newspapers alone, or all news publishers) to coordinate in their dealings with the digital platforms over payment terms and conditions, as contemplated in draft legislation known as the Journalism Competition and Preservation Act. The study also suggests that collective bargaining by itself might not be sufficient to achieve competitive payments, in which case some structured bargaining among the parties with an enforcement mechanism would be needed as a backstop.