A news cartel won’t save local journalism, but might just break the internet
Over the last decade or more, there has been an increasingly bipartisan concern about the decline of local journalism, with a frequent refrain being that small newspapers are the victims of ad revenues and eyeballs moving to large online platforms like Facebook and Google. Protecting local journalism may be a worthy and sympathetic cause, but the causes of atrophy in that industry are not as simple as “Big Tech is killing your local paper,” and defy simple solutions.
Enter the Journalism Competition and Preservation Act (JCPA), S. 673 and H.R. 1735, a bill that would grant news organizations a temporary safe harbor from antitrust laws, effectively licensing them to form a cartel to bargain against social media companies collectively. This cartel may target “online content distributors” worth $550 billion and that have 1 billion monthly active users, which for the moment narrows its scope to Meta (Facebook and Instagram) and Google, including YouTube.
Media giants, not local journalists, will reap the JCPA’s rewards
The bill’s sponsors tout benefits that would accrue especially to small, local newspapers, whose readership and revenues have indeed suffered in part from the migration of its audience to internet sources. Protecting local journalism is both a sympathetic and worthy cause, but the JCPA would likely empower large news conglomerates at the expense of smaller outlets.
As some have noted, industry cartels are banned per se by antitrust law “because there is little to no redeeming social value from allowing competitors to jointly set the terms of trade in a market.” And it would not be the little local journalists setting the terms of these joint negotiations—the JCPA applies to any qualified online news publication or broadcaster, meaning that industry titans like News Corporation, Hearst and The New York Times would be in the driver’s seat.
One reported change proposed to the bill would limit participation in the cartel to new companies with fewer than 1,500 full-time employees. However, consolidation within the news industry means that a huge number of local outlets are owned by large news conglomerates like McLatchy, NewsCorp and Gannett, so it would still be the big players running the show. Ironically, an employee cap could also incentivize companies that are slightly over that mark to lay off staff in order to not miss their seat at the bargaining table.
Letting media companies form a cartel in the name of protecting small outlets has been tried before: the Newspaper Preservation Act was passed into law in 1970 because television networks were cutting into print media’s bottom line. As the precipitous decline of local newspapers in the decades since makes clear, that legislation didn’t work, and in some cases may have discouraged efficiency-creating consolidations that would have helped local print media compete. Creating a law to prop up a declining industry doesn’t magically create new consumer demand.
Creative Destruction and Rent-Seeking
Ultimately, shielding these news companies from competition and subsidizing them via siphoned profits from big tech may merely temporarily immunize the industry from having to make tough decisions about how to adapt to the internet and their customers’ changing preferences. In keeping with many of the other anti-tech antitrust proposals that have been floated these last several years, the benefit for rent-seeking competitors is apparent while the gain to actual consumers is unclear.
Creative destruction is a natural and important feature in a dynamic, innovative economy; at times, entire industries that were once thriving are displaced by advances in technology. All too frequently, members of a legacy industry who find their business models being made obsolete by technological progress look to the government to bail them out, or to at least handicap their rivals.
Importantly, the definition of who may join the news cartel excludes the new generation of independent journalists, bloggers, podcasters and other creators who produce news content outside of the employment of traditional, credentialed media outlets. For better or for worse, declining trust in legacy media has led many, particularly younger internet users, to seek voices outside the mainstream outlets, but credential bias would cut them out of any benefits the cartel manages to secure for its members.
JCPA Threatens to Expand Copyright, Enable a Link Tax
The most alarming aspect of the JCPA is its potential to create, as the Electronic Frontier Foundation (EFF) worries, “a new quasi-copyright law for linking.” This is because, in allowing news organizations to “collectively withhold content from” online platforms, the bills seems to assume that there is a sort of property ownership over linked content. This flies in the face of the basic ethos of the internet, which depends on the ability to link to content freely. Content creators can of course require users to pay and/or subscribe in order to actually read an article or watch a video, but what the JCPA could allow— intentionally or not—is a de facto link tax.
As Public Knowledge has repeatedly warned, the largest proponents for JCPA have not been shy about their desire to expand copyright in a way that allows content creators to charge for linking to their sites. Though the JCPA does not address copyright directly, it could empower the news corporations to seek an expanded copyright authority in court, since the negotiating power that the JCPA grants to the news cartel would be toothless without some legal ability to actually withhold their content.
Not coincidentally, a group of senators—including the JCPA’s sponsor, Sen. Amy Klobuchar (D-Minn.)— sent an inquiry to the U.S. Copyright Office for a study on European efforts to create “ancillary copyright protections” that force “platform aggregators” to pay for linking to outside content. The director of the Copyright Office strongly recommended against that approach, noting that it was “unnecessary,” “would likely be ineffective” and could run afoul of the First Amendment. Concerns about the impact the JCPA might have on copyright could easily be allayed by including a simple clause in the bill affirming that it is not intended to affect copyright protections, but such a clause has not been included in any revised drafts of the bill that have been reported thus far.
Another change reportedly proposed to the bill would ban Google and Facebook from discriminating or retaliating against any outlet in the cartel, essentially creating a “must-carry” requirement that would almost certainly be a violation of the First Amendment.
Even if the idea of hyperlink ownership was not entirely antithetical to a free internet, functionally a link tax would once again help the larger news conglomerates and not local outlets, as has been the case in other countries. Indeed, the compliance costs and direct revenue hit from a news link tax may incentivize platforms to get out of the business of hosting news content entirely—a direction Facebook is already heading.
The JCPA is a politically tempting bill in that it features a sympathetic protagonist in local news outlets, at the expense of everyone’s favorite enemy-of-the-moment: Big Tech. Unfortunately, what lies underneath this Robin Hood story is a classic tale of rent-seeking legacy industries looking to use the government to profit from their rivals’ disruptive innovation. In the process, the bill threatens to undermine a concept central to a free and open internet—the ability to link freely to publicly available content.
The decline of local journalism is a real problem worth addressing, but for those looking for a solution, the JCPA isn’t it.