Friday, February 04, 2022

The Wrong Way to Preserve Journalism

Experts Spar At Hearing on Journalism, Tech and Market Power, as Justin Hendrix nicely reports today in Tech Policy Press.

Here is a brief commentary [still in progress] -- on why the proposed "Journalism Competition and Preservation Act of 2021" is harmful law in terms of its effects on journalism, competition, business models, and the essential nature of the Internet. 

This bill provides for a badly designed subsidy, in a way that is the very opposite of enhancing competition or access to information via the Internet, and removes motivation for news publishers to move beyond their failed business models.

There is a case for subsidizing the preservation of news (especially local news), and for limiting the monopoly rents that the platforms extract from advertisers. Until the market can do that on its own, the way to do that is with a tax on platform ad revenues that is used to fund a subsidy for journalism and to support efforts to find better business models so that journalism can sustain itself in the new digital world of abundance.

My work on the FairPay framework suggests how the latter might be accomplished, in ways that few yet understand, as outlined below. But in the meantime a tax + subsidy strategy seems the only viable option.

The problems with this approach

Hendrix links to a statement by multiple public interest organizations on why this is the wrong remedy"

Free Press led a letter signed also by Public Knowledge, Wikimedia and Common Cause, among others, that said the JCPA “may actually hurt local publishers by entrenching existing power relationships between the largest platforms and largest publishers. News giants with the greatest leverage would dominate the negotiations and small outlets with diverse or dissenting voices would be unheard if not hurt.”

He also cites the hearing testimony of  Dan Gainor and Daniel Francis, which make compelling arguments as to why the good intentions of the advocates are misguided.

Joshua Benton at NiemanLab provides an excellent analysis of why “Australia’s latest export is bad media policy, and it’s spreading fast” (see the "third" idea, part way down): 

The base problem here is that these governments are telling the tech giants that their use of their country’s publishers news content has a monetary value that is somehow different from all other content in existence. And that’s the important word here: use.

...You can have a million complaints about these companies — I do! — but at a fundamental level, the ways in which they “use” content are simply inherent to their natures as a search engine and a social platform.

...The core issue is misdirection. Publishers complain about Google and Facebook’s use of their stories — but that’s not what they’re actually angry about. What they’re angry about is that Google and Facebook dominate the digital advertising business — just as they used to dominate the print advertising business. And those are two really different things!

...It’s also why I get cross with media reporters who let sloppy language seep into their stories — like that this is all about setting “a price for news content published on the companies’ platforms.” None of this content is being published on Google and Facebook unless the publishers have specifically asked it to be. It’s being linked to, in the same way everything else in the world is being linked to. And unless you think the very concept of a search engine or a social platform is immoral, linking to things is just a fundamental part of how these things work.

...So tax them. Say you’re going to put a 1.5% tax on the targeted digital advertising revenue of all companies with a market cap over $1 trillion, or annual revenues over $20 billion, or whatever cutoff you want. That would generate billions of dollars a year in a way that doesn’t warp competition or let Google and Facebook use their cash as a tool for targeted PR payoffs.

Better approaches

As for the question of sustainable business models for journalism, my work on FairPay explains why current models based on artificial scarcity and flat-rate pricing fail in the world of digital abundance, where prices should map to highly diverse and variable customer value propositions -- and how more adaptively win-win models based on customer value in an ongoing relationship can change that.

A large body of work on that is cited on my FairPayZone blog, including work with academic co-authors in Harvard Business Review and two scholarly marketing journals. Some notable items are (start with the first):

Of course, getting to this kind of model will take time, experimentation, and learning, which the news publishers have been too distracted, stretched thin, or simply too unimaginative to do. So...

In the meantime, Congress should provide a stop-gap that sustains journalism and helps it move toward being self-sustaining in this new digital world:

  • Tax the ad revenues of the dominant platforms to limit their obscene monopoly profits on advertising and help drive them toward better business models of their own (see Reverse the Biz Model! -- Undo the Faustian Bargain for Ads and Data).
  • Temporarily, use much of that tax revenue to subsidize news -- directly to publishers of quality news, especially local, and to create new public interest publishers much like public radio and television. 
  • For long-term remedy, use a significant portion of that tax revenue to fund experiments in better business models for publishers, and for operational platforms that help them generate direct reader/patron revenue in consumer-value-efficient ways.
Importantly, publishers should not be rewarded for their lack of business model innovation. Subsidies should be narrowly channeled to preserving actual journalism work itself in the short term, as emergency relief, while also supporting business model innovation projects  -- including development of shared Revenue-as-a-Service platforms. (These qualifications on timing in the use of the tax revenue were spurred by a comment from Chris Riley, referring to his post from a year ago, The Great War, Part 3: The Internet vs Journalism.)

This alternative approach would address the symptoms of failed business models for journalism, with none of the damage that would be caused by embracing cartels of businesses that failed to adapt, eliminating "fair use," and destroying the fundamental structure of linking on the Internet that has created so much value for all of us -- even the publishers who downplay the significant promotional value it has created for them.

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