The CEO of several Bay Area news websites says Big Tech platforms like Google are “essential to our existence.”
But the president and COO of the Los Angeles Times says that without Google paying news publishers for their content, “California faces the very real risk of the entire state effectively becoming a news desert.”
Both remarks came at a high-stakes hearing Tuesday of the Senate Judiciary Committee at the UCLA School of Law.
The four-hour informational hearing comes after the Assembly-passed California Journalism Preservation Act heads to a possible Senate vote in 2024 that could force Google, Facebook-parent Meta and others to pay news publishers for the content that appears on their sites.
Some call it a “link tax.”
But today’s situation, said state Sen. Tom Umberg of Orange County at Tuesday’s hearing, is a Hobson’s choice: Should news publishers allow Big Tech to use their content without paying for it? Or should news publishers “opt out” of having their work indexed and thus forgo possible traffic, and income, that comes from people searching for news stories?
Legacy media like the L.A. Times say they can’t go on like this.
Chris Argentieri, the Times’ president, told four members of the Judiciary Committee that his company, employing the most journalists west of Washington, D.C., is burning cash at an unsustainable rate.
“And as we sit here today, Los Angeles, California and the American West are at the risk of losing a great news organization because we have no way of knowing how long we can survive,” he said. “What we can definitively say is that it won’t be long without significant changes.”
And those changes must include legislation like AB 886, he said, noting that Google earns enough advertising revenue in less than three hours than the annual cost of the Times’ newsroom. (It makes about $280 billion a year, and in the quarter ending Sept. 30, Google parent Alphabet reported profits of $19.7 billion.)
“Google’s revenue for a month or two would cover the cost of all working journalists in California,” Argentieri added, “and I raise this not because I begrudge their success. … Large digital platforms like Google and Meta use our content to generate billions of dollars in revenue and do not compensate us for it.”
Google sent its vice president for news. Meta declined to take part in the hearing — despite being asked, Umberg said. But 15 experts in news and Big Tech testified, making the session appear a trial of Google especially.
Google VP Richard Gingras, a white-haired veteran of online news (including as publisher of Salon.com), said people using Google to search for news amounts to under 2% of total queries and its Google News pages “drive billions of interactions with news content globally.”
But news queries very rarely attract the interest of advertisers, he said.
“In fact, we don’t run ads on Google News or on the news results tab on Google search,” Gingras noted. “We only make money [on news content] if ads are useful and relevant and clicked on by the user.”
He likens Google search to being the largest newsstand on Earth, with people getting to view front pages of many newspapers before choosing one paper to buy [via their click], and “Google sends this traffic to publishers for free.”
Sen. Angelique Ashby of Sacramento and others would later challenge that notion.
“Your own analogy would assume that the newsstand received all of the news for free and they don’t have to enter into agreements with The New York Times or whoever to be able to sell that information,” she said. “But it’s actually the reverse, right? The publisher is actually paying the news stand.”
Gingras said a variety of Google tools, and training of half a million journalists, shows how the Silicon Valley-based company aims to lift news publishers.
He mentioned the Google News Initiative and Google News Showcase, seen in 24 countries with more than 2,500 news outlets in the United States (including Times of San Diego) taking part.
Gingras said the GNI recently provided funding to two local nonprofit news outlets — in Oakland and Richmond. “We share the goal of strengthening the news ecosystem in California. However proposals that Institute a link tax like we’ve seen in other jurisdictions will not achieve this goal.”
Those Bay Area sites — Berkeleyside, Oaklandside and soon-to-launch Richmondside — are the babies of Lance Knobel, CEO and co-founder of Cityside Journalism Initiative.
At Tuesday’s hearing, Knobel said: “I know there’s a lot of doom and gloom about local news. … But on the basis of our experience, I’m optimistic about the future if we can continue to rely on an open free internet,” meaning one that’s not taxed.
He closed by saying: “I hope your work helps you find ways to support the journalism that truly matters in California communities and I hope you’ll start by considering how Californians can get the information they need — not by considering what publishers want or need.”
During a short public-comment period, Times of San Diego editor and publisher Chris Jennewein backed up Knobel. In his one-minute remarks, he appealed to lawmakers to protect the internet ecosystem.
“As the Legislature considers bills like AB 886 and similar measures, I hope nothing is done to stifle innovation,” he said. “The growth of independent news publishing is good for readers, good for California and ultimately imperative for democracy.”
The Del Mar resident and former Union-Tribune vice president expanded on his theme in a 970-word written statement.
He said this nearly 10-year-old site makes a small profit thanks to cost savings like no print edition.
“We don’t need big marketing departments and costly circulation drives,” he said. “Microsoft Bing, Facebook, Apple News, X, Google News, NewsBreak, SmartNews and many others all send us traffic. Let’s face it, readers use these same services, and websites can benefit from that.”
He said his former newspaper colleagues sometimes gripe that Google and other Big Tech companies grew large by stealing news and advertising that once flowed to newspapers.
“But that’s just resentment over an industry that failed to innovate,” Jennewein wrote. “Just like horse-and-buggy makers ignored the automobile, and railroads dismissed airplanes, newspapers missed the Internet.”
In a July opinion piece, Jennewein opposed AB 886, which passed the Assembly in June by a vote of 55-6.
“The bill is bad in purely economic terms — it never makes sense to subsidize obsolete industries — and is also supremely ironic because it would tax California-based tech companies to support out-of-state media owners,” he wrote.
Partly echoing Jennewein was Adam Gillitt, publisher of the digital-only Alameda Post.
“Prevent out-of-state publishers and the largest organizations reaping a financial windfall at the disadvantage of the smallest newsrooms,” he said in written comments. “Instead, we encourage you to create solutions that will fund local news for communities throughout the state that will otherwise be deprived.”
(Other speakers — including Regina Brown Wilson of California Black Media, publisher Martha Diaz-Aszkenazy of the San Fernando Valley Sun and Arturo Carmona of the Latino Media Collaborative — made appeals not to leave black and ethnic news outlets out of their consideration.)
Among the panelists taking the side of legacy news operations, including TV stations, was Courtney Radsch, director of the Center for Journalism and Liberty at the Open Markets Institute, who also works as a fellow at the UCLA Institute for Technology, Law and Policy.
“The crisis facing journalism is not a problem of the news industry’s own making or of the internet,” she said. “It is a result of legal regulatory frameworks that privilege tech platforms over the press and give the former unfettered power to set the rules.”
Radsch depicted Big Tech companies as monopolies.
“They own and control the tools and services journalists used to do their jobs, including email, web hosting, cloud services, messaging, archiving the cloud services, especially important to investigative journalism,” she said.
Google and others decide the rules for reaching audiences and shape the business models and editorial strategies, she said.
Big Tech monopolizes the entire digital advertising ecosystem from ad servers to ad exchanges to auctions as well as the app stores where news outlets sell their subscriptions,” Radsch said, adding that “publishers face a coerced choice” on data platforms.
Contrary to wide industry assumptions, she said, Craigslist “did not destroy and co-opt the business model” by rendering “golden goose” classified ad sections of newspapers obsolete.
“Platform monopolies did,” she said. “Our laws and regulations have not caught up with this reality and these tech platforms enjoy unprecedented exemptions from U.S. libel law and anti-discrimination requirements and privacy constraints, which has an impact on media around the world.”
Nor do they pay their fair share of taxes in the countries where they are based, Radsch said, as they “claim unparalleled rights to use copyright protected material like journalism without permission or compensation.”
But Radsch said policymakers around the world are “waking up” to the economic crisis of news and crafting rules to extract payments from Big Tech. She offered a survey of efforts in Canada, Australia, Brazil, the European Union and elsewhere.
“A dozen countries and all EU member states are actively exploring or enacting policies to address fair compensation” of news producers, she said.
A critique of those various policies came from Jonathan McHale, vice president of digital trade with the Computer & Communications Industry Association, also called CCIA. It represents Amazon, Apple, eBay, Intel and Intuit as well as Facebook, Google and X, the former Twitter.
McHale told horror stories of news outlets going bust amid rules requiring platforms to make payments or bargain for them. And released a white paper on the topic.
In Spain, for example, laws had “more dire consequences.”
“Unlike Germany, it made compensation mandatory,” he said, “even if the publishers did not ask for it. It was essentially a compulsory license for news links or what is often called a link tax. Smaller sites most dependent on referral traffic opposed this law” and one shut down at the end of 2014 before the law took effect.
“Other sites followed suit and the results were predictable — news website [traffic had an] overall drop of 6%,” McHale told the committee. “For smaller publishers who are even more dependent on referral traffic, it dropped 14%.”
McHale concluded: “It is unlikely that forced payments are a silver bullet for the deep structural issues surrounding the economics of news production” and also pointed to the “increased media concentration” in Australia as payments flowed mainly to the Murdoch family’s News Corp.
Journalism scholar Radsch accused Google and Meta of trying to buy off news outlets around the world to head off regulation through direct assistance grants, fellowships and special news products “and by scaring smaller publishers with the idea that they’ll lose out on any crumbs of funding that they may have received from the platforms.”
She cited the Google News Initiative.
“These paltry sums not only undervalue news but also make journalists beholden to the benevolence of the tech platforms that they cover,” said Radsch, who also worries about artificial intelligence systems scraping news sites without compensation.
She urges collective bargaining in a regulatory framework “that creates a forum for negotiations to take place and increases the power of local and smaller news outlets. Currently, there is no forum where tech platforms are compelled to negotiate with all outlets” other than Australia.
Small publishers feel as if they are losing out, she said, “and they are right if we acquiesce to how Big Tech has narrowed the discussion to focus on referral traffic amid vast informational asymmetries.”
At the outset, Sen. Umberg acknowledged the complexity of AB 886 and the road ahead.
“I know it’s inconceivable to Californians, but sometimes we do things wrong,” he jokingly said, alluding to the state’s energy crisis in 2000-2001. “So we want to do the best we can to get it right.”
