California legislators have amended a bill written by newspaper lobbyists — and made it worse. New York has enacted a law pushed by newspapers to give tax dollars to newspapers — excluding some broadcasters and the true future of news: digital and not-for-profit newsrooms. And Canada further demonstrates what a disaster its newspaper lobbyists have caused with a law that drove news off Facebook and Instagram.
The newspaper industry in both countries is in great measure controlled by hedge funds. The only investment they make is in lobbyists to write protectionist legislation. The publishers blame technology for their own failures, seek payoffs for themselves, and threaten to expand copyright and diminish fair use to the detriment of internet freedoms.
The field of journalism is a disaster from top (The New York Times and day-by-day The Washington Post) to bottom (Gannett, Media News Group, Sinclair). I will leave that lament for another day. Now I want to look at the latest in the legislation and its perils.
California’s tax on reading
The California Journalism Preservation Act — which I dissect in detail in a paper I was commissioned to research for the state Chamber of Commerce — has been amended. It is no longer an explicit link tax.
The bill demands payments from platforms for “accessing” news content online. That is a tax on reading. That is noxious to the Constitution and to an enlightened society.
It requires platforms to negotiate — though it’s not clear with whom — or submit to arbitration, paying a fee — with no cap — to “journalism providers” (undefined) based on number of journalists (including freelancers).
The bill now exempts only one technology company from its reading tax: any platform that earns at least half its revenue from “the manufacturing and sales of company-branded devices and hardware to consumers.” Guess who. That demonstrates that Apple has even better lobbyists than the newspaper industry.
Most of my problems with the bill remain: It still supports newspapers owned by hedge funds and national broadcasting companies. It still ends up supporting many out-of-state and national companies that have someone in California. It has another constitutionally troubling clause forbidding platforms from “retaliating” against news companies with whom they do not forge agreements by no longer linking to or changing ranking or placement of their content. That is a clear violation of the Copyright Act and Supremacy Clause and of the First Amendment. Compelled speech is not free speech. (This law would be locked in the courts for years.) Further, the bill sets no standards for what qualifies as journalism (though we would not want government to define that), opening the door to supporting pink slime and propaganda. Finally, there is no accountability.
Last week, I went to Sacramento — brought there by the Chamber — and spoke with legislative aides in the offices of members of the Senate Judiciary Committee, which will hold a hearing on the bill on June 25. (I might testify.) I’d never done such a thing and it was a fascinating and heartening exercise in democracy. Their doors were open and they were all ready to listen. I gave them my paper and in conversation presented them with a nightmare scenario and with alternatives.
The nightmare is being endured in Canada, where passage of Bill C-18 led to Meta pulling news off Facebook and Instagram and ending all support for journalism while Google agreed to pay $73 million (US) but ended other support. (More on this below.) My fear for California is that Meta will follow through on the same vow there, banishing news, and that Google will kill its voluntary Google News Initiative (GNI), taking down a number of valued programs it supports. At the ISOJ conference in Austin a few weeks ago, I heard the editor of a major newspaper from California talk about what a good and useful funder GNI has been.
In an L.A. Times report, I was relieved to see Sen. Tom Umberg, chair of the Judiciary Committee, take these concerns to heart. “I believe that we could screw up so that we make it so expensive that the platforms don’t carry [journalism] content,” he said. “That would be catastrophic.” Indeed.
As an alternative, I suggested that the legislators look to something like New Jersey’s Civic Information Consortium — which distributes grants based on its goals and the quality of proposals, requiring accountability, instead of automatically doling out money to hedge funds’ and conglomerates’ P&Ls via newsrooms on the basis of say, number of employees. The Consortium’s fund is managed by a board appointed by top public universities and the legislature on a bipartisan basis. Such a fund could underwrite initiatives like a California version of Montclair State’s NJ News Commons, which provides support and training for local news proprietors; projects like KQED’s quality news sharing network; efforts to bring coverage to undercovered communities, addressing a long history of inequity in media; and perhaps investment in startups like Lookout Santa Cruz (winner of a Pulitzer Prize this year). Such a fund could also require accountability.
In Canada and Australia before it, legislation aimed at the platforms did not end up taking effect. Google (in both countries) and Meta (in Australia) voluntarily contributed to news and thus earned exemptions from the laws. Unfortunately, I don’t yet see such an opportunity in California. Google has made an offer involving contributions of unused R&D tax credits, a large contribution to a fund, and help raising further contributions from other tech companies, which could add up to well more than $100 million a year. I hope that legislators will look seriously at what this could accomplish. I also hope they will try to foster collaboration rather than divorce for journalists and technologists — especially now, with the advent of AI. If anyone should enable such cooperation, surely it should be California, headquarters state of the internet.
If such agreement could be reached, legislators may take credit for using their bills as forcing mechanisms to bring tech companies to the table. And what about the newspaper lobbyists? As I told folks in the capitol, the old newspapers no longer set the public agenda. Hell, the once-mightly L.A. Times has a digital market penetration under five percent in L.A. County. Media News Group’s and Gannett’s papers are so thin you could shave with them. They don’t matter anymore. Politicians no longer need fear those who buy ink by the barrel as they now buy it by the pint. In fact, if you really want to tax the people who have ruined newspapers in the state, tax the hedge funds.
New York’s retrograde law
Meanwhile in New York, the legislature at the last minute passed a bill to provide tax money for job credits for journalists in the state. It is a disaster. The law specifies paying only print — yes print — newspapers and some broadcasters. Welcome to 1986. The legislation thus explicitly excludes digital outlets and not-for-profits. According to one account, it was the governor’s office that dictated this exclusion in the last-minute rush to get the bill passed without public comment.
The bill did, to its credit, specifically exclude publicly traded companies from receiving money — which should have left out the hedge funds operating in the state. But then it drilled a loophole by granting an exception to companies that have lost a quarter of circulation or workforce in the last five years, which likely lets the hedge funds back in. For Gannett or Media News Group to get money out of this but not TheCity is shameful.
Digital outlets raised alarms but it was too late; the bill had already been rushed through the legislature and signed into law. Though there is a frantic effort to find loopholes to the loopholes, it is simply true that the law is designed to support only legacy news. It is bad law. I am told by the proprietor of one local and digital site that newspaper publishers in the state’s trade association — which still does not allow dues-paying digital members to even vote — told online folks that they should keep quiet and not rock the boat. I am disturbed to see legacy newspaper publishers holding an event at my former school promoting what they call the “NY Local Journalism Sustainability Act.” They’re trying to rename the law after its birth. The bill was named the NY Newspapers and Broadcast Media Act. The name says it all.
This is what happens when politicians fear publishers and when publishers engage in conflict of interest by seeking favors from those we cover — and when they both shut down comment from the people who are doing the real work of rebuilding local journalism, and from the communities they serve. There is just no excuse for implementing something so shortsighted and retrograde — and in the media capital of the world, of all places.
Canada’s aftermath
Legislative aides in Sacramento told me that newspaper lobbyists and publishers have tried to convince them that Canada was a win for news. That’s simply wrong. As I report in my paper (which, by the way, also has a lot of fun history about copyright, media consolidation, and anticompetitive behavior past), news sites in Canada believe they are worse off, losing Meta’s traffic and the opportunity to find new audience, losing Meta’s financial support for journalism, losing Google’s voluntary grants for journalism, and gaining a bit of Google cash. As Jeff Elgie, head of the very successful local news enterprise Village Media told me: “We will probably get a bit more money than we did before with Facebook and Google combined, but we lost the Facebook traffic. So if you ask me, any day I would say, keep your damn money and give us the Facebook traffic back.”
The deal in Canada called or Google to choose an independent body to decide how to divvy up the money it is now forced to grant. Google just announced the organization that will decide among the roughly 1,400 news outlets that have applied for their silver. Given the large number of recipients, the amount any one outlet will receive is unlikely to be life-changing. I note among applicants a fashion magazine, a B-to-B site, many radio stations (I doubt all of them are cornerstones of journalism), and many, many outlets from one company declared bankrupt by the investors that own the Toronto Star and from the hedge fund that controls the largest chain in the nation, Post Media.
What now?
As I sat down with a policy aide in Sacramento —yes, in the lobby — I said, “I’m a Biden Democrat, but for the next 30 seconds I will sound like a libertarian. I am troubled by any government intervention in speech and especially journalism. But since the discussion has already gone over that wall to subsidize news, I just want to consider how to do it well.”
Supporting news should mean not supporting the hedge funds that are killing newspapers and news. It should mean making judgments about quality, equity, serving underserved communities, and accountability to communities. It should support diversity, innovation, new business models, better listening, and independence. It should support collaboration over retribution against technology companies that did not ruin news — and in any fair exchange, recognize the value of platforms’ links to publishers. If you’re going to pass laws to support journalism, then don’t support news as it was, support news as it could be.
