by Rob Williams , March 12, 2021

 

The alarming collapse in advertising revenue for news publishers and the appearance of “news deserts” have led to greater global scrutiny of how digital media giants like Facebook and Google harm journalism. Australia recently approved a law to force the companies to pay publishers for their journalism, with observers saying its media code could be a model for other countries, including the United States.

A better solution is the Journalism Competition and Preservation Act (JCPA), which a bipartisan group of lawmakers this week reintroduced to the House and Senate. The bill would grant news publishers a limited exemption from antitrust laws, giving them greater power to collectively negotiate payments from Facebook and Google for content.

While Facebook and Google do provide referral traffic to publisher websites, they also benefit when publisher content helps to boost engagement with their own platforms.

There is also a major imbalance in power when Facebook and Google act as quasi-utilities that have benefited from unmatched “network effects,” becoming more indispensable as more people use their services. Plus, Google is a dominant force in online auctions for publisher ad inventory, an area that deserves greater scrutiny by antitrust regulators.

Unlike Australia’s media code, the JCPA would provide a more market-based solution for publishers to negotiate with the digital media giants. Those negotiations could lead to threats by Google and Facebook to stop showing news content on their sites, as Facebook did temporarily in Australia, leading to steep declines in publisher web traffic.

However, it’s more likely that Google and Facebook would reach payment agreements with publishers, as eventually happened in Australia, rather than face the prospect of stricter regulations or more intense antitrust scrutiny.

It’s still dangerous for publishers to rely too heavily on either platform for revenue, making other monetization methods like subscriptions and ecommerce a better way to diversify. That said, the passage of JCPA would be a good first step in rebalancing the scales of power in the digital media marketplace.

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