Media is in crisis: newsrooms all over the world are shuttering and the very profession of journalism is under sustained ideological and physical assault. Freedom of the press is a hollow doctrine if the only news media is written or published by independently wealthy individuals who don’t need to get paid for their labor.
Where did the media’s money go? It’s complicated.
How News Companies Shot Themselves in the Face
Let’s start with the news outlets themselves. Right around the time that personal computers were finding their way into home offices and kids’ bedrooms, news media underwent an orgy of consolidation, starting with the Reagan administration’s deregulation of the financial markets and, later the Clinton administration’s Telecommunications Act, which stripped away the already weak restrictions on media consolidation.
As media outlets across the country merged, national chains took over from family proprietors. They raised prices and fired reporters, turning to wire services and chain-wide correspondents for subjects of national interest. They also fired locally focused salespeople, consolidating classified and display ad-sales to national call-centers. They sold off their buildings and presses and logistics networks, leasing them back. These cuts yielded dividends to the chains’ investors, dividends that were augmented by liquidating the papers’ cash reserves and “rainy day” funds.
Thus the papers were already hollowed out and brittle when online advertising came along. Though papers had weathered the advent of the telegraph, the telephone, the television, cable, and satellites, they were devastated by the rise of online classified advertising sites, from Craigslist to MSN.
Left with no cash reserves, heavy debt loads, a generic product that emphasized wire stories and national correspondents servicing dozens of outlets that purported to be “local” newspapers, the media had no cushion and the impact hit hard.
A national sales office that merchants call to place ads makes sense when you’re the only game in town for reaching local customers, but when local websites spring up to offer cheaper advertising, the national “sales force” of people who sit around waiting to take orders and credit-card numbers won’t cut it. If only the papers’ corporate owners hadn’t fired the shoe-leather salespeople who’d worked the local merchants for decades…
What’s more, selling off and leasing back all that physical plant exposed the papers to rent and inflation shocks.
The financialization of news media weakened it, and the finance sector continues to bleed out the press, with waves of private equity debt-loading and rollups that reduce one-great newsrooms that filled iconic Deco skyscrapers to a few underpaid reporters working out of a remote concrete blockhouse the size of a Chipotle .
Enter Big Tech, Binge-Eating Little Tech
Finance-driven consolidation went beyond the media industry. The companies we call “Big Tech”—Google, Apple, Microsoft, Meta, etc.—attained their scale and reach primarily by buying out their potential competitors, not by inventing new technologies that were so amazing that they beat the competition.
That’s true of Facebook, whose founder, Mark Zuckerberg, candidly told his executives, “It is better to buy than to compete,” before going on to buy Instagram and WhatsApp, among dozens of other firms. Apple buys companies more often than most of us buy groceries.
Google is a company that had one genuine innovation—a best-of-class search engine—and then used its access to the capital markets to buy a video-sharing company; a mobile operating system company; many, many ad-tech companies; a maps company; a document-sharing company, etc. Notably, Google’s own in-house products have been a nearly unbroken string of flops, with the main exceptions being a copy of Microsoft’s Hotmail and a browser based on Apple’s old browser engine.
These companies converted the net to “five giant websites filled with screenshots of the other four,” replacing the dream of “disintermediation” with a new oligarchy of gatekeepers. Together, these companies rigged the ad-market, the app market, and the market for social media.
The result is a system that pleases no one—except the tech monopolists’ shareholders.
Ads cost more, and media companies get paid less for them. Half of every ad dollar is gobbled up by tech intermediaries. Sure, media companies can switch to a subscription model—and hand over 30 cents out of every dollar in “app store taxes” levied by the mobile duopoly. Media companies can try going direct to their readers on social media, but the only way to reach your subscribers on big platforms is to pay to “boost” your posts, otherwise, they’ll be hidden from the users who explicitly asked to see them.
Something Must Be Done! (No, Not That)
Clearly, something must be done. A free press is a key component of a free society.
But just because something must be done, it doesn’t follow that we should just do anything.
Media’s problem is that tech is stealing its money, in great, gulping bites—50 percent ad-tech taxes, 30 percent app store taxes, and, on top of that, having to pay ransom money to reach your own subscribers, people who asked the platforms to show them everything you had to say.
And yet, the media companies’ own default solution—proposed in countries all over the world, including the “JCPA” bill in the USA—is to levy a “link tax” on tech platforms’ mentions of the news. These laws, also called “bargaining codes,” start with the assumption that allowing the public to post links to the news, or indexing news stories, is an unfair business practice.
But that’s wrong. There are lots of things wrong with how the tech sector treats the media sector, but linking to news stories is good. Hosting users’ discussions of the news is good. No one has the right to control who can link to their website or discuss its content. Besides, if you can’t talk about the news, it’s not the news. News you can’t talk about? That’s called “a secret.”
These link taxes are bad for the press, and they’re good for tech. Australia's attempt - a "news bargaining code" - is arguably the most successful of these attempts, and it is a decidedly mixed bag. When Australia's government threatened the Big Tech with mandatory arbitration if they failed to reach agreements with media companies, Google and Facebook did strike bargains - both Rupert Murdoch's newspaper empire and a bargaining unit of dozens of smaller papers got paid.
But the deals themselves were shrouded in secrecy. Both the overall sums and the breakdown per paper are not a matter of public record. While this allows both the tech firms and the media companies to claim success, no one else can know what "success" means. For example, does it mean that smaller papers got a much smaller per-reader share than the Murdoch papers, but decided something was better than nothing?
What's more, the Australian law - passed but never invoked, serving instead as the threat that brought the tech firms to the table - included the possibility that the tech firms would be required to carry the newspapers' content. In other words, Facebook or Google wouldn't be allowed to simply drop news content from papers with whom they couldn't reach a deal. While this certainly gives the papers more bargaining power, it also constitutes a form of compelled speech, in which Facebook and Google must carry content even if they object to it. That would seriously hamper platforms' ability to engage in other kinds of beneficial news content, such as removing or downranking disinformation or inflammatory materials.
The architects of Australia's news bargaining code say that it isn't a link tax. Rather, the platforms were merely being forced to bargain voluntarily or have their deals decided by an arbitrator, with the news companies being allowed to form collective bargaining units. It's true that these don't add up to a link tax on their own, but when you add in the threat of "must carry," then a link tax emerges. There's just not much of a difference between "you must carry these links, and you must pay for them" and "you must pay to carry these links."
We're not fans of government orders to display, publish, or disseminate speech, and while the Australian constitutional tradition may allow such a move, any attempt to make this happen in the USA would fall afoul of the First Amendment. Even if you like the outcome in Australia, you couldn't do the same thing in the US, where compelled speech is unlawful.
In France, the link tax proposal led to a deal that requires the news media to opt into Google Showcase, an obscure Google product that was rocketed to national prominence by its adoption by major French media outlets.
In Canada, the threat of a looming link tax convinced tech platforms to “voluntarily” pay the Toronto Star, Canada’s highest-circulation newspaper, a license fee— whereupon the Star ceased publication of its excellent, highly critical investigative series on Big Tech.
Do This Instead
Something must be done about the way that tech abuses the press—but that something shouldn’t depend on tech’s eternal dominance. It shouldn’t make the press beholden to a scandal-haunted tech sector that desperately needs the scrutiny of investigative journalists. It shouldn’t enshrine the dominance of ideological media barons or the vulture capitalists who galumphed through national media markets, gobbling up and gutting regional outlets.
Whatever we do about tech and the press, it should make tech weaker. It should do at least as much for independent journalists and small outlets as it does for massive media companies. It should not depend on surveillance, nor on gigantic, abusive social media companies overriding the preferences of their users.
In this series, we present four proposals for fixing tech and media that fit all these criteria. One of these proposals is already out there, working its way through legislatures; another has already passed into law and is waiting to be implemented; one has been repeatedly killed by corporate lobbyists; and one is a brand new idea we just thought up.
We’ll be publishing one per week for the next four weeks, and then we’ll round them all up into a single “report” PDF suitable for emailing to your Member of Congress—or just that friend who is (rightly) concerned about how tech is clobbering the press, but is (wrongly) convinced that the only way to fix this is to create a new pseudo copyright over links to the press and short clips and headlines.
Here’s what we’ve got coming:
- Break up the ad-tech sector: Senator Mike Lee’s AMERICA Act will force the largest ad-tech platforms, including those of Google and Meta, to break themselves up into small, competing independent pieces. Under the AMERICA Act, a single company won’t be able to simultaneously operate an ad marketplace and represent both the buyers and the sellers in the marketplace. If you want to know how the ad-tech sector manages to claim half of the money spent on ads, look no further than this hilariously abusive market structure.
- Pass a comprehensive privacy law: America is long overdue for a real, national privacy law. Such a law would effectively ban surveillance-driven “behavioral advertising” (if tech companies could only spy on you with your consent, they wouldn’t be able to spy on you, because almost no one truly consents to surveillance). Banning surveillance ads would make “contextual ads” (based on the content of a publication, not the characteristics of a given user) much more attractive. Context ads are much harder for tech giants to capture—after all, a tech company may know everything about a reader’s web-history and recent purchases, but no one knows more about a publication than its publisher.
- Open up app stores: The mobile duopoly of Apple (iOS) and Google (Android) take 30 percent off the top of every dollar spent in an app. Apple bans third-party app stores, while Google merely engages in a suite of dirty tricks to hold them at bay. The EU’s Digital Markets Act will make choosing another app store a simple matter of a couple of clicks. In the US, the Open App Markets Act is designed to do the same. Competition will drive down the app store tax— if credit card networks can process a payment for 2-5 percent, so can an app store.
- End-to-end delivery: The internet’s founding technical design principle is “end-to-end” - the idea that intermediaries should make the best effort to deliver data from willing senders to willing recipients. Bringing this principle to social media and webmail would mean that media companies could be assured that their subscribers see everything they post, and end the practice of ransoming those subscribers to “boosting” payments.
Each of these proposals is focused on paying all news services more, whether independent or corporate; ad-supported or subscription-based. They’re designed to weaken Big Tech, not make it stronger. They ensure that media companies are independent of tech and able to report on tech wrongdoing without risking their bottom lines by angering a tech giant that “bargains” with them for license payments that pay reporters’ salaries.
Most of all, they serve the user, the audience for the news. They don’t create a new right to decide who can talk about the news. They ban spying. They make sure you see what you ask to see. They let you choose whose software you want to install on your devices.
The news media and news consumers are allies here. The news does not and should not require collusion with tech monopolists, nor mass surveillance, nor digital locks.
There’s a way to make news better and make tech better. That’s what we’ll be bringing you in the weeks to come.