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What we can learn from the Facebook-Australia news debacle

Democracies are right to look for creative ways to direct money from big tech to the news industry.

February 20, 2021
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Ms Tech | Pexels, Unsplash

Democracies around the world are all mired in one crisis or another, which is why measures of their health are trending in the wrong direction. Many look at the decline of the news industry as one contributing factor. No wonder, then, that figuring out how to pay for journalism is an urgent issue, and some governments are pushing ahead with ambitious plans. Big ideas for ways to funnel billions of dollars back into newsrooms are rare, but it’s time to take a gamble on more than one. 

Such an idea rose to the world’s attention this week: an Australian law that would compel search and social media platforms to pay news organizations for linking to their content. Google has decided to comply with the law and is doing deals with major companies such as News Corp, Nine, and Seven West Media. But Facebook took the other route—rather than pay for news to appear on its platform, the social media giant blocked Australian users from accessing and sharing news entirely. 

Reactions have been swift. Some commentators pounced on Facebook’s actions as proof of its monopolistic intent and lack of concern for civic discourse. Others blame the Australian government for bowing to the protectionist interests of media cronies such as Rupert Murdoch, and putting tech companies in an absurd position. 

What else can be done to push billions of dollars back into journalism?

Australia’s approach is now being considered by lawmakers and regulators in multiple other governments. Reuters reports that Canadian heritage minister Steven Guilbeault said Canada will model its own legislation on the Australian law. There are also some similarities in a bill proposed by US congressman David Cicilline of Rhode Island that would “provide a temporary safe harbor for the publishers of online content to collectively negotiate with dominant online platforms regarding the terms on which their content may be distributed.” 

In general, these measures seek to boost the bargaining power of news organizations and help them extract value from tech giants for the content that newsrooms produce. The Australian model’s novelty lies in its arbitration mechanism, a kind of membrane between the parties intended to help them arrive at a fair exchange of value.

The Australian law will likely pass, so this grand experiment in pushing capital back to the news media will soon be under way. We’ll get to see how it works out, and whether opponents’ concerns bear out—if larger news organizations are privileged over small ones, for instance, or whether the money actually ends up being spent on producing more journalism. 

But in view of the objections to this approach, what other options exist? If new subscription models are not enough to sustain the media industry, what else can be done to push billions of dollars back into journalism?

A raft of ideas can be found in the archives of the US Federal Trade Commission (FTC), which studied this problem extensively in the early 2000s. The commission’s 2010 paper “Potential Policy Recommendations to Support the Reinvention of Journalism” found “reasons for concern that experimentation may not produce a robust and sustainable business model for commercial journalism.” So the authors went on to look for other pots of gold. 

One idea put forward in the report was antitrust exemptions to “allow news organizations to agree jointly on a mechanism to require news aggregators and others to pay for the use of online content,” which sounds a lot like the Australian law. 

But others are more novel, such as:

  • A spectrum auction tax. This intervention would seek not to extract a pound of flesh from platform companies, but rather to mine the profits of mobile operators and broadcasters by taxing the licenses they purchase for the right to operate on specific frequencies, with the proceeds going to some kind of public media fund. This year, for instance, the 5G mobile spectrum (considered a public resource) fetched more than $80 billion at auction. Since the proceeds go to the US Treasury, Congress could decide that some portion of the revenue should be put toward journalism. 
  • Advertising taxes. Rather than forcing tech platforms to pay news companies directly, governments could simply assess a tax on digital advertising. In its 2010 report, the FTC surmised that a 2% sales tax on advertising would generate $5 to $6 billion annually that could go toward journalism. Maryland has just put forward legislation to introduce a tax on digital advertising, which it intends to use to fund another public good—education. (The big tech companies oppose it vehemently.)
  • Taxes on cell phone plans. Another way to pay for public media would be for consumers to pay a small tax on their monthly cell phone bills. In 2010 dollars, a tax of 3% on the monthly fees would have generated $6 billion annually, and there are roughly 120 million more US mobile subscriptions today

The FTC report is replete with suggestions for alternative tax structures, copyright advantages, and other creative mechanisms to sustain journalism, as well as ideas for how to provide more direct subsidies to the news industry. In addition to these ideas, I think there’s another possibility that Congress should consider: funding journalism by diverting fines against the tech platforms for privacy and antitrust violations. 

For instance, in 2019 the FTC announced a $5 billion fine against Facebook for multiple privacy violations, including the Cambridge Analytica scandal. Five billion dollars is double the endowment of the Knight Foundation, one of the most generous philanthropies investing in journalism today. And that same year, Google settled allegations that it violated children’s privacy by paying the FTC $170 million. 

It’s not difficult to imagine a mechanism that could divert fines from privacy and antitrust violations to a quasi-governmental foundation. Over time, that foundation’s endowment could more than sustain the losses to the news industry over the past two decades—the entire industry earned just under $25 billion last year. 

The current political climate in the US and elsewhere makes it likely that governments will increasingly seek to divert funds from tech platforms to the news media. A recent report from the US House titled “Investigation of Competition in Digital Markets,” led in part by Congressman Cicilline, concluded plainly that “the emergence of platform gatekeepers—and the market power wielded by these firms—has contributed to the decline of trustworthy sources of news.” 

But forcing tech companies to pay the news media directly—with all the hazards that may generate—is only one option. If the goal is to recapitalize journalism at scale, it’s time to get creative. 

Editor’s note: This op-ed was updated to better characterize Facebook’s decision in Australia.

Justin Hendrix is CEO and editor of Tech Policy Press, a new nonprofit media venture concerned with technology and democracy. Previously, he was executive director of NYC Media Lab and spent over a decade at The Economist. He’s an associate research scientist and adjunct professor at the NYU Tandon School of Engineering. 

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