By Julian Do and Sandy Close
State lawmakers announced last week that a bill aimed at supporting California’s struggling media sector by forcing tech companies to pay for the news content they carry is being shelved until next year.
The California Journalism Preservation Act (AB 886) would require online platforms to pay news organizations a “journalism usage fee” comprised of a yet-to-be-determined percentage of their ad revenue, with the funds to be shared among media outlets large and small.
Australia passed just such a law in 2021, allowing the Australian government to force digital platforms into arbitration with news organizations to negotiate fees for using their content. The law has been credited with generating nearly $200 million in revenue for news agencies and the creation of hundreds of jobs in the sector.
Passage of AB 886 in California — the world’s 5th largest economy and home to many high-tech corporations — would be a game changer and could help propel similar efforts across the country and internationally. The bill’s failure, conversely, would be a huge setback for the media industry which in two decades has seen no viable commercial solution to the challenges it confronts.
EMS, as a non-profit organization representing a coalition of ethnic media outlets, supports AB 886, sponsored by Assemblymember Buffy Wicks, D-Oakland, for its intent to rectify the inherent imbalance in the current commercial relationship between news organizations and online platforms.
Its passage would provide a sustainable pathway for the media industry, with key features designed to ensure ethnic media outlets benefit from the new system.
No free rides
Since the emergence of online search engines like Google and Yahoo and social media platforms like Facebook and Twitter, media outlets have followed big tech’s key selling point: by offering their content for free online and by leveraging tech’s digital ad systems, these outlets could expand audiences exponentially.
That increased traffic, the argument went, would generate revenues many times more than what they were earning from the traditional media business model based on print newspaper ads and subscriptions.
More than two decades later, this approach has not only laid waste to thousands of media outlets — some of which had been in existence for more than a century — but has also threatened the foundations of the wider media ecosystem itself.
In contrast, the oligopolist operators of search engines and online platforms, where most media outlets’ content is distributed, now control more than 90% of total digital ad revenue.
Against this background, AB 886 has these three main features:
- Operators of search engines and social media platforms like Google and Meta (parent company of Facebook and Instagram) are required to pay California-based media producers a monthly “journalism usage fee” set by arbitration.
- In turn, media publishers must retain a certain percentage of “usage fee” profits – 50% for newsrooms with five or fewer full-time staff and 70% for the rest of the industry – for re-investment in journalism jobs.
- Web scraping for calculating online traffic and “usage fee” payment must also include all content published in different languages by ethnic media.
Big tech pushes back
Critics, including Google and Meta, have opposed AB 886 on the grounds that instead of helping revive community outlets and the news deserts they once covered, the bill would primarily benefit large and national media organizations with footprints in California.
But that argument, ironically, bolsters arguments made by supporters of AB 886 who say the bill would drive more money into the coffers of ethnic and community media. Many of these outlets are now operating in survival mode and hence can’t afford the investments needed to ramp up their online presence under a system that consistently yields negative returns and whose path is littered with thousands of media closures.
Revenues generated through AB 866 would allow struggling news organizations to invest more in increasing their digital capacity, boosting their online traffic, and reaping “real” positive returns.
Competing media models
Some argue that rather than force tech companies to subsidize local journalism, the government should instead create permanent journalism tax credits with special incentives toward non-profit news outlets that some see as the future of media writ large.
But a new report produced by the University of North Carolina’s (UNC) Center on Technology Policy finds that similar programs in Canada and parts of the US have yielded at best mixed results, with unequal distribution of funds even as layoffs continued apace, and digital subscription subsidies for readers bearing little to no fruit.
There are also concerns that foundations — which are the major funders in the non-profit space — tend to favor digital-first and non-profit media outlets, while governments appear more interested in assisting legacy media whose sector still employs most working journalists.
That leaves ethnic media out in the cold.
Preserving media’s independence
Issie Lapowski co-authored the UNC report. In an interview with Nieman Lab, she said given the country’s current political polarization, receiving government support while preserving editorial integrity would be a tricky proposition.
There is in fact a significant body of research on the consequences of “dependency,” when media outlets become beholden to the state. Ethnic media publishers whose outlets serve immigrant communities are all too aware of this reality. It is precisely why many were motivated to create independent media outlets here in the US, to produce reporting free of government influence.
AB 886 offers a market-driven solution that ensures the media’s continued independence, providing a “usage fee” that rewards outlets based on performance. Additionally, the bill requires newsrooms to re-invest significant percentages of gained profits from the new system in hiring and retaining journalists.
One size doesn’t fit all
Wicks said on Friday the decision to shelve the bill until next year is part of an effort to “ensure the strongest legislation possible.” A hearing in the fall of this year, meanwhile, will look at the issues addressed in the bill and explore similar legislation in countries including Australia, as well as Brazil and Indonesia, both of which are now considering similar legislation.
To be clear, AB 886 is no silver bullet when it comes to addressing the challenges confronting today’s media industry, which are many and varied. All options need to be on the table, and struggling news outlets will need to develop a diversified strategy of participating in those that best meet their needs, including the proposed “usage fee” system.
Yet the fact remains that all media — large, small, national or local, ethnic or mainstream — have not benefited from the digital media revolution in the way that big tech promised.
AB 886 aims to make good on that promise.
Julian Do is co-director of EMS. Sandy Close is the organization’s executive director.
