History Shows That the News Industry Does Not Need a Handout from Big Tech

Critics of Big Tech often blame the demise of local news on today’s Internet giants. They claim companies like Google and Facebook unfairly monetize the content produced by local news organizations, and in doing so, take away advertising dollars that could support local newsrooms around the country. The reality is much less Machiavellian—the overwhelming evidence shows that the local news industry has declined because new technologies offered better options for advertising, such as free classified ads on sites like Craigslist and dedicated job listings on Monster.com.

Interestingly, the news industry made nearly identical arguments almost a century ago about the technological upstarts of the day—radio broadcasters. The 1920s witnessed commercial broadcast radio begin to emerge as a powerful new mass communication technology that would eventually revolutionize traditional news and entertainment. In the following decade, newspapers began to panic as consumers and advertisers shifted to radio. President Roosevelt famously broadcast his series of fireside chats on radio, bypassing unfriendly newspapers to engage directly with the public. To protect their economic interests, newspapers launched a series of political and legal campaigns against radio in what would later become known as the Press-Radio War.

First, newspapers argued radio broadcasters were misappropriating their work by reading news bulletins on air. The chairman of the American Newspaper Publishers’ Association wrote in 1932, “Now along comes a new competitor. He does not have the news, but he has a means of distributing it that beats ours in range and speed of transmission.… He cannot get news, so what does he do? He gets it from us, free, and then uses it to our detriment.” Sound familiar? Today critics regularly argue that Google and Facebook unfairly enrich themselves by displaying headlines, news snippets, and thumbnail photographs produced by others. Rep. David Cicilline (R-RI) even recently compared Google and Facebook to illegal movie piracy sites that “stream movies without paying a film’s creators.” But in both instances the courts have found that these practices fall squarely within the fair use doctrine under copyright law because of the factual nature of the material, the relatively small amount of content, and the societal value in informing and educating the public.

Newspapers during the Press-Radio War depicted radio broadcasters as greedy capitalists up against the altruistic newspapers. The trade journal Editor and Publisher published an editorial in 1933 arguing “radio’s primary news objective is not public interest, but the profitable sale of advertising to sponsors of its alleged news service.” Critics today use this same villain versus victim dichotomy. For example, Sen. John Kennedy (R-LA) recently stated, “Local papers are the heart and soul of journalism, and they break the news that millions of Americans rely on every day. However, tech giants like Facebook and Google are hammering local publications by keeping them from making a profit on Big Tech platforms—and it’s killing local journalism.” But in neither case is the news industry a hapless victim—as with any other sector, it must adapt to changing economic conditions, business models, and technological innovations. And multiple publishers, including Axios, Politico, and Vox Media, show that digital news publishers can be successful and profitable.

Finally, critics in the 1930s argued radio was a poor substitute for print. Detractors claimed that the shallowness of radio news was “against public policy in a democracy” and that it would lead to “confused, incomplete public thought and intensified ignorance on public matters.” Others complained about the problem of “fake radio news” and called on federal regulators to intervene. These are the same talking points used by critics today. For example, Rep. Jerrold Nadler (D-NY) recently warned of how the changing news landscape will lead to “unchecked governmental corruption, corporate misconduct, and widespread misinformation.” But these are clearly strawman arguments. Just as radio did not destroy the news industry, neither will the Internet. While the news industry is undoubtedly undergoing a tectonic shift, there is no more reason to believe today’s doomsday prophesies than there was nearly a century ago—indeed, history has shown that they were hollow claims.

So why do critics repeat these claims? Both then and now, it is primarily to gain political leverage in their campaigns to shift costs to technological upstarts. In the 1930s, groups like the American Civil Liberties Union (ACLU) and the American Federation of Labor (AFL) were lobbying to ban commercial advertising on radio, while others labeled the dominant broadcasters monopolies and called for greater government scrutiny and regulation. Facing enormous pressure, radio broadcasters temporarily capitulated to the demands from newspaper publishers with the Biltmore Agreement, where they consented to only running select news twice a day, delay its release to give publishers time to get to print first, not have any sponsors, and pay for all associated costs. Not surprisingly, this agreement eventually collapsed as unworkable, but not soon enough.

Unfortunately, history seems to be repeating itself. Today, a similar dynamic is playing out with a bipartisan group of legislators, led by Sen. Amy Klobuchar (D-MN), pushing for Congress to pass S. 673, the Journalism Competition and Preservation Act (JCPA), a bill designed to force large tech companies to pay news outlets for their content. The legislation, which mimics a recent Australian law, would exempt small and medium-sized news companies from antitrust laws for eight years, encouraging them to collectively bargain for access to their content, and if the parties do not come to an agreement, it would force them to finalize terms in third-party arbitration. As ITIF has written before, there is no reasonable justification for this legislation. After all, news publishers are under no obligation to list their content with Google News—there are several technical controls they can employ that will prevent Google News from indexing their articles. But most news publishers choose to remain on these platforms because they benefit from traffic with more subscriptions and ad revenue.

Unfortunately, open hostility to Big Tech seems to be fashionable, so not only has the JCPA gained momentum, but other legislation that would hurt the news industry, such as bans on targeted advertising, have also found political support. But slowing technological progress is not the way to preserve a vibrant and healthy press. Just as policymakers would have been wrong to enact rules to protect print journalism from the rise of broadcast news in the 1930s, so too are policymakers wrong now to try to put their fingers on the scales to limit competition and preserve the status quo.