On Tuesday, Senate Commerce Committee Ranking Member Maria Cantwell (D-Wash.) issued a press release on the committee minority’s 67-page report that demonstrates the impact of news transitioning to online formats and the associated revenue loss of this transition. In particular, the report illustrates that one factor for this decrease in revenue can be attributed to the purportedly “unfair and abusive practices by tech platforms.”
“Local news across America creates competition and trusted information,” Sen. Cantwell stated in the press release. “We shouldn’t let regional and community news die as local newspapers and broadcasters adjust to digital delivery because online giants are unfairly leveraging the advertising market against them.”
The report explores the alleged unfair and abusive practices of tech giants that have supposedly helped to decrease these revenues. Accordingly, the tech giants allegedly “unfairly use content, take local news consumer data, and divert consumers away from local news websites, while providing little in return.” Specifically, the report claimed that “local news has been hijacked by a few large news aggregation platforms, most notably Google and Facebook, which have become the dominant players in online advertising. These trillion-dollar companies scrape local news content and data for their own sites and leverage their market dominance to force local news to accept little to no compensation for their intellectual property.” For example, Google scrapes websites to get headlines and portions of stories, meanwhile, Facebook has content posted by publishers or other users and financially benefits from news content that others created. Senator Cantwell claimed that this highlights the need for Congress to act to grant the Federal Trade Commission (FTC) the authority to protect local news by addressing their aforementioned practices to “help sustain the competition that local news provides.”
The report emphasizes the important role of local journalism in U.S. communities. The report cited that local journalism “is highly trusted in communities around the country.” In particular, a 2019 Gallup and Knight Foundation study found that “Americans trust local news over national news by a two-to-one margin to ‘report news without bias.’” As a result, Cantwell reiterated that local journalism is trusted because of “transparency, accurate reporting, shining a light on crime and corruption, and holding officials accountable.”
While news sources, including publishers and broadcasters, are utilizing new and innovative models “based on their value as a trusted brand,” the COVID-19 pandemic is also affecting local news. For example, according to the report, print ad revenue declined by 45 percent in 2020, local broadcasters may lose an additional 40 percent of their ad revenue because of the pandemic, and local newspaper will lay off 7,000 newsroom employees this year because of COVID-19; these additional layoffs will greatly reduce the newsroom workforce, which if it continues “[a]t this pace, newspaper newsrooms will all but vanish within the next few years.” Additionally, the report indicated that in comparison to 20 years ago, overall newspaper revenue will have dropped by 70 percent by the end of 2020; between 2000 and 2018, local broadcasters lost at least 40 percent of their advertising revenue; and since 2005, newspapers have lost 40,000 newsroom employees, which is about 60 percent of the overall workforce with most states losing at least 50 percent of the newsroom workers. Despite these threats, the report showed that the trust and relationships that local news creates with communities have helped to forge a new business model and new revenue stream for the digital age.
The recent Senate hearing also touched upon this topic, noting the tech giants’ impact on local journalism.