One of the most contentious issues at the end of the legislative session is the so-called “California Journalism Preservation Act” (Assembly Bill 886, by Asm. Buffy Wicks, D-Berkeley), which would require online platforms like Google and Meta (parent of Facebook) to pay for digital news content. Payments could be made either by a yet-to-be-determined annual lump sum or an amount negotiated with publishers.
Another measure, Senate Bill 1327, by Sen. Steve Glazer, D-Orinda, would enact a new digital advertising tax of 7.25 percent tax on the gross receipts of data extraction to fund state journalism fellowship programs and a new tax credit for hiring journalists.
The bills were introduced in response to more than 100 California newspapers folding over the past decade. The Los Angeles Times recently reported that average Sunday circulation for major state newspapers have dropped since 2015. The Fresno Bee’s circulation has dropped a whopping 79 percent!
While Californians should be concerned about newspapers closing or cutting back coverage, the free market provides the path forward to preserve independent journalism – not what the opponents of AB 886 call a “link tax.”
Before proceeding, a primer on digital advertising is in order. Companies, news publishers, and non-profits like PRI seek to build “owned audience” online, getting people to visit our website, read and share our content, sign up for e-mail updates, and ultimately become donors, subscribers, or customers. Digital advertising is the most efficient and effective way to reach targeted audiences.
Google and Meta bring large audiences to news content through paid advertising and search engine results driving content to websites. So, how are they causing problems for California’s declining traditional newspapers? For starters, news publishers argue, according to the committee analysis on AB 886, that the platforms display “so much of the linked content (in their search results or posts) that the reader does not click through to the news site.”
But this isn’t Google or Meta’s fault. This is the news provider not listening to the marketplace. The content that popped up in the search result or ad wasn’t compelling enough for the reader to click through. Whether it is the topic, headline, or ad design, the news publisher obviously wasn’t connecting with their desired audience enough to warrant a click.
And it’s not like the news publisher received nothing from the lack of the click – they received millions of views on the search result or ad, building brand awareness in readers who may not have previously sampled their work. Multiple hits are typically required to get a reader to click on an ad or link.
In my experience overseeing PRI’s digital strategy, I’m always reviewing the data, looking for the content, topics, and ad designs that worked best – adjusting to what the marketplace tells us. That’s what news publishers should be doing – producing content their desired audience wants to read.
Another criticism is that Google and Meta corner the digital ad market, and don’t share enough ad review with news publishers. This criticism is rich coming from the producers of newspaper websites that are filled with so many ads and pop-ups that the website crashes.
Here’s where the free market comes in. News publishers aren’t required to use either service for digital advertising – they can manage digital advertising internally, as nearly all news publishers already do, or they could use a different ad provider.
They also don’t have to make the content that is being clicked on available for free. Many news publishers have strict paywalls and require subscriptions to read their online content, money the news publisher pockets.
In my view, the real reason Google and Meta are being targeted is that’s where the money is. Consider a recently published paper estimating that the companies would owe $11.9 to $13.9 billion annually nationwide if some form of revenue split was required.
News publishers should be careful what they wish for as Google and Meta may stop boosting clicks to news publishers as they have done in Australia and Canada and have already tested in California. This would deny their content of needed publicity.
To win back readers and gain new ones, news publishers should do a better job of listening to their readership, writing more content reflecting the interests and worldview of the communities it serves. They must also avoid trust-shattering partisan journalism, as evidenced by the current media scandal involving the rewriting of history of Vice President Harris’ appointment as the Biden Administration’s “border czar.”
Markets do work – even for journalists who rarely understand or write about them.
Tim Anaya is the Pacific Research Institute’s vice president of marketing and communications.
