While the Senate Judiciary Committee markup of the Journalism Competition and Preservation Act (JCPA) may have moved the bill forward in terms of process, it did nothing to resolve the ongoing problems, confusion, and contradictions about the legislation.
We’ve analyzed and written about the JCPA a lot (see additional resources). We recognize and have written about the crisis in local news (for example, here), and seek policy solutions designed to meet the information needs of communities (for example, here). In fact, we have developed some of our own (see our “Superfund for the Internet” proposal here).
But even after multiple amendments and much discussion, the JCPA remains the wrong solution. It compounds some of the biggest problems in our information environment and it does absolutely nothing to “rein in Big Tech.”
If you haven’t been tracking the debate, you should find this post a fresh if consistent take on what critics say about the JCPA – what it is, where it is now, what’s broken about it – and what Congress should do now.
If You’re New Here: What Does the JCPA Do?
The bill creates an exemption to antitrust law, which normally prohibits industry collusion on pricing and other business terms. It would allow news organizations to band together into “joint negotiating entities” to negotiate for payment from dominant digital platforms for “accessing” (i.e., crawling, indexing, and/or displaying snippets or thumbnails of) their content. After months of industry lobbying, what was once a straightforward five-page document that simply provided an antitrust exemption for newspapers and online news outlets has become a tortured 35-page, highly elaborate set of requirements for how negotiations are structured, conducted, and enforced, including with broadcasters. The new language includes the introduction of “baseball-style” arbitration if an agreement can’t be reached.
“On its face, that sounds plausible (albeit complicated). But the whole thing falls apart on deeper scrutiny. Indeed, the case for the JCPA is built on a series of false assumptions, misleading conflations, bad economics and a fundamental misunderstanding of what and who needs support.”
– “Journalism’s Bad Bargain,” by Sanjay Jolly and Timothy Karr of Free Press
What Does the JCPA Have To Do With the Australian Bargaining Code?
In reality, not much, especially given what we now know about how that bill went down, down under.
The Australian News Media and Digital Platforms Mandatory Bargaining Code, passed in early 2021, was designed by the country’s competition authority to address a perceived “market imbalance” between platforms and Australian publishers. The legislation was designed to force the most dominant large technology platforms that operate in Australia – essentially Google and Facebook – to pay local news publishers for the news content made available or linked on their platforms. If platforms and publishers can’t come to agreement on the value or terms, the government steps in with a forced arbitration process.
But the Australian code is not as relevant to the JCPA as proponents would have you believe. In a last-minute revision forced by the platforms, the code was changed so that digital platforms can avoid being “designated” under the law – and so, being subject to forced arbitration – if they make a “significant contribution” to the sustainability of the Australian news industry. Facebook and Google promptly used the loophole they helped create and cut private commercial deals with large news publishers. The agreements pertain to Google News Showcase, a licensing program that launched globally the same month as the bargaining code, and Facebook News, a new tab serving personalized news.
This means that the Australian legislation does precisely nothing to “rein in Big Tech.” It leaves their gatekeeper power in search and social media completely intact. And when JCPA advocates point to the success of the Australian News Bargaining Code in securing an estimated $150M U.S. dollars for publishers, it’s not really accurate. Those funds actually resulted from side deals cut to avoid being designated and subject to the bargaining code.
There are also big problems with the Australian code that prove our points about the JCPA. One investigation showed that the two media corporations that, together, own 90% of Australian newspapers and control much of the country’s TV market benefited disproportionately. Small publishers complained that they have been left out of the negotiations altogether, even though they qualify under the code. And the code itself was designed without transparency requirements, which is now widely acknowledged as a big mistake.
“Australia looks like a success story to those who’ve long yearned to force Big Tech to prop up suffering newsrooms. But it’s a murky deal, with critical details guarded like they’re nuclear launch codes. If you want to know how much money the platforms have paid to news organizations, you’re out of luck. If you want to learn whether newsrooms are spending that money to bolster journalism, rather than pad executives’ salaries, you’re out of luck.”
– “Millions of dollars for news, shrouded in mysterious deals” by Bill Grueskin in Columbia Journalism Review
What’s Still Wrong With the JCPA?
We’ll address each of these:
- Antitrust exemptions, in general, tend to preserve and strengthen incumbents. The bill builds up the power of dominant media organizations; it doesn’t break down the power of dominant tech companies.
- The requirement for payment for simply crawling or linking to content undermines years of copyright law. The bill also allows publishers to restrict users from posting links to news stories, ultimately limiting the public’s access to information online.
- Despite claims that it will “fairly compensate” news outlets for the value of their work – in fact, that’s the whole premise of the bill – the arbitration process is not structured to do so.
- Provisions in the bill discourage or outright prevent platforms from using content moderation to support their community standards or terms of service, meaning users will see more harmful disinformation, extreme content, and hate speech online.
- The largest news companies will get a disproportionate share of the money – and there are no provisions requiring them to spend it on journalism or journalists.
1. Antitrust Exemptions Build Corporate Power, Not Break It Down
The JCPA does nothing to “rein in Big Tech” or “level the playing field between publishers and platforms” because antitrust exemptions are not designed to do that. The fact is, other approaches hold far more promise for reducing the dominant power of the technology platforms and opening up healthier innovation and competition in the news business. Rather than build up a cartel of media companies to rival the power of Big Tech, we should break down the power of Big Tech with new competition reforms like S. 2992, the American Innovation and Choice Online Act (AICOA). AICOA and other Big Tech competition legislation can create fair competition on dominant digital platforms like Google and Facebook, as well as promote competition against those gatekeepers so that disruptive innovators have a shot to unseat them. There are other ways to do this: Data privacy protections can undercut the surveillance business model of the dominant platforms that is their not-so-secret weapon in targeting and content customization. There are also proposals for a dedicated regulator with the expertise and agility to keep up with innovation in the technology sector while reining in its excesses.
How do we know antitrust exemptions consolidate power and protect incumbents? We’ve been here before: the Newspaper Preservation Act of 1970. The date alone shows how far back the challenges facing newspapers really go. This piece of legislation was passed by Congress back when TV and radio were seen as the existential threat to newspapers. It provided a special antitrust exemption for geographically co-located newspapers to, among other things, set common advertising and subscription rates across newspapers – in essence, a pricing cartel similar to what the JCPA brings about. It did little to solve the underlying trends that were already reducing the number of newsrooms across the country; instead, it insulated the industry from new competition and innovation. The smaller players in these agreements were usually the first to die, and the joint operating agreements were ultimately abandoned. The fact is, antitrust exemptions, in any industry, have rarely improved competition or minimized the impact of market power on consumers.
“This is not a distribution method primarily from platforms to small publishers. This is a distribution method that includes, and in fact is specifically weighted toward, news publishers that have more spending today on journalists and journalistic activities. Large publishers, profitable conglomerates, not only can participate, but pursuant to the rules in the bill, will enjoy the lion’s share of the proceeds. The benefits of this bill will flow not to struggling news publishers, but to enormous conglomerates.”
– Daniel Francis, Assistant Professor of Law at NYU, in “Countervailing Power: Why It Cannot Save Local Newspapers or Competition”
2. The JCPA Could Impact the Open Nature of the Internet
The bill introduces payment for crawling and/or linking to content on the internet (what the bill euphemistically calls “access”), a precedent that could be extended in the future (and why some opponents of the bill use the idea of a “link tax” to describe its impact). Payment for links, snippets, or thumbnails of news stories by platforms would also upend decades of copyright law. Linking does not infringe on any of the exclusive rights of copyright holders, and snippets have been consistently considered fair use of the content by the courts. It would not be a big leap to extend the demand for payment for linking to smaller platforms (recently, Nine Entertainment, one of Australia’s major news organizations, asked that TikTok and YouTube be designated under the Australian code), then other kinds of organizations, and then even internet users themselves.
Importantly, a copyright savings clause was added to the JCPA after Public Knowledge’s extensive discussions with policymakers about these risks. The savings clause, derived from one proposed by Public Knowledge, addresses immediate concerns that the bill constitutes a change in copyright law. However, the basic mechanism of the bill appears to create an ancillary copyright, an idea that the copyright office explicitly rejected earlier this year. This expands the rights of content owners beyond the traditional bounds of copyright law, creating a new form of intellectual property right that could have broad implications, without the legal protections that ensure average Americans can share and link to content online without accruing fees.
Lobbyists for the JCPA claim that “the Australian law didn’t break the internet.” But as we described above, the Australian law brought about licensing agreements – not payment for access to content in search or social media the way the JCPA is designed to do.
“The JCPA is a politically tempting bill in that it features a sympathetic protagonist in local news outlets, at the expense of everyone’s favorite enemy-of-the-moment: Big Tech. Unfortunately, what lies underneath this Robin Hood story is a classic tale of rent-seeking legacy industries looking to use the government to profit from their rivals’ disruptive innovation. In the process, the bill threatens to undermine a concept central to a free and open internet – the ability to link freely to publicly available content.”
– “A news cartel won’t save local journalism, but might just break the internet,” by Josh Withrow, Resident Fellow, R Street
The JCPA also gives online publishers and broadcasters in a joint negotiating entity the right to jointly deny platforms access to their content at any point after they’ve initiated negotiations. Of course, this means citizens who get their news from those platforms would be denied access, as well. When Facebook shut down news on its platform and Google threatened to in Australia as part of their negotiating strategy, news organizations – and politicians – went berserk. Now publishers want the right to do the same thing to achieve their goals. But online publishers can already prevent platforms from linking to their news content. For example, they can use “noindex” and “nofollow” tags on their sites to prevent Google from indexing their pages in search or from following links on that page. And they can put up paywalls to keep their news content from being accessed without payment. And they could take down their account pages on Facebook.
But they don’t – because the traffic the platforms create, which can be converted to revenue by the publisher through advertising, subscriptions, or memberships, is simply too valuable. This value is expressly excluded from consideration by arbitrators in determining payments under the JCPA (more on that later).
3. The JCPA Doesn’t Really “Fairly Compensate” News Outlets
It’s expected that most of the negotiations under the JCPA will end in arbitration, where each side submits a final offer and a panel of three arbitrators chooses one offer without modification. That means that each arbitration may have wildly different outcomes, none of which may reflect the actual “value of news.” (And if we could peg “the value of news,” there would be far more straightforward ways to fund it.) In fact, the arbitration panel is prohibited from considering the value any eligible publisher or broadcaster has gotten from the platform distributing its content – so how can the outcomes be fair?
Adding to the challenge: The assessments of “value” from news outlets and platforms underpinning their offers are likely to be miles apart. Both the News Media Alliance and the National Association of Broadcasters have pegged the value of “stolen” advertising in the billions of dollars (the former report, in particular, has been widely debunked, even in publishing circles), while both Facebook and Google maintain that news drives a very small proportion of engagement or advertising revenue. The likelihood that any resulting deals, each selected from one of two wildly conflicting and likely over- or under-stated offers, reflect the “fair market value of news” is low.
4. The JCPA Will Worsen Our Information Environment, Not Improve It
There are several provisions in the bill that mean platforms will be prohibited or discouraged from conducting content moderation – that is, removing, labeling, downranking, or fact-checking content, even the most extreme content or harmful disinformation or hate speech. First, platforms are prohibited from “retaliating” against eligible news outlets for participating in a joint negotiating entity by changing how they moderate that outlet’s content. Second, they are prohibited from “discriminating” against any news outlet in a negotiating entity based on their size or “viewpoint.” Because publishers and broadcasters can bring a civil action against platforms with these claims, platforms may choose to do less content moderation to avoid the legal risk.
For some, this is by design. In fact, some supporters claim with glee that a late amendment to the JCPA that prohibits discussion of content moderation during negotiations will keep publishers and platforms from “conspiring to censor” conservative voices. These supporters overlook the constraints the bill already included on content moderation (and that research shows “censorship” is a myth). They also overlook the devastating impact that restrictions on content moderation will bring to communities harmed by extreme content, disinformation, and hate speech.
The JCPA will also increase publishers’ reliance on dominant platforms. Google and Facebook are already the largest benefactors of journalism in the world; in fact, reports that Facebook will decrease its investment in news made headlines a few months ago. Is it likely we’ll get the next investigative piece on platform behavior if publishers are even more invested in their success?
Besides being bad for consumers, these provisions may also introduce a potential constitutional challenge for the JCPA under the First Amendment: it creates forced speech, or a “must carry” provision, for platforms. Some have also wondered about a Fifth Amendment challenge, since it forces payment by platforms when the value they provide to publishers cannot be considered in the event of an arbitration.
“…the JCPA imposes a novel carriage regime on covered platforms. It does so by subjecting any ordinary decision of a platform to moderate or rank content to scrutiny as an act of ‘retaliation,’ in the JCPA’s parlance, for a publisher’s participation in a joint negotiation with the platform. This carriage obligation raises substantial First Amendment questions and conflicts with the mechanics of Section 230 of the Communications Act. Moreover, it raises concerns that it will be abused by some publishers to compel platforms to carry hate speech, mis- and disinformation, and other content that the platforms may hold a legitimate First Amendment interest insuppressing, de-indexing, downranking, or otherwise moderating.”
– Blake E. Reid, Clinical Professor at Colorado Law, in a letter to the Senate Judiciary Committee
The bill also favors dominant publishers and broadcasters with a legacy business model based on advertising. Many experts think the brightest future for local news lies in new business models, including nonprofits, community-owned organizations, and philanthropy. These models don’t encourage inflammatory news and clickbait and are seen as more responsive to community needs. Some of these are eligible for the JCPA, but the whole premise of the JCPA is to get back advertising revenues “lost” to the platforms. Perpetuating these legacy models does nothing to transform the media landscape to meet the needs of news deserts or underserved communities, and is the farthest thing imaginable from furthering localism, diversity, or a reparative media framework.
5. The JCPA Won’t Help Small Publishers and It May Even Hurt Them
First, some small local publishers aren’t eligible. The JCPA does not apply to news organizations that have been in business for less than a year, and it excludes news businesses that earn less than $100,000 per year. That’s why some local news organizations, like the Local Independent Online News Publishers, are actively advocating against the bill: almost half of their membership would not be eligible. It also leaves out a new generation of independent and freelance journalists, bloggers, podcasters, and other creators.
Second, the JCPA doesn’t require that funds gained through negotiation or arbitration will be spent on journalism. Given how they have used profits in the past, hedge funds and other financially motivated owners will make acquisitions, pay dividends, or reward shareholders. (A provision in the bill that requires publishers to report how they use any funds received undermines lobbyists’ claims that these funds simply can’t be tracked or directed to specific uses.)
“Revenue distributions under JCPA are not tied to new hiring of news workers…nor is there a requirement for any of the new funds disbursed under JCPA to be spent on journalism. There is no mechanism for the public to examine exactly how much our industry’s Wall Street-controlled mega-chains will profit by getting excused from following the antitrust laws that have traditionally constrained their power for the public good. Finally, we have no confidence that these massively consolidated publishers will use whatever revenues they collect from JCPA to invest in journalists rather than more mergers, stock buybacks, overpaid executives and union-busting lawyers – because that’s how these companies spend the revenues that they already extract from our members’ journalism.”
– News Guild-CWA local presidents and unit leaders in a letter to the Senate Judiciary Committee
And third, the large news conglomerates that brought lobbying and editorial clout to the bill’s development will also bring that clout to the negotiating table, inevitably dominating the negotiations and structuring payments in ways that favor their scale and business model. That’s why the two largest media lobbying associations, the News Media Alliance and the National Association of Broadcasters, are the bill’s two fiercest advocates by far. This is why the newspapers and stations that belong to these trade organizations have covered the bill so positively in their reporting. (Have you noticed a lot of the op-eds and letters to the editor are identical?)
“I have many concerns with the reasoning behind this legislation…in a time when more than half of U.S. newspapers, by circulation, are owned by hedge funds or other financial interests, chances are slim that payments would be spent on re-seeding the news deserts that these same conglomerates have spent years withdrawing from. Second, communities have no say in how these dollars would be spent. Without input from places that are starved for news and information, how exactly do payments to these large conglomerates do anything to preserve journalism? Finally, nearly half of LION members won’t see a dime.”
– Chris Krewson, Executive Director of Local Independent Online News Publishers, in a letter to membership about the JCPA
Some advocates for the JCPA have claimed the bill “favors small publishers exclusively” but this is an enormous over-reach. Publishers with more than 1500 employees are not eligible to join a negotiating entity. However, that applies to precisely THREE newspapers in the United States: The Wall Street Journal, The Washington Post, and The New York Times. And the employee cap doesn’t apply to broadcasters at all. So Sinclair Broadcasting Group – with approximately 13,000 employees and $2.59 billion in profit in the first quarter of 2022 alone, can participate as an eligible broadcaster.
Supporters have also said that funds will be allocated “based on the number of reporters.” This is simply not true. The bill actually says that publishers have to provide information about their spending on journalists working at least 20 hours a week (which omits many freelancers serving small communities) as a proportion of their budget. If – and only if – the negotiations go to arbitration, arbitrators will use this information to “guide” – not direct – only 65% of the distribution of funds among the members of a joint negotiating entity. A version of the bill being discussed in the House would strengthen this: It calls for 70% of funds received to be used for news journalists as confirmed by a required independent auditor.
The bill provides particular advantages to large broadcasters (more on this here). For example, if they have an online presence, a media conglomerate can double dip into the funds by participating as both an eligible broadcaster and an eligible publisher. This conglomerate could also vote in joint negotiating entities as both an eligible broadcaster and an eligible publisher. And whereas publishers engage in negotiations as one entity no matter how many qualifying publications they own, “eligible broadcaster” has no such limitation. If they own multiple broadcast licenses, they may get multiple votes. Lastly, broadcasters are not subject to any employee cap or any requirement that at least 25% of their content be news content, as publishers are. Lastly, even the minor limitations on television networks don’t impact radio networks and large radio group owners. No matter how you look at it, the JCPA feels tailored to enrich large broadcasters despite its stated focus on “saving local newspapers.”
Despite Years of Advocacy, the JCPA’s Major Flaws Remain
A broad cross-section of constitutional, copyright, telecommunications and antitrust law experts; media organizations; labor; academics; and civil society organizations have advocated against the JCPA or asked for material changes to it since the bill was introduced in the House in 2018. While some of these changes have been adopted, on the whole the negotiating terms have gotten more and more favorable to media conglomerates. The latest round of amendments from the Senate Judiciary Committee do little to address concerns.
One amendment reduces the length of the “safe harbor” from eight years to six years (it started out as four, then jumped to ten, and down again to eight). However, any negotiation or arbitration that is initiated before the end of the six years can continue for 180 days, implying that some deals will extend far beyond the Congressional authorization of the bill.
Another amendment requires that agreements filed with the Federal Trade Commission be available to the public on the agency’s website. Another awards attorneys’ fees to the prevailing party in the event of a civil action by journalism providers for bad-faith negotiation, or for claims of discrimination or retaliation by platforms. The last amendment, a compromise of a Ted Cruz (R-Texas) missile that came in at the first scheduled markup, prohibits news outlets from engaging in any discussion about the platforms’ “content moderation policies, practices or procedures.” As noted above, this prohibition was based on the notion that the technology platforms “censor” conservative voices and would otherwise conspire with news organizations to do so. Accordingly, it makes no impact on the real implications of the JCPA for platform content moderation of extreme content and hate speech.
Next Steps on the JCPA?
As of this writing, we’re hearing that the JCPA may undergo additional revisions in both the Senate and the House. Nothing we’ve heard, though, would change the fundamental problem with the JCPA: It’s the wrong tool for the job. Congress should take the hard work and time they’ve put into appeasing news conglomerates and put it toward competition policy reform, data privacy regulation, a new regulatory regime for digital platforms, and other efforts that can really rein in Big Tech’s excesses and spur more innovation and competition in the news business. Given how much research shows the connection between local news and citizens participating in the democratic process, it wouldn’t be an exaggeration to say that democracy may depend on it.