US news giants prepare to do battle with Google and Facebook over digital advertising revenue

Google and Facebook continue to gobble up the digital advertising market, siphoning away revenue that once paid for the quality journalism that Google and Facebook now offer for free.

They are gaining increasing control over digital distribution, so newspapers that once delivered their journalism with their own trucks increasingly have to rely on these big online platforms to get their articles in front of people, fighting for attention alongside fake news, websites that lift their content and cat videos.

And for all of Google’s and Facebook’s efforts to support journalism by helping news organisations find new revenue streams – and survive in the new world that these sites helped create – they are, at the end of the day, the royals of the court. Quality news providers are the supplicants and the serfs.

It’s an uneasy alliance that has publishers chafing at the returns they receive from Google and Facebook, which rely on the free flow of premium news and information.

So what we used to call “the newspaper industry” – but which now includes outlets with robust online existences – is coming together to make its biggest push to change the balance of power.

This week, a group of news organisations will begin an effort to win the right to negotiate collectively with the big online platforms and will ask for a limited antitrust exemption from Congress in order to do so.

It’s an extreme measure with long odds. But the industry considers it worth a shot, given its view that Google and Facebook, regardless of their intentions, are posing a bigger threat economically than President Donald Trump is (so far) with his rhetoric.

That’s how David Chavern, chief executive of the News Media Alliance, put it in an opinion piece published online by The Wall Street Journal Sunday evening.

The Alliance, the main newspaper industry trade group, is leading the effort to bargain as a group. But it has buy-in across the spectrum of its membership, bringing together competitors like The New York Times, The Wall Street Journal and The Washington Post, as well as scores of regional papers like The Star Tribune of Minneapolis, which face the gravest threats.

Capturing the current mood, News Corp – which oversees The Journal, The New York Post and Dow Jones – said in a statement that it supported the effort to “focus the public and Congress on the anti-competitive behaviour of the digital duopoly, especially as it adversely affects the news and information businesses”.

Mark Thompson, chief executive of The New York Times Company, said that “the temperature is rising in terms of concern, and in some cases anger, about what seems like a very asymmetric, disadvantageous relationship between the publishers and the very big digital platforms”.

The thinking is that publishers need the option of operating as a group – and the leverage that would come from any collective action – should they determine that it’s the only way to win meaningful accommodations.

The manoeuvring is about more than the fight for digital territory. It’s about the endurance of quality journalism – expensive to produce, and under economic pressure as never before – at a time when false, cost-free “reportage” about things, like “millions of illegal votes”, can gain enough prominence to drive federal initiatives.

“If you want a free news model, you will get news,” Mr Chavern said last week. “But it will be garbage news – it will be ‘Pope Endorses Trump’.”

(That article was widely shared on Facebook during the election; Pope Francis did not endorse Trump.)

The timing also seems ripe considering the murmuring in the United States about the possibility of regulation for the tech giants, and more direct action against them in Britain and across Europe, where regulators recently socked Google with a huge antitrust fine.

In the tumultuous news climate, Google and Facebook don’t want to be seen as undermining real journalism. And executives with both companies said it was in their interests to have ample, reliable news content.

“We’re committed to helping quality journalism thrive on Facebook,” Campbell Brown, Facebook’s head of news partnerships, said. “We’re making progress through our work with news publishers and have more work to do.”

This week, Facebook executives will meet with publishers to introduce new ways for them to sell subscriptions on the site. It will be the latest of several moves over the past few months to improve exposure for local news on the site’s news feed and make it easier for news organisations to run their own ads in Facebook’s Instant Articles programme.

Google has made similar efforts through its News Lab. It says it has made changes to its algorithm to show quality news more prominently in search results. And it is working to help newsrooms take advantage of new technology to innovate and increase online revenue.

“We want to help publishers succeed as they transition to digital,” Google said in a statement, calling the effort “a priority”.

Publishers say they appreciate how Google and Facebook put their news content in front of many millions of users they couldn’t reach on their own. And they acknowledge the efforts the platforms are making to help.

But, as Mike Klingensmith, publisher of The Star Tribune and chairman of the News Media Alliance, said in an interview, “they’re talking to us, but there hasn’t been a lot of action yet”.

Even if more help comes as promised, the economic imbalance leaves the industry at the mercy of the platforms’ generosity or immediate public relations imperatives: Facebook and Google are on the way to holding nearly 60 per cent of the online advertising market, according to eMarketer.

Mr Klingensmith said that, for midsize dailies, which have been hit particularly hard by the shift in ad spending, “it is impossible for us to go as a one-off company and negotiate or even get an appointment with these companies”.

The Times is backing the move for an anti-competitive safe haven, in part, Mr Thompson said, “because we care about the whole of journalism as well as about The New York Times”.

He said The Times would consider joining a collective negotiation should its own talks fail to yield satisfactory results, which, he noted, they have yet to do.

In seeking the right to negotiate together, the news providers are trying to avoid the trouble that major book publishing houses got into when they worked with Apple to develop an online book rival to Amazon. Without any government clearance, they ran afoul of antitrust laws.

The Alliance acknowledges that its bid requires legislation giving them specific clearance to negotiate as a group, which is not commonly granted. It’s an especially big ask from a Congress that hasn’t had a great legislative batting average and whose controlling party, the Republicans, is not in a very press-friendly mood these days.

Then again, News Corp’s founder and executive chairman is Rupert Murdoch, whose sway with the Trump administration and Republicans in Congress is without parallel in the media world.

Press representatives for the Senate and House Judiciary committees – led by Senator Chuck Grassley, of Iowa, and Republican Bob Goodlatte, of Virginia – said they couldn’t comment without hearing directly from the Alliance.

The Alliance’s outside counsel, Jonathan Kanter, said he was hopeful that one argument in particular could sway them: “The product at issue is important from a public policy perspective – we’re not just talking about widgets, we’re talking about news, and news is crucial for a democratic society.”

Whatever the outcome, that should be a starting point everyone can agree upon.

© New York Times