Saving journalism and local news means helping democracy

In times like these, when politics are in turmoil and the amount of information is overwhelming, reliable and trustworthy news is essential for democracy. People can’t make decisions or figure out who to vote for if they don’t know what’s happening around them. And yet, over the last two decades, many local news outlets around the world have shed jobs and closed down. The result is a vacuum filled by Tiktok videos, talk radio and opinion rather than fact. 

In Oregon, 71% of local newspaper staff were lost between 2017 and 2022, according to Oregon Public Broadcasting.

Oregon has come up with a pathbreaking plan, Senate Bill 686, which could do a lot to help local news.

Public hearings on the bill start this week. The beauty of the proposal is it will support local news outlets around the state, as well as the major ones, create jobs and support innovation. If passed, the bill could inject millions of dollars into the sector.

For years we’ve been studying how to support quality journalism and one of the points we’ve made is that it’s important to get Big Tech to pay their share to publishers: Google and Meta have made billions of dollars in profits while underpaying news publishers for the content that these monopolies have profited from. The problem is even worse now as Generative AI searches produce handy summaries and rob publishers of badly needed traffic. We co-authored a paper showing that in the U.S. alone, Meta and Google owe newspaper publishers about $13 billion a year.

If we take into account the theft of quality journalism by the AI firms, the numbers would be even higher.

The economics driving our estimates relies on two core ideas. First, tech platforms and news publishers produce more economic value when used together than separately. This idea, called surplus value, arises because of the complementary nature of the two services. While the benefits of platforms to news publishers are often discussed, such as providing an important channel for the dissemination of information and content, the benefits accruing to platforms are not.

Platforms benefit through the presence of quality and timely news content covering a variety of topics from politics to sports and entertainment. This content drives usage of search engines and enhances engagement on social media. Importantly, it builds trust and habit for users, which increases the likelihood that they will use these platforms for monetizable services. If people have trust in the quality of search results on Google, for example, they are more likely to use it to search for commercial products. Our estimates suggest the joint value created by tech platforms and news publishers is very large. 

If the joint value is so large then why do publishers see so little of it? This relates to the second core idea of our study. The split of joint value depends on the bargaining power of the two parties. The sheer dominance of tech platforms in the advertising market as well as the basic structure of the market means that news publishers have very little ability to negotiate fair payments from platforms for their content. Our study estimates what news publishers would receive if markets were competitive. Applying our methodology to the context of Oregon, news publishers would receive roughly $122 million a year from Google and Meta. We obtain this number by multiplying our estimate of payments at the national level ($12.9 billion) by the share of Oregon GDP as a share of U.S. GDP (0.94%). However, such payments cannot be achieved without measures taken to redress the imbalance in bargaining power.

The beauty of the SB 686, sponsored by Sen. Khanh Pham, is that it combines the best of what has been tried elsewhere. It builds on a similar bill in California that got Google and Meta to help pay for news they used. And the money raised in Oregon will be distributed fairly and openly: 90% of the funds, whether paid through the fund or arbitration, will go to publishers as in the California bill, and 10% will go to a consortium, the latter being similar to what New Jersey has been doing. Eligibility would, in part, be based on the number of journalists employed by the outlets — and not clicks or audience size — which it’s hoped will promote quality news rather than supporting clickbait. Support would also be given to Oregon Public Broadcasting, important at a time when the federal government is making drastic cuts.

After spending years analyzing proposals from all over the world aimed at supporting local news, we’re delighted to see good ideas being tried. We’re also glad, in this age of polarization, to see the bill has support from journalism associations, the News Guild-CWA and the Society of Professional Journalists.

We will be watching closely to see what happens in Oregon but right now it looks like SB686 could be a model for the rest of the country looking to help save local news and quality information.

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Anya Schiffrin is the director of the technology, media and communications specialization at Columbia University’s School of International and Public Affairs. She graduated from Reed College in Portland in 1984. Haaris Mateen is assistant professor of finance at the University of Houston. The authors of the study mentioned above are Patrick Holder, Haris Tabakovic, Mateen and Schiffrin.