[Senate Hearing 117-880]
[From the U.S. Government Publishing Office]
S. Hrg. 117-880
BREAKING THE NEWS _ JOURNALISM,
COMPETITION, AND THE EFFECTS
OF MARKET POWER ON A FREE PRESS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON COMPETITION POLICY,
ANTITRUST, AND CONSUMER RIGHTS
OF THE
COMMITTEE ON THE JUDICIARY
UNITED STATES SENATE
ONE HUNDRED SEVENTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 2, 2022
__________
Serial No. J-117-50
__________
Printed for the use of the Committee on the Judiciary
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
www.judiciary.senate.gov
www.govinfo.gov
_______
U.S. GOVERNMENT PUBLISHING OFFICE
56-410 WASHINGTON : 2026
COMMITTEE ON THE JUDICIARY
RICHARD J. DURBIN, Illinois, Chair
PATRICK J. LEAHY, Vermont CHARLES E. GRASSLEY, Iowa, Ranking
DIANNE FEINSTEIN, California Member
SHELDON WHITEHOUSE, Rhode Island LINDSEY O. GRAHAM, South Carolina
AMY KLOBUCHAR, Minnesota JOHN CORNYN, Texas
CHRISTOPHER A. COONS, Delaware MICHAEL S. LEE, Utah
RICHARD BLUMENTHAL, Connecticut TED CRUZ, Texas
MAZIE K. HIRONO, Hawaii BEN SASSE, Nebraska
CORY A. BOOKER, New Jersey JOSH HAWLEY, Missouri
ALEX PADILLA, California TOM COTTON, Arkansas
JON OSSOFF, Georgia JOHN KENNEDY, Louisiana
THOM TILLIS, North Carolina
MARSHA BLACKBURN, Tennessee
Joseph Zogby, Chief Counsel and Staff Director
Kolan L. Davis, Republican Chief Counsel and Staff Director
.........................................................
SUBCOMMITTEE ON COMPETITION POLICY,
ANTITRUST, AND CONSUMER RIGHTS
AMY KLOBUCHAR, Minnesota, Chair
PATRICK J. LEAHY, Vermont MICHAEL S. LEE, Utah, Ranking
RICHARD BLUMENTHAL, Connecticut Member
CORY A. BOOKER, New Jersey JOSH HAWLEY, Missouri
JON OSSOFF, Georgia TOM COTTON, Arkansas
THOM TILLIS, North Carolina
MARSHA BLACKBURN, Tennessee
Keagan Buchanana, Democratic Staff Director
Wendy Baig, Republican Staff Director
C O N T E N T S
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OPENING STATEMENTS
Page
Klobuchar, Hon. Amy.............................................. 1
Lee, Hon. Michael S.............................................. 4
WITNESSES
Bertetto, Jennifer............................................... 8
Prepared statement........................................... 34
Francis, Daniel.................................................. 11
Prepared statement........................................... 40
Gainor, Dan...................................................... 15
Prepared statement........................................... 86
Reponses to written questions................................ 147
Oxley, Joel...................................................... 10
Prepared statement........................................... 89
Singer, Hal...................................................... 13
Prepared statement........................................... 100
APPENDIX
Items submitted for the record................................... 33
BREAKING THE NEWS -- JOURNALISM,
COMPETITION, AND THE EFFECTS
OF MARKET POWER ON A FREE PRESS
----------
WEDNESDAY, FEBRUARY 2, 2022
United States Senate,
Subcommittee on Competition Policy, Antitrust,
and Consumer Rights,
Committee on the Judiciary,
Washington, DC.
The Committee met, pursuant to notice at 3:00 p.m., in Room
226, Dirksen Senate Office Building, Hon. Amy Klobuchar, Chair
of the Subcommittee, presiding.
Present: Senators Klobuchar [presiding], Blumenthal,
Booker, Ossoff, Lee, Hawley, and Blackburn.
Also present: Senators Durbin and Padilla.
OPENING STATEMENT OF HON. AMY KLOBUCHAR,
A U.S. SENATOR FROM THE STATE OF MINNESOTA
Chair Klobuchar. Thank you, everyone. I call to order this
hearing of the Subcommittee on Competition Policy, Antitrust,
and Consumer Rights entitled, Breaking the News -- Journalism,
Competition and the Effects of Market Power on a Free Press.
I want to welcome our witnesses. We have votes going on
right now, so Senator Lee and I will be going back and forth,
as well as some of the other Senators during this time. I want
to thank him and his staff for working with us to put together
this hearing as well as my own staff, Marc and Avery and
Keagan, for the work they do every day.
Some of you may know my dad was a newspaperman. As a
reporter and a columnist in the Twin Cities, he covered it all
in an estimated 8,400 columns and about 12 million words in
which he interviewed everyone from Ronald Reagan, Senator Lee,
to Ginger Rogers to Chicago Bears Coach Mike Ditka. I won't say
which interview was his favorite. He was proud to be a
newspaperman. As you can imagine, in my house growing up, it
was impossible to forget the importance of a free press.
That is what we are here to talk about today, to talk about
the critical work news outlets around the country are doing and
explore solutions to some of the existential challenges facing
journalism.
It is truly local news that reports on the issues that
people face in their everyday lives. I think about the Fargo
Forum in my home State actually of Minnesota, next to North
Dakota, that includes Moorhead, Minnesota. When the floods,
catastrophic floods, hit the area, that newspaper and the local
broadcasters were the one covering it, warning people, giving
them news updates all the time.
I think about investigative journalism at the local level
with everything from city council scandals, not that those ever
exist, to all kinds of things that would not be covered. I
think of the sports games for high schools and the pride that
people have in their local community events.
All of this brings the community together in different
ways. They find stuff out. They have common--common information
that they can look at in addition to what they see nationally,
which sometimes can seem very distanced and larger than life.
What our local news does is oftentimes tells a story of what my
dad called ordinary people doing extraordinary things. As I
said, this work not only connects communities, it also helps
policymakers better understand how issues are impacting their
constituents and helps them to figure out what needs to be
done.
That's why it's critical that we ensure that local news
cannot only survive but thrive, particularly as outlets face
off with some of the biggest companies the world has ever
known. Local news is facing a crisis in the U.S.
Since 2005, about 2,200 local newspapers across America
have closed, and many of the ones that remain are on life
support. Between 2008 and 2019, newsroom employment fell by 51
percent. With much smaller newsrooms, surviving outlets are
often mere shells of their former selves.
I was thinking about that really troubling photo from the
Denver Post where, the journalists, they show a picture of
everyone happily smiling. Then a few years later, they show the
hollowed-out images, the silhouettes of the journalists who are
no longer there. Less than half of them are left.
As you know, local newspapers aren't closing or drastically
reducing their coverage because of a lack of talent or a
passion for the work. Yes, many of them have online presence,
and they have tried their best to do that. In fact, their real
problem is a lack of revenue.
Ad revenue for U.S. newspapers plummeted from over $37
billion in 2008 to less than $9 billion in 2020. Thirty-seven
billion in 2008 to less than $9 billion in 2020. What else
happened during that time? If you see the ad revenues for the
world's biggest companies, you'll see the exact opposite story
being told.
Facebook and Google, worth over $2.6 trillion combined, as
I speak, became digital advertising titans during that same
time. Just yesterday, Google reported $61 billion in
advertising revenue in a single 3-month period, a 33 percent
jump. I say to my colleagues, ``A 33 percent jump from the same
period just last year. Look at those numbers.'' $61 billion in
just 3 months for one company. $61 billion. You have U.S.
newspaper revenue from 2008 to 2020 going from $37 billion to
$9 billion. As one of my colleagues said during the
Presidential race, ``Do the math. It's not that hard to figure
it out. Do the math.''
These Big Tech companies are not friends to journalism.
They are raking in ad dollars while taking news content,
feeding it to their users, and refusing to offer fair
compensation. They're making money on consumers' backs by using
the content produced by news outlets to suck up as much data
about each reader as they can.
It's kind of a double whammy, right? They're the big guys.
They're bringing in the content. They're not compensating for
it as they should. At the same time, they are getting the
revenue off the consumers that read the content that then don't
go to the ones that are producing the content. Then that data
really exacerbates what is already a huge divide in where that
revenue goes.
How much do these companies care about retaining this power
over the news and reader data? They care a lot, enough to even
hold entire countries, industrialized nations, hostage as we
saw happen last year in Australia. When Google was told by the
government that they would have to pay for the news content
that they wanted to use--this is the Australian government--the
company essentially said, ``We're out of here,'' and threatened
to pull Google search out of an entire country.
That's what monopolies do. That's what you do when you can
do it because you have over 90 percent of the search market.
Google didn't follow through on its threat, in part, because
there was so much international pressure to stop them from
doing it. Facebook actually switched off all news on its
platform to protest the law only reversing course after a few
days under immense outside pressure.
What does Big Tech's dominance over the news mean for
Americans? As I've already noted, less revenue for local news,
fewer journalists to do in-depth, high-quality reporting, more
exposure to misinformation, and fewer reliable sources. While
the rise of these platforms has sometimes meant a larger
audience for some news outlets, that hasn't translated to
increased ad revenue.
For years, I've heard concerns about things like the
platforms do not provide adequate branding for news outlets'
original content on the platforms, that they hoard for
themselves all of the data on the users that access the news
content produced by news providers through their platform, that
they publish large snippets of newspapers' content to attract
users to the platform without any compensation at all to that
news outlet, and repeated complaints to Google and Facebook
from newspapers and broadcasters are simply ignored because
that's what a monopolist does.
They can ignore things. They can use their market dominance
to elbow others out and retain their control. That's why we
need to step in to level the playing field as so many other
countries are doing.
We're here today to talk about how we'll give these news
outlets a fighting chance. I teamed up with my colleague
Senator Kennedy to lead the bipartisan Journalism Competition
and Preservation Act. Our bill gives local news outlets the
ability to collectively negotiate for fair compensation with
companies like Google and Facebook so they can continue to
invest in the kind of quality reporting that keeps us all
informed.
We're working with our bipartisan partners in the House of
Representatives on improvements to the bill. We're ready to
take all ideas and address all challenges raised by our
colleagues because we believe there's a way to do this fairly
to make sure that all news outlets are included to better help
correct the better--imbalance in bargaining power between
newspapers and Big Tech.
We're looking at this, a clear framework for good faith
negotiations between news organizations and Big Tech,
mechanisms to help make those negotiations go smoothly,
protections to prevent discrimination against news outlets
based on the political views that they express, and provisions
to better ensure that the interest of small independent news
outlets are paramount in any joint negotiation.
I also introduced the Future of Local News Act to help
local outlets chart the path forward as they recover from the
pandemic. I'm working with my colleagues to pass the Local
Journalism Sustainability Act to help Americans pay for
newspaper subscriptions.
All this said, if we were living in a perfect world where
we didn't have monopoly search engines and monopoly platforms
with, in some cases, over 90 percent of the market, and we were
able to pass some of the bills that I have, my colleagues have
on a bipartisan basis, Senator Grassley, to even that playing
field, maybe we wouldn't be where we are.
We are here because we have a crisis going on when we've
lost over 2,000 news outlets, and that is why we have come upon
this targeted approach to protect the First Amendment, to
protect the news organizations that we believe are so critical
to making sure that the First Amendment stays strong.
We need to recognize that what separates the news from the
vast majority of our other industries is its crucial role in
our democratic system of Government. That's why our founders
enshrined freedom of the press in the First Amendment. When the
exercise of monopoly power results in a market failure in our
news industry, it's critically important for our democracy that
we act.
Local journalism is also important to local communities and
their economies. The closures of local newspapers can lead to
higher municipal borrowing cost and increased Government
inefficiency. This means less money for schools, hospitals, and
roads.
Thomas Jefferson said that our first objective should be to
leave open, quote ``all avenues to truth'', end quote, and that
the best way of doing that is through, quote ``the freedom of
the press'', end quote. That rings especially true today.
As elected leaders, we certainly may not always like what
we read or hear in the news. I think all of us can relate to
this. I think we can all agree that ensuring the future of a
vibrant and independent free press is essential to the fabric
of our democracy and the American way of life.
Thank you. I now turn it over to my colleague, Senator Lee,
for his opening statement.
OPENING STATEMENT OF HON. MICHAEL S. LEE,
A U.S. SENATOR FROM THE STATE OF UTAH
Senator Lee. Thank you so much, Chair Klobuchar. I think
today's hearing is important. I look forward to it for a
variety of reasons. I think it'll be illustrative on a number
of fronts.
It first involves what ails the news industry. News
publishers do, in fact, have a legitimate beef with the Google-
Facebook ad duopoly. That's a problem, and Google and
Facebook's unrivaled market power in digital advertising
imposes a sort of de facto tax on every business that places or
makes money from ads, which is a large swath of the 21st
century economy.
I'm grateful to you, Madam Chair, and along with Senators
Grassley and Blumenthal for working with me and my office to
help tackle that two-headed hydra, which does need to be
tackled, and we have a lot of agreement on that issue. I also
think that it's important to ask the question whether that's
really these publishers' only problem. I don't think it is. In
fact, I think it's far from that.
Our witnesses today may not exemplify it, and I'll assume
for purpose of our discussion today that they don't. There are
a number of voices within the mainstream news media whose
publications are rife with shoddy and extraordinarily biased
reporting that many consumers simply don't trust or, in any
event, don't want to spend money consuming.
There are too many examples to cite all of them. I think
it's important to point out at least a few of them. We have the
Steele dossier, a work of pure fiction, funded by the Clinton
campaign and breathlessly, dutifully reported on by news media
outlets across the country. Blinded by their own impassioned
hatred of President Trump, they helped spread the dossier's
lies even after it had been proven demonstrably literally
false. We're still waiting on the retractions.
What about The Washington Post defamation of Covington
Catholic High School student Nicholas Sandmann or the Post's
fawning description of Islamic State leader Abu Bakr al-
Baghdadi as a, quote unquote, ``austere religious scholar''?
Who can forget The New York Times reporting that Russia had
placed bounties on the heads of American soldiers, which was
quickly, dutifully parroted by other outlets in the run-up to
the 2020 Presidential election? It wasn't until after President
Biden was inaugurated that they felt comfortable admitting that
the story didn't hold up. Mission accomplished, I suppose.
I know Senator Cotton will recall how his suggestion that
COVID-19 may have been leaked from a lab in Wuhan was scoffed
at and derided rather viciously in a series of personal attacks
against him for saying that. As it turns out, he was right. How
did the media respond? They stealth-edited their original
reporting to pretend that it never happened.
Just last month, just in the last few weeks, the Salt Lake
Tribune's editorial board literally said that if Utah were a
more just, decent place that the National Guard would be
mobilized to, in effect, hold people under house arrest orders
if they were unvaccinated.
The fiery but mostly peaceful protests of the summer of
2020, the denials that Critical Race Theory is being taught in
the schools, these things add to and constitute part of this
list along with, quote unquote, ``temporary inflation.'' The
list goes on and on.
Look, today's news media is often a source of
misinformation, and it's one of the leading causes when it does
this of social discord and political upheaval, especially when
it doesn't even acknowledge its mistakes and especially when
its mistakes appear so frequently, so consistently, so
constantly to lean one direction and not the other.
The self-proclaimed Fourth Estate loves to preach to the
masses about democracy dying in darkness while they themselves
turn out the lights. On top of the fact that the mainstream
media is selling something that, in many cases, people don't
want, there are also the series of poor business decisions that
have been made within that industry. During the years in which
they made comfortable profits, almost nothing, in some of the
companies at least, was reinvested into the business to
innovate and to grow in response to changing technologies.
When the market changed with the advent of the internet
forcing newspapers for the first time to face meaningful
competition for advertising dollars, many publishers just went
all in on an advertising-only business model, even abandoning a
subscription revenue, for online content.
The bottom line here is that whatever the challenges that
the news publishers are facing as a result of Big Tech's
dominance over digital advertising, for some publishers,
perhaps for many, they've got other problems. For some of them,
perhaps for many, it may involve inferior product quality and
failure to take into account evolving technologies to adapt
their business model.
The second thing to straight--set straight here is that
what we should do about this or rather what we should not do
also matters. The last thing I think we should do is try to
solve this or any other competition problem by saying that it's
okay to just accept a cartel, that it's okay to make changes to
the laws to encourage the formation and allow the formation and
thereby encourage the formation of a cartel as many publishers
are requesting. Make no mistake that is what this is. That--it
is what this call is for, and that is what the JCPA would do.
We're not talking about an arguably procompetitive type of
competitor collaboration on some sort of run-of-the-mill joint
venture. This would be competitors themselves colluding with
the approval of law against a common business partner in order
to fix problems they're facing.
There is a lot that Senator Klobuchar and I have agreed on.
One of the many things that--we've agreed also on a lot of
areas within antitrust law. We held a fantastic hearing back in
2013, I think it was, when we talked about cartels. Senator
Klobuchar said cartels have no other purpose other than to rob
consumers, and I agree.
I certainly think that we're not going to be better off by
giving a cartel formation hall pass to an industry that's been
ravaged by a number of other problems that I've identified.
This ends up passing those problems along to consumers, the
very same consumers that are being forced to, in many cases,
accept an inferior product and partisan hackery and so much
else that goes along with it.
I know publishers, including some of our witnesses today,
believe that they would benefit. Legislation like the
Journalism Competition and Preservation Act would do far more
to help The New York Times and far more to help The Washington
Post than it would be a benefit for local journalism in Salt
Lake City or in Minneapolis. The only way to fix this is by
encouraging competition and allowing it and promoting it, not
eliminating it, and not--certainly not giving people a hall
pass to engage in contact that would challenge, threaten, and
undermine it.
Finally, as I understand, the authors of the JCPA are
rewriting that bill in an effort to mirror some reforms in
Australia and the music licensing system of the United States,
but I want to register my frustration that the majority hasn't
shared draft texts with it. We haven't seen that draft text.
It's nearly impossible for Senators and witnesses to prepare
for a hearing where a draft of the legislative solution is
still floating--is floating apparently around K Street, but not
publicly available for Senators and for the American people,
for that matter, to review.
With all that said, I look forward to this hearing and
hearing from our witnesses and their contributions.
Chair Klobuchar. Thank you very much, Senator Lee. I'd also
note that your--the venue bill, we didn't have any hearing on
that. We are here having a hearing on this, and I'm, of course,
the lead author of that. I think I went through after our last
discussion on my innovation bill, and we found dozens of bills
including led by Republicans where the hearings were either at
the Subcommittee level or there wasn't a hearing. We were able
to have a markup and a discussion of the bill based on hearings
such as the one we're having today.
I just think it's--after we're done with this hearing, we
should look at that history because we would be putting on hold
the venue bill and many others if that was our new standard
that would be suddenly adopted this week.
I'm now going to introduce the witnesses that are before us
today. From the local news area, something near and dear to my
heart and the reason I feel so strongly about this bill,
Jennifer Bertetto. Thank you for being here. Did I say that
correctly? Thank you. Is the president and CEO of Trib Total
Media located outside of Pittsburgh. The company operates a
daily paper with a circulation of approximately 35,000, 11
weekly community newspapers with smaller circulations, and a
handful of monthly newspapers.
Mr. Bertetto has been with the company--Ms. Bertetto has
been with the company for more than 20 years, holding positions
ranging from regional advertising director to chief operating
officer to president. Her first job in the news business was
taking baseball scores for the local baseball and soccer
leagues at the age of 16. She also serves on the board of the
News Media Alliance.
Next up, Joel Oxley. Mr. Oxley is the general manager of
WTOP News. For anyone in the DC area, you've heard WTOP. It is
a DC area radio station owned by Hubbard Broadcasting that
happens to be located in Minnesota. WTOP has over 100 local
journalists, and it is known for its local news programming.
The station first went on the air in 1926. Mr. Oxley joined
WTOP in 1992 and worked his way up the ranks in sales and sales
management to general manager in 1998.
Dan Gainor. Mr. Gainor is a vice president of Free Speech
America and Business for the Media Research Center, a nonprofit
organization focused on alleged liberal media bias. He is a
commentator for Fox and has a regular spot on the One America
News Network. Prior to joining the Media Research Center, Mr.
Gainor was an editor at several newspapers including the
Washington Times and the Baltimore News American.
Next, last but not least, Daniel Francis. Mr. Francis--Dr.
Francis is a lecturer on law at Harvard Law School where he
writes about regulation and competition. His research focuses
on antitrust as well as constitutional and other rules that
facilitate, constrain, and shape regulatory action and
competitive processes. He has a particular interest in digital
and high-tech markets. Dr. Francis previously served at the
Federal Trade Commission as senior counsel to the director--
associate director for digital markets and ultimately deputy
director.
Another witness that's here with us virtually, Hal Singer.
Dr. Singer is an economist who has researched, published, and
testified on competition-related issues in a wide variety of
industries including media, pharmaceuticals, sports, and
finance. Late last year, he published a paper commissioned by
the News Media Alliance about the impact of Google and Facebook
on newspapers finding that Google and Facebook undercompensate
newspapers for content and advertising.
If the witnesses now would please stand and raise your
right hand.
[Witnesses are sworn in.]
Chair Klobuchar. Let the record reflect that each of the
witnesses answered in the affirmative. You may be seated. I
will now recognize the witnesses for 5 minutes of testimony
each. As I noted, Senators have votes. We've invited all the
Senators on the Committee as we always do to this hearing. We
will begin with you, Ms. Bertetto. Thank you.
STATEMENT OF JENNIFER BERTETTO, PRESIDENT
AND CEO, TRIB TOTAL MEDIA, INC.,
PITTSBURGH, PENNSYLVANIA
Ms. Bertetto. Chairwoman Klobuchar, Ranking Member Lee, and
Members of the Subcommittee, thank you for the opportunity to
participate in today's hearing.
My name is Jennifer Bertetto, and I'm the president and CEO
of Trib Total Media. We are a small publisher that delivers
news, information, and advertising to four counties in South--
Southwestern Pennsylvania. Our company is 272 employees strong
with daily and weekly newspaper circulations and hyperlocal
community websites that comprise our neighborhood news network.
Our newsroom is a collective of 88 journalists,
photojournalists, editors, and designers. Our high-quality and
award-winning journalism is why our flagship website,
TribLIVE.com, draws more than 300 million page views each year.
Trib Total Media's commitment to delivering high-quality
journalism dates back to our founding in the 1800's. Our
company was transformed in 1970 when Richard Mellon Scaife
purchased our local publishing company. We have remained
focused on providing local news to our communities. With the
rise of the internet, we recognize that we needed to shift our
focus from print to digital. Having done that, we're proud to
provide our flagship website for free, a testament to our
commitment to the community and to making news accessible.
I've worked my entire career in the news industry, starting
out of college and working my way up to president and CEO in
2015. I've seen firsthand the changing nature of news
consumption and distribution and can attest that the news
industry faces a dire and insurmountable challenge: leveling
the playing field against the vast power exerted by dominant
digital platforms.
I'd like to discuss three main points. First, local
newspapers are under incredible financial pressure, and we must
ensure that the people who create high-quality journalistic
content are compensated for it. With the growth of the digital
platforms, we saw our readership shift to fewer subscriptions
and then cancellations.
To become profitable, in 2015, we restructured our
business. We closed two newspapers, sold three others, and made
the difficult decision to lay off more than 150 employees. In
2016, we published our last print edition of the Pittsburgh
Tribune Review and moved our reporting in that market online.
These decisions were essential to stay in business, but they
have ramifications to this day. Several communities in
Southwestern Pennsylvania are considered news deserts not
served by any local newspaper.
Second, access to news online has become concentrated on
two platforms, Facebook and Google, which serve as gatekeepers
and determine how news is displaced, prioritized, monetized
without compensating the journalists that create the content
they rely on. Tech platforms have become gatekeepers,
controlling access to news, my company's original content, on
their sites. Sadly, most Americans get their news from these
platforms who are raking in record profits by simply curating
content, a word that has subtly devalued the painstaking work
of real reporting by journalists.
On Google alone, 65 percent of users don't leave their site
to click through to a newspaper's website depriving publishers
of the traffic and ad dollars it brings. Some say the newspaper
industry has failed to modernize, and that's nonsense. Even
with restructuring and enhanced digital offerings, no matter
what we did, it was not enough to level the playing field.
Small publishers are stuck between a rock and a hard place. We
carry no weight in negotiations with platforms. We do not have
the resources or the stature to bring them to the table.
There is a solution to the problem. The Journalism
Competition and Preservation Act would give publishers a seat
at the table to negotiate fair terms for the value of our
journalism. Thanks to the leadership of Chairwoman Klobuchar
and Senator Kennedy, the JCPA would provide a limited safe
harbor period for news publishers irrespective of size or
political persuasion to negotiate collectively with the
platforms for fair compensation for the use of our content.
It's imperative that journalists are fairly compensated,
and the JCPA would allow us the opportunity to seek just that.
The bill does not prescribe the outcome, but it allows the
opportunity to seek fair compensation, requiring the parties to
negotiate in good faith. To receive fair compensation for our
work would enable small publishers like my company to invest
more in our communities, hire more reporters, increase quality,
fact-based news.
Thank you again for the opportunity to testify at today's
hearing.
[The prepared statement of Ms. Bertetto appears as a
submission for the record.]
Chair Klobuchar. Next up, Mr. Oxley.
STATEMENT OF JOEL OXLEY, GENERAL
MANAGER, WTOP NEWS, WASHINGTON, DC
Mr. Oxley. Good afternoon, Chairwoman Klobuchar, Ranking
Member Lee, and Members of the Subcommittee. My name is Joel
Oxley, and I am the senior vice president and general manager
of all-news radio station WTOP-FM, WTOP.com, and
FederalNewsNetwork.com, which are all owned by Hubbard
Broadcasting.
Hubbard Broadcasting is a Saint Paul, Minnesota family-
owned and operated broadcasting company with 13 television
stations located in Minnesota, New York, and New Mexico and 50
radio stations located in Minnesota, Illinois, Missouri, Ohio,
Arizona, Washington, Florida, and Washington, DC.
I appreciate the opportunity to testify on behalf of the
National Association of Broadcasters and its more than 6,600
free and local television and radio station members in your
hometowns. Broadcasters represent one of the last bastions of
truly local unbiased journalism, information that is still
respected by all Americans. Your constituents turn to their
local reporters and anchors for voices they trust. Legislative
action, including swift passage of the Journalism Competition
and Preservation Act, the JCPA, is needed to preserve this
central cornerstone of our democracy.
Local journalists and the communities we serve face an
existential threat whose fate increasingly rests in the hands
of a few dominant digital platforms. We applaud this
Subcommittee's attention to this challenge and your continued
work in examining the digital marketplace for news and
journalism.
The pandemic has shown that, when needed most, local
television and radio stations provided the civic bond for the
communities we serve doing incredible work in the face of our
own enormous challenges. More importantly, we continue to be
the primary source of the community-focused information on
which your constituents have relied during this pandemic from
health and vaccine resources to vital information about schools
and local businesses.
I've been in the news business since college, when I wrote
for the school newspaper and was a sportscaster at the radio
station. I worked with Scripps Howard. I worked with the
Chicago Tribune before joining WTOP three decades ago where I
have worked my way up in sales and sales management before
becoming the GM in 1998.
I understand the significant cost of producing quality
journalism. I'm keenly aware of the significant financial
resources needed to run a station and invest in the type of
equipment necessary to serve the public day in and day out 365
days a year. Quality journalism delivered through our uniquely
free service has only been made possible over the decades
through advertising revenues. As you all are aware, these
revenues have experienced a free fall in recent years, due
almost exclusively to the rapid often anticompetitive expansion
of the dominant online platforms who've upended the advertising
marketplace.
The market power of the tech platforms undermines the
online advertising model for local broadcast journalism in two
important ways. First, the tech platforms' role as content
gatekeepers stifles our ability to generate user traffic.
Second, anticompetitive terms of service and a take it or leave
it approach leave local broadcasters with a below-market sliver
of those advertising revenues derived through their products.
For local broadcasters and our viewers and listeners who
rely on quality journalism, this is a real catch-22. To attract
online user traffic, we must be accessible through the major
platforms, yet the terms of access dictated by the online
platforms devalue our product. For example, not only is WTOP
being compensated by Facebook and Google for its content, WTOP
is actually--not being compensated. WTOP is actually paying to
make sure its content is being accessed on their platforms.
Even more concerning is the degree to which certain platforms
commoditize news content with little regard for the quality and
veracity of the story.
This puts fact-based reporting like ours on par with
unsubstantiated clickbait as we fight for user eyeballs in both
platform newsfeeds and search results. There is no doubt that
tech platforms and their algorithms prioritize content that
favors sensationalism over hard journalism. The dominant online
platforms have flourished, siphoning off huge amounts of
advertising revenues that are the lifeblood of free, local
journalism.
Consider the big storm that just flew through the Northeast
over the weekend, a nor'easter with blizzard conditions. Tons
of work at a lot of cost and time for local broadcasters to
cover for millions of people, but not for Facebook, Google, and
the like. They simply take our coverage and profit from it, and
virtually nothing comes back to us. But without local news, my
guess is a lot of people would have not evacuated places like
Cape Cod last weekend, and lives would have been risked. We
just can't have that.
In conclusion, this Committee can address these concerns
with the passage of the JCPA. The NAB thanks Chairwoman
Klobuchar and Senator Kennedy for introducing the JCPA, a
targeted, commonsense proposal. The NAB strongly supports the
JCPA, which would level the playing field by creating a
temporary safe harbor for broadcasters and certain digital
publications to jointly negotiate with dominant online
platforms regarding the terms and conditions by which their
content may be accessed online.
Thank you again for the opportunity to appear before you
today. I look forward to your questions.
[The prepared statement of Mr. Oxley appears as a
submission for the record.]
Chair Klobuchar. Thank you very much, Mr. Oxley. Next up,
thank you for being here, Mr. Francis.
STATEMENT OF DANIEL FRANCIS, LECTURER
ON LAW, HARVARD LAW SCHOOL,
CAMBRIDGE, MASSACHUSETTS
Mr. Francis. Chair Klobuchar, Ranking Member Lee, Members
of the Subcommittee, thank you for having me here to testify
today.
As a former Federal antitrust enforcer, I strongly support
the Subcommittee's focus on digital monopoly, and I want to
acknowledge the seriousness of the difficulties that many
publishers are facing across the country today while doing some
of our most important work. I cannot think of anything the
country needs less, now or ever, than a national news media
cartel.
I want to make just three points. Point number one, cartels
are the supreme evil of antitrust. They're so reliably harmful
that we extradite and imprison people who form them, they're
automatically illegal in civil litigation with no justification
allowed at law, and for decades, the Justice Department has had
a flagship policy project of fighting cartels and opposing
exemptions just like this one. Congress has licensed cartels a
handful of times over the 130 years of our antitrust laws but
always with great caution and not always with happy results.
Point two, I think the real complaint that I hear from the
publishing industry is not so much about monopoly but is rather
about property rates on the internet. I appreciate the
publishers complain that platforms and users can share links to
websites and can get fair use previews of news websites that
are a sentence or two long without paying. They argue that
that's evidence of monopsony power because platforms are
profiting and they're not paying or not paying nearly so much
for those rights.
This is not evidence of monopsony power. Platforms aren't
linking and previewing for free because they're monopsonists
exercising buyer power. It's because our property laws very
wisely don't give a website owner, whether it's an owner of a
news website or something else, the power to veto or tax
linking or fair use previewing of that website.
It's pretty easy to see that this has nothing to do with
monopsony power because no one pays for it. We could--if
someone has the coding ability in this room, we could start an
app today and link and preview websites without paying for that
privilege. Our law gives everyone that freedom, and I think
that's a really good thing. Links are the lifeblood of the
internet. Imagine how hard it would be to write even a
traditional article or book if you couldn't cite a source or
quote a sentence or two without paying for that privilege.
Imagine the consequences of that rule for our internet today.
Despite the framing, my strong sense is that this is not
really about monopoly or monopsony at all. It's a request to
dramatically expand profit rights on the internet and then to
allow that property right to be sold by a new national news
cartel with major media conglomerates at the helm. I think
whatever antitrust reform we need today--and I think we need
some--this is not that.
Point three, I think we're going to hear today about
countervailing power. I think that's a red herring. It's true
that in economic theory if you have a single dominant buyer
there is an argument that total welfare can be improved if you
let the suppliers form a cartel, at least in the perfect world
of theory. I don't think that's applicable here for two
reasons. Number one, I don't see evidence of monopsony power
here at all despite the size of the platforms. Again, platforms
aren't linking and previewing for free because of buyer power.
They're linking and previewing for free because that right,
that freedom is theirs under our property law today.
This wouldn't be a cartel that would correct buyer power.
It would create new seller power. That's a monopoly surcharge
on all the news in the United States cascading down the supply
chain driving up prices that are already too high.
Second, the harm would far outweigh any good. Despite the
size of the platforms, it actually doesn't look a lot like they
hold monopoly power in markets for news today. A national news
cartel sure would be a monopolist. I think this Subcommittee
would be really concerned if even two of the major publishers
were to propose a merger. The idea that we might put all of
them together under one roof to agree on rates and terms and
business models strikes me as a consumer's nightmare.
Every week the antitrust agencies hear pretty creative but
sometimes fragile blackboard economic theories about why we
should tolerate harmful conduct. I don't think the agencies
would accept this argument, and I don't think Congress should
either. I think the best thing we can do for competition in
news is significantly increase our funding for the antitrust
enforcers. I think that's the most urgent need we face.
Thanks for inviting me today, and I look forward to your
questions.
[The prepared statement of Mr. Francis appears as a
submission for the record.]
Chair Klobuchar. Thank you. Next up, Dr. Singer who is here
in person. Thank you.
STATEMENT OF HAL SINGER, MANAGING
DIRECTOR, ECON ONE RESEARCH,
WASHINGTON, DC
Dr. Singer. Thank you to the Subcommittee for inviting me
to speak today on this most serious issue. I want to begin on a
slightly lighter note however by giving a shoutout to my mom,
who turned 90 last month, who's watching this hearing the old-
fashioned way and has not forgiven me to this day for becoming
an economist rather than a lawyer.
The economic concepts here are complex and require a lot of
ink, but I will try to boil them down to just a few by
answering three questions. One, what is the competition problem
this bill seeks to solve? Two, what are the social harms that
flow from the competition problem? And three, how would a
targeted bill address the competition problem?
Regarding the competition problem, two platforms, Google
and Facebook, have monopolized the digital advertising
industry. Google and Facebook capture approximately 61 percent
of all digital advertising dollars because of their ability to
collect consumer data across the web. Seventy percent of
referral traffic to newspapers originate from just these two
sites. This market power makes news publishers completely
beholden to the dominant platforms for viewers and advertising
dollars. The resulting power imbalance ensures the market rate
for accessing news content will always be below competitive
levels.
Google and Facebook achieved their dominance in the mid-
aughts with the acquisition of countless competitors,
complementors like Instagram and YouTube as well as critical
input suppliers in ad tech like DoubleClick and AdMob. Also in
the mid-aughts and not by coincidence, newspaper began losing
advertising mainly to the platforms. According to Pew Research,
newsroom advertising declined from $37.8 billion in 2008 to
$8.8 billion in 2020. Over the same time period, newsroom
employees decline from 71,070 to 30,820. If these trends are
left unchecked, we might not have local newspapers in the
recent--in the near future.
The reason why Google scrapes indexes and posts news
publisher content for free is because it can. It's like a
school bully eating a smaller child's lunch. So long as market
forces are allowed to dictate the payments for accessing news
publisher content, the access price will remain zero and news
publishers will be deprived of the billions of dollars a year
of value created for the platforms.
Turning to my second question, in addition to the private
harms, the underpayment to news publishers results in
underemployment of journalists and other news employees as well
as a host of other social ills associated with local news
deserts including less competent local governments, greater
spread of partisanship and misinformation, removal of economic
stimulus to local economies, and a reduction in the diversity
of viewpoints.
Turning to my third and final question, a targeted
intervention similar to the negotiation framework adopted in
Australia would solve the competition problem and mitigate the
associated social harms by doing three things. First, it could
permit a coalition of news publishers to form a joint
negotiating entity to alleviate the power imbalance. No new
publisher--news publisher would ever unilaterally shut down
access to Google and Facebook. To do so would be suicidal.
Second, the bill could compel the platforms to negotiate in
good faith for the access rights.
Third, if the good faith negotiation does not produce an
agreement, the coalition of news publishers, but not
broadcasters, could invoke arbitration rights. At that point, a
panel of arbitrators would decide using baseball-style
arbitration whose estimate of the value added to the platform
by all the members of the coalition was closest to fair market
value for accessing the content in the absence of the power
imbalance.
Granting a narrow exemption to antitrust laws to address
underpayments to vulnerable input providers finds precedent in
both the labor exemption and the farm cooperative exemption to
the antitrust law. Other countries such as Australia, which
have employed a similar intervention to what I call for here,
have seen immediate rewards to publishers for their
interventions.
Relative to Australia's model, what I'm calling for would
be more favorable to small publishers as it would not permit
any large individual newspaper to avail itself of the good
faith negotiation or arbitration rights. Only news publishers
that remain in the coalition would be entitled to those rights.
Thank you, and I look forward to answering your questions.
[The prepared statement of Dr. Singer appears as a
submission for the record.]
Chair Klobuchar. Thank you very, very much. Now, our
remaining witness who's appearing remotely is Dan Gainor, vice
president Free Speech America and Business for the Media
Research Center. Thank you for being with us Mr. Gainor.
STATEMENT OF DAN GAINOR, VICE
PRESIDENT, FREE SPEECH AMERICA AND
BUSINESS FOR THE MEDIA RESEARCH
CENTER, RESTON, VIRGINIA
Mr. Gainor. Thank you. Chairperson Klobuchar, Ranking
Member Lee, and Members of the Committee, thank you for the
opportunity today to speak about one of my favorite topics,
local journalism.
I worked as an editor on three different local daily
newspapers as well as an editor of two weeklies, an editor and
associate publisher to third. The best and honestly the most
fun jobs I've ever had were in local news. If I could snap my
fingers and fix local news, I would. I would hazard a guess
that every single Member of this Committee would do the same.
The Journalism Competition and Preservation Act of 2021 does
not fix that problem.
It's a well-intentioned attempt to level the playing field
between Big Tech and local journalism, but that's not what it
does. It seems premised on a misinterpretation of history that
somehow local journalism was killed by a few Big Tech
companies. It was not. How do I know? I was there. I was there
working in local journalism as news outlets brought in 20, 25,
to 30 percent profits year after year and didn't reinvest those
epic gains. Newspapers consolidated because delivery became
difficult in rush hour traffic and more readers turned to TV
news.
Baltimore, where I grew up, went from three dailies down to
one in less than a decade. None of that was caused by the
internet. I was director of Noon Media for a weekly chain as
the internet began to catch on. I watched as news organizations
downplayed the threat and posted their content online for free.
Sclerotic news outlets were unable or unwilling to respond to
the opportunities online, and so they were dissected by the
competition. The Great Recession took a particular toll on
local businesses, and that meant advertisers stopped
advertising. COVID restrictions were just another example how
the heavy hand of government harmed local news.
That's the background that brings us here today to discuss
the future of journalism. The JCPA allows big media companies
to ignore antitrust laws and work together. That isn't fixing
the problem of having a Big Tech advertising cabal. It's simply
adding another cabal to negotiate with it. Allowing a few of
the largest and most powerful media companies to act as proxies
for others only ensures that big firms will secure deals that
benefit them.
We all want trustworthy local journalism that helps inform
the public as well as hold powerful people accountable. Except
that's not how corporate media have handled local journalism in
the past. Local outlets were treated as cash cows. Big
corporations milked them and slaughtered their remains.
This law would only serve to support huge existing
corporate media instead of independent media. Corporate news
organizations don't need our help. The New York Times just
spent $550 million in cash purchasing The Athletic, which
according to journalist Aron Pilhofer, covers 270-plus sports
teams in more than 47 local markets. ``The Times has placed
itself in direct competition with every local news site from
the same pool of subscribers,'' he wrote. Times already had
more than 8 million paid subscribers, and The Times even just
bought the popular game Wordle for a price in the low seven
figures. So why are we helping them?
The Washington area used to have a thriving chain of
community weeklies. The Gazettes were founded in 1959 and grew
to 550,000 in circulation in suburban Maryland. They were
closed down by their owners, The Washington Post, in 2015. In
2021, The Post achieved record-breaking digital advertising,
and it's also owned by Big Tech billionaire Jeff Bezos. He
purchased the company in 2013, 2 years before it killed the
chain of weeklies. So why are we helping them?
Corporate media already benefit from better treatment by
social media algorithms than smaller and independent outfits.
Consolidating their already enormous advantages only makes them
even more powerful. This JCPA also treads dangerously in the
areas best left alone when defining a news content creator as
one that has a dedicated professional editorial staff.
Independent journalists still make news, but they would be
squeezed out by corporate media.
Last, this issue needs to be seen in context. There are a
few journalism bills floating around in this Congress. There is
a concerted effort to get government involved in the practice
and funding of journalists and journalism. It is unrealistic to
expect journalists funded or supported by politicians to turn
around and report aggressively on those same politicians. We
can't expect journalists to hold powerful people accountable
when they are accountable to those powerful people for their
paychecks.
All this happens at a time when Americans' trust in media
is near an epic low. According to Gallup, Americans' trust in
media to report the news fully, accurately, and fairly has
fallen to just 36 percent. For Republicans, that number stands
at 11 percent. Why then are we bailing out corporate media when
ordinary Americans would rather find new sources of
information?
Thank you, and I look forward to your questions.
[The prepared statement of Mr. Gainor appears as a
submission in the record.]
Chair Klobuchar. Thank you very much, and thank you for
appearing remotely. I'll get started here. I'll start with you,
Ms. Bertetto.
Google is a search giant. About 90 percent of searches as
we know, they have 90 percent market done on Google and also
the largest company in the online advertising space, something
I know that my colleague Senator Lee is very concerned about.
For small newspapers, Google takes a large percentage of
the revenue generated on the newspaper's site. How would you
characterize your negotiations with Google over the share of
the advertising revenue it gets compared to what your
newspapers can keep?
Ms. Bertetto. Thank you for your question. I guess the best
way to answer that would be there have never been negotiations
between my company and Google about the manner in which we get
paid or how much we get paid. In fact, I've often had my
company penalized whenever I have had other advertising
services available on TribLIVE to help fund our free website.
We get punished in the algorithm. If someone goes to search for
TribLIVE, because we are using other companies that are not
Google, our search results are pushed down.
When we have reached out directly to Google for help to
improve our search rankings, we have been sent to resellers of
Google products who charge us anywhere between 12 and 15
thousand dollars a month, which is a lot for our company, to
help us solve our problem. The problem is always solved by
removing other advertising mechanisms that exist on our site.
When I have attempted to find other ways to monetize our
content independent of Google, I have hit wall after wall with
Google. In fact, the resellers have been as brash as to say to
me, ``Look. I would take off these other platforms that you're
using on your site.'' When I explain that I actually get a
higher dollar per click using those resellers, they told me,
``Well, Google doesn't like that, and Google owns everything.''
Chair Klobuchar. Okay. Pretty direct. Okay. Mr. Oxley, in
your written testimony, you wrote that Big Tech companies like
Google have adopted anticompetitive terms of service and a take
it or leave it approach which leaves local broadcasters with a
below market sliver of the ad revenue derived through their
products. Can you tell the Committee what's your experience
been negotiating with Big Tech companies like Google?
Mr. Oxley. There is no negotiation. There is no
conversation. There is no emails. There is no back and forth
whatsoever. They don't really even give you that opportunity in
any way, shape, or form. Believe me, we've tried every way
possible with both of them. The bottom line is that they don't
get back to you. Even worse, they make changes whenever they
feel like it. We oftentimes over a weekend or overnight or in
the middle of the afternoon, we'll all of a sudden have changes
in terms of service just come down to us out of the blue, and
we just have to deal with it. There is not any kind of
negotiation. There's not any kind of conversation.
Chair Klobuchar. Okay. Again, Dr. Singer. News aggregators,
such as Apple News, Google News, Facebook News, take content
from various news publishers and give it to consumers. It makes
it very difficult for newspaper publishers and other news sites
to establish direct relations with their own readers, which
cuts into their ability to retain subscribers and improve their
own advertising operations. Can you talk about the challenges
faced by smaller media outlets which often find themselves in
an unevening bargaining position with news aggregators?
Dr. Singer. Sure. There is--the challenge, of course, is
more acute for the smaller publishers than the larger because,
as a matter of bargaining position, they have even less
bargaining power, countervailing power. I would say that the
asymmetry or the power imbalance extends across the entire
industry, not just smalls but the mediums and the large as
well.
The fundamental problem is that they cannot summon the
will--the publishers cannot summon the will to do what's
necessary to extract a fair market payment for access which is
to shut down the access to Google or Facebook from their site.
No one would rationally do that on a unilateral basis. Now, the
reason why is because they're extremely dependent and beholden
on Google and Facebook for traffic. Like I said, 70 percent of
the referrals come from just those two sites.
What the bill would seek to do to attack this power
asymmetry, this bargaining asymmetry, is to first allow the
newspapers and news publishers and broadcasters to bargain
collectively vis-a-vis the dominant platforms. I think that, to
answer your question, yes. They are facing dire straits in
this.
Chair Klobuchar. All right. I just want to ask one last
question, and that is this. You've heard from I think it was
Mr. Francis and my colleague over here with the use of the word
news cartel about what this bill does. Of course, there's been
Representative Buck, conservative over in the House, Senator
Kennedy, not exactly a liberal. Senator Boozman has just been
added to the bill, and there's a lot of interest in this bill.
I think it's really important as we look at the changes
we're making to make clear that there isn't going to be any
kind of bias here but that also--could you address this
argument they've made that this creates some kind of news
cartel? I'm only knowing the supporters of this bill in terms
of the news organizations that run the gamut from liberal to
very conservative. I find this impossible to see it that way.
But could you comment about why this is not a news cartel?
Dr. Singer. Right. The concept of creating a cartel here is
laughable and uneconomic. Let me just try to explain why. The
newspapers and the news publishers generally would not be
getting coordination rights in their dealings with consumers.
Would not. If they got together and tried to set prices for end
users, they would go to jail.
The coordination rights that are being delivered here are
narrowly tailored to pertain to only the news publishers'
dealings with the dominant platforms. They wouldn't have
coordination rights with respect to workers. They wouldn't have
coordination rights with respect to buyers or customers. The
notion of a cartel being created is fanciful.
I want to just make one other point too. I heard Mr.
Francis say that it's going to result in higher prices as, you
know, the cartel is going to exercise presumably its selling
power vis-a-vis consumers. Well, that's false. Just think about
what would happen if the news publishers got their way and got
the bill passed and there was an arbitration hearing and there
was an award that was given in the billions of dollars to the
news publishers. What would happen?
You have a large lump sum payment coming in on the revenue
side, and there is no theory in economics or no theory in
pricing, which I happen to teach at Georgetown, that would
suggest that a big, large increase of a lump sum revenue would
ever cause a firm to raise its prices to end users. It just
doesn't make any sense as an economic matter. If someone in my
class suggested as such, they would fail.
Chair Klobuchar. All right. Don't worry, Mr. Francis. When
Senator Lee or another Senator returns, I myself will give you
a chance to respond. Just hold your beer.
Okay. We have next up Senator Durbin. We're thankful he is
here as the Chair of the Judiciary Committee. We're honored to
have him here since he's not officially a Member of this
Subcommittee, but he is our Chairman. We also thank Senator
Grassley, the Ranking Member, for his constant interest in this
issue and help. Senator Durbin.
Chair Durbin. Thank you, Madam Chair. I have to leave very
shortly, and I appreciate your putting me on the queue.
I recently read about the brown-headed cowbird. It's a
brood parasite meaning it lays its eggs in the nests of other
species. A female cowbird quietly searches for female birds of
other species that are actively laying eggs. Once she's found a
suitable host, the cowbird will sneak into the resident bird's
nest when it's away, usually damage or remove one or more egg,
and replace it with one of her own. The foster parents then
unknowingly raise the young cowbirds usually at the expense of
their own offspring.
It sounds like an analogy to something we're talking about
here. It appears news sources are creating information which is
being used by others that they don't pay any money to create.
The advertising revenue comes their way when they steal that
content and put it on their own tech boards and such.
I'm wondering here. Is there a way to deal with this? Let
me quote one of the friends of mine, Dennis Lyle. You may know
Dennis, president of the Illinois Broadcasters Association. He
said to me, ``The economic harm these tech giants are
inflicting on local broadcast journalists around the country is
brought out in this testimony where advertising revenues for
radio broadcasters have experienced a free fall in recent years
due to almost exclusively the rapid expansion of dominant
online platforms who have devoured advertising market share in
the digital marketplace and devised anticompetitive practices
to protect it.''
We're discussing the passage of JCPA to level the playing
field. I'd like to ask Mr. Oxley. Can you discuss how this
proposal and negotiation framework would help boost small
Illinois broadcasters like those Dennis Lyle represents?
Mr. Oxley. Absolutely. I appreciate the question.
Absolutely. It would help us and all kinds of news operations
to have a level playing field. I think that's all that we're
asking for is a seat at the table. We want to be able to
negotiate. We want to be able to have a conversation. We want
to be able to jointly work together to try to have an outcome
that will help small journalistic outfits and, you know,
including broadcaster--but also including the newspaper
industry.
In terms of broadcasting, we desperately need this because
we're fading away. We're having fewer and fewer people involved
in the news business. We've seen such a dramatic and steep
decline in people involved in news that broadcasting has seen
tremendous amounts of people leave the industry.
Chair Durbin. You know Chicago.
Mr. Oxley. Yes, I do.
Chair Durbin. You've worked in Chicago.
Mr. Oxley. Yes.
Chair Durbin. I can tell you in my Senate career of a
little over 20 years there's been a dramatic change. A press
conference in Chicago you're lucky to draw one reporter. Lucky.
Instead, it's a bank of cameras. By union rules or by
tradition, the cameramen don't ask questions. You make your
statement, then they look at you, and you look back at them.
That's the end of the story unless you want to start
volunteering information and asking yourself questions. That's
what it's come to in terms of what used to be one of the most
vibrant news markets and competitive news markets in America.
It has just disintegrated.
We now incidentally have a new experiment announced this
week where WBEZ, the NPR station in Chicago, is joining up with
the Chicago Sun-Times in a not-for-profit venture to deliver
regular newspaper journalism with radio journalism through NPR.
I wish them well. We need some competition. We need some people
that are asking tough questions of politicians like myself, and
it's just not the case. If nothing has changed, it's all going
to go away.
Mr. Oxley. And----
Chair Durbin. It's just going to disappear.
Mr. Oxley. That is my big concern is that, without
something like the JCPA to help out these journalists, we're
not going to be able to cover council meetings. We're not going
to be able to cover press conferences. We're not going to be
able to cover local weather emergencies or traffic or, you
know, all of these things are just going to go away. What are
you going to rely on then? Your local LISTSERV?
In the way it's been set up over the years is that to make
a go at it from a digital business, as I know Jennifer could go
into great detail, but it's very, very difficult. The profits
just aren't there. You're lucky if you break even. Something
has to change if we want local journalism to survive. The JCPA,
I believe, can get that started by having--let us have a seat
at the table so that we can at least even the playing field.
Chair Durbin. If we don't do something, the cowbirds won't
find any nests to raid.
Mr. Oxley. They will not.
Chair Durbin. Thank you. Thank you very much.
Senator Lee. Mr. Francis, first, I'd like to let you
respond to a point Dr. Singer made a moment ago. I was out in
the hall, so I didn't hear all of it. He described I think the
word was--as laughable the point I was making earlier that this
would authorize cartel behavior. You want to respond to that?
Mr. Francis. Thank you. Yes. For sure. I understood Dr.
Singer to suggest two things, both of which were pretty
surprising to me and I think anybody sort of in the antitrust
enforcement space.
Thing number one is the idea that a cartel is only a cartel
if it deals with your dealings directly with consumers or
workers. That is really not right, and that would be news to
the Department of Justice. I think some of the flagship cartel
enforcement actions have dealt with cartel agreements to
harmonize on prices for sale to intermediate suppliers. I think
of the wire harness cartel, the auto parts cartel, the LCD
cartel. People went to prison for quite a long time for these
things, even though they didn't involve dealings with consumers
or workers. It's a routine piece of cartel enforcement.
Senator Lee. His conclusion is based on a distinction that
you're saying is not one that's recognized by the antitrust
enforcers at the Department of Justice?
Mr. Francis. Certainly, the Department of Justice in cartel
enforcement absolutely does not distinguish between cartels for
sales direct to consumers and cartels for sales to an
intermediate seller like a platform. They are equally illegal.
In addition----
Senator Lee. That wouldn't be a defense then.
Mr. Francis. That would absolutely not be a defense.
Second, I understood Dr. Singer to suggest that the cartel
overcharge here wouldn't increase prices. It is absolutely true
for sure that a one-off lump sum payment would not have any
effect on downstream prices. If what we're talking about here
is just cutting a check, a one-time check, to Google and
Facebook and then it's back to business as usual forever that
would not as--sorry. From Google and Facebook. That alone is
unlikely to impact downstream costs.
I understand that what we're talking about is an agreement
that would lead to a rolling payment from Google and Facebook
on an ongoing basis for news-related activity on search engines
or social media. I think it's a pretty elementary piece of
textbook microeconomics that if you take a monopolist and you
increase their costs, then the process maximizing process of
the monopolist will increase. I understand that, not a single
one-off lump sum payment, to be what's contemplated here.
Senator Lee. Thank you. That's helpful. Just to be clear,
getting back to the earlier point about the cartel, it's not
like that is just an offshoot ramification of this. That is the
point of the bill. Isn't that the primary point of the bill is
to make lawful that which is currently unlawful?
Mr. Francis. That's exactly how I would understand it.
Getting competitors together to agree on the prices and terms
with which they'll deal with a trading partner, that's a
classic cartel.
Senator Lee. Thank you. Mr. Gainor, isn't the problem for
news publishers simply that their value as an advertising venue
has been diluted by the advent of the internet and targeted
digital advertising?
Mr. Gainor. It's been diluted even before the internet. If
the Congress passed the Newspaper Preservation Act in 1970,
trying to stop newspapers from going out of business back then.
We ended up with, I think, more than two dozen joint operating
agreements back then. You know, people live their lives online
in much of the country right now, and 2 years of COVID
restrictions have further encouraged that. When people aren't
going to advertisers, they aren't going to stores, they aren't
going to restaurants, those restaurants and stores stopped
buying ads. That affects everybody, the businesses that we're
talking about here.
Senator Lee. I've got a chart up behind me. I don't know
whether you can see it. Digital advertising revenues have
increased severalfold while the areas where newspaper is now
face more competition. Classified ads and retails ads have
declined precipitously. How much of this is a Big Tech problem
versus how much of it might be a matter of business choices and
how they interact with emerging technologies?
Mr. Gainor. I'd say it's a mix of both. I mean, you look at
that--look at those numbers. They were all declining--as I
said, at Baltimore where I grew up had three newspapers.
Baltimore News-American died in 1986 before the internet. The
Evening Sun was shut down soon after the internet. That wasn't
caused by the internet. You know, so the problem also was these
publishers, the biggest ones, didn't reinvest, you know, for
the future. You know, now, we've seen that the ones who are
really doing well are what are called verticals that are very
specialized. New York Times, a political vertical. Washington
Post, the same. Sports, other things like that. Local news
isn't doing as well because it's just not doing well across the
board.
Senator Lee. Thank you. Mr. Francis, to be clear when we're
talking here about what is at risk, what's at stake, what's
suffering, we're not talking about the death of journalism
itself. We're not talking about the idea that journalism itself
can't be economically viable in the absence of this. We're
talking more I think about whether certain business models
followed by some in the news publishing industry are viable. Is
that correct? Is that consistent with your understanding?
Mr. Francis. I think that's exactly right. I think local
news is clearly critical. I grew up in a very small English
village where, when the LIFE Magazine or the Villager or the
Town Crier or local newspapers would land through our letter
box, everybody in the house at some point that week would read
it and we would learn a bunch of things that we wouldn't find
through alternative channels. Local media, local news are
clearly critical. Exactly as you describe, what's at stake here
is the manner in which local news will survive.
Senator Lee. Right.
Mr. Francis. It's very clear that the business model is
responding to competitive pressures.
Senator Lee. What that suggests is that some--not
journalism itself is at stake but some business models, some
businesses will fare better than others in that environment. If
we--I have no idea. I'm not a businessperson. I'm certainly not
an expert in the news publishing business. I never purport to
know the ins and outs of that business.
I think it's fair to assume that you can identify a certain
subset--I don't know exactly how big it is--a certain subset
within the news publishing industry that has adopted a business
model that's not succeeding. It's not going to succeed. Is it
generally good policy from the standpoint of promoting
competition for the Government to step in and sanction the
formation of a cartel in order to save a particular type of
business model that's dying?
Mr. Francis. It's almost always not. That is not to say
that we look with anything other than horror and sadness at the
real difficulties that competitive change brings. Particularly
with the transition to digital business models, we've seen from
one sector to another legacy business models experiencing real
difficulty as they transition to something that makes economic
sense and is sustainable in the economy as it's emerging today.
But----
Senator Lee. Horse and buggies to automobiles.
Mr. Francis. Exactly. Video rental stores, film and camera.
Like we see this story and there's real suffering associated
with that. If you believe in antitrust, you have to believe in
the competitive process that antitrust is there to guarantee.
Without tolerating and allowing some degree of failure, some
degree of discomfort, even market exit sometimes, then you
don't have a competitive process. Then it's not clear what the
antitrust project is for. As difficult as it is, the pains in
exactly the way you describe are a necessary part of the
competitive process.
Senator Lee [presiding]. I like your comparison to the home
video industry. The consumption of home video entertainment
didn't die. Netflix emerged long before it was an online
streaming company, and it survived where Blockbuster didn't and
a delivery mechanism. One worked. The other didn't. It wasn't
the industry itself had died. Particular business models
succeeded over others. Mr. Blumenthal.
Senator Blumenthal. Thank you very much, Senator Lee. Thank
you all for being here today. There are moments in the U.S.
Senate I have found in my 10 years here that America comes to
one of our hearings, literally America comes before us. I think
we have that moment today. It is a moment for America about a
failing industry that has been the lifeblood of America going
back to the founding of our republic. It is part of the genius
of America that we have local journalism which covers local
stories and provides stories and provides a local form for
people to be informed.
One of the ironies here is that Big Tech is using
information in effect to dominate. It's information that is
collected in all kinds of ways that local journalism simply
doesn't have the power to do, and then it is used, in effect,
to suffocate other sources of information, namely local
journalism newspapers and now increasingly broadcast. To all of
the sophisticated economic arguments that might be made against
this act, I think Ms. Bertetto and her recounting what was told
to her, I think, by someone who was asked, Google doesn't like
it and Google owns everything. That's the nature of the power
here.
I would like to say that the market will self-correct, that
we can use existing antitrust law, but it ain't working. It
isn't working for the Hartford Courant, which was weakened and
then taken over, and its fate is uncertain. It was taken over
by a vulture hedge fund, Alden Capital which has been,
seemingly, selling off its assets, taking advantage of its real
estate, of other assets in no way caring about, seemingly, its
journalistic staff or even quality. They've cut staff in fact
at twice the rate of their competitors.
On the bright side, The Connecticut Mirror in Connecticut
has enabled vibrant democratic debate and discussion. It is a
nonprofit. It depends on donations. It has discussed in recent
times the importance of local elections and local reporters
hold public officials including myself accountable to the
people that we serve.
Dr. Singer, let me ask you and any of the other panelists
that want to comment. I'm a supporter of this measure, but I
wonder are we too late. Can we still rescue American
journalism?
Dr. Singer. I don't think we're too late, Senator. What
this enforcement mechanism would do would provide for a payment
to a collective or a coalition of newspapers or news publishers
that would attempt to approximate the fair market value of what
they are contributing to the platforms in terms of users and
clicks and the like. If we can put money back into the pockets
of the news publishers, I think we can breathe life back into
the industry, and that money would eventually pour down to the
benefit of journalists and all the other workers and input
providers that go into the production of news.
Senator Blumenthal. Ms. Bertetto and Mr. Oxley, same
question to you.
Mr. Oxley. Yes. I certainly want to respond to that because
I think that what's at risk here really is local news. That's
what's really at risk. The huge news operations, yes, they will
be just fine. When you talk about local news, local news is in
a lot of trouble whether it's broadcast or print. I have
experienced it even in the Washington, DC area that there is
not a viable economic model that I have ever seen for local
news to be all digital. It just doesn't work. The money's not
there.
That's very distressing. Over time, I think, well, are we
too late? No, I don't think we're too late. We're getting
close. We might even be in the 11th hour because it's getting
there. This is getting very dire. I look at it--you know, we're
also a platform too. Hey, we're aggregators, and we're good
with that, and we understand that. And we're a platform that
pays for news content. I don't think the Associated Press would
like it very much if all of a sudden we didn't pay for their
content.
In many respects, I think that's what's happening here is,
you know, the Facebooks and the Googles get all the advantage
of it but don't have to pay for any of the content. To me,
that's just not fair. It's the downfall--the true downfall
putting out local news. You're just not going to be able to
find a revenue model.
Senator Blumenthal. Ms. Bertetto.
Ms. Bertetto. You know, I can't sit here and pretend that
as an industry we have done everything correctly. You know,
there are certainly things that over time we have made
missteps, and I feel like the JCPA is one aspect of what needs
to happen for our business models to be corrected in the
future. It is one piece, and there is responsibility on each of
us as publishers to work on other solutions that make our
business successful.
Our company, for example, you know, we have gone to great
lengths to diversify our revenue streams, and I think it's
creative solutions like that that will be necessary from all of
us. JCPA won't fix all of our problems, but it will fix one of
them.
Senator Blumenthal. Thank you. My time has expired. This
topic is urgent in my view because I agree that we are in the
11th hour, maybe even toward the end of the 11th hour, because
once these institutions are gone, they are gone. There is no
reconstructing them, at least with the quality of excellence
that we've seen over so many years in exposing corruption and
enabling information about school boards and holding
accountable public officials so importantly at the local level
because it is irreplaceable and indispensable. Thank you.
Chair Klobuchar [presiding]. Thank you very much, Senator
Blumenthal. I believe Senator Blackburn who was here diligently
early is now on remotely and then we go to Senator Padilla. I
think he should be fine for voting. I guess that's my promise.
Okay, Senator Blackburn.
Senator Blackburn. Thank you, Madam Chairman. I thank you
all. What an interesting panel, and I really appreciate the
testimony that you got to us and that you came to give today.
Mr. Gainor, I think I want to start with you because your
organization has really put up a lot of attention--a lot of
attention on bias in the mainstream media and how Big News and
Big Tech team up and filter the news and really take control of
what you hear and what you see when it comes to news.
When I go to Tennessee, I hear a lot about this from
Tennesseans, and they don't like it. They feel that their views
are not being represented and that they're very concerned about
if they can or cannot trust mainstream media. We thank you for
the work that you're doing on this front, but I'd like for you
to touch on what small news outlets are doing that will help to
combat that bias, what you all are seeing that they're doing. I
think it's important that they do that. If you will just very
quickly touch on what are the best placed efforts for combating
this bias from the coziness of Big Tech and Big News?
Mr. Gainor. First of all, thank you very much, Senator.
We've seen examples all through, even the recent Presidential
election, of the problems of Big Tech and then followed up by
Big Journalism not covering major issues. It's fair to note the
difference between, you know, corporate media which is what,
you know, you're talking about there and several people on the
panel right now. Local journalism is something I think we all
love and is at the heart of a community. On a national level,
yes, there is incredible bias from the traditional media, the
legacy media, and working hand in hand with the same people
that I think we all want to beat up on right now with Google
and Facebook and others.
The scary idea here of creating, you know, a cartel or
whatever you want to call it, some sort of organized unit where
the major players in journalism who, you know, The Washington
Post and New York Times who didn't stand up during the Hunter
Biden story and cover that story while the New York Post was
being censored that they're going to stand up and represent the
little----
Senator Blackburn. Okay. Let me jump in there because, see,
it is--what we want to do is make certain that local news--that
you're going to give local news what they need to be
competitive, that you're not going to cut them off. I think
everyone would agree with that. What we don't want to do is do
something that is going to have the unintended consequence of
the reverse effect to that.
Mr. Francis, let me come to you. Do you think that
companies like Facebook, like Instagram, YouTube would stand to
benefit from an antitrust exemption and what bad behaviors
could they get away with if they did get that exemption?
Mr. Francis. My understanding, Senator, is that this
proposed exemption would work the other way around. In the
event that this were created, two things would happen. The
first is that the most immediate beneficiaries would be the
participating media companies, obviously including some very
large conglomerates as well as the smaller publishers that
we're talking about. Certainly, the cartel overcharge that
would emerge from agreements on prices would be paid in the
first instance by Google, Facebook, and then transmitted most
likely in the form of higher prices for advertising down the
chain to consumers.
Senator Blackburn. Okay. Basically, what you see is more
hands in the pot for the money that is there adding extra
layers of fees. In the end, you're going to have the originator
of the content gets no more, but you're going to have the
conglomerates reaping more profit off of that content. Am I
following what you're saying there?
Mr. Francis. That's exactly correct. There would be a new
monopoly charge at the top.
Senator Blackburn. Yes. Let me ask you this. Yes. Let me
ask you this. The music industry. When it comes to royalties
and some really tricky royalty issues, what we've done through
the years is look at how they operate under consent decrees. A
few years ago, we had to work diligently creating the Music
Modernization Act. It's something that was very important to a
lot of my Tennessee constituents. Do you see something like the
Music Consent Decrees being needed if Congress grants an
antitrust exemption?
Mr. Francis. My sense is--and I am not an expert. It's been
many years since I worked on music licensing and the process
under the consent decrees that you mention. I'll say a couple
things. Thing number one, I think that has been an extremely
complicated, difficult, and controversial process for a very
long time in a way that I think would exemplify some of the
difficulties if we were to embark on a similar price setting
mechanism here, for example, with a, you know, compulsory
arbitration mechanism.
Thing number two, all the--or many of the music licensing
examples are distinctively situated because there's a
compulsory licensing obligation. In other words, the licensor
has a statutory obligation to issue the license. Obviously,
that has all kinds of complicated effects for how you want to
set up your system, and I don't think anybody is talking about
creating a statutory obligation here on news publishers to
issue a license. I am really not an expert on music licensing
in particular. Everything that I say about it should be taken
with some caution.
Senator Blackburn. I appreciate your candor. Thank you all.
Thank you, Madam Chairman.
Chair Klobuchar. Okay. Very good. Thank you. Senator
Padilla.
Senator Padilla. Thank you, Madam Chair. I want to begin by
thanking all the witnesses for your testimony on this very
important topic.
It is not an understatement to say that our democracy
depends on a healthy and vibrant information ecosystem, and
this requires, for example, that all of our communities can
readily access online news via a high-speed internet
connection, a reliable internet connection, that people are
equipped with information and media literacy skills responsive
to today's complex content streams, and that they're served by
a thriving free press that includes media outlets, journalists,
and broadcasters that both reflect and are responsive to the
diversity of our Nation.
Economic recessions and a loss of advertising revenue has
devastated the news industry. In the last 20 years, more than a
quarter of the country's newspapers have disappeared. Local,
regional, community, and independent media are understaffed,
underresourced, and in need of assistance as they work to
identify new sustainable business models. It's critical that
Congress explore how we can assist the news industry as it
tries to find its footing during this transition period.
Ms. Bertetto, I know from personal experience that local
news is so vital to keeping communities in California informed
particularly during elections, for example, or during and after
natural disasters. You touched on it during your opening
statement. Can you discuss what's at stake if local and
community-facing news outlets disappear particular when it
comes to our democracy or public safety?
Ms. Bertetto. Of course. Our readers, again being a small
publisher in Southwestern Pennsylvania, rely on us for the
information they are literally not going to get anywhere else.
That is covering school board meetings. That is covering city
government. That is letting them know when the bridge is out in
their community. That is letting them know when the senior
citizens' center is going to be open during the cold winter
months as heating stations. We often provide that very content
as well to the television broadcasters. Often, they're relying
on us to inform them so they can spread the message through
their channels.
Obviously, as newspaper staffs continue to dwindle, what
will become very problematic is there will be no one. You know,
The Washington Post and The New York Times will probably be
fine no matter what is decided, but New Kensington,
Pennsylvania won't be. Who is going to report on New
Kensington, PA if my company isn't doing that? How are we going
to have an informed electorate, how are we going to have a
society that understands what is happening in local government,
State government, and national Government if my company is not
providing them those resources?
Senator Padilla. Thank you. Those are great examples. I
mean, I appreciate that not every bridge failure makes national
cable news.
Ms. Bertetto. Exactly.
Senator Padilla. God only knows how contentious school
board meetings are in this day and age. Given the importance of
local newsrooms to our democracy, I'm deeply concerned that
newsroom employment in the United States has dropped by 26
percent since 2008. Ms. Bertetto, in your testimony, you stated
that the Journalism Competition and Preservation Act, the JCPA
as we're referring to it, would help small publishers make
additional investments into the community and hire more
reporters. A question for Ms. Bertetto and Mr. Oxley. Can you
discuss the importance of explicitly tying benefits from the
bill to job creation and retention?
Ms. Bertetto. Presently in our company, about $7 million is
paid out in salaries to journalists on staff. To give you some
sense of what we earn presently from Google, it is $144,000 a
year. I really feel I'm starting at zero, and any additional
moneys that could come in could certainly help to first keep
reporters on so we can stop this decline because it's
astronomical the number of reporting positions I'm seeing leave
our market.
I also think that with a hundred--you know, when you're
looking at $144,000 and say I can get $600,000, just for
example, I could cover more communities. I could add beats. I'm
presently making decisions every single day about which
communities we can afford to have a reporter in on a full-time
basis and where we have to decide to have a part-time reporter
or no reporter at all. Any additional economic relief to help
me avoid those decisions would certainly be welcome.
Senator Padilla. Mr. Oxley.
Mr. Oxley. The same goes for us. Our sizes aren't all that
different. Our newsroom is about--costs about $12 million to
run every year. What we're finding is more and more has to be
switched to the digital side even though the digital side
really doesn't make us money. At best, over the years, we've
broken even. In the last 10 years, our digital overall revenues
off of our website have barely moved and the costs have gone up
a lot. If we were able to have money come in--and I think that
the JCPA could provide that by having a level playing field,
having a seat the table--then we would be investing in
reporters.
The very thing I get all the time from all of the people on
the content side and the programming side is, you know, can I
add people. Of course, we would like to add people. Also, our
area has grown exponentially. It wasn't that long ago that the
whole area in Washington, DC was 3 million people. Now, it's
about 6 million people yet our newsroom has not been able to
grow in size because we have not been able to really change in
terms of growing our people. The very first thing we would do
would be to add more journalists.
The one other thing I would say about the journalists that
we would add is they're professional journalists, and I think
that is a huge point here. These aren't people who are doing
clickbait or they're people who are researching these stories.
They've been educated to do that. They know what they're doing.
They make sure to get it right. We have a saying at our
operation, ``Before you get it first, first get it right.'' And
that means getting good sources. That means verifying. That
means doubling, tripling, quadrupling your efforts to make sure
that you've got it right before you put it out. That way,
people get the facts. That's what people need in local news.
Senator Padilla. Thank you very much. Madam Chair, just in
closing, I know that the conversation has also gone in the
direction of what else the industry is doing to find solutions,
short term and longer term, during this transition period. I
invite the ongoing conversation of what else Congress can be
doing both in the short term and the longer term to help the
news industry. Thank you very much.
Chair Klobuchar. Okay. Thank you very much, Senator
Padilla. I think it's down to just Senator Lee and myself here.
I'm going to have to leave at about five to five. I'm going to
let him maybe do 5 minutes or so. I'll have two more questions
and we can go from there.
Senator Lee. Thank you. Mr. Gainor, let's go back to you if
that's all right. How do you believe consumer trust or distrust
of news publishers might impact their success? I ask because
the Edelman Trust Barometer as displayed in the chart behind me
shows a growing mistrust of the media across the globe. Edelman
reported this year that 46--46 percent of people around the
world view government and media as divisive forces in society
and 74 percent of Americans worry about fake news.
How do you think political bias or, you know, including
anticonservative censorship might have contributed to that
mistrust?
Mr. Gainor. I think it helps contribute to it a lot both on
the, you know, Big Tech side and on the media side. Again,
that's--you know, you're talking about large media outlets,
corporate media. It's not a slam on local news. When people,
when ordinary Americans think about media, they're generally
not thinking about their local news outlet, their weekly
newspaper, their radio station. They're thinking about larger
media. They're thinking about the media they see on TV, and
then they're also thinking about the problems of Big Tech.
I don't know if this Committee or others want to go to war
with Big Tech. I think conservatives would be very happy about
that. The question is does this bill work to do that? You know,
when you look at the years of, you know, gradual decline of
people's interest at media and then you also look at people's--
the rising tide of people distrusting media, the two track very
similarly.
Senator Lee. That makes some intuitive sense, and there
seems to be anecdotal support for that. At least intuitively,
it makes sense to me. The Congressional Research Service has
noted that 70 percent of daily newspapers are owned by private
equity firms, hedge funds, or other investment groups. Nothing
wrong with those business models, but those are the data that
I've got.
Do you think these owners are necessarily going to be more
concerned about investing in journalists and quality journalism
than they are about getting a return on investment? Regardless,
would the JCPA make a difference in that regard? Is the JCPA
going to change the incentives in place for the owners of these
businesses one way or another?
Mr. Gainor. It certainly doesn't seem like it. I mean, you
look at, you know, just The Washington Post, for example. The
Post--its identity is as a national newspaper. When it owned a
chain of weeklies that were very popular in suburbia, it shut
it down. When Tribune owned the Baltimore Sun, they had a chain
of weeklies that they gutted to the point where they're largely
nonexistent now.
That's been an ongoing problem, you know, not necessarily
the local ownership. You know, local ownership, which I think
is reflected on this panel, local ownership tends to care about
the local community. You know, but when its national ownership
that you were saying 70 percent, then they're not necessarily
loyal to their readers or their viewers.
Senator Lee. Mr. Oxley, while I'm never going to support
legislation that I believe attempts to improve competition by
forming a cartel as this one does, if the purpose of something
like the JCPA is to protect small and independent local
publishers, then why not at least limit the bill's scope? Why
not limit its application to small and independent local
publishers?
Mr. Oxley. I don't know the ins and outs of that as well as
an awful lot of people in this room. I don't know--I haven't
been able to look at the ins and outs of this bill and how it
works. But----
Senator Lee. Are you saying that you would support it if it
were so limited?
Mr. Oxley. I would certainly support anything that would
help local news. I feel at this point that we're in a really,
really tough spot with local news. That's to me what we're
really talking about here. We're not talking about the national
news players. Local news players are still some of the most
trusted in America, you know? Study after study shows that your
local news people are trusted and that there is actually a very
favorable view of them, you know? The national is a different
story. But locally--we need something to truly help out the
local news providers.
Senator Lee. If that's the case, if we are going to make as
most of this discussion today has been, if we are going to make
it about the local folks, then why not limit it to them? Dr.
Francis, I assume you'd agree with this suggestion that if you
buy into the notion that creating a cartel or a type of cartel
permission slip is acceptable for one universe you could reduce
the harm inflicted by that universe where cartels are
authorized by reducing the scope. In this case, since most of
the discussion has focused around small, independent, local
publishers, couldn't that have that effect?
Mr. Francis. I think that's exactly right, Senator. As
you've heard, I have pretty strong feelings about cartels. I
don't object in principle anything like so much to the idea of
supporting local struggling news publishers. At a minimum,
restricting the scope of what you were describing--sorry.
Restricting in the way you described the scope of the exemption
so that it's truly targeted at small, struggling publishers,
that means we can avoid conferring the ability to, you know,
add a cartel overcharge to large, very profitable media
companies. That would really help.
I am pretty uncomfortable at this moment in our sort of
political life about taking a big bite out of antitrust when we
should be reinforcing it. I would love to be talking about
other ways to support local news. Any support mechanism should
be targeted to those who really need it, not to the most
prominent publishers.
Senator Lee. Is there a risk that by focusing on this
particular issue it might draw attention away from other
things, other things that also need to be addressed including
the problem we've got with Google and Facebook?
Mr. Francis. I think digital monopoly and monopoly in
general is a problem that at the minute vastly overmatches the
ability of our antitrust agencies. I would love to see more
funding and more resources. I think that's the most urgent need
we have as, you know, a competition policy community in this
country even more urgent than antitrust reform is money and
personnel for the agencies. That's where I would love the focus
of the conversation to be. That's what I think is top of the
wish list.
Senator Lee. Thank you.
Chair Klobuchar. Thank you very much, Senator Lee, and
thank you for--I'm sure you have other questions for the
record. Thank you. Mr. Francis, that's something where we agree
on the funding for the Agencies. As you probably know, Senator
Grassley and I have a bill that passed the Senate actually to
change the merger fees actually make it easier for smaller
mergers and harder for bigger ones, maybe not harder but just a
little more expensive, to help pay for the agencies to be able
to do their reviews as well as some other funding mechanisms
that we're working on.
A few things. I'm just going to ask a few questions here at
the end. Be brief here, Dr. Singer. I have to go now work on
the Electoral Count Act. Dr. Singer, in your opinion, should
news organizations have a right to be compensated when digital
platforms take in profit from detailed snippets--I think it's a
little more than snippets--of their copyrighted content?
They're claiming it's fair use, and I'd like your response.
Dr. Singer. Right. Yes, they should be compensated for any
value that is being conferred from the newspapers to the
platforms including when the platforms scrape and index and use
Rich Text and images to decrease the likelihood of a user
actually clicking on the link.
I'd like, if I could, just to address the cartel pricing
increase that Mr. Francis keeps saying which doesn't make sense
as an economic matter. He did admit, I think his most important
admission today, that if there was a one-time lump sum transfer
from the platforms to the newspapers, as a coalition, there
would be no price increase by the newspapers. I think he did
admit that. That's the most important admission that we heard
today.
What he said next, which was uneconomic again, was that if
it were to recur every 5 years then there would be a price
increase of some sort. I can't follow what the economic logic
is, and I start--maybe he's talking about a price increase by
the platforms. I want to rebut that as well because the
platforms, as you know, Senator, has used a free price--a zero
price model to consumers. The notion that the platforms having
to write a check of say $5 billion every year for the payment
of access is going to induce them to suddenly abandon their
free model and start charging consumers access for search or
charging consumers access to the Facebook social platform is
uneconomic. I can't say it any nicer than that. There will be
no cartel price effect from this lump sum transfer. You can
take my word for it.
Chair Klobuchar. Okay. Thank you. Dr. Singer, just some
questions about some of the concerns that we've heard. Of
course, I mentioned we're making revisions with the House to
the bill. Are there changes we should consider to ensure that
small and local organizations benefit from joint negotiations
and can exert an appropriate level of control over the process?
Dr. Singer. Yes, I understand there are certain provisions
in the bill that would protect small publishers that you were
asking, and the most important that comes to mind is the
nondiscrimination provision. A newspaper--a small newspaper
that wanted to apply to become a member of the coalition could
not be discriminated against based on its size or on its
viewpoint. That's very important. That is they could access to
the bargaining coalition.
The second thing I understand there are voting rights. One
member, one vote. It's very important that smaller newspapers
who are members of the coalition must be protected and their
interests must be protected that way.
Chair Klobuchar. Should we also consider changes to prevent
discrimination--this has been raised by some of my colleagues--
in the joint negotiation process against news outlets carrying
content that expresses different or even unpopular views
whether they are from the left or the right? I know that we
have support for this bill, some of my colleagues have noted,
from news organizations that they consider left and then we
have support from--that are in support of the bill, Washington
Examiner, Washington Times, Daily Caller, not exactly a bastion
of liberal organizations. Could you respond to that if there's
some provision we could put in to ensure that there is no bias?
Dr. Singer. The provision again is the nondiscrimination
provision. Any coalition of newspapers that forms would not be
able to exclude a member based on their viewpoints, plain and
simple.
Chair Klobuchar. Okay. If joint negotiations with the
dominant platforms stall, should Congress consider providing
for binding arbitration to resolve the impasse?
Dr. Singer. Yes. Binding arbitration is critical here
because it is possible for Google or Facebook to check all the
boxes and abide by the good faith protections during the good
faith negotiation period. It's very important that they look
down the road and see that, if they do that, they're going to
be faced with binding arbitration again at which point a panel
of, say, three arbitrators would make a determination as to
whose estimate of the fair market value was fairest of them
all, most closely approximated the value being conferred by the
news publishers onto the platform.
Chair Klobuchar. Okay. That's one proposal--thank you--as
we finish up this bill. I also would like to enter a set of
more than three dozen letters from newspapers, news
organizations into the record.
[The information appears as a submission for the record.]
Those letters focus on the state of competition in
journalism and the need for solutions like the Journalism
Competition and Preservation Act, which is bipartisan both in
the Senate and the House. We also have a letter from Lee
Enterprises, no relation, discussing the challenges the
industry faces from those who would exploit it for short-term
profit opportunities as well as a few others.
Chair Klobuchar. I'll put those in the record. I want to
thank you all for being here. Local news is of foundational
importance to our democracy. I want to thank our witnesses
today for their testimony. Many Senators from different
parties, different views as you can see came together today.
That's part of the exercise of free speech and part of being a
Senator. Senator Lee and I truly enjoy doing these hearings and
really appreciate it. I want to get something done here. That
is my goal, and we want to make it work for this country.
The record will remain open for 1 week until February 9th.
Thank you. Do you want to add anything, Senator Lee. Okay.
Thank you very much to all of you.
[Whereupon, at 4:55 p.m., the hearing was adjourned.]
[Additional material submitted for the record follows.]
A P P E N D I X
Miscellaneous submissions:
Alliance for Audited Media....................................... 166
America's Newspapers............................................. 167
Arkansas Press Association....................................... 169
Association of American Publishers (AAP)......................... 153
Association of Magazine Media (MPA).............................. 234
Authors Guild (AG)............................................... 155
Bay Area News Group.............................................. 171
California News Publishers Assocation............................ 175
Cherry Road Media................................................ 178
Copyright Alliance............................................... 180
Dallas Morning News.............................................. 196
Deseret News..................................................... 184
Electronic Frontier Foundation (EFF)............................. 157
Georgia Press Association........................................ 185
Journalism Competition & Preservation Act (JCPA)................. 159
Kansas Press Association, Inc.................................... 194
Lee Enterprises.................................................. 163
Manchester Cricket............................................... 189
Minnesota Newspaper Association.................................. 198
Missouri Press Association, January 7, 2022...................... 205
National Newspaper Association (NNA)............................. 188
National Press Photographers Association (NPPA).................. 209
NewsGuard........................................................ 207
Various Newspapers Letter, May 7, 2021........................... 190
Radio Television Digital News Association and Radio Television
Digital News Foundation....................................... 212
South Dakata Newspaper Association (SDNA)........................ 214
Southern California News Group................................... 213
StarTribune...................................................... 215
Summerland Advocate-Messenger, Clearwater, Nebraska.............. 219
Support Letter for Journalism Competition and Preservaton Act
(JCPA)........................................................ 217
Tampa Bay Times.................................................. 220
Tennessee Press Association (TPA)................................ 221
Tennessee Press Association (TPA), Letter to Senator Cornyn...... 224
Tennessee Press Association (TPA), Letter to Senator Cruz........ 229
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