Forcing tech companies to share revenue with publishers could backfire

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It’s impossible to determine who’s the first person to have proposed forcing large platforms like Google to share their revenue with news publishers, but Rupert Murdoch was the first that I can remember who came up with a mechanism to enforce such a transaction.

Back in 2009, Microsoft had just launched Bing and was planning to spend up to $100 million in just its first year in its efforts to unseat Google as the king of search. A few months later Murdoch proposed a deal in which all of News Corp’s content would be pulled from Google’s search index and made exclusive to Bing searches, and in exchange Bing would pay News Corp a hefty sum. In theory, this would give Google users an incentive to switch over to Bing, and in the long term it would force Google to the negotiating table if it wanted some of the world’s largest news websites to be reintroduced to its search engine. 

Nothing ever actually came of the proposal, and most articles about it at the time expressed skepticism that it would even work. But it was only a few years later that other media executives started announcing their support for variations of the same idea. In 2017, the News Media Alliance, an industry trade group that represents most major newspapers, proposed new legislation that would provide antitrust exemptions so the industry could collectively negotiate with the tech platforms for revenue share. Such legislation, if it ever passed, would allow thousands of news sites to band together and threaten to boycott a platform that didn’t meet its demands. 

Even BuzzFeed’s Jonah Peretti, a man who once seemed dismissive of the idea that social platforms were destroying the media industry, has recently started calling attention to their unfair advantage. In a 2018 Code Media conference he complained that “most of Facebook’s revenue is in News Feed, and that’s where they’ve not shared revenue.” He even floated the idea in The New York Times of a merger between several prominent media companies so he could have greater collective bargaining power with Facebook. 

And those are just the free market ideas that have been put forth. In recent years, a growing chorus has called for heavy government intervention, both in terms of breaking up the tech platforms and forcing them to pay publishers some percentage of their revenue. Early last year, the European Union passed new copyright rules that could potentially force Google to pay publishers if it showed snippets of articles within its search results. This month, France’s government went a step forward by forcing Google to the negotiating table with publishers. Not to be outdone, Australia’s government plans to force Google to not only share revenue, but user data as well.

Now that forced revenue sharing is no longer a hypothetical scenario and will soon become a reality, I think it’s a good time to consider the various ways that it may both hurt and help the media industry. Put another way, would such an endeavor actually reverse the last two decades of decline of a struggling news industry, much the same way that the rise of music streaming platforms restored health to the music labels? Here are some of the pros and cons:

The pros

Between 2006 and 2016, the U.S. newspaper industry lost $31 billion in advertising sales. Together, Google and Facebook generate around $200 billion a year. Even if they were forced to hand over only 10% of their revenue to the news industry, that money could serve as a significant boost to struggling media outlets and help many newspapers expand their coverage. This capital could also serve as venture funding for media outlets that hope to diversify their revenue streams so they’re less reliant on advertising. One of the reasons some newspapers have struggled to pivot to paid subscriptions is because they lack the technical resources to do so.

Diverting billions of dollars away from the major tech platforms would also reduce any monopolistic power they have, making it more difficult for them to acquire or out-compete rising upstarts in the tech space. With prominent Democrats calling for the breakup of major tech companies, sharing revenue with the media industry could help in easing pressure from antitrust regulators who’ve come to believe that a handful of tech companies are too powerful.

Finally, one could argue that the tech giants have already established a precedent for paying content creators. In fact, platforms ranging from YouTube to Facebook Watch to Apple News give publishers a cut of any advertising dollars generated against their content. Expanding those practices so they include publishers featured in the Newsfeed or Google search results, therefore, wouldn’t be much of a stretch, merely an extension of already-existing policies. If Spotify can afford to give the music industry a cut of every single dollar it generates, why can’t this model be applied to news media?

Cons

This could halt the media industry’s already ongoing business pivot away from display advertising, a pivot that’s been in the works for years. Publishers like The New York Times, Washington Post, and Wall Street Journal recognized years ago that advertising would never sufficiently fund quality journalism, and they’ve since embarked on digital subscription models that have strengthened their underlying businesses and improved the quality of their reporting. The rest of the industry is engaged in similar pivots, expanding into subscriptions, ecommerce, and live events. A sudden influx of easy money might remove their incentives to continue with these pivots, making them vulnerable to the next wave of disruptive technology.

I’m also wary of how this would benefit already-entrenched media players at the expense of independent content creators. Would Facebook and Google suddenly owe money to the millions of websites that daily appear in their feeds? Would, say, a blog post on a corporate blog be just as worthy as any media outlet in terms of revenue sharing? Well funded media companies would suddenly be incentivized to increase their exposure on the major tech platforms to an even greater extent, making it harder for independent creators who don’t have millions to spend on SEO consultants or Facebook promoted posts to break through.

I think the greatest downside to a compulsory revenue share is that it will undermine our longheld understanding of fair use and our rights to link to any website on the internet. Curation, aggregation, and analysis are staples of the modern web, and any policy enforced against a Google or Facebook would likely apply to the BoingBoings, Techmemes, and Drudge Reports of the world. More than a decade ago, the blogosphere erupted in outrage when the AP tried to claim that even its headlines were protected by copyright, and for good reason. Some would argue that copyright laws are already too draconian. YouTubers, for instance, regularly complain when their videos are removed or demonetized because they simply played a snippet of a song -- something they believe should fall under fair use. Installing stricter regulations could expand this type of abuse across more forms of media. 

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Of course, this is all speculation at this point. It’s unclear how the regulatory bodies in Australia and France will apply these revenue share requirements, and what that will mean for the relationship between tech platforms and media companies going forward. One thing’s for sure: the platforms seem to recognize that they bear at least some responsibility for the current media crisis: both Facebook and Google pledged $300 million in 2018 to media initiatives, with most of that money earmarked for local news organizations. And with the onset of the coronavirus crisis, which has decimated newsrooms even further, the platforms pledged even more money in support. A cynic would label these donations as PR stunts aimed at staving off regulators, but given the dire situation the media industry faces, I don’t think the news outlets that receive these funds are in a position to complain. 

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Simon Owens is a tech and media journalist living in Washington, DC. Follow him on Twitter, Facebook, or LinkedIn. Email him at simonowens@gmail.com. For a full bio, go here.

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