A revelatory new study estimates that Google and Facebook owe U.S. news outlets at least $12 billion a year for the value that news content adds to their platforms.
Google owes publishers $10 billion to $12 billion annually and Facebook $1.9 billion, according to the study by professors at Columbia University and the University of Houston, with Boston-based consulting firm The Brattle Group.
“Existing deals made between these platforms and news publishers do not capture the full value generated by news content on the platforms,” it states.
This comes as democratic governments around the globe are trying to save their local news industries, which is unlikely to succeed unless publishers get fairly compensated by tech giants profiting from their work.
The study won’t be the final word on what’s owed in the U.S. But it advances the conversation about the imbalance of power between a few dominant tech companies and thousands of small and regional news outlets trying to establish a foothold online. It might also help persuade Congress to help news outlets get paid before America’s news industry collapses any further.
By quantifying the news bill Google and Facebook would owe if the playing field were level, the study also helps explain why they are using aggressive lobbying, threats and outright blockages of news to kill or weaken media-bargaining policies.
This isn’t out of the blue. Investigations by state and federal antitrust enforcers found the platforms are unfairly exploiting their immense power. The U.S. Department of Justice’s latest case against Google alleges that publishers are getting shortchanged and have no choice but to use the monopolistic platform.
No wonder newspapers, still the source of most journalism, are struggling to build sustainable businesses online, where much of their work is distributed and read.
As tech platforms grew into behemoths, newspapers’ combined revenue fell from $50 billion in 2005 to $20 billion in 2022. Thousands of papers closed and others shrank, leaving 70 million Americans with little to no local news coverage, according to the 2022 State of Local News report.
“We’re not dying of old age, we’re dying of homicide,” said Danielle Coffey, CEO of the News/Media Alliance trade group.
The study estimates 17.5 percent of Google search ad revenue and 6.6 percent of Facebook ad revenue “should be paid to news publishers on an annual basis.”
That’s based on the estimated value of news-related searches, and value that professional news adds to the platforms.
Correcting the imbalance, by giving outlets bargaining power and a better chance to survive, is the motivation behind policies approved in Australia, Canada and France. A U.S. version, the Journalism Competition and Preservation Act proposed by Sen. Amy Klobuchar, has bipartisan support and nearly passed last year.
The JCPA would enable news outlets to collectively negotiate content deals with the platforms. If they can’t agree, deals would be made through arbitration.
A Facebook spokesperson declined comment. Google spokesperson Jenn Crider said: “These types of studies are based on inaccurate assumptions, faulty premises, and often serve agendas.”
In an interview, Crider said Google is “one of the largest financial supporters of journalism in the world.” That includes grants, agreements reached with some publishers and ad revenue. Asked if Google believes current compensation to publishers is adequate and fair, Crider repeated that “we’re one of the largest financial supporters of journalism.”
Google will be — if the study’s even halfway right, policymakers stand up to tech bullying and the U.S. decides its local news industry must be fairly paid for its work.
Brier Dudley is editor of The Seattle Times Save the Free Press Initiative.