The WGA East, decrying the “negative impact” the Big Tech giants are having on ad revenue for news organizations, has submitted written testimony to the Senate Judiciary Committee’s Subcommittee on Competition, Antitrust and Consumer Rights for its hearings on “Breaking the News – Journalism, Competition, and the Effect of Market Power on a Free Press.”
The WGA East, which represents film and TV writers and news writers at CBS News and ABC News and numerous digital news sites, urged the subcommittee “to examine the huge, negative impact of Big Tech companies on the ability of news organizations to raise enough revenue to employ professional journalists to do their essential work.”
Sen. Amy Klobuchar, the 2020 presidential hopeful who chairs of the subcommittee — and is the daughter of a newspaperman — has introduced legislation to rescue the struggling local news industry. “Local news is facing a crisis in the U.S.,” she said last week. “These Big Tech companies are not friends to journalism; they are raking in ad dollars while taking in news content, feeding it to their users and refusing to offer fair compensation.”
The guild noted in its statement that a Pew Foundation report found that 63% of all advertising revenue in 2020 was from digital advertising, that nearly two-thirds of all digital ad revenue went to Big Tech companies and that 55% of it went to Facebook/Meta and Google/Alphabet alone.
Noting that all news organizations face the challenge of paying for professional journalists while “Big Tech takes the lion’s share of the advertising revenue,” the guild said:
“The tech platforms do not pay writers and correspondents and editors and producers and crews to investigate and report the news. They simply make money by selling ads against the stories that are created by professional journalists who are employed by news organizations.
“To be clear, the news is going online, which is where the Big Tech companies take the revenues. Pew reports that in 2021 fully 84% of Americans got news from digital devices like smartphones and computers – and 51% said they ‘often’ got their news digitally. This is a continuing trend. As recently as 2016, only 28% of Americans said they preferred to get their news online. Thus, news organizations increasing rely on digital distribution to reach their readers and audiences, regardless of whether they are principally newspapers, broadcasters, or digital-native publications. If Big Tech continues to siphon off such a huge share of digital advertising revenue, there will be no money to pay journalists to do their work.
“This is not just a matter of platform. There is nothing inherent in digital technology that would preclude news organizations from obtaining revenue by distributing their stories online. The problem is the concentration of market power by a tiny handful of Big Tech companies. Facebook and Google – and to a lesser extent, at least for now, Twitter and Amazon – have the market power to completely dominate the digital advertising market. News organizations simply cannot compete.
“The result is predictable: Continued consolidation and cutbacks and layoffs in newsrooms across the country. Local newspapers have slashed their newsroom staffs. Local broadcasters often fill their newscasts with stories created by national chains. Even digital-native news organizations, which had been growing enormously, face severe headwinds as ad revenue gets more and more difficult to find. WGAE members have been laid off at premier digital news organizations like HuffPost, Vice, G/O media, and others. Digital-native enterprises are forced to shutter verticals and to consolidate with other digital companies just to survive in the current climate.”
“Two pillars of American democracy are (1) competitive markets free from domination by a small number of giant firms and (2) a robust, free press,” the guild said. “Both pillars are undermined by Big Tech companies gorging on the digital ad revenues that could, and should, be used to pay professional journalists to investigate and report the news.”