All Out Of Ideas, Legacy News Providers Ask US Gov't For The Right To Collude Against Google & Facebook

Failures

from the failure-to-adapt dept

About a month ago, Buzzfeed’s founder and CEO, Jonah Peretti summed up my feelings about watching old news media organizations running around everywhere blaming Google and Facebook for their own failure to innovate:

?A lot of the traditional media players are opportunistically attacking Facebook and Google because Facebook and Google have figured out a better model for delivering information and entertaining people which is real-time, personalised, shareable and global ? all these things that you can’t do in broadcast and print,? he says.

?These traditional media companies have had decades of massive cashflow and they decided to stockpile that instead of investing in digital. They just kept managing earnings on their traditional businesses even though we have known for 20-plus years that the internet was going to be a big thing and now all these things have unfolded, with some surprises but in a way that was not that hard to predict. Now we are at the point where Facebook?s and Google’s revenues are starting to be a substantial portion of the pie, they are attacking them, saying it is unfair.

?The truth is that Facebook and Google have always taken a long term perspective ? so has Netflix, so has Amazon ? that the internet would win out in the end. A lot of the big media companies always took a quarter-to-quarter perspective, a maximise earnings perspective, and that has resulted in them being in a tough position and so they attack Facebook and Google because of it.?

This is, more or less, what we’ve been arguing for nearly two decades. There are a ton of opportunities for these companies if they actually embraced digital — but they did so in drips and drabs and often stupidly chasing fads, rather than actually figuring out how to deliver content that people actually wanted in a way they wanted it. So, for the past few years, they’ve focused on whining about how it’s so gosh darn unfair that the companies who did figure it out — Google and Facebook — are now making lots of money.

And… now those legacy firms are seeking the nuclear option. The News Media Alliance — formerly the Newspaper Association of America — has spent the last few years pushing bad idea after bad idea to try to “save” the news organizations that failed to actually innovate (for example: asking Trump to whittle away fair use). We mocked the fair use proposal as complete nonsense, but in order to make it happen, the News Media Alliance is… asking the government for a special exception to antitrust law to allow its members to collude against Google and Facebook… and to generally make the internet less interesting and more expensive.

Today, the News Media Alliance ? representing almost 2,000 news organizations ? called on Congress to allow publishers to negotiate collectively with dominant online platforms. The objective is to permit publishers to have concrete discussions with the two dominant distributors of online news content, Google and Facebook, on business model solutions to secure the long-term availability of local journalism produced by America?s newsrooms.

Supposedly there are three goals here: to get greater copyright control over news and to create a snippet tax, to force Google and Facebook to work with news organizations on some sort of subscription program, and to get “a fair share” of revenue and user data. None of these make much sense. As Matt Schruers at the Disruptive Competition Project points out, all three of these goals have issues:

Let?s consider those three objectives: IP protection, subscriptions, and a ?fair share? of revenue and data. First, news publishers do not need an antitrust exemption to lobby for more IP protection; federal law already allows it. (As I?ve noted before, News Corp. is already quite fond of doing so.)

Second, Google and Facebook are already pursuing new strategies for supporting subscriptions. The NMA proposal, however, suggests a collective turn to subscription models, removing consumers? ability to choose among products with different business models, including ad-supported ones. Individual newspapers should have the freedom to experiment, pursuing the model best suited to their business. Consumers are best served when they can choose between competing models.

Third, Chavern wants a ?fair share of revenue and data.? In pursuit of this, the NMA would make an end-run around copyright law?s fair use doctrine, which permits the indexing of content, so as to force digital services to pay for the privilege of sending traffic to their sites. As I discuss below, news publishers have tried this in Europe. It hasn?t gone well.

There are lots of other problems here as well. As Mathew Ingram pointed out, there’s tremendous hubris in the NMA members thinking that they’re the only ones producing quality journalism:

This sense of entitlement is at the core of what the NMA is proposing. In effect, it is suggesting that mainstream newspaper companies are the only entities capable of producing quality journalism, and therefore they deserve a get-out-of-jail-free card so they can engage in what amounts to collusion. And they are hoping Congress will see Google and Facebook as the enemy.

Here?s a thought: What if these newspaper companies had spent a little more time trying to compete over the past decade or so, instead of relying on their historic market control to keep their profits rolling in? What if more had tried to improve their websites and their mobile versions, so that users wouldn?t install ad blockers, or turn to other solutions like Facebook Instant Articles?

Every single competitive threat the newspaper industry has faced, from Craigslist to Facebook, has been visible long before it decimated the industry?s profits, and most of the newspapers in the NMA did little or nothing to deal with them until it was too late.

Indeed, some more local news organizations are already pushing back against the NMA’s plans. The Local Media Consortium, which admits some overlap with NMA members, points out that this whole thing seems like the wrong approach:

First, Chavern?s position ignores the LMC?s work during the last four years forging partnerships essential to us as providers of quality local content and local business solutions. Those partnerships align the news industry ? print, broadcast and ultimately digital ? with tech companies in a symbiotic relationship. The LMC has provided revenue opportunities for all levels of local media ? and we?ve done that while leveraging our scale to garner both the attention and respect of the tech platforms. We have built partnerships based on shared value, not entitlement.

Second, I am concerned about the mixed messages the NMA?s stance is creating within the industry and our own LMC membership. The NMA board includes several members of the LMC, and these board members may not be fully aware of our relationship with tech companies. Chavern?s op-ed suggests a lack of knowledge of the tens of millions of dollars our partnership with Google has netted the industry, or the inroads we have made influencing innovation with Google, Facebook, Apple and Yahoo

That is, the LMC is looking at new tech and innovation as an opportunity. The NMA, on the other hand, seems to be looking at it as the enemy. This is a fairly typical response for legacy industries who failed to adapt, then flail about wildly against those who succeeded, but it’s never good for consumers (there’s a reason we don’t allow collusion to happen after all…).

Rafat Ali probably summed all of this up best:

Look, I get it. Google and Facebook are big and successful and making lots of money. And because these news organizations failed to do much to adapt (or, at best, made superficial embraces of digital), they’re pissed and they blame Google and Facebook for their own failures (not unlike the recording and film industries). But that misses the point. There’s a reason why this happened, and we shouldn’t have the US government reward those who didn’t innovate by taxing those who did. The end result would be bad for the public. It would be bad for innovation.

And, sure, I’m saying this as a news publication that is concerned about Google and Facebook’s power in the market — but it’s on me to figure out how to adapt and leverage the benefits that platforms like that (and others) bring. Not to go running to the government seeking to collude with others and to cement weak business models in place. Frankly, for companies seeking to blame others rather than their own failures, it’s probably best that they go out of business sooner, rather than later. Clear the field for others who are willing to innovate and embrace technology, rather than whine about it.

Filed Under: antitrust, collusion, competition, innovation, news, newspapers
Companies: facebook, google, news media alliance, newspaper association of america, nma