Why Australia Is Making Facebook and Google Pay the Media
And why it might not work
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News media are in crisis. Like many other industries, they’ve lost a huge chunk of revenue to the pandemic as advertising has dried up. What makes it worse for media is that they were already in deep trouble.
The New York Times calculated on April 10 that some 36,000 newsroom employees in the United States had been laid off, furloughed, or taken pay cuts since the coronavirus hit. The number now is surely higher. A running list maintained by the nonprofit Poynter stretches for pages; it can’t keep up with the pace of cuts. It’s all happening to a sector that had already lost half of its workforce between 2008 and 2019 according to Pew Research. Now, The Guardian is predicting an “extinction-level” crisis for U.S. newspapers.
A cruel irony is that the demand for news has spiked even as the supply shrivels. Traffic to top news sites as of mid-March was up 30%, the Wall Street Journal reported. Those clicks don’t directly boost their bottom line, though, if businesses aren’t buying ads. Some outlets have seen a rise in subscriptions, but even that effect has likely been blunted by many publishers’ decisions to take down their paywalls for their coronavirus content. (Medium, whose business is based on subscriptions rather than ads, is among those that have made pandemic-related stories available for free.)
How things got this bad for news media is a long story, but it’s partly a tale of two business models. News media pay journalists to produce content that draws readers. Internet platforms such as Google and Facebook aggregate content produced by others. The latter turns out to be more attractive to both readers and advertisers and can be done on a vast, global scale at essentially no marginal cost. And so Google and Facebook have sucked up some 60% of the U.S. market for online advertising, a share that’s only growing as the media’s share dwindles away. That’s why Google’s parent company Alphabet and Facebook are among the world’s richest corporations while many news organizations are underwater.
One straightforward way to solve this, if we assume that news media’s continued existence is important, is to get internet companies to pay them for their content. Australia announced last…
