ICYMI: House Judiciary Hearing Testimony Notes Tech Benefits For Consumers And Publishers Alike
The House Judiciary’s Subcommittee on Antitrust hearing Tuesday examined the relationship between leading tech services and news publishers, with testimony from industry and media representatives. Despite the rhetoric, there is no denying that leading tech services provide benefits to users, publishers, and consumers.
Highlights from the subcommittee hearing and experts below:
Matt Schruers, Vice President for Law and Policy, Computer and Communications Industry Association
—Leading tech services help lower distribution costs, promote sharing and discussion about news stories. “Because journalism is important to any democracy, we share the goal of ensuring that it continues. Digital services play an important role in doing that. In fact, digital services provide benefits to three separate constituencies – users, news producers, and advertisers.”
—Leading tech services enable and benefit advertisers while also facilitating global reach for small businesses. “Digital services also enable and benefit advertisers. As the saying goes, an advertiser knows half his ad budget is wasted, he just doesn’t know which half. With technology, advertisers can now figure out where their budget is best optimized and where their money actually is, in fact, wasted and direct funds accordingly. This is increasingly important for small firms who now have a global reach regardless of the size of the business.”
— Publishers receive 70 percent (or more) of the advertising revenue generated by leading tech services. “The Cairncross report that I identify cites revenue splits between other major Internet services that are at 70% and above depending on the particular product being used by different platforms. In some cases, it’s 85 or even 100% retained by the publisher.”
—News publishers and digital services also compete for ad dollars, allowing competitors to collude could lead to higher prices, decreased quality, and slower innovation. “Economic analysis would show us that news publishers and digital services fight fiercely for ad dollars, and indeed that’s why we’re here today. This intense inter-medium competition is generally healthy and undermining it with antitrust exemptions is unlikely to achieve the goal we all share. If competitors collude, prices will be higher, quality will decrease, and innovation will slow.”
Experts and commentators agree that cartel-style regimes are not the right policy prescription:
—Politico’s Senior Media Writer Jack Shafer: Proponents of antitrust exemptions “falsely blame” leading tech services for newspapers’ declining revenue when circulation declines actually “predate the emergence of the web.” “This proposed antitrust exemption—being pushed by the 2,000-plus member News Media Alliance trade group—is misguided on several levels. For one thing, it would be wrong to pass a law that would prop up one media sector by selectively bestowing special competitive privileges on it. The bill would not allow broadcasters to join the new cartel. The bill’s supporters also falsely blame Google and Facebook for the newspaper industry’s decay when circulation declines—especially when measured per capita—predate the emergence of the web.“
—If consumers are choosing to steer away from newspapers and toward other sources for news and advertising, “it’s not the business of Congress to steer them back,” notes Shafer. “If consumers are deliberately spurning newspapers en masse and flocking elsewhere for news and advertising, it’s not the business of Congress to steer them back. Instead of petitioning Congress for special privileges in the Katharine Graham manner, the news industry needs to compete. If it can’t wrangle enough customers, it deserves what’s coming to it.”
—In New York Magazine, Brian Feldman notes that the NMA study on news content and online platforms does not make the case that leading tech services are purposely exploiting news organizations. “But the report fails to make the case that Google is aggressively and intentionally exploiting news organizations specifically. The reality is Google has hurt the sustainability of news organizations, but it’s not because it’s draining money from them with aggregated blog posts and news alerts. It’s because Google built a system for online advertisers to reach people that’s better than advertising with news companies, and that has hurt their bottom line.”
—Competition expert Matt Lane wrote in a recent DisCo post that technology disrupting the news industry isn’t anything new. “It’s easy to forget that technology has regularly disrupted the news industry. Video may have killed the radio star, but radio was the first disruptor. During the ’20s and ’30s radio came into its own as a national competitor to the printed news. Newspapers were forced to adjust, and revamped their formats, added more in-depth reporting, and started offering things radio couldn’t like comics and weekend magazines. Competition from televised news in the ’50s again forced newspapers to adapt. Some, like USA Today, adopted color newsprint and short, to the point stories. Others focused on feature stories and detailed analysis pieces. Newspapers also focused on bringing their costs down. Competition from televised news may have led to the death of afternoon papers, but newspapers adapted to remain strong competitors.”