Before Today’s HJC Antitrust Hearing, Read This
Before today’s House Judiciary Subcommittee on Antitrust, Commercial and Administrative Law hearing, it’s important to remember:
— The internet created an explosion in media and opportunities for consumers to access information.
— Rather than having to stick to one channel, publishers now have multiple options to grow traffic to their sites.
— From TV to Craigslist, newspapers face increasing competition for ad spend.
— News publishers are innovating to succeed in the digital age.
—Recent proposals to overhaul the way news is shared would harm market dynamics and consumers.
The internet created an explosion in media and opportunities for consumers to access information.
Tech services enable news publishers to reach wider audiences than ever before, notes CCIA president Matt Schruers. “These services enable publishers, journalists, and other content producers of all sizes to reach a larger, global audience at a fraction of the cost of traditional formats. This has permitted traditional publishers and media outlets to greatly expand their audience through their websites,apps, and social sharing. Newspaper website traffic continues to grow. The average monthly unique visitors for the top 50 newspapers rose from 8.2 million in 2014 to 11.5 million in 2017, an increase of 40%.”
Publishers gain more from reader traffic and subscriptions than the tech services that send readers to them, writes the Washington Post Editorial Board. “[P]ublishers (including The Post) make more money from the traffic and subscriptions they gain through platforms than platforms do from monetizing the material publishers put there. What platforms gain is high-quality content and a healthier information ecosystem.”
In fact, Google does not run ads on Google News, reminds Slate’s Jordan Weissman. “Google does not actually run any ads against its Google News app, which means they don’t directly monetize it, and if you use its regular search bar to look up the news of the day, there’s a good chance you won’t get much if any advertising either.”
Rather than having to stick to one channel, publishers now have multiple options to grow traffic to their sites.
Most Americans bypass search and get their news directly from news websites or apps, shows a recent Pew poll.
Media companies have a plethora of digital advertising options to choose from, notes Professor Thom Lambert of the University of Missouri School of Law. “The media companies insist that these mandates are needed because the platforms’ ad tech services extract an excessive portion of revenues from advertisements on the publisher’s websites. But the publishers need not utilize those services in selling display ads. They could sell their advertising space directly and pocket all the advertising revenue, or they could utilize competing intermediaries; as the ACCC acknowledged, competitors exist at every stage of the digital advertising sales chain.”
Publishers control where and how their content appears online, writes the Bloomberg Editorial Board. “If a publisher doesn’t like how Google displays snippets of its content, for instance, it’s free to adjust those settings or to opt out entirely.”
From TV to Craigslist, newspapers face increasing competition for ad spend.
Newspapers have been losing share of advertising since the emergence of television as an alternative advertising medium in the 1950s, shows analysis by Benedict Evans.
Using the example of Craigslist versus classified ad sales, PPI’s Alec Stapp makes the point that the explosion of choice that consumers now have between online publishers has disrupted the hold publishers once held over ad revenue. “[I]t was very easy for newspapers to dominate the local market with one bundled product, which included everything from political news and opinion to sports and classifieds. The monopoly profits were used to fund, among other things, investigative journalism (which would lose money as a standalone business but provides value and prestige as part of a bundle). The internet blew this arrangement to pieces. No longer was owning printing presses and delivery trucks sufficient to charge advertisers and readers whatever you wanted. The newspaper was unbundled by many internet companies, large and small.”
News publishers are innovating to succeed in the digital age.
Local news outlets boosted digital subscriptions by 50% from 2019 to 2020, according to consultancy Mather Economics. “Mather Economics, an Atlanta-based consulting firm that handles subscription data for major North American news chains, conducted an analysis of news outlets in 138 media markets of various sizes. It found that digital circulation was up 51.2% from November 2019 to November 2020 while print circulation was down 12.9%. Mather also found that 25.6% of all subscription starts in 2020 were digital. This year’s increase in digital subscriptions is greater than in previous years, Mather said.”
Bloomberg is moving to expand its appeal to a younger audience by expanding its video offerings, writes Nieman Labs Ken Doctor. “Bloomberg is — like the Times, the Post, the Journal, CNN, The Guardian, NPR, and others in the Digital Dozen — a case of the old and the new working here. Targeting well-heeled business news readers with high digital subscription prices…while moving aggressively to lure a younger demographic into business news video, hopefully leading them into long-term Bloomberg customers. One foot on the shakier ground of today, one looking for a step forward.”
The New York Times and Wall Street Journal continue to accelerate digital subscriber growth, notes Joshua Benton of the Nieman Journalism Lab in a February post. “Earnings season means it’s time for successful publishers to brag about their digital subscription numbers. On Thursday, it was The New York Times Company’s turn, throwing out some big numbers: 5,251,000 total subscriptions across all print and digital, 4,395,000 total digital subscriptions (including Cooking and Crosswords), and 3,429,000 digital news subscribers. Perhaps most impressive to me: There’s little evidence that the potential customer base for a Times digital news subscription has topped out. That 3.429 million total at the end of 2019 was up from 2.713 million a year earlier, a strong 26 percent rate of growth. On Friday, it was News Corp’s turn, announcing that its Wall Street Journal had topped 2 million digital subscriptions for the first time, and that Dow Jones — which also includes Barron’s, its news wires, Factiva, and some other information businesses — had topped 3.5 million digital subs.”
Recent proposals to overhaul the way news is shared would harm market dynamics and consumers.
Antitrust exemptions for specific groups distort the free market and harm consumers, according to a report from the Antitrust Modernization Commission. “Typically, antitrust exemptions create economic benefits that flow to small, concentrated interest groups, while the costs of the exemption are widely dispersed, usually passed on to a large population of consumers through higher prices, reduced output, lower quality, and reduced innovation.”
Such exemptions, while motivated out of a concern for local publishers, would benefit even the largest media conglomerates, writes Lambert. “It would not apply merely to ‘small publishers’ but would instead immunize collusive conduct by such major conglomerates as Murdoch’s News Corporation, the Walt Disney Corporation, the New York Times, Gannet Company, Bloomberg, Viacom, AT&T, and the Fox Corporation. The bill would permit news organizations to fix prices charged to digital platforms as long as negotiations with the platforms were not limited to price, were not discriminatory toward similarly situated news organizations, and somehow related to ‘the quality, accuracy, attribution or branding, and interoperability of news.’ Given the ease of meeting that test—since news organizations could always claim that higher payments were necessary to ensure journalistic quality—the bill would enable news publishers in the United States to extract rents via collusion rather than via direct government coercion, as in Australia.”
Potential regulatory remedies should not damage intensely competitive advertising sectors, Schruers says. “The intense competition taking place in the advertising sector is generally healthy and benefits the U.S. economy. It has given people more access to information at lower costs. But some traditional news publications have struggled to compete in the face of changing consumer habits and a new media environment. Policies to address this effect may be appropriate, but should tackle directly the news production problem, and not impair competition in the broader advertising market.”
Antitrust should protect competition, not competitors, posits Schruers. “As the head of an association that has defended free competition in the marketplace and fought media consolidation, I am well aware of the role that governments should play in safeguarding consumers’ welfare. But regulators should protect the competitive process, not competitors. Consumers win when competitors have to slug it out in the marketplace for their dollars or attention. Prices fall, quality rises, innovation increases.”
Regulation should not protect commercial rivals at the expense of consumers, Schruers also writes. “Cheerleading regulations that would hamstring rivals, seeking to beat the competition not in the marketplace but rather the regulatory ‘swamp’ ー what I’ve called ‘swampetition’ ー is a strategy to which politically sophisticated companies sometimes turn…regulators should protect the competitive process, not competitors. Consumers win when competitors have to slug it out in the marketplace for their dollars or attention. Prices fall, quality rises, innovation increases.”
Proposals to require payment for links to news websites would break the internet, asserts its inventor, Tim Berners-Lee. “Requiring a charge for a link on the web blocks an important aspect of the value of web content. To my knowledge, there is no current example of legally requiring payments for links to other content. The ability to link freely – meaning without limitations regarding the content of the linked site and without monetary fees – is fundamental to how the web operates, how it has flourished till present, and how it will continue to grow in decades to come.”
Discriminatory proposals that favor only some news publishers but not others, and which target some tech services, but not others, distort the free market, writes CCIA’s Marianela Lopez-Galdos. “[T]he Australian government is taking extraordinary, discriminatory and unjustified legislative action to intervene in the market and force payments from American companies to Australian publishers. Policymakers committed to a free and open Internet should continue to push back against such foreign protectionism — in Australia, and against any other governments that pursue a similar path.”