NEWSFLASH: California’s CJPA Is Unconstitutional And Would Impose A Devastating Link Tax
CCIA’s Disruptive Competition Project outlines how a California proposal, based on the problematic federal Journalism Competition and Preservation Act (JCPA), would impose a link tax on digital services, is unconstitutional, and fails to protect the local publishers it seeks to support.
Here’s what you need to know:
CJPA “runs afoul of the U.S. Constitution in multiple ways” while also threatening “the fundamental structure of the internet.” “CJPA is a worse notion than its federal predecessor. Having misdiagnosed local journalism’s difficulties, it aims to remedy those challenges with a straight tax-and-spend subsidy, funding handouts to news publishers by taxing the advertising revenues of a leading source of traffic to those publishers. It runs afoul of the U.S. Constitution in multiple ways, and threatens the fundamental structure of the internet by adopting a strategy that has failed in countries abroad: subjecting a central building block — the link — to taxation.”
The proposal is unconstitutional.
CJPA would violate the First Amendment in “at least two independent ways.” “It [CJPA] violates the First Amendment in at least two independent ways. First, by forcing covered digital services to link to news publishers who demand payment under the guise of prohibiting ‘retaliation’, the bill unlawfully limits the editorial discretion of those services.”
— “Second, the bill runs afoul of the First Amendment principle against compelling the subsidization of another’s speech. A recent Supreme Court ruling made clear that the First Amendment prohibited a public employee from subsidizing speech with which they disagreed. Yet the CJPA does exactly that by compelling payments by digital services.”
Federal copyright law preempts the CJPA. “In addition, the bill is preempted by federal copyright law. That is, it attempts to intervene in policy choices that the Constitution reserves for Congress, here with regard to intellectual property. As a result, it conflicts with the Constitution’s Supremacy Clause by conflicting with the Copyright Act.”
CJPA could also interfere with interstate commerce, inviting more legal challenges. “CJPA also arguably interferes with interstate commerce, another domain reserved for federal law, by imposing a tax on linking to out-of-state content, which cannot be regulated in Sacramento. The upshot of all these constitutional infirmities is that the bill invites legal challenges.”
This bill would not help local journalists, instead benefiting large publications and the production of “clickbait.”
CJPA would “provide little help to local newspapers or reporters.” “The CJPA won’t actually help local journalism or journalists. Like the JCPA, the CJPA also would provide little help to local newspapers or reporters.”
In fact, small publishers would be ineligible for the subsidies CJPA would create. “CJPA imposes a revenue floor of $100,000, ensuring the smallest publishers are ineligible for subsidies. It further prohibits payments to any new entrants that later enter the market.”
— Additionally: “As a result, most of the ‘journalism usage fee payments’ would go to large and out-of-state or even international publishers, including those increasingly owned by hedge funds or broadcasting conglomerates. The result of increased subsidies to these entities would be to entrench incumbent publishers, likely causing greater media concentration.“
Finally, the bill would also create a structure that financially incentivizes “clickbait” instead of quality journalism. “At the same time, as the bill contains a formula-driven transfer of revenues, it would provide financial incentives for ‘clickbait’ rather than quality journalism, and it would require the subsidization of all kinds of potentially problematic or even extremist outlets that could fit under the bill’s broad definitions. These proposals will not fix the problems with local journalism — and will likely even exacerbate them.”Learn more about this misguided proposal and how a broad group of stakeholders are already pushing back against CJPA here.