Like it or not, Google and Facebook are becoming the leading patrons of the news industry
For years, Google and Facebook wanted to have it both ways. They wanted publishers’ content to attract and retain users, but they didn’t want to pay for it. They wanted to publishers to create content and test new products they were trying, but they didn’t want them to build businesses that relied on those products.
At one point early last year, Facebook’s point person on the news industry, Campbell Brown, gave publishers some tough talk: “Facebook cannot be the entire solution to your problems,” she told a room full of magazine publishers.
But today, in the middle of a shared economic downturn, Facebook and Google are playing a larger role in the future of news publishers. Over the next few months, Google and Facebook will, combined, spend close to a quarter billion dollars supporting local news, through a combination of emergency relief grants, extra marketing dollars earmarked for ads on publishers’ sites, and the waiving of fees Google normally collects from its ad server. Google said it expects its relief funds will reach at least 4,000 different publishers. Facebook has already dispersed $16 million across 200 different newsrooms.
On top of that, Google and Facebook are both large advertisers for news publishers, which are seeing tech as one dependable category for growing ad spending when most categories are down to wiped out.
“The money we make with our advertising tools is entirely dependent on the success of publishers,” said Richard Gingras, vp of news at Google.
Google and Facebook also face pressure as more foreign governments force them to compensate publishers directly for using their content. In April, the Australian government ruled that both companies would have to pay Australia’s publishers for using their content; earlier that same month, the French government’s competition authority ruled that Google was obligated to pay publishers for reusing their content in its search results.
While American antitrust laws prohibit U.S. publishers from working together on similar concessions, some are interested in building support around a similar initiative: Two weeks ago, The New York Times’s Ben Smith tweeted out a letter that Heath Freeman, the CEO of Alden Global Capital, a hedge fund that owns newspapers including the Denver Post, sent to several American newspaper CEOs trying to build support for a campaign requiring Google and Facebook to pay up.
Though Google and Facebook in many cases represent news publishers’ most important business and distribution partners, “most publishers are still unhappy with this situation,” said Rasmus Kleis Nielsen, director of the Reuters Institute. Earlier this month, the Google News Initiative announced it was supporting an independent news emergency relief effort led by the Reuters Institute. “They feel that this is unsatisfying and unfair.”
The emergency funds, which Facebook began doling out last week, were needed because news media has become even more precarious. The Los Angeles Times, for example, told staffers in April that the spread of coronavirus had nearly “eliminated” the paper’s advertising revenues.
“We had over 2,000 applications,” said Nancy Lane, the president of the Local Media Association, which helped select recipients for the first round of grants Facebook meted out. “And a lot of them were, ‘If we don’t get this money, we’re going to go out of business.’”
That would have undone a lot of work and money that Facebook and Google have invested already. Both companies have separately pledged to spend $300 million to help publishers figure out a sustainable business model. That money has gone to subscription labs, programs to help local publishers create branded content; it funded Facebook Watch shows and publishers trying Subscribe with Google.
“I still believe that subscriptions and building on the work we’ve done is the direction we want to go but it’s impossible to have these conversations when you’re just trying to keep the lights on,” said Brown in an interview.
That investment in a new business model, and the programs those dollars have funded, have drawn high marks from their participants. But progress for some publishers does not help all of them. Many local news publishers, particularly smaller ones, remain heavily reliant on print advertising.
“[The past few weeks], I’ve had many meetings with local news associations, and one of them said, ‘This has been a wake up call for us to focus on our digital strategies,’” Gingras said. “That was such a sad statement to hear.”
With things in such a precarious place, the Duopoly may not be able to avoid calls for them to directly support news publishers. “The industry is going to perilous places,” said David Chavern, the president of the News Media Alliance, a trade group. “There’ll be more and increasing calls where they’re going to have to create a compensation regime.”
And for publishers that have managed to diversify their businesses and create balanced relationships with the platforms, the continued support suits them just fine.
“People want to debate whether this is an offensive move or a defensive move, and I don’t care,” said Evan Smith, the CEO of the Texas Tribune, which has applied for money from both Facebook and Google. “My job, our job, is to get as much money as we can to pay for serious journalism.”
This story has been updated. An earlier version story said Facebook and Google each pledged $300 million in 2017. Google made its pledge in 2018; Facebook in 2019.
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