Marketplace. To help us discuss that this , wethe communicators have two guest. David chavern of the News Media Alliance which represents spapers, and matthew which represents technology and communications firms. When someone goes to a social media site and access news and information and perhaps a news site, is that a boon or a bust to traditional legacy news sites . It is definitely a boon. These Services Provide an extraordinary amount of traffic to traditional news media publishers in the context of a variety of other services. Internet users go to these services not just for news content but also to learn, to get answers, to engage with friends and families, to engage in communications but one service is accessed in his content. Happens, is publishers on the receiving end get extraordinary benefit. These services send upwards of 10 billion users a month to news publisher sites which those sites can then monetize either through their own services or through at networks. Pete if i went on google or bing right now and typed in democratic debate or President Donald Trump and pulled up a New York Times article, who benefits . You click through to the New York Times website and that is being supported by adding networks that are serviced by any of the number of services that provide those services, but revenue share is generally about 70 of 30 30 , give or to take depending on the services and the news publisher and any Additional Services take the additional 70 . While those numbers vary a bit depending on the service and products, that is something of an industrystandard. Pete do you agree to social media sites have been a boon to traditional media . David definitely a boon and a bust. Have biggerwe content audiences audiences for content than ever. The access, these are amazing Distribution Systems and access to readers is multiples of what it ever was in whatever golden era you had before. We also make a fraction of the revenue we did in those areas. That raises the question, who is making the money from all these audiences . Frankly, one thing i will immediately object to is the 7030 split as an industrystandard. That does not reflect my numbers experiences. Pete in your interpretation, lets go through the same example. Type in democratic debate or President Donald Trump, do that takesng or google, and it me to the New York Times or the Atlanta Journalconstitution. The searchsee in result, there is a link and something called a snippet. Most people just read the snippet and never go to the article. If you click through the link and actually go to the website by the way, a lot of people go through aggregation sites now. Going to a news website is a minority of the experience. Like appleegator news or google news, or microsoft news. S displayed on that page. Networks sold through of ad technology. Brains most of the money away. That brings most of the money away. We have to deal with this core dichotomy of this is an industry with a bigger audience than ever. More people want the content than ever, and there is less money than ever. Who is getting the money, because it is not us. The money, that is money that needs to support journalism. At the hearing, we had the editorinchief of the Atlanta Journalconstitution make this point. Peter lets listen to him right now. We have more people reading the Atlanta Journalconstitution then at any other point in our history. The challenge is simple. World do youof grow your audience, reach a bigger market, and somehow Face Even Greater financial challenges than you did before . Some thing iout of whack in that equation and it is just counterintuitive to how American Business works. Peter what is your response to the editor of the hac . Relation to the news content i was referring to earlier with 10 billion or more users, we know publishers websites in large part due to traffic from Internet Services is up something on the order of 40 . But the internet has globalized the Advertising Market, so the advertising that is appearing on those news publishers websites are also competing for users attention for social media, for blogs, for podcasts, citizen journalism as well as lots of other content that isnt actually news but entertainment content. News publishers arent just competing for ad dollars with other news publishers but they are competing with games and audiovisual content, game of thrones. It is a more challenging Advertising Market and technology is enabling advertisers to figure out where they can target to get a better return on their investment for advertising and that is good for advertisers but because news publishers have so much prices they can demand are unfortunately not as competitive as when they had a much more strong position in a small local marketplace with fewer competitors. Peter our aggregators paying for the Atlanta Journalconstitution content or the New York Times content . If they reproduce the content in a way that requires a license, yes. Theylot of cases, though, are simply linking to the content at saying this appears to be responsive to your interest or responsive to the request. In that case, they dont. It is interesting that spain actually tried an experiment. Some people referred to it as a link tax. If you send traffic to a news publishers website, you should pay for the privilege. What happened is a lot of news aggregators it. Google news closed in spain when they try this experiment. In part because the return on remedy wasnt there. Google is still the most popular website in spain but it demolished the local news publishers who lost out to the big publishers of el pais who can rely on name recognition. The privilege of sending traffic to our website hasnt working modern place market places. First of all come at a dont pay for news content. To imply that, that doesnt happen. There are reasons for that, including intellectual property regime in the u. S. But if you think about it, when you talk about the Digital Future of news, people still get caught up in these old economy, things about newspaper versus audio versus video. The future of news delivery is all those things. Ands text, it is audio, they are now two companies that regulate that business. They stand between us and our readers. Google and facebook being those companies, and they determine how content is delivered, to whom it is delivered, how the news we get is different and how we can or cannot monetize that news. Be a great in the print era, that was a great thing when you wont distribution. We dont own our distribution anymore but two other companies do and they decide everything about your news experience, including whether we live or die. Frankly, what this bill was about, ive not been asking the government to regulate them. Peter lets explain the bill you are talking about, which is the journalism competition and preservation act of 2019. What is that . Distortue to some bad the precedents, antitrust laws protect google and facebook from us, if you can believe that, ironically. In the sense news publishers cannot collectively negotiate and act with the platforms. That would be in antitrust violation for us to act collectively to ask for better terms for our news delivery. That is an inequity, which we notk is deeply problematic only for our business, but for the future of journalism which means for society. Is for have simply asked an antitrust exemption that would allow us to cut collectively negotiate. Im not asking to regulate the tech guys, not to break them up, not to tax them. Im asking them to be left alone to negotiate better terms with the platforms. Peter this bill was introduced with a bipartisan cosponsors and is temporary, supposedly. David four years. Matthew when david says antitrust exemption, that is effectively a get out of jail free card for People Publishing content against which advertisements can be placed. To say we are not going david that is not correct. Matthew what the bill says peter we will let him finish and then matthew as long as negotiations arent limited to price, which means as long as you were talking about price, and you apparently are doing ok, that requires a lot of consideration. Are we going to see pricefixing here. Id is corrupted antitrust correct in the antitrust law says we will not sell our products less than news price because people pay more in the marketplace. The antitrust law is to promote consumer welfare. That is pricefixing. Antitrust should prevent that type of behavior. David i find that heartening and fascinating that facebook and google are worried about our market power potential. Listen, we are content businesses. Before, just a portion of peoples online full experiences. I just heard a whole reverie about all the other things people do. That isn industry incredibly stressed, but also something else. Really important to the future of our democracy and Civic Society. If we just watch it get run off the table, we are all going to own the outcome from that. To make the claim we should all be worried about the potential collective market power of news publishers visavis the platforms, i think is not a particularly strong argument from my perspective. We are going to have to decide if we want journalism in the future or dont we and how that will be supported. Peter why do you say newspapers, or your content folks are so vital to a Civic Society . Isnt it just progress that we are going out to facebook or google or apple ever graders aggregators . David put all those together, facebook, google, apple, they employed zero journalists. The amount of journalism they are doing is zero. They are not going to city hall. They are not going to school board meetings. They are not covering the president. They rely on delivering our content and monetizing around the content. If you dont do that anymore, if we dont have local journalism, it willvers city hall be a golden age of corruption. If you dont have information about your community, just understand you dont understand anything about your community at that point. This is a content business, but not just a content business. No one is asking for congressional hearings about fake cap videos. Matthew david and i are in agreement that objective journalism is a critical ingredient to an informed electorate. It is why Internet Companies have pledged hundreds of over a halfdollars, billion industry wide to promote journalism. It is why there are a lot of efforts to facilitate news producers use of Digital Technology to increase ad revenue. The question is not whether or not we want a strong and vibrant journalism industry. The question is how to get there and should we do it with an antitrust exemption, specifically. We tried that in the 1970s when newspapers were last threatened by a new medium. The broadcast era, it didnt work. The 1970 antitrust exemption for newspapers is regarded as failed. Some historians actually say it fostered media monopoly. Why should we apply the same failed treatment 50 years later . I thinkt to point out we are in agreement this is a critical policy issue and something we need to address. There is just a difference of view on how to solve the problem. Peter how would you solve it . You think the Atlanta Journalconstitution and the New York Times are vital to the society . Matthew it is vital to an informed electorate. Whether through the antitrust exemption is a problem. Tax incentives and deductions, nonprofit treatment, grants. About 10 years ago, the federal trade commission put out an informed white paper that looked at a lot of these issues and they discussed the antitrust exemption. As well as a bunch of other proposals. Some are being piloted in other countries. We should look at what those alternative solutions are and whether or not the other means journalism for a Civic Society are having success before jumping straight to a solution we have tried without much success. Peter a democrat of rhode island is the congressman who chairs the antitrust subcommittee. Year, it was announced another round of layoffs due to advertising losses, reducing staff by 80 from Employment Level seven years ago. The Huffington Post has announced significant layoffs. These are Online Publishers that have never relied on revenue from classified sections work prescriptions that subscriptions subscriptions. This rate is a critical question. If online news publishers cant survive, then who can . Chairman cicilline gets to the heart of it. Into these to get fights. What the newspaper world was like, the radio was like, the phonograph. If you look objectively at what is going on in the News Business right now, if you were trying to earn a living with news content online, the fact of the matter is it is not sustainable currently. This is not a printing. This is not old economy issues. There are struggles at every level, including digital only news providers who are members of my. Mine. Hope is not a strategy. Hopes and dreams for some other magic pot of money to arrive from benefactors or from the government or from other magic billionaires, from other people. I am not looking for a magic pot of money to arrive from the sky. All im asking for is for a for the industry to stand up for itself and negotiate with people who deliver our content and to profit greatly from it. Peter and you think the journalism competition and preservation act is the vehicle that will help . David i think it is a great im not because again, asking anybody for anything other than to be left alone. Left alone so we can try to develop a better Sustainable Business model with the platform. Matthew how is it to know that if David Chavern says 70 of the revenue from a click or from an article goes to the news publisher, that isnt a sustainable model . David i dont agree with that number at all. We can get into a debate about numbers, but let me just say that does not reflect my members experience. There is a great article and figure, one by the guardian s for they placed ad themselves and tried to figure our the money went. 70 does not reflect my Member Experience at all. It is closer to them getting to the 30 and the 70 . Also understand when we talk about percentages of pies, this is an overall market where two companies now have 70 or so of the whole market. Google and facebook have 70 of the visual ad market. You are talking about percentages of an ever diminishing edge case of online advertising. O by the way, look at the digital only news providers. Buzz feed, Huffington Post, and the rest. They are trying to make a living off the digital ad model and it is not working. Peter if Google Google and facebook have been successful. Can you agree with that . Yes. Peter have they been positive influences . Positive in the sense that more people consume more hard news than ever, including millennials. People often say young people dont consume news. They consume more news than when we were their age because it is available. To have that expansive audience, returns diminishing asks, where is the money going . Matthew i think the answer is something we discussed. We often say in the internet sector that the competition is always a click away. That applies equally to these digital native news publishers who are not just competing with one another but also competing with other entertainment content, other sources of answers and entertainment. You can look something up on the Washington Post and you might look at the wikipedia entry. All of these provide competition for the news content. At the same time, they are competing for the advertising money. Attention markets are twosided. Or have to bring users readers on one side and advertisers on the other so at this in time, these news publishers are coming under pressure from all these different content sources. There is also lots of other advertisers out there and some who are more effectively powers,ng advertising going to audiovisual content, to games, to other kinds of ecommerce websites. Market andbalized ad that type of competition is very tough. David we should also step back matthew we should also step back and realize that newspapers have been struggling for over a century as new media modalities came around. From 1910 to the 1980s, the number of cities with multiple newspapers declined precipitously. Newspaper circulation has been declining since the 1980s and these are all preinternet trends. There not caused by the internet. There caused by competition with other media. Citing what, happened in 1950 is not incredibly compelling to whether we will have journalism going forward. Listen, there is a route we can agree on. You cant make the case we are sending more traffic than ever and im sorry youre competing with the rest and not making money. The fact of the matter is our audience is bigger than ever and as you say, they should be thanking the platforms for all they are giving us even though it is not paying for anything. At the end of the day, that is an untenable course. Ill talk about something other than google and facebook. Apple news. Productapple news plus they just rolled out, but the traditional product draws tremendous traffic and produces almost no money. Having been grateful for the traffic and not being able to pay the coffee bill is not a sustainable tack. That that is not going to get journalism to the next generation. There seems to be a lack of clarity as to the 7030 split, where the money comes. Where do you see the money going . Matthew i think the critical difference of fact is when we talk about advertising networks, there are a number of secondary Service Providers that median users are relying on for verification, for additional targeting data and so on, that they are paying in addition to the split they are getting from the network. The advertising network. My testimony suggests there are four to six additional Service Providers in between the ad network and news publisher, which makes it a little bit difficult when david says they are controlling the marketplace. They are relying on all of these other services as well. How much is being spent on Additional Services . If i sell you a house and he will get seven dollars for the sale, but other Real Estate Agents are taking a cut, that seven dollars will be smaller. Are those additional costs money well spent . Those decisions cant be made by the network facilitating the transaction. Suggesting that some of the networks areising the source of the problem overlooks what is a lakc what is a lack of optimization and that there are more compelling advertising platforms to consumers. That is not necessarily an antitrust problem. Host if the journalist preservation act is enacted into law, how will that affect the folks you represent . Happens what generally is when we have these kinds of exemptions or policies, they tend to advantage the larger players in the marketplace who can take advantage of them. The smaller players solve their saw theirll traffic fall out. They could not compete as effectively. These are the advancements we see against antitrust exemptions all the time. In 2007, they antitrust Modernization Commission said is our law up to snuff for the digital era . Time,ea put forth at the what do we think about antitrust exemptions . The council said this is a bad idea, it protects sophisticated players that have invented to take that can take advantage of the new rules. We saw it happen in spain. We should not let it happen here too. David there is no news publisher that has any leverage over the marketplace. To assert in any way a news publisher picks this vast and complex and economically determinative digital and marketplace ad marketplace is incorrect. I will stop at incorrect. The people who need this exemption the most are the smallest players, because they have no voice in their future. The information may want to be free, but reporters want to get paid. If you want professional journalism, we need a system that returns value to the the e to journalist to the journalists. Host gentlemen, thank you. This composition will be continued on capitol hill and on the communicators. All communicators episodes are available as podcasts. 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