WASHINGTON — America’s local media is in crisis and looking for a new business model, forced to downsize or close altogether due to rising costs and falling revenues. But two proposals backed by Northwestern lawmakers in Congress could offer a solution.
The Local Journalism Sustainability Act, introduced in 2021 by Washington Senator Maria Cantwell, a Democrat, and GOP Rep. Dan Newhouse of Sunnyside, would use tax credits to allow news organizations to hire more journalists and help subscribers and advertisers pay for their services. These measures could provide a temporary lifeline while another bill, the Competition and Journalism Preservation Act, would allow news publishers to bargain for fair compensation for the content they create.
As news and advertising have shifted from the print page to the webpage, tech giants Google and Facebook have reaped the benefits, scooping up ad revenue while squeezing the media that creates the content these platforms rely on. line build. According to the News Media Alliance, an association that represents around 2,000 outlets, up to 70% of digital ad revenue goes to Google and Facebook – and their respective parent companies, Alphabet and Meta.
Local American newspapers have been hit particularly hard since the financial crisis that began 15 years ago, losing some 40,000 newsroom jobs – a staggering rate of 57% – between 2008 and 2020, according to the Pew Research Center. Online-only media outlets only partially filled the void, creating around 10,000 jobs during this period.
The COVID-19 pandemic has exacerbated the problem, with publishing costs rising and advertising revenue falling despite a surge in demand for up-to-date information about the virus and its local impacts. About 1,800 newspapers have closed since 2004, according to a study by the University of North Carolina, with more than 100 local newsrooms closed since the start of the pandemic.
The decline of local news is having a range of negative effects on American society, according to numerous studies: Fewer people are voting, and those who do vote are basing their decisions on highly polarized national issues rather than local issues that directly affect their life. Less oversight breeds more corruption and wasted taxpayers’ money, while elected officials are less accountable to their constituents.
As the national media landscape has become increasingly polarized in recent years, a late 2021 poll by Gallup and the Knight Foundation found that Americans trust local news more than national news, with 44% saying they do trust local media and only 27% say they trust. the nationals.
Yet Americans were largely unaware of the crisis, with 71% telling the Pew Research Center in 2018 that they thought their local press was doing well financially, while only 14% said they had paid for local news in the past year.
Danielle Coffey, executive vice president and general counsel of the News Media Alliance, said the most fundamental problem facing the news industry is how Facebook and Google have misappropriated ad revenue with little recourse. for the media. Over the past decade, she said, online audiences have increased tenfold, but revenues have halved.
“Obviously, if you’re providing content that people are consuming at exponentially increasing rates, but the revenue isn’t going back to the creator, there’s a problem,” Coffey said.
“Users remain in their walled gardens,” she added, referring to online platforms, “to consume our content and the platforms reap the benefits and value of our content without rendering the fair market value of that content. to content creators, like them do with other industries, like music and film.
The Journalism Competition and Preservation Act, first introduced in 2019 and reintroduced last year, draws inspiration from a pioneering 2021 law in Australia that requires Google and Facebook to negotiate deals to compensate media outlets Australians for the stories shared on the platforms. A report released in May by the former head of Australia’s competition regulator found the law had already facilitated annual payments of more than A$200 million, the equivalent of around $144 million. .
The bill enjoys broad bipartisan support in Congress, where “Big Tech” companies like Meta and Alphabet have faced criticism from both Democrats and Republicans. The Senate bill was introduced by Sens. Amy Klobuchar, D-Minn., and John Kennedy, R-La., while the House counterpart is backed by lawmakers from all political walks of life, from Rep. Pramila Jayapal, D-Seattle, to Rep. Matt Gaetz, R-Fla.
Coffey said she expects the Senate Judiciary Committee to hold a markup in the coming weeks to amend the bill before introducing it to the Senate. It’s unclear when the bill could get a final vote in the full Senate, and tech companies have hired an army of lobbyists to try to shape the final legislation, but its bipartisan support in both chambers suggests the bill law has a good chance of becoming law.
Meanwhile, the Local Journalism Sustainability Act, led by Cantwell and Newhouse, would offer a temporary boost to declining news outlets while they negotiate deals with tech giants.
The bill includes three tax credits: one would allow taxpayers to deduct up to $250 per year spent on subscriptions; another would allow businesses to deduct up to $5,000 in advertising expenses in the first year and $2,500 in the next four years; and a third credit would allow the media to deduct part of a journalist’s salary up to $25,000 in the first year and $15,000 in the following four years.
“I think the three provisions of the Local Journalism Sustainability Act would benefit newspapers, especially in rural western areas,” said Kenton Bird, associate professor of journalism at the University of Idaho.
Bird, who worked for 15 years as a journalist and editor in northern Idaho, said the advertising tax credit could help reverse a “self-perpetuating decline” in which businesses locals cannot afford to promote themselves and in turn lose business while depriving the media. an important source of income.
“One of the consequences of the decline of the local news industry is that there is simply less day-to-day coverage of government, tax, public affairs, law enforcement and the courts,” did he declare. “And so if there’s a tax advantage for businesses, I think maybe we could reverse that.”
Despite bipartisan support for the bill, it seems unlikely to pass as a standalone bill. In 2021, Democrats added one of its three parts — the payroll tax credit — to the all-in-one tax and spending bill dubbed the Build Back Better Act. That legislation died amid universal opposition from the GOP and concerns from moderate Democrats, including Sen. Joe Manchin of West Virginia.
But Manchin, a co-sponsor of the original bill, is in talks with Senate Majority Leader Chuck Schumer of New York who could deliver a scaled-down version of the so-called reconciliation package that could pass with only Democratic votes. . Coffey said including the media payroll tax credit in this potential legislation appears to be the most viable route for its passage.
“We know that local journalism and competition for voices is so important,” Cantwell said in an April interview with Spokane, adding that she saw the tax credits as a continuation of what Congress had done with the assistance to businesses during the pandemic.
“We think it’s important to continue for the next two years,” she said. “We don’t think we have it all figured out when it comes to the transformation that has taken place in the online world.”
In a statement, Newhouse said he continues to support the Local Journalism Sustainability Act, but opposes broader legislation that Democrats aim to use as a way to pass it.
“Local journalism matters, and that is clearly reflected in the broad bipartisan support for this bill and the 72 MPs who have already signed it into law,” he said. “I will continue to work with my colleagues to find a comprehensive solution, but if the majority really wanted to move this bill forward, Speaker Pelosi would introduce it immediately.”
Democratic leaders in the House and Senate have a limited time to propose legislation before this session of Congress ends at the end of this year, so they will have to choose their priorities. Coffey said the urgency of the local news crisis demands that lawmakers make both pieces of legislation a top priority.
“Quality local media coverage in communities across the country is what’s at stake,” Coffey said. “And during the pandemic, we saw how valuable that information could be for a local community, because it’s about health, schools, businesses. This is information to ensure a functioning democracy that newspapers have always provided historically, for hundreds of years.