A recent State of Local News Report revealed that more than 100 newspapers are closing each year in the United States as the news industry struggles to remain profitable. But another recent study places a large share of the blame for those struggles on unfair business practices by Google and Facebook, which are blamed for making billions of dollars off of news content while sharing only a small percentage of that money with the companies producing the content.
“We’re not dying of old age, we’re dying of homicide,’” Danielle Coffey, CEO of the News/Media Alliance trade group, told Brier Dudley of The Seattle Times.
Professors at the University of Houston and Columbia University conducted the research along with The Brattle Group, a consulting firm based in Boston. According to Dudley, the study “estimates that Google and Facebook owe U.S. news outlets at least $12 billion a year for the value news content adds to their platforms.”
The study is just the latest in a long line of accusations that Google and Facebook are harming other business competitors, Dudley reported. "Investigations by state and federal antitrust enforcers found the platforms are unfairly exploiting their immense power. The U.S. Department of Justice’s latest case against Google alleges that publishers are getting shortchanged and have no choice but to use the monopolistic platform."
News content remains popular, but now that readers are consuming more news online, publishers find it difficult to make money that way, because Google and Facebook dominate much of the online advertising market.
“Correcting that imbalance, by giving outlets more bargaining power and a better chance to survive, is the motivation behind media-bargaining policies approved in Australia, Canada and France and under consideration in other countries,” Dudley reported. “A U.S. version, the Journalism Competition and Preservation Act proposed by Sen. Amy Klobuchar, has bipartisan support and nearly passed last year.”
Coffey told Dudley: “It’s eye-opening how much revenue is generated off our content.”