Suffering Publishers Want A New Ball Game

Michael Hedges July 17, 2017 Follow on Twitter

Newspaper publishers were late, to be generous, to the digital age. Whether they didn’t see the revolution coming or didn’t believe it is, by the second decade of the 21st Century, a moot point. Readers, subscribers and advertisers made the transition rather easily. Hubris kept the publishers in the dark.

US publisher trade body News Media Alliance (NMA) has a new plan, as they see it, to correct the flow - money and influence - away from them and toward the giants of digital distribution, Google and Facebook. In a Wall Street Journal (WSJ) op-ed (July 10) NMA president and chief executive David Chavern exhaustively reiterated complaints “that today’s internet distribution systems distort the flow of economic value derived from good reporting.” The solution, he said, is a “new law granting a limited safe harbor under anti-trust (regulations) for publishers to negotiate collectively with dominant online platforms.” Current US anti-trust provisions, he said, “undermine press freedom.”

The WSJ is published by Dow Jones & Co., a subsidiary of News Corporation, controlled by the Murdoch family. Rupert Murdoch is, arguably, the world’s most venerable Google-hater. Virtually every US newspaper publisher is an NMA member. Until last September the organization was known as Newspaper Association of America.

In its recent salvo, the lobbying group referred to the “digital duopoly” of Google and Facebook that must be forced to negotiate. As many other firms provide equal or similar services related to digital advertising sales platforms, these two giants only approach the legal definition. By market share of digital advertising - or all advertising - they meet certain criteria of an economic duopoly. There is no evidence the two collude on pricing, which could trigger anti-trust action.

Payment processing networks VISA and MasterCard are a “near” duopoly. The two carry about 75% of all credit card and digital payments in the world. Deep in the last century the US Department of Justice (DoJ) ended contractual exclusivity among merchants, which in the stark light of the present had no discernible impact on their business. Attempts at breaking the VISA/MasterCard duopoly have failed, mostly on the high cost of entering the payment processing business. Online and mobile entrants like PayPal, Amazon Payments and Google Wallet (and hundreds others) keep payment processing competition high.

A limited exemption (safe harbor) from US antitrust legislation, speculative at best in the current environment, could allow newspaper publishers to coordinate self-preservation and collectively negotiate for various trms and conditions. The best known American example would be Major League Baseball, given an exemption to the Sherman Antitrust Act by the US Supreme Court in 1922 and reaffirmed many times. A similar safe harbor for newspapers has eery echos.

“Owners and players prove day after day that they consider baseball above all a business,” explained David Greenberg in Slate (July 19, 2002). “But the exemption stems from the government's naive insistence that baseball is only a game. Alone among professional sports, baseball enjoys immunity from antitrust prosecution because neither Congress nor the Supreme Court has been willing to overturn an ancient decision that baseball is merely an amusement, not a commercial enterprise.”

US newspaper publishers would certainly like to force search engines and news aggregators to pay for snippets if not links. European publishers loved that idea, tried to enshrine it through legislation and failed miserably. US Courts (and others) have held under fair use provisions of copyright law that search engines are allowed to display short text from published works for purposes of identification. The NMA wants that rolled back because “the industry is currently forced to give away much of its product for free,” noted NeimanLab (December 7, 2016), implying those pesky snippets in the digital age are all web searchers need.

The recent decision by European Commission (EC) competition commissioner Margrethe Vestager to punish Alphabet, owner of Google, for allegedly rigging search rankings within its ad-supported comparison shopping feature emboldened publishers to make their pitch to US lawmakers. With €2.42 billion on the line an appeal by Alphabet is almost certain. One line of defense would be that online users have not been harmed, only competitors in the shrinking online comparison shopping segment, increasingly dominated by Amazon and eBay. Establishing true damages to consumers could be difficult to prove.

The digital tech giants continue under threat of legal action in European courts, generally considered more change - and disruption - resistant. Several European newspaper publishers - notably Spanish, Belgian and German - have gone down that legislative road only to find themselves worse off. A French court struck-off (July 12) a €1.12 billion tax claim against Google for booking revenues and corporate taxes in Ireland. French publishers have formed two ad sales data alliances to compete with Google and Facebook.

Meeting with publishing groups in Paris Facebook executives “disappointed” by not offering “concrete actions,” reported Les Echos (July 13). The publishers are bored with the Facebook Journalism Project and are not happy being forced to work through Instant Articles. They want Facebook users directed to subscription pages and a better split on ad revenues. And, too, they want “respectability” rankings to distinguish from fake news. The News Media Alliance manifesto also mentioned hot topic buzzword fake news, as if none of their members profit from taking liberties with veracity.

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