Digital Sources of News

Democratic presidential candidates are helping to raise the issue of whether tech giants are violating antitrust rules and should be broken up. Considering what could be described as an extortion racket directed at journalism, the answer is probably yes. 

Here is an example of how it works: A news organization produces content and posts a link to it on Facebook. Not only is Facebook getting a valuable service at no cost, it sells its own advertising around that freely obtained content, undercutting in many cases the pricing of traditional news outlets. Then Facebook doubles down, seeking to charge the news organizations for pushing the content to more readers, for which Facebook rakes in more advertising dollars. 

This is a big problem for local news organizations. Together with Google, the two companies control two-thirds of the digital advertising market in the United States. This has resulted in what many small publishers see as artificially low ad rates, which are not enough to make up for a decline in mailed subscriptions and print revenue. Facebook is now a major means by which roughly 7 out of 10 Americans take in information.

The company’s new Today In effort is billed as a means to improve access to local news among Facebook users. Viewed cynically, the $300 million initiative could be seen as a way for Facebook to assure its supply of free content, paid for and produced by others, on which it thrives. It need not be that way; YouTube, which is part of Google, shares advertising dollars with, at least, its top-tier video contributors. Scale matters though. Because the ad rates are so low, the income for news organizations on Google’s platform is only meaningful at the most popular sites. 

The irony, at least in Facebook’s Today In project, is that it is trying to improve coverage in parts of the country known as “news deserts,” after helping to create them by undermining the business model of local media.