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'We need a better deal': Media make case for more bargaining power against digital giants

A group representing roughly 2,000 newspapers and digital publishers in the United States asked Congress last month for an antitrust exemption to form a bargaining coalition that could have more sway in negotiations with digital giants Google and Facebook.

David Chavern, president and chief executive of the News Media Alliance, spoke to The Globe and Mail about this effort, Canada's potential policy changes and how the business is changing.

What would allied bargaining do for you that news organizations can't do on their own?

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It's an interesting problem. You have two parties that currently have a massive market position, around 70 per cent of digital advertising. And yet, due to some bad decisions here in the U.S. – in particular, there was a decision about the booksellers wanting to get together to negotiate with Apple and our Justice Department slapped them down on antitrust grounds – the people constrained by antitrust in this circumstance are the publishers, not the massive platforms. It's a funny inequality. Google and Facebook are tremendous distribution platforms where the public enjoys getting news. But the terms of engagement mean that those platforms aren't really sustaining news going forward. We need a better deal. One is a better revenue share around advertising related to news. We need data sharing – often the readers of our products are invisible to us, so we don't know who our audience is. That's a problem. Support for subscriptions: in the Facebook context, that would mean an easier way to get to subscriptions, and in the Google context, getting rid of policies that are really anti-subscription. Like there is a policy, for example, called "first click free," that in order to show up high in the search results, a news piece has to be effectively given away. If you try to put paywalls in there, it puts you really low in the search results. You're effectively invisible.

The priorities of the so-called "digital duopoly" are different from those of your members.

Google and Facebook are very focused on user experience. Look, the user experience in my local bar would be a lot better if I never had to pay the tab. But at some point, user experience can't trump sustainability.

A counterpoint editorial in The Wall Street Journal pointed out that "American antitrust law exists to protect consumers, not existing competitors from new competition." What's your response to that?

It is clear around the world, not just in the U.S., that old rules of antitrust don't fit very well with new megacompanies. There is a long history in antitrust about it being about consumer harm as defined by price. So what do you do with free services? Facebook and Google are free in terms of money, but not in terms of consumers' data. Talking about consumer protection in terms of just a monetary transaction is outdated.

A recent poll found that 42 per cent of adults in the U.S. look at Facebook several times each day to get their news, more than double the number who said the same for news outlets.

You get growing percentages of the population that will say "I get my news from Facebook." Facebook doesn't have reporters. Nobody gets their news from Facebook, they get it from journalists and it's delivered to them through Facebook.

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Some have called [the request for an antitrust exemption] a long shot. How likely do you think this is to come to pass?

It's got more of a chance than people think. Even having the discussion is important. If you don't have a news ecosystem, it really undermines civil society. You can have free news – because people want to know about the world, things will fill that void – but it will be garbage. A free news business is "Pope endorses Trump." [A false story spread widely over social media during last year's election.] But if you want quality news, that isn't free.

Have you had any discussions with Canadian media companies about forming an alliance beyond U.S. borders?

I intend to. I would like to integrate our efforts, because we're all facing the same issues: In the future, publishers are primarily going to communicate with readers by digital means, and Google and Facebook are going to be a big part of the distribution system. The quality of that relationship will determine how sustainable the business is. It is an international challenge. In Europe, for example, you see the publishers being more activist than we've been so far.

Here in Canada, a recent report recommended, among other things, government funding to help cover the cost of running newsrooms. Has the idea of such subsidies for journalism crossed your desk?

We haven't gone down that path, and that may reflect histories and philosophies that are different. In Canada, there is a history of the CBC, and the government being involved in journalism. We don't have that history here, and we don't come to it naturally from a philosophical point of view. There are a lot of concerns about what kind of journalism would be produced by a government-supported enterprise. Usually my members do not come naturally to the point of view of, let's get the government more involved in our business.

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Is part of the goal of going to Congress not just to ask for your own exemptions, but to urge greater regulation of digital giants by pointing out their dominance of the market?

Yeah. I mean, we have not gone down the path of asking the government to come in and regulate them. We've taken a more conservative position: just let us negotiate. But we are looking forward to the opportunity to tell the story of the news business and its interaction with Google and Facebook.

Some have had success shifting the revenue balance to depend less on advertising revenue and more on readers who are willing to pay for news. This works for The New York Times. But can it work for smaller regional or local outlets?

I think so. News is valuable, so it is completely appropriate to ask that it be valued. We're in the pretty early stages of understanding different subscription models. In the print world, it was a binary thing: you were a subscriber or you weren't, and here's the price. But if you look at other consumer products, it's not like there's just one price for a can of Coca-Cola. It depends on where you buy it; are you buying in bulk or at the convenience store? We have to think as an industry in a much more sophisticated way, about giving readers a range of choices so that they can buy what they like and want. We need to get better at that.

Facebook has said that later this year it plans to integrate subscriptions into its Instant Articles product– allowing for example, a metered paywall approach that would track how many of a publisher's articles are read through Facebook and send them to a subscription page once they'd passed a weekly limit. What have you been hearing from your membership about their relationships with Facebook?

There's growing frustration at the publishers with Google and Facebook. There's a lot of nice talk about journalism, but we need to get to a better place. With regard to subscription support through Facebook, I'm all for anything that works. We still have very few of the details.

Is there any risk in letting Facebook not only into the distribution process – which they've already wrested away from the publishers – but also into the sales process of signing up a subscriber, and all of the data that could come along with that?

It all depends on the details. I don't know why giving it away for free is preferable to that. I know that there are a lot of tech bloggers who like to make academic arguments about how the industry should be structured. I'm trying to deal with the reality of publishers today needing to get a better return, so they can pay for journalism. Anything that gets me to that, I'm happy to do.

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About the Author
Media and Marketing Reporter

Susan covers marketing and media for Report on Business. Before joining The Globe and Mail in 2009, Susan worked as a freelance reporter contributing to the Ottawa Citizen, the Montreal Gazette and other publications, as well as CBC Radio's Dispatches and Search Engine. She has a Masters degree in journalism from Carleton University. More

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