David Pitofsky, News Corp general counsel, testified before the House Judiciary Committee’s antitrust, commercial and administrative law subcommittee on June 11. The hearing was called "online platforms and market power." He spoke during the first session on "the free and diverse press."
“Many in Silicon Valley assert that members of the press are nothing more than a relic of the ‘old media,' displaced by the ‘new media’ thriving in the digital world. That is not the case. Dominant online platforms have not invented a better way to gather or report the news. And news publishers have not failed to adapt to the digital world. Only two percent of the US population went online to get news in 1995, but as of last year 93 percent of US adults accessed at lease some news online.
“Instead, online platforms are placing news organizations under siege through massive free-riding. They deploy our highly engaging news content to target our advertisers, then turn around and sell that audience engagement to the same advertisers that news publishers are trying to serve. Dominant platforms take the overwhelming majority of advertising revenue without making any investment in the production of the news, all while foreswearing any responsibility for its quality and accuracy. As a result, one of the pillars of the news industry’s business model, advertising is crumbling.
“Many news publishers have responded by trying to shift to a business model more reliant on subscription revenue. To boost subscriptions, news publishers must invest in high-quality content that will be a compelling product to subscribers. But the dominant platforms have thwarted these efforts by, for example, demoting in their search results news websites that charge for access on the grounds that this is a ‘bad user experience’ for search users, who prefer free content, Consider this for a moment: consumer choice has been all but eliminated by a false and fateful decree that all search users prefer free news, not quality news.
“This is obviously a bad deal all around for publishers, but the absence of competition denies us other options. In a competitive marketplace, we would see fairer terms from the search and social media providers that surface our stories, and we would take our digital ad inventory to other ad tech providers, who would need to compete for our inventory by offering better terms. But there is no competition, and as a result we are powerless to negotiate a fair price, either for our news content or for our digital ad inventory.”
Pitofsky said online platforms have ‘financially dis-incentivized’ news organizations from investing in investigative reporting, which requires a number of experienced journalists and editors, because the costs can’t be recouped. He told how the Wall Street Journal assigned five reporters, multiple editors and lawyers for months on the Stormy Daniels story, that the paper broke last November. A few hours after the WSJ published the story about Donald Trump paying Daniels for sex, re-writes of the story were all over the Internet.
“The dominant platforms benefited from the Journal’s hard work because the large majority of online readers access their news through these platforms. And copycat publishers also enjoyed an outsized and unearned benefit by investing in copying rather than original reporting. Because the Journal has a subscription paywall, search results demoted the original, Journal version of the article below scores of copycat rewrites—on mobile devices it was the equivalent to scrolling down five pages. Because of the press convention of citing original sources, the demoted search result for the Journal story did note that it was ‘highly cited,’ meaning the search engine knew it was the original, authoritative source, but demoted the Journal story anyway.
“Publications that used to pride themselves on producing investigative, hard-hitting journalism now compete to see how quickly they can free-ride off each other’s stories and optimize to the top of search engine pages.”