A California Bill Would Break the Open Internet & Harm Local News

Over the past 15 years, the United States has lost more than half the newspaper reporters covering state and local beats. Runaway consolidation has decimated local news, and this crisis has disproportionately harmed low-income communities, people of color, rural communities and immigrants.

The news crisis is prompting lawmakers to examine how to use public policy to keep communities informed. For instance, last year California dedicated $25 million to create the California Local News Fellowship program at UC Berkeley. This new initiative seeks to place journalists in underserved communities across the state to try to fill in gaps left by the commercial local-news market.

Not all policies to support local news are good ones, however. And unfortunately lawmakers in California — after creating this community-focused program at Berkeley — have devised a horrible solution to the state’s local-news crisis: the California Journalism Preservation Act. The CJPA, whose proponents include industry players and corporate media outlets that have a proven record of harm and divestment, is moving quickly through the state legislature. The bill (AB886) would break the open internet, make it harder for websites to remove hateful content, and provide giant giveaways to the same corporations and hedge funds that have destroyed local news.

You can take action against the CJPA here. Keep reading to learn more about why this bill is bad news for local communities.

Good intentions, wrong solution

Local journalism in California, as in the rest of the country, has reached a crisis point, the consequences of which are substantially harming communities. California itself has lost 25 percent of its newspapers, and total news circulation has dropped by more than 50 percent.

Californians need better access to high-quality local reporting to participate in civic affairs, share their stories, connect with fellow community members and ensure public accountability. The destruction of local news across the state threatens the most fundamental of civic democratic values. Moreover, these deprivations have fallen hardest on poor people, people of color, rural communities and non-English speakers. The outlets serving these communities are disproportionately vulnerable to the market failures at the root of this crisis.

That’s why Free Press Action worked with lawmakers and our California allies to help launch the California Local News Fellowship. We’ve worked for years to combat the local-news crisis in states throughout the country — and spearheaded the campaign to create the New Jersey Civic Info Consortium, a nonprofit that invests public and philanthropic dollars to help support community news and information. A first of its kind in the country, the consortium has invested $2.5 million since 2021 in projects designed to give residents the news and information they need. New Jersey is investing $4 million in the consortium in 2023 — and this increased funding will help the organization better address the rise of news deserts and serve marginalized communities in the state.

So while Free Press Action supports legislative measures to address the dwindling supply of truly local and responsive journalism, such interventions must understand and respond to the causes of its decline: namely, a lack of market incentive to produce public-interest journalism, runaway media consolidation, mismanagement, new technologies and changing consumer habits.

The CJPA’s current structure fails to meet that mark. It also has the potential to incentivize and even mandate financial support for hateful and misleading content that social-media platforms would otherwise refuse to link to and amplify. To make matters worse, it would also threaten the architecture of the open internet by giving content creators unprecedented rights to compensation when others merely link or point to their work.

The CJPA would benefit from more engagement with the communities that lack quality local-news coverage: communities of color, low-income areas, non-English-speaking communities, and isolated or remote areas. Trustworthy and easily accessible local journalism is a public good that can inform community members about local government, economic activity, local schools and public health. Members of underserved communities have just as much of a stake — if not more — in the future of local news in California, and can speak to the types of news and information they need.

Studies show that local journalism boosts civic participation, strengthens social cohesion and helps hold local institutions and officials accountable. Yet the CJPA will do nothing to increase the supply of local public-interest journalism to underserved populations.

Bad policy, bad outcomes

The CJPA proposes to take a percentage — as determined by an arbitration process — of large internet platforms’ advertising revenues. That money would then be distributed as “journalism usage fee” payments to “eligible digital journalism providers.” There is no requirement that these providers must be located in California. The bill requires only that 25 percent of an eligible journalism provider’s editorial content must consist of information “about topics of current local, national, or international public interest” — but doesn’t specify how to identify what information meets that test.

The CJPA would also require 70 percent of journalism-usage fees to be spent “on news journalists . . . and maintaining or enhancing the production and distribution of news or information.” Eligible providers would include television broadcasters, including stations owned by networks, hedge funds or other large conglomerates. And the bill proposes payments to eligible entities based on nothing more than how often their content is displayed to Californians.

While there are some key differences between the CJPA and similar federal legislation introduced in the last session of Congress, the California version of the bill suffers from many of the same flaws and bad outcomes. Indeed, a recent report from the U.S. Government Accountability Office said policies similar to the CJPA “may help generate additional revenue for some news outlets but are not designed to specifically promote public interest journalism. Moreover, if not properly designed, these policies could result in some unintended consequences for small publishers, startups, and consumers.”

More specifically, the CJPA would:

• Subsidize all television stations — no matter how large and lucrative they are — with journalism-usage fees. That idea is no doubt popular with the mega-broadcasters that lobbied for this type of bill at the federal level.
• Reward journalism providers both inside and outside of California for the sheer number of views they get or times their links are displayed. This would drown out local and community-centered content. It would also incentivize the clickbait and sensationalism already driving too much news coverage on air, in print, and online.
• Allow recipients to use accounting tricks to allocate more funds to corporate profits, dividends, stock buybacks or other costs that aren’t associated with increased and improved coverage. The bill doesn’t mandate that these fees instead support hiring more journalists and expanding news production.
• Allow providers to retaliate against social-media platforms that refuse to link to or amplify content that’s hateful, harmful, false or misleading.
• Threaten the nature and character of the internet by charging platforms merely for linking to content, or for displaying snippets of third-party articles. This would directly threaten the free and open exchange of information online, creating economic incentives that would distort the market and give more power to media gatekeepers.

The CJPA’s flawed assumptions and analyses

These damaging outcomes stem from a series of misconceptions about the nature of journalism production, as well as the precise market failures that have created the local-journalism crisis. They also flow from a misunderstanding of the relationship between content producers and aggregators, and the purposeful confusion the largest media conglomerates have sown about their supposed need for subsidies.

Here we address some of the bill’s key components: 

The inclusion of television broadcasters is unjustified and runs counter to the intention to expand high-quality local news.

While the newspaper industry has been in decline for decades, in terms of both subscribers and revenues, the local broadcast-television industry continues to enjoy record revenues — which reached more than $38 billion in 2022 alone, according to S&P Global. Local television broadcasters have been financially healthy for quite some time. And since the Great Recession they have steadily increased their reporter-employment ranks, now nearing their late 1990s-era employment levels. 

Yet despite this fiscal health, television stations do not consistently supply the kind of local journalism that’s both worthy of and in need of public funding. Much of local-TV news coverage does not provide the nuance and depth needed for local accountability reporting. Television broadcasting firms recognize that their viewership is primarily drawn to sports and entertainment programming, and daytime coverage is optimized to attract and retain viewers through frequent weather updates and crime coverage that’s both superficial and racist.

It’s impossible to make a rational argument that there is a market failure in broadcast-television news. Even if CJPA funds led to more local-television reporting jobs, this would not yield the kinds of quality news that people need.

Local commercial newspapers have seen greater declines in revenues than local TV stations, but subsidies from the CJPA would not result in high-quality journalism.

The CJPA mistakenly assumes that the rise of internet platforms led to the decline in the production and distribution of local newspapers specifically and local news generally. But market forces never produced journalism in sufficient quantity or quality in the first place — and has always failed to serve the needs of people of color and non-English-speaking populations.

It’s true that newspapers have lost advertising revenues and their former place of prominence due to technological advancements — but this shift did not originate with internet platforms and in fact began with radio and television.

Yet the decline of newspaper revenues itself doesn’t require policy intervention. What requires intervention is the lack of civic information, a true public good. Even at the height of newspapers’ dominance, most areas never had enough of the locally responsive, diverse and competitive sources of civic information they needed. It would be misguided and ineffective to design public policy to bolster advertising-supported television, radio or newspaper industries, which have failed to produce enough of this public good and have contributed much to the crisis we are in.

The free exchange of information and ideas online benefits independent local publishers. The CJPA would reward incumbents and low-quality content rather than creators of high-quality local news serving diverse communities. 

A major motivation behind the CJPA is the mistaken belief that internet platforms are “siphoning” news content and depriving publications of advertising revenue. But while online platforms’ ad revenues have grown tremendously, that doesn’t prove that advertising-driven models ever sufficiently supported high-quality local news.

It also doesn’t mean that platforms provide no benefit to news publishers. In fact, they have a symbiotic relationship: Publishers benefit from platforms amplifying and referring people to their content, and platforms benefit from how publishers’ content generates traffic to their services. Legislation that aims to make platforms pay publishers to link to content threatens this relationship — as well as the free exchange of ideas on the open internet. 

Mandating that social-media platforms pay publishers to link to content could motivate these platforms to reduce their link-tax costs by moving away from content. It could also incentivize platforms to limit the growth of publishers, frustrating the ability of smaller, underresourced publishers and independent outlets to grow their audiences.

Meanwhile, large incumbent and hedge-fund-owned publishers whose content is already widely viewed would benefit the most from the CJPA’s proposal to pay journalism providers based on the number of times their content is shown to California residents. This would fund content like clickbait that generates the most views and clicks. The advertising-driven news model already motivates publishers and platforms to maximize engagement over educational value and to over-produce this kind of “junk food” — i.e., low-cost, low-quality, sensationalist and broadly appealing content.

On the other hand, providers of high-quality local news — including those serving specific geographic areas as well as those serving communities of color, LGBTQIA+ individuals, immigrant populations and non-English-speaking groups — would not benefit. That means that the CJPA would at best entrench the advantages of large media companies — and at worst, reduce incentives for platforms to link to or show return results for smaller and more diverse outlets.

The CJPA’s retaliation provision would allow purveyors of hateful, harmful, and misleading content to sue for better placement on platforms and more amplification.

At first glance, the protections against “retaliation” in the CJPA would appear to guard against a decision to stop amplifying or linking to diverse sources of content. However, the CJPA’s retaliation provision would allow purveyors of hateful, harmful and misleading content to sue platforms for better placement and more amplification — potentially mandating financial support for content that platforms would otherwise refuse to link to and amplify.

Content moderation is the type of editorial discretion and curation protected by the First Amendment. But this bill would allow publishers to sue when platforms remove content that is hate speech, identify a source of information as inaccurate, or engage in any aspect of moderation that could lead to a publisher’s content being removed or downgraded. While the bill purports to limit claims to instances in which a covered platform “retaliate[s] against an eligible digital journalism provider for asserting its rights,” it would take little lawyering to cast any and every content-moderation decision as retaliation.

The CJPA would reward the worst kinds of journalism and make it harder for platforms to protect users and the public from the spread of hateful and deceitful content, resulting in an internet ecosystem where more hate speech, misinformation and sensationalist clickbait proliferate online. This dangerous result alone is reason enough to rework the CJPA, and it’s why Free Press Action so vigorously opposed these kinds of provisions in the federal model for this “journalism protection” act and other antitrust bills with the same flaw. The words and actions of Republican co-sponsors of those measures — as well as lawmakers in states including Florida and Texas — make perfectly clear their intent to use these kinds of bills as cudgels against so-called “censorship” of election and public-health disinformation. 

This has real-world consequences.

The disappearance of local news has created a void that misinformation often fills. We’ve seen the horrific consequences of this during the pandemic with the deadly impact of misinformation about the virus, vaccines and masking. Misinformation has also led to violence and harassment directed at members of the Asian American community, who have been falsely blamed for the pandemic.

Meanwhile, disinformation campaigns have resulted in widespread distrust in our electoral processes and violence against election workers. This misinformation and disinformation disproportionately harm marginalized communities that already grapple with a lack of access to resources, and with damaging stereotypes perpetuated by traditional media. The CJPA would create an environment that rewards and amplifies hateful and deceitful content — and make it harder for platforms to protect users and the broader public. 

The CJPA’s attempts to ensure that 70 percent of journalism-usage fees go to journalists and news production are unworkable.

The CJPA’s attempt to guarantee that 70 percent of these fees go to journalists and news production is commendable — but the provision won’t guarantee the continued employment of journalists or the hiring of additional reporters who are assigned to produce high-quality local content.

This is the case for at least three related reasons.

First, the CJPA mandates combined spending of 70 percent of these fees on “news journalists employed” by the journalism provider as well as any other expenditures alleged to “maintain or enhance” the “production and distribution of news or information that concerns local, regional, national, or international matters of public interest.” That catch-all category for the “production and distribution of news or information” could include all manner of spending on things other than journalists’ salaries, including other operational and distribution costs. It could even include steps that the provider takes to reduce its expenditures on journalists and increase them on AI, search-engine optimization, or other line items intended to enhance its profitability and visibility.

Second, even if the journalism provider did place the required 70 percent of its usage fees into journalists’ salaries, there is nothing preventing entities receiving these funds from reducing their current outlay on salaries by an amount equal to the new money received through the CJPA. This kind of accounting sleight-of-hand would even seem to satisfy the command in the bill that the fees go toward either enhancing coverage or merely “maintaining” it at present levels, as long as the expenditures amount to 70 percent of what is received under this bill.

Third, this provision seems to understand that maintaining a staff of qualified journalists is a crucial aspect of producing news that delivers community-specific civic information; but it does nothing to guarantee the hire and retention of journalists assigned to produce this kind of news. Outlets could then just maintain or enhance their production of information that is broadly appealing, entertaining, or even biased and sensationalist, all just to increase traffic to their sites and grow their profit margins.

Better ways to fund local journalism

While the CJPA is not the right solution, it’s good to see California officials examine how public policy can support local news and lead to more informed communities. We believe that public policies at the local, state and federal levels should focus on the information needs of communities, support community-rooted publishers, cultivate emergent models of delivering local news (which are primarily noncommercial in nature), bolster existing publicly supported media, and remedy the effects of racist harm in the U.S. media system. 

Free Press Action has proposed federal policies to directly tax the same platforms’ advertising revenues that the CJPA does. Under our proposal, the proceeds would go to support local-news startups, sustain investigative projects, seed civic-engagement initiatives, and lift up diverse voices that have long been excluded from traditional media coverage.

Taxing covered platforms’ ad revenues in that manner — then investing those funds in high-quality local journalism — would not disrupt the relationship between platforms and publishers in the same way that the CJPA’s pay-per-view model would. It would not motivate platforms to stop linking to and amplifying diverse and independent news. It would not create new subsidies incentivizing even more low-quality (and sometimes harmful) information just because it would gain the most clicks.

Policies like this, as well as Berkeley’s fellowship program and the New Jersey Civic Info Consortium, improve the quantity and quality of local news available, especially in underserved communities. It’s crucial that such policies are designed to meet each community’s specific information needs — rather than directing money to incumbents whose business models are no longer viable.

We commend the committee’s interest in addressing the local-journalism crisis. But legislation that primarily benefits TV conglomerates, hedge funds, out-of-state publications and all manner of large publishers producing low-quality content will not address the real problem. California residents need policies that would expand public-interest journalism and increase the number of journalists covering their communities. They do not need a bill that would exacerbate the spread of online hate and misinformation and make it harder for people to access trustworthy news.

Donate today to help us continue fighting for journalism policies that will benefit local communities. Thank you!