Free Press Action Study Finds California Legislation to 'Save Journalism' Won't Help Local Outlets Struggling to Cover Their Communities

LOS ANGELES — On Thursday, Free Press Action published Crumbs for California: How a Bill to ‘Save Journalism’ Would Enrich Big Media and Harm Community News Outlets a report that analyzes the negative impact that a recent California bill would cause. The bill, the California Journalism Preservation Act (CJPA), would force tech companies like Alphabet and Meta to pay a link tax to outlets for every impression that appears on their platforms.

In Crumbs for California, co-authors S. Derek Turner and Alex Frandsen show that the CJPA would result in a massive giveaway to large and very profitable media outlets, including Fox News, Sinclair Broadcast Group and People magazine. Meanwhile, California’s independent media outlets, which are closest to the communities they serve and in most need of support, are highly likely to see little-to-no benefit from the CJPA. “These independent news firms might initially receive at-best fractions of pennies on the dollar,” the co-authors write.

In their research, Turner and Frandsen surveyed the website traffic going to a sampling of outlets that would qualify for support under the CJPA. Their methodology enabled Free Press Action to estimate the likely magnitude of differences in CJPA payments between classes of news outlets — including prominent broadcast-television firms, hedge fund-owned chains and nationally focused news and entertainment outlets, as well as locally focused independent, nonprofit and ethnic media outlets.

Other key findings of the report include:

• Broadcast-TV network affiliates — which are already very profitable — would receive a disproportionately large share of the CJPA payments compared to legacy newspapers and local independent, nonprofit and ethnic media outlets.
• The clickbait incentive system that the CJPA creates would over time crowd out smaller independent, nonprofit and ethnic media outlets, leaving them worse off than they are today.
• Right-wing political websites in our national sample on average generated three times the number of Meta referrals and four times the number of Alphabet referrals as the average local independent, nonprofit or ethnic media outlet in our sample. Outlets like the Daily Wire and Newsmax — which often traffic in hate and disinformation — are all eligible for CJPA payments.

S. Derek Turner, Free Press Action’s senior advisor of economic and policy analysis, said:

“The problems with the CJPA are inherent to the legislation’s design, and failed models elsewhere show that this approach is the wrong path to take. No amount of tinkering with this framework would change the reality that the independent, nonprofit and ethnic media outlets that need help the most would receive at-best token payments. This is because the CJPA creates an automatic revenue stream for companies that can afford to invest in search engine optimization and viral content production.  

“Over time, this CJPA-created clickbait gold rush would further reduce these small outlets’ online visibility, shrinking their readership and ultimately rendering them worse off than they are today. Meanwhile, national broadcast companies and other conglomerate- and hedge fund-owned news outlets would be the main beneficiaries of the bill. And there’s absolutely no reason to believe that funneling more money into their coffers would do anything to combat the local journalism crisis. The CJPA incentivizes clickbait content over meaningful local reporting, an effect that over time would reduce locally based outlets’ visibility and ultimately crowd out their impactful journalism on social media and search platforms.”

Alex Frandsen, Free Press Action’s journalism program manager, said:

“Lavishing financial largesse onto the same giant media companies that have failed to serve Californians’ information needs is not a viable solution to the journalism crisis. If California policymakers want to strengthen journalism in their local communities, they should reject the CJPA’s flawed approach and instead explore more targeted and impactful solutions.

“Smaller community-focused outlets are innovating and pushing the entire field of journalism forward, away from the boardroom’s focus on quarterly profits, and toward a future where impact is not measured in revenue growth. Yet any CJPA payouts such outlets would receive would be — at best — the leftover crumbs from revenue pies gorged on by already-wealthy media companies.”

Background: In July, California Assemblymember Buffy Wicks and State Sen. Tom Umberg decided to delay further consideration of the CJPA until 2024. The lawmakers pushed the legislation back to allow more time to consider amendments and examine the bill, which has run up against strong opposition from civil- and digital-rights groups, small publishers and community advocates. Free Press Action has proposed a number of policy alternatives to the CJPA, including independent public-grantmaking bodies such as the New Jersey Civic Information Consortium and a tax on online ad revenues that would underwrite local-accountability journalism and civic information.