If tech giants Google and Meta were paying a fair share of the revenues generated by their use of content from U.S. news organizations, they’d be paying out as much as $14 billion annually.
That is according to a new study from the Boston-based Brattle Group, which analyzed the financial benefits online platforms Google and Facebook receive by leveraging excerpts of content from news outlets in search results and social media postings.
Researchers derived “fair payment” values for ad revenues generated by online platforms’ use of news content, based on a 50-50 split of that income, and using that formula found Google would owe U.S. news publishers $10 billion to $12 billion every year and Facebook would owe $1.9 billion annually.
The analysis noted that the platforms do currently have some revenue sharing arrangements with U.S. news organizations but the payouts fall well short of a fair revenue sharing metric.
“Existing deals made between these platforms and news publishers do not capture the full value generated by news content on the platforms,” researchers wrote.
The U.S. news industry has been in financial decline since the mid-2000s as the distribution and consumption of news content has migrated largely to digital formats. Data gathered by Pew Research Center finds the U.S. newspaper industry has gone from a peak of nearly $50 billion in combined advertising and circulation revenues in 2005 to about $20 billion in 2022.
In research published in 2022, Pew noted that digital devices are by far the most common way Americans access their news but where they get that news on their devices is divided among a number of different pathways. Those pathways now include news websites, apps and search engines. And half of Americans, according to Pew researchers, at least sometimes get news from social media.
Brattle Group researchers also noted that the 50-50 revenue split they used to compute what could be owed to news outlets applies to revenue generated only from news content on the platforms and not to the total revenue these platforms generate.
“As a percentage of total advertising revenue, we estimate that 6.6% of Facebook advertising revenues and 17.5% of Google Search advertising revenues should be paid to news publishers on an annual basis,” Brattle researchers wrote.
According to data from Statista, Google generated over $224 billion in advertising revenues in 2022 and Facebook earned $114 billion from digital ads last year.
Earlier this year, Sen. Amy Klobuchar, D-Minn., introduced a bill aiming to build bargaining clout for smaller U.S. news outlets when it comes to negotiating revenue sharing contracts with online companies.
The Journalism Competition and Preservation Act of 2023 “sets out a process through which certain broadcast or digital news providers may collectively negotiate with covered online platforms ... regarding use of the news providers’ content by the platforms,” according to the proposed legislation’s summary filing.
The collective bargaining option, per the proposal, would be available to outlets that employ less than 1,500 people but that generate at least 50 million monthly domestic users.
Brattle researchers wrote that large digital platforms and news content creators provide “complementary services,” meaning that they create more economic value when used together, rather than when they are used separately. For the digital platforms, researchers noted, news media provides a source of high-quality content to keep their users engaged and coming back to the platforms. Likewise, for news publishers, the platforms provide popular, easy-to-use channels through which to distribute news content to a larger audience.
“Presently, the large digital platforms in the U.S. dominate digital advertising markets, allowing them to retain essentially all of the economic value they create jointly with news publishers,” the report reads.