>> local news executive testified on how the industry is affected by large tech companies using their content. this senate judiciary subcommittee hearing was shared by minnesota senator amy klobuchar who's introduced legislation that would allow news publishers and organizations to negotiate fair compensation. this is just under two hours. [inaudible conversations]

[inaudible conversations] >> thank you, everyone. i called order this hearing of the subcommittee on competition policy, antitrust and consumer rights entitled "breaking the news - journalism, competition, and the effects of market power on a free press." i want to welcome our witnesses. we have boats going on right now so senator leahy and i will be going back and forth as will some of the other senators during this time. but i want to thank him and his staff for working with us to put together this hearing as well as my own staff, mark and avery and kagan for the work they do

everyday. so some of you may know my dad was a newspaperman, as a reporter and a columnist in the twin cities. he covered it all in an estimated 8400 columns, and about 12 million words in which he interviewed everyone from ronald reagan, senator lee, to ginger rogers, to chicago bears coach mike ditka. i won't say which interview was his favorite. he was proud to be a newspaperman, and as you can imagine, in my house growing up it was impossible to forget the importance of a free press. and that is what we are here to talk about today, to talk about the critical work news outlets around the country are doing and explore solutions to some of the existential challenges facing journalism. it is truly local news, the

reports on issues that people face in their everyday lives. i think about the forum in my home state actually of minnesota next to north dakota that includes moorehead minnesota when the floods catastrophic floods hit the area. that newspaper and the local broadcasters were the ones covering it, morning people, giving them news updates all the time. i think about investigative journalism at the local level with everything from city council scandals, not that those ever exist, to all kinds of things that would not be covered. i think of the sports games for high schools and the pride that people have in the local community events. all of this brings the community together in different ways. they find stuff out. they have common information that they can look at, in addition to what they see

nationally which sometimes can see the very existence and larger-than-life. what our local news does is oftentimes tells a story about my dad called ordinary people doing extraordinary things. and as i said this work not only connects communities, , it also helps policymakers better understand how issues are impacting their constituents and helps them to figure out what needs to be done. that's why it's critical that we ensure that local news cannot only survive but thrive, particularly as outlets face off with some of the biggest companies in the world is ever known. local news is facing a crisis in the u.s. since 2005 about five about 2200 local newspapers across america have closed and many of the ones that remain are on life support. between 2008-2019, newsroom employment fell by 51%. with much smaller newsrooms,

surviving outlets are often mere shells of the unsold rustic about that really troubling photo from "the denver post" where the journalist they show a picture of everyone happily smiling and then a few years later they show the hollowed out images of silhouettes of the journalist who are no longer there, less than half of them left. as you know local newspapers aren't closing or drastically reducing their coverage because of a lack of talent or passion for the work. and yes, many of them have online presence and have tried their best to do that. but, in fact, the real problem is a lack of revenue. ad revenue for use newspapers plummeted from over 37 billion in 2008, less than 9 billion in 2020. 2020. 37 billion in 2008, to less than 9 billion in 2020.

what else happened during that time? well, if you see the ad revenues for the world's biggest companies you will see the exact opposite story being told. facebook and google, worth over $2.6 trillion combined as i speak, became digital advertising titans during that same time. just yesterday google reported 61 in advertising revenue in a single three-month period, a 33% jump. i say to my colleagues, a 33% jump on the same three just last year. look at those numbers. 61 billion in just three months for one company. 61 billion, and and you have u.s. newspaper revenue from '08-2020 going from 37 billion to 9 billion. as one of my colleagues said during the presidential race, do the math.

it's not that hard to figure it out. do the math. the big tech companies are not friends to journalism. they are raking in ad dollars while taking his content. feeding into the users and refusing to offer fair compensation. and they're making money on consumers backs by using the content produced by news outlets to suck up as much a data about each reader as they can. so it's kind of a double whammy. they are the big guys bringing in the content. they are not compensating for it as they should, and at the same time they are getting the revenue off the consumers that read the content that then don't go to the ones that are producing the content. so then the data really exacerbates what is already a huge divide in where the revenue goes. and how much do these companies care about retaining this power over the news and reader data? they care a lot. enough to even hold entire

countries, industrialized nations, hostage as we saw happen last year in australia. when google was told by the government that they would have to pay for the news content that they wanted to use, this is the australian government, the company essentially said we are out of here, and threatened to pull google search out of an entire country. that's what monopolies do. that's what you do when you can do it because you over 90% of the search market. google didn't follow through on its threat in part because there was so much international pressure to stop them from doing it. but facebook actually switched off all news on its platform to protest the law. only reversing course after a few days under immense outside pressure. and what does big tech's dominance over the news mean for americans? as i've already noted less revenue for local news, fewer

journalists to do in-depth high quality reporting, more exposure to misinformation, and fewer reliable sources. well, the rise of these platforms is sometimes met a larger audience for some news outlets. that hasn't translated to increased ad revenue. for years i have heard concerns about things like the platforms did not provide adequate branding for news outlets original content on the platform. that they forage for themselves all of the data on the use that access the news content produced by news providers to their platform. that they publish large snippets of newspapers content to attract users to the platform without any compensation at all to that news outlet. and repeated complaints to google and facebook from newspapers and broadcasters are simply ignored because that's what a monopolist does.

they can ignore things. they can use their market dominance to elbow others out and retain their control. that's why we need to step in to level the playing field as so many of the countries are doing. we are here today to talk about how we will give these news outlets a fighting chance. i teamed up with my colleague senator kennedy to lead the bipartisan journalism competition and preservation act. our bill gives local news outlets the ability to collectively negotiate for fair compensation with companies like google and facebook so they can continue to invest in a kind of quality reporting that keeps us all informed. and we are working with our bipartisan partners in the house of representatives on improvements to the bill. we are ready to take all ideas and address all challenges raised by our colleagues because we believe there's a way to do this fairly to make sure that all news outlets are included to

better help correct -- better the bargaining power between newspapers and big tech. we are looking at this, a a cr framework for good faith negotiations between news organizations and big tech. mechanisms to help make those negotiations will smoothly, protections to prevent discrimination against news outlets based on the political views that they express, and provisions to better ensure that the interest of small independent news outlets are paramount in any joint negotiation. i also introduced the future of local news act to help local outlets chart the passport as a recover from the pandemic and them working with my colleagues to pass the local journalism sustainability act to all americans safer newspaper subscriptions. so all this said, if we were living in a perfect world where we didn't have monopoly search engines and monopoly platforms

with some cases over 90% of the market and we were able to pass some of the bills that i have, my colleagues have on a bipartisan basis, senator grassley, to even the playing field, maybe we wouldn't be where we are but we are here because we have a crisis going on when we have lost over 2000 news outlets and that is why we have come upon this targeted approach to protect the first amendment, to protect the news organizations that we believe are so critical to making sure that the first amendment stay strong. we need to recognize that what separates the news from the vast majority of our other industries is a crucial role in our democratic system of government. that's what our founders enshrined freedom of the press in the first amendment. so when the exercise of monopoly power result in a market failure and/or news industry, it's critically important for our democracy that we act.

local journalism is important to local communities and their economies. the closures of local newspapers can lead to higher municipal borrowing costs and increase government inefficiency. this means less money for schools, hospitals and roads. thomas jefferson said that our first objective should be to leave open quote, all avenues to truth, end quote. and that's the best we doing that is through quote, the freedom of the press, end quote. that rings especially true today. as elected leaders we may not always like what what we rr in the news. i think all of us can relate to that but i think we can all agree that ensuring the future of a vibrant and independent free press is essential to the fabric of our democracy and the american way of life. thank you. i now turn it over to my colleague senator lee for his opening statement. >> thanks so much, chairwoman klobuchar. today's hearing is important. i look forward to it for a variety of reasons. i think it will be illustrative

on a number of fronts. but first involves what ails the news industry. now, news publishers do, in fact, have a legitimate beef with google, facebook as duopoly. a problem with facebook's unrivaled market power in digital advertising and poses a sort of de facto tax on every business that places or makes money from ads, which is a large swath of the 21st century economy. i'm grateful to you, madam chair, along with senator grassley and senator blumenthal working with my office to tackle that two headed hydra which does need to be tackled. we have a lot of agreement on that issue. i also think that it's important

to ask the question whether that's really news publishers only problem. i don't think it is. in fact, i think it's far from that. now, our witnesses today may not exemplify that. i'll assume for purposes of our discussion today that they don't, but there are a number of voices within the news, mainstream news media whose publications are rife with shoddy and extraordinarily biased reporting that many consumers simply don't trust or in any event don't want to spend money consuming. there are too many examples to cite all of them but i think it's important to point out at least a few of them. if the steele dossier, work of pure fiction, funded by the clinton campaign and dutifully

reported on by news media outlets across the country, blinded by their own impassioned hatred of president trump, they help to spread the lies, even after it had been proven demonstrably, literally false. we are still waiting on the retractions. or what about the "washington post" defamation covington catholic high school student nicholas hammond? or the post fawning description of islamic state leader al-baghdadi as a quote-unquote austere religious scholar? and who can forget the "new york times" reporting that russia placed bounties on heads of american soldiers, which was quickly dutifully parroted by other outlets in the run-up to the 2020 president election. it was until after president biden was not good that they felt comfortable admitting that the story didn't hold up,

mission accomplished i suppose. i know senator cotton will recall how his suggestion that covid-19 may have been leaked from a lab in wuhan, was scoffed at and derided rather viciously in a series of personal attacks against him for saying that. as it turns out he was right. so how did the media respond? well, they still have their original reporting. they pretend it never happened. just last month just in the last few weeks the salt lake tribune editorial board literally said that if you tell we are a more just decent place at the national guard would be mobilized, it would affect all people on under house arrests if there unvaccinated.

so they are fiery but mostly peaceful protests, the summer of 2020. the denials that critical race theory is being taught in the schools. these things add to and constitute part of this list along with quote-unquote temporary inflation, and the list goes on and on. look, today's news media is often a source of misinformation, and it's one of the leading causes when it does this, so a people especially doesn't even acknowledge its mistakes and especially when it's mistakes appear so frequently, so consistently, so constantly to lean one direction and not the other. self-proclaimed fourth estate loves to preach to the masses about democracy dying in darkness while they themselves

turn out the lights here. on top of the fact the mainstream media is selling something that in many cases people don't want, there are also the series of poor business decisions that been made within that industry. during the years in which they make comfortable profits, almost nothing in some of the copies of these was reinvested into the business to innovate and to grow in response to changing technologies. and when the market changed with the advent of the internet orsi newspapers for the first time to face meaningful competition advertising dollars, many publishers just went all in on advertising only business model, even abandoning the subscription revenue for online content. the bottom line here, whatever the challenge is that the news publishers are facing as a

result of big tech's dominance over digital advertising, for some publishers, perhaps for many, they have got other problems. and for some of them, perhaps for many, that may involve inferior product quality and a failure to take into account evolving technologies to adapt their business model. the second thing to sit straight here is that what we should do about this, or rather, what we should not do also matters. the last thing i think we should do is to try to solve this or any other competition problem by saying that it's okay to just accept a cartel, that it's okay to make changes to the laws to encourage the formation and allow the formation and thereby

encourage the formation of a cartel, as many publishers are requesting. make no mistake, that is what this is. it is what this call is for. and that is what the jcpa would do here we're not talking about an arguably procompetitive type of competitor collaboration on some sort of run-of-the-mill joint venture. this would be competitors themselves colluding with the approval of law against a common business partner in order to fix problems they are facing. now, there is a lot that senator klobuchar and i have agreed on, and one of the many things we have agreed also a lot of areas within antitrust law.

we held a fantastic hearing back in 2013 i think it was when we talk about cartels. senator klobuchar said cartels have no other purpose other than to rob consumers, and i agree. and i certainly think we are not going to be better off by giving a cartel formation a hall pass to an industry that's been ravaged by a number of other problems that i have identified. this in the passing those problems along to consumers, the very same consumers that are being forced to in many cases except an inferior product and partisan hackery and so much else to goes along with it. now, i know publishers, including some of our witnesses today, believe that they would benefit, but legislation like the journalism competition preservation act would do are more to help the "new york times" and far more to help the "washington post," and it would

be a benefit for local journalism in salt lake city or in minneapolis. the only way to fix this is by encouraging competition and allowing it and promoting it, not eliminating it and not, certainly not giving people a hall pass to engage in contact that would challenge, , threaten and in a minute. but finally, as i understand the authors of the jcpa are rewriting that in an effort to mirror some reforms and australia and the music licensing system and the united states. i want to register my frustration that the majority hasn't shared draft text and we have seen a draft text. it's nearly impossible for senators and witnesses to prepare for hearing where draft

legislation is floating around case tree but not publicly available for senators and for the american people, for that matter, to review. with all that said i look forward to this evening and hearing from our witnesses and their contributions. >> thank you very much, senator lee. i would also note that the venue built we do not have any hearing on that, and we are here having a hearing on this and i of course am the lead author of that but i think, i went through after our last discussion on my innovation go and we found dozens of bills including led by republicans where the hearings were either at the subcommittee level or the wasn't a hearing, and we were able to have a markup and a discussion of the bill based on hearings such as the one we are having today. so think after we're done with this and we should look at that history. because we would be putting on a full venue built and many others if that was our new standard, that would be sadly adopted this

week. i'm now going to introduce the witnesses that are before us today. from the local news area, something near and dear to my heart and the reason i feel so strongly about this bill, jennifer bertetto, thank you for being here. did i say that correctly? thank you for is the president and ceo trib total media located outside of pittsburgh. the company operates a daily paper with a circulation of approximately 35,000, 11 weekly community newspapers with smaller circulation, and a handful of monthly newspapers. ms. bertetto has been with the company for more than 20 years holding positions ranging from regional advertising director to chief operating officer, to president. her first job in the news business was taking a small scores to the local baseball and

soccer leagues at the age of 16. she also serves on the board of the news media alliance. next up, joel oxley. mr. oxley is a general manager of wtop news. for anyone in the d.c. area you've heard wtop. it is a d.c. area radio station owned by hubbard broadcasting which happens to be located in minnesota. wtop has over 100 local journalists and it is known for its local news programming. the station first went on the air in 1926. mr. oxley joined wtop in 1992 and worked his way up the ranks in sales and sales management to general manager in 1998 dan gainor, mr. gainor is a vice president of free speech america and business for the media research center, a nonprofit organization focused on alleged liberal media bias. he is a commentator for fox and

has a regular spot on the one american news network. prior to joining the media research center, mr. gainor was an editor at several newspapers including the washington times and the baltimore news america. next, last but not least, daniel francis. mr. francis, dr. francis is a lecturer on law at harvard law school where he writes about regulation and competition. his research focuses on antitrust as well as constitutional and other rules that facilitate, constrained and shaped regulatory action and competitive processes. he has a particular interest in digital in high-tech markets. dr. francis previously served as the federal trade commission as senior counsel to the director associate director for digital markets and ultimately deputy director. another witness that's here with us virtually, hal singer. dr. singer is an economist who

has researched, and testified on competition related issues in a wide variety of industries, including media, pharmaceuticals, boards and finance. late last republished a paper commissioned by the news media alliance about the impact of google and facebook on newspapers finding that google and facebook under compensate newspapers for content and advertising. if the witnesses now would please stand and raise your right hand. [witnesses were sworn in] >> thank you. let the record reflect that each of the witnesses answered in the affirmative. you may be seated, and i will now recognize the witnesses for five minutes of testimony each, and as i noted, senators have

voted. we've invited all the senators on the committee as it always due to this hearing, and so we would begin with you, ms. bertetto. thank you. >> chairwoman klobuchar, ranking member lee, and members of the subcommittee, thank you for the opportunity to participate in today's hearing. my name is jennifer bertetto and i'm the president and ceo of trib total media. we are a small publisher that delivers news, information and advertising to four county in southwest -- southwestern pennsylvania. our company is 272 employees strong with a daily and weekly newspaper situation and hyper local commander websites that comprise our neighborhood news network. our newsroom as a collective of 88 journalists, photojournalist, editors and designers. our high quality and award-winning journalism is why our flagship website tree of life.com draws more than 300 300 million views view.

our company was transformed in 1970 when richard mellon scaife purchase our local publishing company. we have remained focused on providing local news to our communities but with the rise of the internet we recognize we need to shift our focus from print to digital. having done that we are proud to provide our flagship website for free, a testament to our commitment to the community and to making news accessible. i've worked my entire career in the news industry started out of college and working my way up to president and ceo in 2015. i've seen firsthand the change in nature news consumption and distribution and can attest the news industry faces i dyer and insurmountable challenge. leveling the playing field against the vast power exerted by dominant digital platforms. i would like to discuss three main points.

first, local newspapers are under incredible financial pressure, and we must ensure that the people who create high quality journalistic content are compensated for it. with the growth of the digital platforms we saw our readership ship to fewer subscriptions and then cancellations. to become profitable, in 2015 we restructured our business. we close two newspapers, sold three others, , and made the difficult decision to lay off more than 150 employees. in 2016 we published our last edition of the pittsburgh tribune review and moved our reporting in that market online. these decisions were essential to stay in business but they have ramifications to this day. several communities in southwestern pennsylvania are considered -- not served by any local newspaper. second, access to news online has become concentrated on two

platforms, facebook and google which serve as gatekeepers and determine how news is displayed, prioritize, monetized without compensating the journalists that create the content they rely on. tech platforms have become gatekeepers control access to news. my companies original content on their sites. sadly, most americans get their news from these platforms who are raking in record profits by simply curating content. a . a word that is subtly devalued the painstaking work of real reporting by journalist. on google alone 65% of users don't leave their site to click through to newspapers website. depriving publishers of the traffic and ad dollars it brings. some say the newspaper industry has failed to modernize and that's nonsense. even with restructuring and enhanced digital offering the matter what we did it was not enough to level the playing field. small publishers are stuck between a rock and a hard place. we carry no weight in

negotiations with platforms. we do not have the resources or the statue to bring them to the table. but there is a solution to the problem. the journalism competition and preservation act would give publishers a seat at the table to negotiate fair terms for the value of our journalism. thanks to the leadership of chairwoman klobuchar and senator kennedy, the jcpa would provide the limited safe harbor period for publishers, irrespective of size or political persuasion. to negotiate electively with the platforms for fair compensation for the use of our content. it's imperative journalists are fairly compensated and the jcpa would allow us the opportunity to seek just that. the bill does not prescribe the outcome but it allows the opportunity to seek fair compensation, requiring the first to negotiate in good faith, to receive fair compensation for our work when it enables small publishers like my company to invest more in our communities, hire more reporters, increase quality

fact-based news. thank you again for the opportunity to testify in today's hearing. >> next up mr. oxley. >> good afternoon, chairwoman klobuchar and ranking member lee and members of the subcommittee. my name is joel oxley and then the senior vice president and general manager of all-news radio station wtop fm, wtop.com which are all owned by hubbard broadcasting the hubbard broadcasting is a single minnesota family owned and operated broadcasting company with 13 television stations located in minnesota, new york and new mexico, and 50 radio stations located in minnesota, illinois, missouri, ohio, arizona, washington, florida and washington, d.c. i appreciate the opportunity to testify on behalf of national association of broadcasters and it's more than 6600 free and local television registration members in your hometown. broadcasters represent one of the last bastions of truly local

unbiased journalism come information that is to respected by all americans. their constituents turn to the local reporters and anchors for voices of a trust. legislative action including swift passage of the journalism competition and preservation act, jcpa, is needed to preserve this essential cornerstone of our democracy. local journalists and the communities we serve face existential threat whose fate increasingly rests in the hands of a few dominant digital platforms. we applaud the subcommittees attention to this challenge and your continued work in examining the digital market place for news and journalism. the pandemic has shown that when needed most, local television and radio stations provide specific bond for the committee's we serve. doing incredible work in the face of her own enormous challenges. more importantly we continue to be the primary source of the committee focused information on which our constituents have relied during this pandemic from health and vaccine resources to vital information about schools and local businesses.

i been in the news business since college. when i work for the school newspaper or sportscaster of the rescission. with the "chicago tribune" before joining wtop three decades ago where i worked my way up in sales and sales management before becoming the gm in 1998. i understand the significant costs of producing quality strollers. i'm aware of significant financial resources needed to run a station and invest in the type of equipment necessary to serve the public day in and day out 365 days a year to a year. quality journalism delivered through uniquely free service has only been made possible over the decades through advertising revenues. as you are all aware these revenues have experienced of freefall in recent years due to almost exclusively to the rapid often anticompetitive expansion of the dominant online platforms who upended advertising marketplace. the market power of the tech platforms undermines the online advertising model for local

broadcast journalism in two and part ways. the tech platforms role of contact gatekeepers stifled ability to generate using traffic. second, at competitive terms of service and a take it or leave it approach leads local broadcasters with a below market sliver of those advertising revenues derived through products. for local broadcasters and our viewers and listeners rely on quality journalism this is a real catch-22. to attract online use traffic we must accessible to the major platforms yet the terms of -- devalue our product. for example, not only is wtop being compensated by facebook and google for its content, wtop is not being competent -- wtop is paying to make sure its content is being accessed on their platforms. even more concerning is the degree to which certain platforms commoditize news content with little regard for the quality and veracity of the story. this puts fact-based reporting

like ours on par with unsubstantiated clickbait as we fight for user eyeballs in both platform newsfeeds in search results. there is no doubt tech platforms and the algorithms for our content that they sensationalism over our journalism. the dominant online platforms have flourished side near future mess of advertising revenues are the lifeblood of free local julissa. consider the big storm that just flew to the northeast e weekend, a nor'easter with blizzard conditions. tons of work and a lot of cost and time for local broadcasters to cover for millions of people but not for facebook, google and like. they take our coverage and profit from it and virtually nothing comebacks to us. without local news my guess is a lot of people would've not evacuated place like cape cod last weekend and lives would've and wrist. we just can have that. in conclusion this committee and address these concerns for the passage of the jcpa. nab thanks, senator klobuchar and senator kennedy for

introducing jcpa. we support the jcpa which level the playing field by creating a temporary safe harbor for broadcasters in certain digital publications to join negotiate with dominant online platforms regarding the trends of expenses for which their content may be accessed online. thank you again for the opportunity to appear before you today. i look forward to your question. >> thank you very much, mr. oxley. next up, thank you for being here, mr. francis. >> chair klobuchar, ranking member lee, members of the subcommittee, thank you for having me here to testify today. the former federal antitrust enforcer i strongly support the subcommittees focus on digital monopoly and i want to acknowledge the seriousness of the difficulties that many publishers are facing across the country today often some of our most important work. but i cannot think of anything the country needs glass now or ever than the national news media cartel.

i want to make just three points. point number one, cartels are the supreme evil of antitrust. they are so reliably harmful that we extradite and imprisoned people who form them, they are automatically illegal in civil litigation with no justification allowed law, and for decades the justice department had a flagship policy project of fighting cartels and opposing exemption just like this one. congress has license cartels a handful of times over the 130 years of her antitrust laws, but always with great caution and not always with happy results. point number two, i think the real complaint that i hear from the publishing industry is not so much about monopoly but is rather about property rights on the internet. so i appreciate the publishers complain that platforms

end-users can share links to websites and can give previews of news websites that are essential too long without paying. they argue that evidence of monopoly power because platforms are profiting and they are not paying, or not paying nearly so much, for those rights. but this is not evidence of monopoly power. platforms are not linking and preparing for free because they are monopolistic exercising firepower. it's that our property laws very wisely don't give a website owner whether it's a news website or something else the power to veto or tax linking or previewing of that website. it's pretty easy to see it has nothing to do with monopoly power because no one pays for it. we could at some has the coding ability and the shrimp we could start an app today and lincoln preview websites without paying for that privilege. our law is everyone that freedom. i think that's a really good

thing here links to the lifeblood of the internet. imagine how hard it would be to write even a traditional article or book if you couldn't cite a source or quote a sentence or two without paying for that privilege. and now imagine the consequences of that rule our internet today. so despite the framing, my strong sense is that this is not really about monopoly or monopoly at all. it's a request to dramatically expand proper rights on the internet. and then to allow that property right to be sold by a new national news cartel with major media conglomerates at the helm i think whatever antitrust reform we need today, any think we need some, this is not that. point number three, i think we're going to hear today about countervailing power. i think that's a red herring. it's true that in economic theory if you have a single dominant buyer, there is an

argument that total welfare can be proved if you let the suppliers from a cartel, police and a perfect world theory. but it don't think that's applicable here today for two reasons. number one, i don't see evidence of monopoly power here at all despite the sides of the platforms. again, platforms are not linking everything for free because of firepower. there linking and previewing for free because that bite that freedom is theirs under our property law today. so this wouldn't be a cartel that would correct firepower. would create new seller power. that's a monopoly surcharge and all the news in the tourney cascading down the supply chain driving up prices that are already too high. second, the harm would far outweigh any good. despite the size of the platforms it actually doesn't look a lot like a hold monopoly power in markets for news today. but a national news cartel she would be a monopolist i think think the subcommittee would be really concerned even two of the major publishers would propose a

merger. the idea that we might put all of them together under one roof to agree on rates and terms and business models strikes me as a consumers nightmare. adweek the antitrust agencies here pretty creative but sometimes fragile blackboard economic theories about why we should tolerate harmful conduct. i don't think the agencies would accept its argument at a don't think congress should i do. i think the best thing we can do for competition in news isn't typically increase our funding for the antitrust enforcer. i think that's most urgent advice. thanks for inviting me today and i look forward to your questions. >> thank you. next up, dr. singer who is here in person, so thank you. >> thank you, subcommittee for inviting me to speak today on this post serious issue. i want to begin on a slightly lighter note however by giving a shout it to my mom who turns 90 last month who's watching this young people fashion wear on c-span and does not forgive me to the state for becoming an

economist rather have a lawyer. the economic content here are complex but a kind of boiling down to just a few by answering three questions. one, what is the competition problem this bill seeks to solve? what is the social harms that flow from the competition problem? how would a targeted bill address the competition problem? regarding the competition problem, to platforms google and facebook have monopolized the digital advertising industry. google and facebook capture approximately 61% of all digital advertising dollars because of the ability to collect consumer data across the web. 70% of referral traffic to newspapers originate from just these sites. this market power makes news publishers completely beholden to the dominant platforms for viewers and advertising dollars. the resulting power imbalance insureds at the market rate for accessing news content will always be below competitive

levels. google or facebook achieve their dominance in the mid-odds with acquisition of countless competitors, call the mentors like instagram and youtube as well as critical input suppliers and at tech like double-click an ad mob. also not by coincidence newspapers begin losing advertising, mainly to the platforms. according to pew research, newsroom advertising declined from 37.8 billion in 2008 to 8.8 billion in 2020 and over 20 and over the same time, newsroom employees declined from 71,070 the 30,820. if these trends are left unchecked we might not have local newspapers in the near future. the reason why google scrapes indexes and post news publisher content for free is because it can pick it's like a school bully beating the smaller child's lunch. so long as market forces are allowed to dictate the payments for accessing news publisher content the access price will

remain zero and news publishers will be deprived of the billions of dollars a year of value created for the platforms. turning to my second question, in addition to the private harms, the underpayment to news publishers resulting underemployment of journalists and other news employees as well as a house of other social ills associate with local news deserts including less competent local governments, greater spread of partisanship and misinformation, removal of economic stimulus to local economies, and a reduction in the diversity of viewpoints. turning to my third and final question, a targeted intervention similar to negotiation framework adopted in australia with solve the competition problem and mitigate the associate social harms by doing three things. first, they could permit a coalition of news publishers to form a joint negotiating entity to alleviate the power imbalance. no news publisher no news publisher whatever unilaterally shut down access to google and

facebook. to do so would be suicidal. second, the bill could compel the platforms to negotiate in good faith for the access rights. third, if the good-faith negotiation does not produce an agreement, the coalition of news publishers but not broadcasted could invoke arbitration rights. at that point a panel of arbitrators would decide using baseball style arbitration whose estimate of the value added to the platform by all the members of the coalition was closest to fair market value for accessing the content in the absence of the power imbalance. now granted and narrow exemption to antitrust laws to address underpayments to vulnerable input providers find precedent in both the labor exemption and the farm cooperative exemption to the antitrust law. and other countries such as australia which have employed a similar intervention to what i call for here have seen immediate rewards to publishers

for their interventions. relative to australia's model what i'm calling for would be more favorable to small publishers as it would not permit any large individual newspaper to avail itself of the good-faith negotiation or arbitration rights. only news publishers that remain in the coalition would be entitled to those rights. thank you, and i look forward to answering your questions. >> thank you very, very much. and now our remaining witness who was appearing remotely is dan gainor, vice president free speech america and business for the media research center. thank you for being with us, mr. gainor. ..

>> every single member of this committee would do the same. the conservation act of 2021 does not fix this problem. attempt to level the playing field of tech and journalism. it's a misinterpretation of history that it was killed by tech companies. it was not. how do i know? i was there working with local journalism, bought at 20 to 25 to 30% profit reinvested. and there's the delivery that became difficult out of traffic and turned to tv news. furthermore, where i grew up, none of that was caused by

this. the director of new media began to catch on and watched the organization downplayed the threat and put the content off for free. news outlets were unable to look at the opportunity and they were dissected by the competition. there was the particular toll of local businesses and that meant advising, and restrictions were an example of heavy hand of government on local news, that's the background that brings us here today to discuss journalism. j c.p.a., rather than fixing big advertising, it's adding another to negotiate with. allowing the big media companies to act for others. -- we all want trusty

journalism to help hold people accountable. local outlets who treated as cash cows, they milked them and slaughtered their remains. a local media instead of independent media. and the new york times 550 million dollars in cash purchasing-- according to the journalist 270 plus sports teams and more than 47 local markets, times placed itself in local competition, and more than 8 million paid subscribers, and with the popular games in the low seven figures, why are we helping them. and there was the communities weekly and it was founded in 1959 with a 550,000 and circulation in suburban

maryland. they were down by their owners washington post in 2015. in 2021 the post achieved regard breaking advertising, billionaire jeff bezos purchased the company in 2013, why are we helping them? media with social media algorithms and makes it more powerful. this-- with the dedicated editorial, and independent journalists make news, but they're squeezed out by corporate media. there's a concerted evidence to get involved in the process of funding in journalists, it's unrealistic to expect

journalists funded and supported by politicians to report aggressively on the same politicians. we can't expect them to be when they're accountable to those powerful people with their paychecks. when the trusted media is near an epic low. the americans trust media to report fully, accurately and fairly, and for republicans, that number stands at 11%. why then are we bailing out corporate media when ordinary americans would rather find new sources and information. thank you, i look forward to your questions. >> thank you very much, and thank you for appearing remotely. i'll start with you, google is a search giant about 90% of searches as you know, 90% done on google and biggest in the on-line advertising space,

nothing i know my colleagues are concerned about. google pays a large revenue generated on the newspaper site. how would you characterize your your negotiations with google over the share of advertising revenue it gets compared to what you newspapers can keep? >> thank you for your question. >> i guess the best way to answer that would be there have never been negotiations between my company and google about the manner in which we get paid or how much we get paid. in fact, i've often had my company penalized whenever i have had other advertising services available on trib live, to help fund our free website. we get punished in the algorithms. if someone goes to search is tore trib live, because we're using other companies because they're not google, our search

results are pushed down. when we've reached out direct to google to help our search rankings, we've been directed to google products 12 to 15,000 a month which is a lot the problem is to solve by removing other advertising mechanisms that exist on our site. so, when i have attempted to find other ways to monetize our content independent of google i've hit wall after wall with google and in fact, the resellers have been as brash as to say to me, look, i would take off the other platforms that you're using on your site when i explain i actually get a higher dollar per click using those resellers, they tell me, well, google doesn't like that and google owns everything.

>> okay. pretty direct. >> mr. oxley. in your written testimony you wrote that big tech companies like google adopted anti-competitive service and take it or leave it which leaves markets with a sliver of the ads derived from their product. can you tell your experience with negotiating about big tech companies like google. >> there's no negotiation, there's no e-mail, no back and forth. and they don't give you that opportunity. and we've tried every way possible with both of them. the bottom line they don't get back to you and even worse, they make changes whenever they feel like it. we oftentimes over a weekend or overnight or in the middle of the afternoon, we'll all of a sudden have changes in terms of services that come down to us out of the blue and we just have to deal with it. there's not any kind of negotiation, not any kind of

conversation. >> okay. and again, direct. dr. singer, news aggregator, such an apple news, facebook news, take various news from publishers and give it to consumers and it makes it very difficult for newspaper publishers and other news sites to establish direct relations with their readers and to improve their own advertising operations. can you talk about the challenges faced by smaller media outlets which often find themselves in an unevening bargaining position with news aggregators? >> sure, there is a-- the challenge, of course, is more acute for the smaller publishers than the larger, because as a matter of bargaining position, they have less bargaining power, counter veiling power. i would say the asymmetry extends across the industry, not just smalls, but the medium and the large as well. the problem, the publishers

cannot summon the will to do what's necessary to access is fair market payment to access, which is to shut down the access to google or facebook with their site. no one would rationally do that? because they're beholden to google and facebook, and from those sites. the bill would do an attack the bargaining asymmetry would be to first allow the newspapers and news publishers and broadcasters to bargain collectively vis-a-vis the dominant platform. so i think to answer your question, yes, they're-- >> all right. i just want to ask one last question and that is you've heard from, i think it was mr. francis and my colleague over here with the use of the word news cartel about what

this bill does and of course, there's been representative buck, conservative over in house, senator kennedy, not exactly liberal, both have just been added to the bill and there's a lot of interest to this bill and i think it's important as we're looking at the changes we're making to make clear that there isn't going to be any kind of bias here, but that also, could you address this argument they've made that this creates some kind of news cartel? i'm only knowing the supporters of this bill in terms of the news organizations that run the gamut from liberal to very conservative and i find it impossible to see it that way, but could you comment about why this is not a news cartel? >> the concept of creating a cartel here is laughable and not economic, let me explain why. >> the news publishers would not get coordination rights in dealings with consumers, would

not. if they got together and tried to set prices for end users, they would go to jail. the coordination rights that are delivered here are narrowly nail tailored only to the dominant platforms and they wouldn't have coordination rights with respect to workers, wouldn't have coordination rights with buyers and the notion is fanciful and one other point, too, i heard mr. francis say it's going to result in higher prices, as you know, the cartel is going to exercise presumably selling power. that's false. just think about what would happen if the news publishers got their way and got the bill passed and there was an arbitration hearing, an award in the millions of dollars, what would happen? you'd have a large lump sum amendment on the revenue side and there's no theory in economics or pricing which i happen to teach at georgetown

that would suggest a big large increase of a lump sum revenue would ever cause a firm to raise its prices to users, it doesn't make sense. as an economic matter, if someone in my class suggested such, it would fall. >> don't worry, mr. francis, when senator lee or another senator returns, i myself may give a chance to respond. so just hold your beer. >> next up, senator durbin, we're thankful he's here as the chair of the judiciary committee, honored to have him here he's not officially of the subcommittee, but we thank senator grassley for his interest in this issue and help. mr. durbin. >> thank you, madam chair, i have to leave and thank you for putting me in the queue. and i heard about the cow bird, a brood parasite and meaning it

leaves its in other species and they're looking for species laying eggs and once she has a host she'll sneak in when it's away damage or remove one or more egg and replace with one of their own. the foster parents raise the cow birds usually at the expense of their own offspring. it sounds like analogy of something we're looking at here. it appears news organizations are creating news used by others that they aren't paid to create and the advertising money comes their way when they steal that content and put it on their own tech boards and such. and i'm wondering, is there a way to deal with this? let me quote one of the friend of mine, dennis loyal, you may know from the illinois broadcasters association and says the economic harm they're inflicting on local broadcast

journalists is brought out, with radio broadcasters demonstrate add freefall in recent years due to almost exclusively the on-line platforms who dominated advertising, and anti-competitive practices to protect it. so we're discussing the passing of j c pa. how with this help those broaders as dennis lyle represents? >> absolutely, absolutely it would help us to have all kinds of news operations to have a level playing field. i think that that's all that we're asking for is a seat at the table. we want to be able to negotiate. we want to be able to have a conversation, we want to jointly work together to try to have an outcome that will help

small journalistic outfits, you know, including broadcaster, but including the newspaper industry, but in terms of broadcasting we desperately need this because we're fading away. we're having fewer and fewer people involved in the news business and we've had a dramatic and steep decline and broadcasting now has seen tremendous amounts of people leave the industry. >> you know chicago. >> yes, i do. >> you've worked in chicago. >> yes. >> i can tell you in my senate career a little over 20 years there's been a dramatic change. a press conference in chicago you're lucky to draw one reporter, lucky. instead it's a bank of cameras and by union rules or by tradition, the cameramen don't ask questions. so you make your statement, and they look at you and you look back at them and that's the end of the story unless you want to start volunteering information and ask yourself questions. that's what it's come to in terms of what used to be one of the most vibrant news markets

and competitive news markets in america. it's just disintegrated we now incidentally have a new experiment with the npr station in chicago, joining up with the chicago sun times not for profit venture to deliver newspaper journalism and radio journalism through npr. i wish them well. we need people asking tough questions of politicians like myself. it's not the case. if nothing's changed. it's all going to go away and just going to disappear. >> that's my big concern, without something like the jcp a. we're not going to be able to cover council meetings or press conferences not going to cover local weather emergencies or traffic for all of these things are going to go away. what are you going to rely on then, your local list serve? the way it's been set up over

the years to make it a-- go at it as a digital business i know that jennifer to go into it. the profits aren't there and lucky if you break even. something has to change if we want local journalism to survive and jcpa could let us have a seat at the table so we could at least even the playing field. >> if we don't do something the cow birds won't have any nests to raid. >> they will not. >> thank you very much. >> mr. francis, first, i'd like to let you respond to point mr. singer made a moment ago, i was out in the hall and didn't hear all of it, but how he described, i think the word was laughable, the point i was making earlier that this bill would authorize cartel behavior. do you want to respond to that? >> thank you.

yeah, for sure. so i understood dr. singer to suggest two things, both of which were pretty surprising to me and for anything of us in anti-trust involvement space. number one a cartel is only a cartel if it deals with your dealings directly with consumers or workers. and that is really not right and that would be to the department of justice. he think some of the flagship enforcement actions have dealt with cartel agreements to harmonize on practice for sale to intermediate, and the lcd cartel, people went to prison for quite a long time for these things even though they didn't deal with consumers arn workers, a routine cartel enforcement. >> his conclusion is based on a distinction not recognized anti-trust enforcers at the

department of justice? >> certainly doesn't deal with cartel sales direct to consumer and sales to an intermediate platform illegal. >> that wouldn't be a defense then? >> that would absolutely not be a defense. second, i understood dr. singer to suggest that the cartel evercharge wouldn't increase prices, it's absolutely true for sure that a one-off lump sum payment would not have any effect on downstream prices. so if what we're talking about here is just cutting a check, a one-time check to google and facebook and it's back to business as usual forever-- i'm sorry, from google and facebook that alon is unlikely to affect downstream costs. i understand what we're talking about is an agreement that would lead to a rolling payment from google and facebook on an ongoing basis for news related

activity on search engine and social media. i think it's pretty textbook microeconomics, if you take a monopolies and increase their costs then the maximizing prices flow increase, and i understand that, not a single one-off lump sum payment to be what's contemplated here. >> thank you, that's helpful. just to be clear getting to the earlier point about the cartel, it's not like it's an off-shoot ramification of it. that's the point of the bill. isn't primary point of the bill to lawful what is now unlawful? >> and with the deals with the trading partner, that's a classic cartel. >> mr. gainer, isn't the problem for news publishers simply their advertising venue has been diluted by the advent of the internet and targeted digital advising? >> well, diluted even before

the internet. and the congress passed newspaper preservation act of 1970 trying to stop newspapers from going out of business back then. and we ended up with more than two dozen joint operating agreements back then. look, people live their lives on-line as much as a country right now and in two years of covid restrictions have encouraged them. and people aren't going to advertise it, not going to stores, not going to restaurant and that's everybody for the business center that we're talking about here. >> so, i've got a chart and i don't know whether you can see it. digital advertising revenues have increased severalfold while the areas in newspapers have more competition, classified ads and retail ads have declined precipitously.

how much of this is a big tech problem versus how much of it might be a matter of business choices and how they interact with emerging technologies? >> well, i'd say it's a mix of both. you look at that, look at the numbers, and they're all declining. in baltimore where i grew up had three newspapers and died in 1986 before the internet and the evening sun shut down shortly after the internet. that wasn't caused by the internet. so the problem was news publishers, specific ones didn't reinvest for the future and you know, now we've seen the ones that are doing well are vertical, and very specialized. the new york times political, washington post the same. sports, other things like that. local news isn't doing as well because it's just not doing well across the board.

>> thank you. mr. francis, to be clear when we're talking here about what is at risk, what is at stake, what's suffering. we're not talking about the death of journalism itself? we're not talking with the idea that journalism itself can't be economically viable in the absence of this. we're talking more, i think, about whether certain business models followed by some in the news publishing industry are viable, is that correct? is that consistent with your understanding? >> i think that's exactly right. i think that local news is clearly critical. i grew up in a very small english village where when the life magazine or the villager or the town cryer, our local newspapers would land through our letter box, everybody in the house at some point that week would read it and learn a

bunch of things we wouldn't find through other channels, local media and news are critical. exactly as you've described, what's at stake here is the manner in which local news will survive. >> right. >> and it's very clear that the business model is responding to competitive pressure. >> so what that suggests is that some businesses-- journalism it's self is at take and some business models will survive better in that environment. i'm certainly not an expert in the news publishing business, never purport to know the in's and outs of that business, but i think it's fair to assume that you can identify a certain subset. i don't know exactly how big it is, a certain subset within the news publishing industry that has adopted a business model that's not succeeding, it's not going to succeed. is it generally good policy from the standpoint of promoting competition for the

government to step in and sanction the formation of a cartel in order to save a particular business model that's dying? >> it's almost always not. and that's not to say that we look with anything other than horror and sadness at the real difficulties that competitive change brings. so, particularly with the transition to digital business model, we've seen from one sector to another, legacy business models experiencing real difficulty as they transition to something that makes economic sense and is sustainable in the economy as it's emerging today. >> horse and buggy to automobiles? >> exactly. video rental stores, film in camera and we see the story and there's suffering sewed associated with that. if you believe in anti-trust and the process that anti-trust is there to guarantee and

without tolerating and allowing some degree of failure, some agree of comfort, exit times then you don't have competitive and it's not clear what the anti-trust project is for. as difficult as it is, the pains exactly as you describe are a part of the process. >> i like your comparison to the home video industry. the consumption of home video entertainment didn't die. netflix emerged long before it was an on-line streaming company, and it survived, where blockbuster didn't, they had a different delivery method. particular business model succeeded over others, mr. blumenthal. >> thank you very much, senator lee. thank you all for being here today. there are moments in the united states senate, i've found in my 10 years here that america

comes to one of our hearings. america comes before us and i think that we have that moment today. it is a moment for america about a failing industry that's been the life blood of america, going back to the founding of our republic and it is part of the genius of america that we have local journalism which covers local stories and provide a local forum for people to be informed. one of the ironies here is that big tech is using information in effect to dominate. and it's information that is collected in all kinds of ways that local journalism simply doesn't have the power to do and then it is used in effect to suffocate other sources of

information namely, local journalism numbers. and now increasingly, broadcast. to all of the sophisticated economic arguments that might be made against this act, i think ms. bertetto, recounting what was told to her by someone who was asked, google doesn't like it and google owns everything. that's the nature of the power here. and so i would like to say that the market will self-correct, that we can use existing anti-trust law, but it ain't working. it isn't working for the heartford current. which was weakened and then taken over. and its fate is uncertain.

it was taken over by a vulture hedge fund, alden capital which has been seemingly selling off its assets, taking advantage of its real estate, of other assets. in no way caring about seemingly its journalistic staff or even quality. and they've cut staff, in fact, at twice the rate of their competitors on the bright side, the connecticut mirror in connecticut has enabled vibrant democratic debate and discussion, but it is a nonprofit. it depends on donation. it has discussed in recent times the importance of local elections and local reporters and public officials, including myself, accountable to the

people that we serve. so mr. singer, let me ask you and any of the other panelists that want to comment, i'm a supporter of this measure, but i wonder, are we too late? can we still rescue american journalism? >> i don't think we're too late, senator. what we-- what this enforcement mechanism would do would provide for a payment to a collective or a coalition of newspapers or news publishers that would attempt to approximate the fair market value of what they are contributing to the platforms in terms of users and clicks and the like. and so, if we can put money back into the pockets of the flues publishers, i think we can breathe life back into the industry and that money would

eventually go down to the journalists and workers and input providers that go into the production of news. >> ms. bettetto and mr. ross over to you. >> what is at risk here is local news, that's really what is at risk. huge news operations, yes, they will be fine. but when you talk about local news, local news is in a lot of trouble, broadcast or print, and i have experienced it even in the washington d.c. area. there is not a viable economic model that i have ever seen for local news to be all digital. it just doesn't work. the money is not there. and so that's very distressing, and over time, i think, while are we too late? no, i don't think we're too late, but we're getting close. we might even be in the 11th hour because it's getting there. this is getting very dire. and i look at it, you know,

we're also a platform, too, hey, we're aggregators, we're good with that and we understand that and we're a platform that pays for the news content. i don't think the associated press would like it very much if all of a sudden we didn't pay for their content and in many respects, i think that's what's happening here is, you know, the facebooks and the googles get the advantage of it, but don't have to pay for the content and the true down fall of local news, you're just not going to be able to find a revenue. >> i can't sit here and pretend that as an industry we have done everything correctly, you know, there are certain things that over time we have made missteps. but -- and i feel like the jcpa is one aspect of what needs to happen for our business models

to happen in the future. it's one piece and there's responsibilities for us as publishers, to work on solutions to make our businesses successful. our company, for example, we've gone to great lengths to diversify the revenue streams and it's creative solutions necessary for all of us. jcpa won't fix all of our problems, but it will fix one of them. >> thank you, my time expired. this topic is urgent because we're in the 11th hour or maybe toward the end of the 11th hour. once these institutions are gone, they're gone. there's no reconstructing them, at least with the quality of excellence that we've seen over so many years in exposing corruption and enabling information about school boards and holding accountable public

officials. so importantly at the local level because it's irreplaceable and indispensable. >> thank you. i believe senator blackburn who was here diligently early is now on remotely and then we go to senator padillo and then fine for voting. >> thank you madam chairman and thank you all. what an interesting panel and i really appreciate the testimony that you got to us and that you came to give today. i want to start with you, your organization has put a lot of attention on bias in the mainstream media. and how big news and big tech team up and filter the news and really takes control of what you hear and what you see when

it comes to news, and when i go to tennessee i hear a lot about this from tennesseans and they don't like it. they feel that their views are not being represented and that they're very concerned about if they can or cannot trust mainstream media. so we thank you for the work that you're doing on this front, but i'd like for you to touch on what small news outlets are doing that will help to combat that bias, what you all are seeing that they're doing. i think it's important that they do that so if you will just very quickly touch on what are the best placed efforts for combatting this bias from the coziness of big tech and big news? >> first of all, thank you very much, senator. we've seen examples all through even recent presidential elections of the problems of

big tech and by big journalism not covering major issues and it's the difference between, you know, corporate media, which what they're talking about there and several people on the panel right now. and the local journalism is something that we all love and it's the heart of the community and on national, and we have the incredible biases from the traditional media, the legacy media and working hand in hand with the same people that i think we all want to beat up on right now, with google and facebook and others. and so, the scary idea here of creating, you know, a cartel or whatever you want to call it, some sort of organized unit where the major players in journalism, "the washington post" and new york times who didn't stand up during the hunter biden story and didn't

cover that story while the new york post was cencored. >> let me jump this there, we want to make sure that local news that you're going to give local news what you need to be competitive that you're not going to cut them off and i think that everyone would agree with that, but what we don't want to do is do something that's going to have the unintended consequence of that. and mr. francis, let me come to you. do you think that companies like facebook, like instagram, youtube which stands to benefit from an anti-trust exemption, and what bad behavior could they get away with if they did get that exemption.

>> and what i understand this proposed exemption would work the other way around in the event that this were created two things would happen. the first is that the most immediate beneficiaries would be the participating media companies, obviously, including some very large conglomerates, as well as the smaller publishers that we're talking about. and certainly the cartel overcharge that would emerge from agreements on prices would be paid in the first instance by google, facebook, and then transmitted, most likely in the form of higher prices for advertising down the chain to consumers. >> so basically what you see is more hands in the pot for the money that is there, adding extra layers of feed so in the --

fees so the originators of the content gets no more, but you're going to have the conglomerates with more profit, is that what you're saying there? >> that's correct. there would be a charge at the top-- >> let me ask you this, the music industry, when it comes to royalties and some really tricky royalty issues, what we've done through the years is look at how they operate under consent decrees, and a few years ago, we had to work diligently creating the music modernization act, it's something that was very concern to a lot of my tennessee constituents. so, do you see something like the music consent decree being needed if the grants and anti-trust exemptions? >> so my sense is, and i am not an expert. it's been many years since i worked on music licensing and

the process under the consent decrees that you mention. but i'll say a couple of things, the thing number one, i think that's been an extremely complicated, difficult, and controversial process for a very long time, in a way that i think would exemplify some of the difficulties if we were to embark on a similar price setting mechanism here, for example, with, in a compulsory arbitration mechanism and number two, many of the music licensing examples are situated because there's a compulsory obligation. the licenser has an obligation to issue the license and complicated effects for how you want to set up your system and i don't think that anybody is talking about creating a statutory obligation here on news publishers to issue a license, but i'm really not an expert on music licensing in particular, so, everything that i say about it should be taken with some caution. >> i appreciate your candor. thank you all.

thank you, madam chairman. >> okay. very good. thank you senator padilla. >> thanks, madam chair. let me begin my thinking the witnesses on your testimony on this very important topic. >> it's not an understatement to say that our democracy depends on a healthy and vibrant eco system, via a reliable internet connection that people are equipped with information and meet the literacy skills responsive to today's compressed content streams, and it they're served by a thriving free press, that includes media outlets, journalists and broadcasters that both reflect and are responsive to the diversity of our nation, and economic recessions and a loss of advertising revenue has devastated the news industry. and the last 20 years, more

than a quarter of the country's newspapers have disappeared. local, regional, community, and independent media are understaffed, underresourced, and in need of assistance as they work to identify new sustainable business models. it's critical that congress explore how we can assist the news industry as it tries to find its footing during this transition period. miss bertetto, i know from personal experience that local news is so vital to keeping communities in california informed, particularly during elections, for example, or during and after natural disasters. can you discuss what's at stake if local and community facing news outlets disappear, particularly when it comes to our democracy or public safety?

>> of course. so our readers, again, being a small publisher in pennsylvania, rely on us for the information they're lit e.r.ly-- literally not getting anywhere else, that's covering city government and letting them know when the bridge is out in their community. that's letting them know when the senior citizen center is going to be open during the cold winter months and heating stations. we often provide that very content as well to the television broadcasters. so, often they're relying on us to inform them so they can spread the message through their channels. obviously, as newspaper staff continues to dwindle. what will become very problematic, there will be no one, you know, "the washington post" and the new york times

will probably be fine no matter what is decided, but new kensington pennsylvania won't be. who is going to report on flu kensington, pa if my company isn't doing that. how are we going to have an informed electorate? how are we going to have a society that understands what is happening in local government, state government and national government if my company is not providing those resources? >> thank you, those are great examples. i appreciate that. not every bridge failure makes national cable news. >> exactly. >> and how contentious school board meetings are in this day and age. given the importance of local news rooms for our democracy, news room employment in the united states has dropped by 26% since 2008. miss bertetto, you testified that the jcpa would help smaup

small business investments into the community and hire more reporters. and can you discuss the importance of explicitly tying benefits to job creation and retention? >> presently, in our company about $7 million is paid out in salaries to journalists on staff. to give you some sense of what we earn presently from google, it is 144,000 a year. so i really feel i'm starting at zero and any additional monies that could come in could certainly help to keep, first, keep reporters on so we can stop this decline because it's astronomical, the number of reporting positions i'm seeing leave our markets. i also think that with, you

know, when you're looking at $144,000 and say i can get 600,000, just for example, i could cover more communities. i could add these. i'm presently making decisions every single day about which communities we can afford to have a reporter in on a full-time basis and where we have to decide to have a part-time reporter or no reporter at all. any additional economic relief to help me avoid those decisions would certainly be welcome. >> mr. oxley. >> and the same goes for us, our sizes aren't that different. our news room costs about $12 million to run every year and what we're finding is more and more has to be switched to the digital side. even though the digital side really doesn't make its money, at best over the years broken even.

in the last 10 years our overall digital revenues off of our website have barely moved and the costs have gone up a lot. so if we were able to have money come in and i think that the jcpa could provide that by having a level playing field and seat at the table, we would be investing. it's the thing that i get all the time from all the people on the content side and the program side. can i add people? of course we would like to add people. and also, our area has grown exponentially. it wasn't that long ago that the whole area in washington d.c. was three million people and now six million people and now it's been able to grow in size because we haven't changed in terms of are growing our people. the very first they think we would do is add journalists, and the journalists that we would add are professional journalists, they're not doing people doing click bait.

they're doing real stories, educated to do that and we have a saying in our operation, before you do it first, first get it right. that means sources, doubling, trim tripling, quadrupling to get the facts. >> madam chair, just in closing and i flo know that the conversation has gone in what direction the industry has to find solutions short and long-term during this transition period during the ongoing conversation of what else congress can be doing both in the short-term and the longer term to help the news industry. thank you very much. >> okay. so thank you, senator padilla. i think it's just down to senator lee and myself and i'm going to have to leave at about five to 5:00. so i'm going to let him maybe do five minutes or so and i'll

have two more questions and we can go from there. >> thank you. let's go back to you, if that's all right. how do you believe that consumer trust or distrust of news publishers might impact your success? i ask because at the edelman trust barometer as displayed in the chart behind me shows had a growing distrust of the media across the globe. 46% of people around the world view government and media as divisive forces in society and 74% of americans worry about fake news. how do you think political bias or including anti-conservative censorship, might have contributed to that mistrust.

>> i think it helps to contribute to it a lot, both on, you know, big tech side and on the media side. and again, you know, talking about corporate media and it's on the local news and when ordinary americans think about media they're generally not thinking about their local news outlet or weekly newspapers, their radio stations, they're thinking about larger media, thinking about media they see on tv and then also thinking about the big tech. i mean, to make going to war with big tech, i think that conservatives would be very happy, but that, but the question does this still work to do that? and you know, when you look at the years of, you know, graduate decline of people's interest in media and also look at people's-- the rising times, and people trusting media, the two tracks

are very similar. >> it makes some intuitive sense and there seems to be anecdotal support for that, at least intuitively, it makes sense to me. now, the congressional research services noted that 70% of daily newspapers are owned by private equity firms, hedge funds or groups, nothing wrong with the business models, but the data that i've got. do you think that these owners are necessarily going to be more concerned about investing in journalists and quality journalism than they are about getting a return on investment and regardless, would the jcpa

make a difference in that regard? is the jcpa going to change the place for these businesses one way or another? >> it doesn't seem like it. you look at "the washington post," for example, the post is-- its identity is as a national newspaper. when it owned a chain weekly popular in suburbia, and from the baltimore sun, they had a chain of weeklies that they gutted to the point they're -- and that's been an ongoing problem. you know, not because of local ownership. local ownership, which i think is reflected on this panel, local ownership tends to care about the local community and national ownership, 70%. then they're not necessarily to the readers and their viewers.

>> mr. oxly, while i'm never going to support legislation that i believe attempts to improve competition by forming a cartel, as this one does, if the purpose of something like the jcpa is to protect small and local publishers, why not limit the bill's scope? why not limit its application to small and independent local publishers? >> well, i don't know the in's and outs of that as well as an awful lot of people in this room and i haven't been able to look at the in's and outs of the bill and how to works. >> are you saying you would support it if it was so limited? >> i would certainly support anything that would help local news. i feel at this point that we're in a really, really tough spot with local news and that's to me what we're talking about here. we're not talking about the national news players, local news players are still some of the most trusted in america,

and study after study shows that your local news people are trusted and that they're very favorable view of them. and you know, the national is a different story, but locally, and we need something to help out, truly help out the local news providers. >> so then, but if that's the case, if we're going to make it as most of this discussion today has been, if we're going to make it about the local folks, then why not limit it to them? dr. francis, i assume you'd agree, if-- with the discussion that if you buy into the notion that creating a cartel or a type of cartel's permission slip is acceptable for one universe, you could reduce the harm inflicted by that universe where cartels are authorized by reducing the scope.

and in this case, since most of the discussion has focused around small independent local publishers, couldn't that have that effect? >> i think that is exactly right, senator. you've heard, i have pretty strong feelings about cartels, but i don't object in principle anything like so much to the idea of supporting local struggling newspapers publishers, so at a minimum, restricting the scope of what you're describing, or restricting in the way you describe the scope of the exception so that it's truly targeted at install, struggling publishers, we can avoid conferring the ability to add a cartel overcharge to large, very profitable media companies, that would really help. i am pretty uncomfortable at this moment in our sort of political life about taking a big bite out of anti-trust when we should be reinforcing it.

i'd like to talk about other ways to support local news, any support mechanism should be targeted to those who really need it not to the most prominent publishers. >> is there a risk focus ong this particular issue, it might draw attention away from other things, other things that need to be addressed and including the problem with google and facebook? >> i think that digital monopoly, and monopoly in general is a problem that overmatches our anti-trust agencies. i'd love to me more funding and resources, the most recent need we have in politician commission in this country even more, is money and personnel to the agencies. and that's where i would love the focus of the conversation to be. that's what i think is top of the wish list. >> thank you. >> thank you very much, senator lee and thank you for-- i'm sure you have other questions for the record. thank you. >> and mr. francis said

something where we agree on the funding for the agencies and as you probably know, senator grassley and i have a bill that have passed the senate, actually, to change merger fees and make it easier for smaller mergers and harder for bigger ones-- maybe not harder, but more expensive to help pay for the agencies to be able to do their reviews, as well as some other funding mechanisms that we're working on. a few things, i'm just going to -- a few questions here at the end and be brief here. dr. singer, as i work on the electoral count act. dr. singer, if your opinion should news organizations have a right to be compensated when digital platforms take in profits from detailed snippets? i think it's a little more than snippets of copyrighted con at the point in time. they're claiming it's fair use and i'd like your response. >> yes, they should be compensated for any value that is being conferred from the

newspapers to the platforms, including when the platforms scrape and index and use rich texts and images to decrease the likelihood of a user actually clicking on the link. i'd like if i could just to address the cartel pricing increase that mr. francis is saying, he did admit if there was a one time lump transfer to the coalition, there would be no crease increase by the papers. that's the most important mission than we heard today. what he said next, on economic again, if it were to recur every five years, then there would be a price increase of some sort. i can't follow what the economic logic is and i start, maybe he's talking about a price increase by the platforms, but i want to rebut that as well. the platforms, as you know, senators has used a free price,

zero price model. and the notion it's $5 billion every year for the payment of access is going to induce them to suddenly abandon their consumers by search and access to the platform is uneconomic, i can't say it nicer than that. therele be no cartel price effect from this lump sum transfer, you can take my word for it. >> okay. thank you dr. singer some quick questions about some of the concerns that we've heard and of course, i've mentionled we're making revisions with the house to the bill. are the changes we should consider to ensure that small and local news organizations benefit from joint negotiations and can exert appropriate level of control over the process? >> yes, i understand there are certain provisions in the bill that would protect small publishers and the most

important that comes to mind is the nondiscrimination provision, a small newspaper that wanted to apply for the coalition could not be discriminated against based on its size and viewpoint and that's important and they could get access to the bargaining coalition. the second thing i understand there are voting rights when one member votes. smaller newspapers or members of the coalition must be protected and their interests must be protect that had way. >> should we consider changes to prevent discrimination? this has been raised by some of my colleagues in the joint negotiation process, against news outlets carrying content that expresses different or even unpopular views either from the left or right and i know we have support from this bill, some of my colleagues have noted from news organizations that they consider left and then we have support from letter in support of the bill, washington examininger, washington times, daily caller, not exactly a bastion of liberal

organizations. ... and if joint negotiations with the dominant platform stalls should congress provide arbitration to resolve the impasse? >> yes. binding arbitration is critical because it is possible for google or facebook to check all the boxes and abide by the good-faith protections during the good-faith negotiations. it's very important they look down the road and see if they do that they are going to be faced with binding arbitration again at which point a panel of say three arbitrators would make a determination as to whose estimate of the fair market value was fairest of them all. most closely approximated, the value being conferred by the

news publishers onto the platform. >> okay. that's one proposal, thank you. as we finish up this bill. i also would like to enter a set of more than three dozen letters from newspapers, news organizations into the record. those letters focus on the state of competition and journalism and the need for solutions like the journalism competition preservation act which is bipartisan both msn and the house. we also have a letter from lee enterprises, no relation, discussing the challenges the industry faces from those who would exploit it for short-term profit opportunities as well as a few others. but those in the record. i want to thank you all for being here. local news is a foundational importance to our democracy. i want to thank our witnesses today for their testimony. so many senators from different parties, different views, as you can see came together today. that's part of the exercise of

free speech and part of being a senator and senator lee and i truly enjoy doing these hearings and really appreciate it. i want to get something done here. that is my goal, and we want to make it work for this country. so the record will remain open for one week until february 9. thank you. you want to add anything, senator lee? okay. well, thank you very much to all of you. [inaudible conversations] [inaudible conversations] [inaudible conversations]

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