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As Israeli media look to level field with Facebook, some see hidden pitfalls

In the face of faltering revenues and a tidal wave of layoffs, journalism outfits in Israel and around the world are now looking to an unlikely savior: Facebook, the same social media behemoth that has desiccated vital ad streams and left the news business in what many experts describe as a global crisis.

In the United Kingdom, Facebook plans to begin to pay news outlets to feature their stories on a dedicated Facebook News product slated to be rolled out next month. Some UK news organizations expect to make millions of pounds a year from deals, according to The Guardian.

Australia has introduced a proposed law to force Google and Facebook to pay for news. France has ruled that Google must pay news outlets to display snippets of text, while in the United States there is growing support for legislation that journalism industry advocates believe would strengthen the news media by pushing back against some of Google and Facebook’s enormous market power.

In Israel, there are early stirrings of an appetite for similar initiatives. Last month, several media and news outlets banded together to lobby politicians and regulators to require Facebook to pay for local content.

But where some see a possibility of financial relief that would make up for lost advertising revenue while driving more traffic, others fear the move will only give Facebook and other social media giants even more control of an industry they have already helped decimate.

“It’s better for Facebook to compensate news outlets for using their stories rather than not, but that alone won’t solve the problem the tech giants pose to the journalism industry,” said Nick Charles, spokesman for the US-based Save Journalism Project, in an email.

“To save journalism, it is necessary to end the distorting market power Facebook and Google have over the online marketplace.”

‘Our business model has collapsed’

On November 5, a newly created pressure group, consisting of nine prominent Israeli broadcasters, radio stations and print news outlets sent a strongly worded position paper to the Committee for the Examination of Regulation of Broadcasting, a special panel convened by the Communications Ministry to re-examine how broadcasters are regulated in light of changes in media consumption in recent years.

The new lobby, which calls itself the Forum of Content Creators, urged the committee to address the crisis of television, radio and print media in light of Google and Facebook’s growing dominance in the advertising market.

Google and Facebook together receive 60 percent of US digital ad spending and 25 percent of all ad spending globally.

Among the Forum’s members are Globes, Ma’ariv, The Jerusalem Post, Reshet, Keshet, Mako and several local radio stations. (The Times of Israel is not currently a member of the forum.)

The move came after years in which the journalism industry has contracted significantly, a process that has sped along at an alarming pace. In just the last few months, Yedioth Ahronoth, the country’s second most popular print publication, announced it was cutting 32 jobs and shutting down its network of local newspapers. Channel 13 has laid off many of its star reporters. The list could go on.

This crisis is not unique to Israel. In the United States, newspaper jobs have fallen by 51 percent since 2009. According to the Reuters Institute for the Study of Journalism at Oxford University, the crisis is global, as newspapers in country after country, in a pattern that is startlingly consistent, have lost much of the advertising revenue they used to rely on. Much of this ad revenue has gone to tech behemoths like Google and Facebook, which together receive 60 percent of US digital ad spending and 25 percent of all ad spending globally.

The two tech giants are a growing force in Israeli advertising as well. According to the Israeli Marketing Association, an association of Israeli retailers, insurance companies and other firms with large advertising budgets, about $1.3 billion total is spent on advertising by Israeli entities each year.

Thirty-eight percent of that goes to digital advertising. Most of that digital advertising money in turn goes to Google and Facebook, the association says on its website, but does not specify how much.

In 2019, according to the Marketing Association, the amount Israeli entities spent on digital advertising surpassed the amount spent on television for the first time.

The share spent on print news media is currently at 11 percent and falling rapidly.

According to the Forum of Content Creators, not only have Google and Facebook gobbled up ad market share, but they use local producers’ content without paying for it.

Google and Facebook, the position paper said, “are a significant channel through which the Israeli public is exposed to the content of local content creators — without generating any local content of their own and without investing in it. In effect, the business model of companies that have worked to create local content collapsed as a result of the growing power of tech giants. If we don’t act to require the Internet giants to invest in local content, then the local content industry — both news and entertainment — is in serious danger,” the paper said.

The Forum expressed a desire to see legislators ultimately pass laws to limit Facebook and Google’s enormous market power. But in the short-term, it said, a stop-gap measure is needed.

“[Sweeping] regulatory changes take years,” the paper states. “In Israel, a small country that speaks a distinctive language, it is very important to have original creative work and a high standard of journalism.”

Because these things are in “existential danger,” the paper proposed that the government implement an “efficient solution that does not require a long legislative process. The government could require the tech giants to deposit a percentage of their ad earnings in Israel to a designated fund which will be used to fund local content.”

The Times of Israel contacted both Facebook Israel and Google Israel asking what they think of the idea of paying the media for their work, either voluntarily or by force of law. A Google spokeswoman did not respond to our message. A spokeswoman for Facebook said the company did not wish to comment.

Avoiding self-regulation

Avishay Cohen, an Israeli lawyer representing Israeli plaintiffs in a class-action lawsuit against Facebook for alleged privacy violations, told The Times of Israel that Facebook should pay for content, but worries that such a move, done the wrong way, could make Facebook a more powerful market actor than it already is.

“It’s a good idea but I’m not sure the model proposed in the UK, which is a kind of news page on Facebook that includes articles from big news sites, is the right way to go about it,” said Cohen.

The danger, he said, is that Facebook is being allowed to regulate itself, rather than being subjected to robust government oversight.

“Even that news page proposed in the UK would be controlled by Facebook. It makes the news outlets dependent on Facebook. The best solution, I think, is one where Facebook does not get to regulate itself. There should be a government body doing it.”

Amit Gold, Cohen’s law partner who is also involved in the suit, said that even though news outlets are currently dependent on Facebook for traffic, being dependent on the company for income is of a whole different order of magnitude.

“Facebook is a commercial enterprise with certain interests. If it pays journalists it could cause journalists to produce content that advances Facebook’s interests.

The news consumer could get media that is slanted in Facebook’s favor, that is not clean and objective,” he warned.

On the other hand, he said, he does see a benefit to the UK model, in that there will be more money to pay journalists.

“The minute you pay for content you encourage journalists to produce higher-quality content, to write more thorough and better articles,” he said.

‘Distorting market power’

Outside of Israel, observers are also divided on whether the British model in which Facebook voluntarily funds the news is always a good thing.

Jill Abramson, former executive editor of the New York Times and author of the 2019 book “Merchants of Truth: The Business of News and the Fight for Facts,” said she thought Facebook’s plan to pay news outlets in the UK is a good idea.

“I think it’s important for news organizations to be paid for their original work. Good journalism is labor-intensive and expensive.

It is also vital to democracy. Facebook profits off the journalism on its platform and should pay for it,” she said.

But others said the UK plan does nothing to address the deeper problem — concentrating economic power in the hands of big tech companies. Some critics also believe that Google and Facebook’s entire business model, whereby they use data collected about users to target them with ads, is pernicious and corrodes competitive markets and democracy.

Matt Stoller, author of the 2019 book “Goliath: The 100-Year War Between Monopoly Power and Democracy” told The Times of Israel that not only is Facebook too big, but its sale of advertising is problematic.

“I think Facebook should be broken up and barred from selling advertising,” he replied. “The problem is the concentration of power in the hands of Facebook; creating a new financing channel reinforces this concentration.”

Charles, from the Save Journalism Project, said the problem is deeper than just finding a quick source of cash for the journalism industry.

“These companies have unfair advantages because of their massive data collection, control of web traffic, and platform dominance,” he said.

While news outlets have no choice but to adapt, he said regulators must also take steps to “prevent a few dominant companies from exploiting their market power to harm competition in that marketplace.”

Will the Israeli government save the ‘leftist’ media?

The Israel Journalists’ Association said it had no plans to exert collective pressure on Facebook, but said it would be open to joining a possible initiative in the future.

A source with many contacts inside the Israeli government told The Times of Israel on background that there has been anger at Google and Facebook within the media industry for a long time, but that this anger has yet to mature into legislation. The main reason for this, the source said, is that the Trump administration has repeatedly asked the Israeli government to back down from any efforts to tax or regulate Facebook and Google.

Israeli officials, the source said, complied out of fear of ending up in a trade war with the United States, similar to President Donald Trump’s threatened trade war with France.

The US Department of the Treasury did not respond to a request for comment.

While it remains to be seen what the Biden administration will do, some observers believe Biden is likely to tone down threats against foreign countries seeking to tax and regulate US tech companies.

“While the Biden administration is still in its early stages of formation, we expect it to keep scrutiny of the tech giants front and center and that there will be a greater degree of international cooperation on this and other areas of regulation,” Nick Charles of the Save Journalism Project said.

But even with a new administration in Washington, some observers believe regulation could be an uphill battle in Israel as well.

Attorney and activist Guy Ophir, who specializes in suing big tech companies — including Google, Facebook, Twitter and Amazon — on behalf of Israeli clients, said he was doubtful that the Israeli government would step in to solve the crisis of content creators of its own accord.

He pointed to the fact that Prime Minister Benjamin Netanyahu and members of his Likud party have sought ways to water down much of the mainstream media, which they frequently accuse of left-wing bias.

“Most of the media are perceived by Netanyahu’s government as leftist,” said Ophir, who has spent the last 11 years fighting the Tax Authority in the High Court of Justice to force it to tax Google and Facebook.

“So people with right-wing views in the Knesset and government aren’t going to go out of their way to help the media make more money.”

Source: Simona Weinglass – TOI