If you’ve been following the great debate over how the state of California should step in to aid its dwindling local news force — down 68% since 2005 — you’ve heard many voices. The debate, which began in early 2023, now seems settled — by an actual legislation-avoiding settlement agreed to by Google and Governor Gavin Newsom last week.
Buffy Wicks, the Assemblymember who launched this process with “link tax” legislation a year and a half ago, has framed the deal as being worth $242.5 million in total.
The settlement creates a News Transformation Fund set to last five years. Google would pay $55 million in new local journalist funding and the state would pay $70 million, for a total of $125 million. Additionally, Google is setting up an AI accelerator project that would be entirely funded by tech platforms and is worth, Wicks says, $62.5 million. The remainder — or $55 million — represents Google’s commitment to maintain its current Showcase and Google News Initiative funding in California, at the rate of at least $10 million a year. (The Sacremento Bee’s Andrew Sheeler and David Lightman have done good reporting on the bill’s details; Jeff Jarvis thinks the settlement is a win overall.)
It’s a significant stream of new money to pay journalists, and no one is going to reject the funding, but it continues to spur debate. Over the past 18 months, independent digital-only publishers, the state’s robust ethnic press, the Los Angeles Times, the San Francisco Chronicle, the Media Guild of the West and, of course, the California Newspaper Publishers Association, among others, have all weighed in.
The questions: Who’s a journalist? Which publishers should get priority; should small outfits get more? Should Alden, Gannett, and McClatchy get any money at all? How do you make sure the government doesn’t pick winners and losers? Should the platforms be forced to pay for their impact on news fortunes?
In the end, the settlement calls for the UC Berkeley Graduate School of Journalism to oversee the plan. It will have an appointed board of seven members drawn from the California News Publishers Association, Ethnic Media Services, Local Independent Online News, Latino Media Collaborative, California Black Media, and the Media Guild of the West — a pretty good approximation of interests that swirled around the Sacramento efforts. Wicks dropped the odious link tax, opting instead for a more straightforward distribution of the funding by journalist headcount, with 12% of the fund reserved for smaller (five or fewer journalists) operations publishing in underserved markets.
As both a publisher and a recovering analyst here at the Lab, I’ve been involved in the jockeying since Wicks’ AB 886 first hit the floor. I last wrote about it in May. Here’s my perspective on what sense we can now make of a settlement, one that may act as a template for other states.
Overall, the settlement is a win. Its formula makes sure significant money goes to local journalists (text-based journalists, not broadcasters). The money should be able to start flowing fairly soon; the Canadian Online News Act, I’m told, has yet to deliver any actual payments to publishers since its passage in June 2023.
California swerved, seemingly at the last minute, to avoid the damage that Canadian publishers endured as Facebook blocked news up north. (That’s contributed, by one estimate, to a loss of “news engagement” of 58% by local news outlets and 24% for national ones.) The settlement doesn’t get in the way of continuing Google support for news companies outside of the settlement, and doesn’t open the door to Google suspending news search, something it had been “testing.”
The settlement maximizes the number of supports for local California journalism. In the abstract, it’s always better to have more supports than fewer. The Google News Initiative’s direct grant and training programs, including Showcase, in California and elsewhere have emerged as a significant player in pushing local journalism forward, especially as Facebook and others have peeled away. (Disclosure: My local news site, Lookout Santa Cruz, has received GNI funding.
The settlement is part of a new emerging business model. I described it this way in May: “With a five-year runway as proposed, known and predictable tax credits will become a meaningful part of workable business models. At Lookout, we combine advertising, reader revenue, philanthropy, content licensing, and our school access programs to provide five sources of revenue. Tax credits would be a big sixth source. At the level proposed, they could amount to 15 to 20% of our expense budgets. That would reduce the reliance on those other five and provide much-needed capital for growth. This is an important building block for 2025-2030.”
This settlement then does provide a part, though a relatively small part, of the models many of us are building. It calls for direct payment, rather than payroll tax credits, which should be a plus. The best estimate we’ve gotten so far is that publishers may see somewhere between $5,000 to $10,000 per full-time journalist — which, in high-cost California, is helpful, but not game-changing.
The relatively low level of support, ironically, may address one of the concerns many of us have had throughout this process: Why should the state use its hammer — and taxpayer dollars — to support the financially driven companies (Alden, Gannett, McClatchy) that have disinvested in California local news? For a bevy of political reasons, no settlement or legislation emerged that effectively deprived them of funding; they, like the ethnic press and digital startups, will receive the same per-headcount funding, with no apparent cap. That still seems like bad public policy, but there’s where it landed.
The better news? At that relatively low level of financial support, the funding may not distort the coming local news landscape in the state. Financially driven companies won’t benefit so much that they can stay in operation as their profits ebb. If they’d received the windfall envisioned by some legislation, they might have been subsidized for a long time.
The key players involved in this process all made it clear in 2023 that they expected a settlement rather than actual legislation. From what I can piece together, the settlement here is not hugely different from what was outlined then — so why did it take a year and a half? Yes, politicians work at a far different pace than journalists. How much of the wrangling was political posturing? Why did so few people understood that Gov. Newsom’s final approval (or veto) of the legislation had to be a fundamental part of any solution — and that he had, behind the scenes, said what he would and wouldn’t sign?
The big lesson as this debate rolls across the country and into D.C. may be that publishers are, for the most part, neophytes in the political process.
I asked an industry friend his takeaway from it all. His suggestion: “Write about how the process was not ideal — but that folks, be they publishers or journalists, who decide to work on policy should not be surprised when politics happen, and be ready to move.”
Biggest picture: It’s a reminder that those of us who want a vibrant local press into the 2030s should spend less of our time chasing “cavalry to the rescue” help and more building earned revenue businesses.
What’s next?
Expect other states to look at the California settlement. The Journalism Competition and Preservation Act, which almost passed Congress in 2022, is poised for a second act. It would have provided the news industry the ability to negotiate with the platforms as a group, providing a “safe harbor” from antitrust laws. Opposed by many, including me, it was well-described by the Free Press advocacy group as “pro-cartel and pro-trust.” But NMA CEO Danielle Coffey, who had a hand in the beginnings of California’s “link tax” foray, told Editor and Publisher that she is bringing 120 publishers to Washington, D.C. for a Sept. 11 “fly-in” to re-lobby for JCPA.
