August 2, 2010

FTC Considers New Antitrust Exemptions To Rejuvenate Old Media

New antitrust immunity for old media is one of the options discussed by the FTC staff in its recently released Discussion Draft on proposals to support “reinventing” journalism.  The Draft is part of a project begun in May 2009 to consider the challenges faced by journalism in the digital age.

After reciting well-known statistics about the broad decline of print media (revenue declines, staffing cuts, the proliferation of competing new media), the Draft discussed proposals for two antitrust exemptions aimed at supporting the newspaper industry.

One proposal would allow news organizations to collaborate in erecting “pay walls” that would require consumers to pay for online content.  This proposal is based on the notion that pay walls simply won’t be effective unless they are erected “industry-wide.”  Similarly, the second proposal would allow news organizations to jointly agree on ways to get news aggregators – i.e., Google and other search engines and news services – to pay for the use of online content.

While the Draft reviews both the pros and cons of each proposal, the tone is lukewarm.  Despite some calls for legislation to allow news organizations to experiment with “innovative content distribution and cost saving arrangements,” the Draft acknowledges that these calls have largely dissipated.

Similarly, Congress’s previous experiment with antitrust immunity in the newspaper business, the 1970 Newspaper Preservation Act aimed at allowing coordination between competing newspapers in certain markets, was widely criticized as unsuccessful.

The Draft also acknowledges some compelling comments in opposition to the proposals.  These include the observation that easing the antitrust laws would put small, emerging media companies at a disadvantage.  Barriers to entry into media have never been lower, and the likely beneficiaries of the proposals might just turn out to be the already highly-consolidated, old-media news publishers.  Perhaps most powerful in opposition to the proposals is the report that at least two existing collaborations have been reviewed by the DOJ (one concerning tracking online content, the other platforms for monetizing news content) and deemed to pass muster under the antitrust laws.

Last week Google recently released its own comments on the workshop and the Draft, arguing that the problems of the news industry are “business problems, not legal problems.”  Google insists that it sends 4 billion clicks per month to news publishers, and it is up to the publishers to decide how to interact with (and monetize) those visitors.  Google called on news organizations to work within the antitrust laws to create payment schemes to benefit from their online content without price-fixing, “rather than seeking immunity for anticompetitive behavior.”

Categories: Antitrust Enforcement

    One Response to “FTC Considers New Antitrust Exemptions To Rejuvenate Old Media”

    1. The Law and Economics of Privatizing Alcohol Sales « Truth on the Market Says:

      […] 4. I can’t think of any great examples for the demand for limited government trumping the law of demand, but the persistence of the state alcohol monopolies despite their negative economic consequences on consumers gives a wonderful opportunity to talk about cartel formation and stability, as well as the political economy of these laws more generally.  For politics trumping economics more generally, see “Rent Control” or the proposed antitrust exemption for newspapers. […]

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