Senate Standing Committee on Judiciary

Called the Voice of OC, but for the Voice of OC, that probably wouldn't have been exposed in the way it has. And now three people are likely to go to federal prison. The former mayor, president of Chamber of Commerce, and the secretary of the Democratic Party of the State of California. It's also important to hold people like us accountable, as was illustrated by my previous example. It's critical that we all be held accountable.

So the challenge that we have in this very complicated, very complicated context in which we find ourselves is the challenge where we have platforms which displayed the news, thank you very much. And we have publications that are in need of support. Otherwise, as we've seen, tremendous number of publications have gone out of business here in just the last few years. So how do we reconcile that?

Of course, the platforms have the ability, as well as the publications, to simply say, we're not going to allow our content to be used online, which is Hobson's choice, because if you're not online and you're not getting the clicks, then it's very difficult for you to survive. We realize that. So that's what this hearing is about. How do we make sure that we provide access to credible information so that we can continue to function as a democracy? At least, that's what I'm about here today.

So we're going to bring up our first panel, and Senator Glazer reminds me that I'm hogging the microphone. Thank you very much. Thank you. By the way, thank you, Senator Glazer, for being here. Senator Glazer is not on the Judiciary Committee, but he is very allegedly is that what you said? Oh, he'd like to be. Well, we'd love you to have your President on Judiciary Committee, but Senator Glazer is a champion in this. So I'd like to recognize Senator Glazer also, Senator Ashby.

Senator Ashby traveled from northern from Sacramento to be with us today. She is a member of the Judiciary Committee, a leading member of the Judiciary Committee. So thank you very much. And Senator Allen is here. There's been a Senator Allen sighting. In fact, I've seen him myself. Here comes Senator Allen. Senator Allen was waiting in the wings for me to mention his name so he could make his entrance. Very well done. We forgot the walk-up music. We usually play walk-up music when Senator Allen enters the room, but today we don't have access to your walk-up music. That was in the contract. We are going to get started with panels. I'm going to recognize first Senator Glazer, then Senator Ashby, then Senator Allen for any opening comments.

Thank you. Is this microphone working? Can you hear me in the back? Okay. Thank you, Chair Umberg, for your gracious invitation for me to join this August body here, and certainly at UCLA Law, where my daughter went to school. It's particularly fun to be here. A couple things to say at the start. First, I see the same concerns many here will express and some have directly experienced in the hollowing out of civic journalism and how the lack of critical oversight it provides can erode public confidence in our democratic institutions. My staff and I have three years of work in this space. We've had moderate success which we'll hear about from one of the witnesses on one of the panels in a few minutes. But we also have some scars that I really didn't expect.

Scars not just from naysayers who don't want or appreciate the work of the media in our democracy or from some who rightfully worry about protecting the independence of civic journalism but also from others who simply want to protect their own narrow and selfish interests. I'm here to learn about the options and opportunities that we in government along with the private sector and media leaders can advance in the years ahead.

We need to find the right balance. We need to find the right balance in this work that protects the integrity and Independence of the Fourth State but doesn't turn a blind eye to the threat to our democracy that our failure to act can bring. Would a national solution be preferable? Perhaps, depending on its provisions and prospects. But I'm not willing to have California wait. We should lead with thoughtfulness and urgency as there is so much at stake. Thank you, Chair Umberg.

Thank you. Thank you all so much for being here today and coming to the UCLA campus. What a beautiful Southern California day you ordered up for us, Chair Umberg. It is also lovely in Sacramento, but the sun is shining a little brighter in Southern California today and I'm happy to join you. Felt like turnabouts fair play. They fly up to me most of the time. I could make one trip right down here to be with you for this important hearing.

I do want to thank Assemblywoman Wicks for being here. She's really tried to champion this topic and it's always the hallmark of a great Legislator or a great leader that she shows up in the room to hear about what people have to say and take that all in and make it a part of what she does moving forward. So some of them. Thanks for joining us today. Is you're all invited to my anniversary party today. It's the one year anniversary of me even being a Senator. I was sworn in on this day last year. So thanks for being here with me today. And I'm here to be a good listener myself and I'm really glad to see so many people on that side of this Dias who are interested in the topic too. It's clearly an issue that we need to work on. Can't just sit on it. We have to do something.

So I'm looking forward to having a robust dialogue today about what that pathway forward might look like and always with the key end ingredient being what's best for the most people in the State of California. How do we get good information in the hands of people who need it, need to have that information? There's great work being done out of this room. I see your favorite Berkeley school over there, journalism. Lots of great folks here who are going to be wonderful problem solvers and partners as we move forward. So thank you all so much for being here, and thank you for inviting me, Chair Umberg.

Thank you, Senator Ashby, and we are in Senator Allen's district right now. And so next, I'd like to recognize Senator Allen.

Well, thank you, Mr. Chair, and it's a pleasure to be back here at UCLA Law School, where I've spent some time teaching to talk about an incredibly important topic that is of real importance for our democracy. And I want to first start by just recognizing the leadership that two of my colleagues who are here have played on this topic.

Obviously, Senator Glazer has done a lot of work on trying to get funding for a support system for small press, for local press, including a fellowship that's now funding graduate journalism students. I think is recognizing how difficult, incredibly difficult it is. We were having lunch a little earlier. One of the major topics was the challenges of public interest law and getting young people to be able to afford careers in that space.

But there's even more challenges in getting people to get involved in journalism, given all the challenges that we're going to be talking about today. And I also know that my colleague Assemblymember Wicks has been working really hard on looking at the pricing model, right? I mean, basically looking at the financial model whereby a lot of big tech companies are basically using the journalism, the product of newspapers and journalists to populate their people's feeds and get them interested and engaged.

And the question is, how should those newspapers, how should those journalists be compensated for that use? This whole challenge of the future of journalism, and I really do commend folks if they hadn't had a chance to read this backgrounder that was prepared by the judiciary staff. But the backgrounder opens with a quote from Justice Black, Hugo Black, who talks about the essential notice importance of the press. The press to serve the governors. Sorry, to serve the governed, not the governors.

The governor's power to censor the press was abolished that the press would remain forever free to censor the government. But of course, this depends on a press that's able to receive financing, to be robust, to be engaged, to be a part of our economy. And we know how much that is under attack and how challenging that is for the press to stay in business.

Of course, we know we've got major issues with regards to the rise of the internet and the extent to which the press is able to stay competitive in its traditional form. Many people that are no longer paying for journalism. Paywalls apparently have done nothing but make it so that a smaller sliver of the population is actually getting credible news access.

And everybody else is now getting their news increasingly from TikTok, from algorithms that end up pushing people down rabbit holes and end up confirming bias as opposed to challenging bias, which is what the free press was supposed to be all about. And I'm deeply concerned about it. I've been doing some reading, and I've been at a conference on this not too long ago, and some of the data was just shocking in terms of the extent to which our fellow Americans are getting news from uncredible sources.

And the extent to which it's actually really starting to inform the political process in ways that are very dangerous. And so I'm really looking forward to the discussion and I really do think and applaud our wonderful Judiciary Committee not only for taking on this topic, which is going to be a big area of discussion in the coming legislative session. But I also do want to welcome you and thank you for coming here to UCLA, this wonderful campus which is a center for robust dialogue, discussion, free expression, and academic discourse. And it's wonderful to bring the Senate here, home to UCLA.

Thank you, Senator Allen. And I think all of you in the room here have an agenda. For those of you who are watching, we have a full house. Let me just go over how we're going to proceed today. To accomplish the goals that have been expressed here, we're first going to get an overview of the issues facing digital news today from the executive director of the Institute for Technology, Law, and Policy here at UCLA. We're then going to turn to the interplay between news and technology.

Our second panel features speakers will discuss the nuts and bolts of how online platforms such as search engines and social media, how they affect the reporting, the consumption, and the economics of journalism. And then third, we'll hear from actual reporters on the ground. Our third panel consists of several California publishers and publisher representatives who tell us about their experiences, as well as the program director for the California Local News Fellowship Program, a legislative initiative to help place journalists with local news publishers.

Thank you, Senator Glazer. Our final panel takes us beyond our borders to take a look at the international efforts to balance the interests of news and digital platforms. We'll hear from several experts who offer perspectives on legislative and regulatory measures taken in Canada, Australia, and around the world. Those of you following this, Canada lots of late-breaking news in terms of what Canada is doing on this front.

For each panel, we'll first allow all the panelists to present before opening up for questions and comments from the senators here today. And then after our final panel, we'll open it up for public comment. As I mentioned, public comment each person will be afforded 1 minute. All right, let's hear from our first presenter, Michael Karanicolas. Mr. Karanicolas, if you would approach, that would be great. Go ahead. Floor is yours.

Thanks very much. I would like to start by offering my sincere thanks to the committee for their invitation to speak. I am delighted to be able to engage with you all on this incredibly important issue and particularly glad that this conversation is taking place at UCLA. We are deeply honored to have you all with us. Just as a bit of context, the Institute for Technology, Law and Policy was established in 2020 as a collaboration between the UCLA School of Law and the Samueli School of Engineering. And as our inaugural executive director, I established our mission to foster research and analysis to ensure new technologies are developed, implemented, and regulated in ways that are socially beneficial, equitable, and accountable.

Much of our research on platforms in the press that I'll be talking about today was developed as part of our Information Policy Lab, a new experiential class to onboard law students into the tech policy space. We have our full research findings in this document, and I'd like to take a moment to specifically thank our team of research assistants who did incredible work in finalizing this document Alessia Zornetta, Akshat Agarwal, Ishika Manglik, Maria Munoz Rojas, Nathan Siegel, and Nicholas Wilson.

I want to begin today with three premises which I think should be relatively uncontroversial to most and hopefully all of our attendees. The first is that news media is in crisis. This has been extensively documented, and I'm sure you'll hear the details from other witnesses. A recent report from the Poynter Institute found 130 newspapers closed over the course of 2023, and that since 2005, the US has lost nearly 2900 newspapers and 43,000 journalist jobs.

While some of this can be replaced through new digital news sites or other startups, these tend to be clustered in wealthier and urban areas, leading to a rapid expansion of news deserts across the country. My second premise is that a crisis for news media is a crisis for democracy, which depends on an informed and engaged electorate. Fact-based journalism is essential to public health, development and accountable governance, and the increasing dominance of online platforms over our public sphere is a global phenomenon which has led to an uneasy relationship between news organizations and large tech companies.

While the platforms have generated new opportunities to connect journalists with audiences, evade censorship, and engage in influential cross-border collaborations, they have also forced journalists to contend with shifting algorithmic priorities, warped incentive structures and the attention economy, and an increasingly complex array of technology policies that shape the environment in which they work and the business model for sustainability.

Perhaps most urgently, the platformization of journalism has contributed to a crisis in funding in which quality journalism, particularly locally focused and investigative journalism, has struggled to figure out how to navigate sustainability in the Information Age. It is not a coincidence that the decline of trusted local news is happening at the same time as we are facing unprecedented challenges from misinformation of all kinds as well as increasing polarization and extremism.

Trusted news organizations are vital for establishing a collective public narrative and, as we've seen, a shared understanding of reality. So the challenges to news media sustainability are not only made more dangerous by the accompanying threats to American democracy but indeed are a significant component in fueling these threats.

And my third premise is that the current crisis facing the news industry is driven, at least in part, by changes to our information economy and the increasing dominance of online intermediaries in both the digital advertising market and the broader attention economy. This is not to suggest that platforms are the only cause of the crisis. Some observers have pointed to, for example, media industry consolidation as a parallel force.

The proportional role of the platforms is a matter of legitimate debate, and I would not suggest that the sustainability challenges are the results of any deliberate or direct assault on local news by the platforms. But the changes to our information environment are largely driven by these intermediaries, and these changes have created both winners and losers, with news media organizations often falling into the latter camp.

So if we agree on those three premises, then the question becomes what, if anything, is the appropriate legislative response to what is the pressing challenge to American democracy? While I'm not going to speak to any specific legislative proposal here, I'd like to suggest a few principles that should guide how we understand potential responses in addition to the critical need to support news media sustainability.

First, I think it is important to carefully consider the incentive structure that is being created for both intermediaries and for news organizations and how regulatory interventions are likely to impact that. Among the key impacts of our transition to a digital information society is an erosion of the power and dominance of traditional hubs of information and governance. This is the natural result of giving everyone the tools of mass communication. The discourse is inevitably less centralized. As these traditional information hubs, including legacy news organizations, have lost influence, new players have emerged, and among the most important of these are the online intermediaries. The emergence of these intermediaries in no way supplants the critical role of high-quality investigative journalism to a healthy democracy. However, these intermediaries are not going anywhere. They are firmly entrenched within the new information ecosystem, and decisions they make on how information is managed and attention is channeled are incredibly important and influential. They are also private sector players and are driven by the profit motive like any other company.

So it is important to be mindful of how a rational, profit-driven company might be expected to react to the kinds of incentives that are being developed and how to structure legislative interventions to ensure that the results are net positive for news, education, and information integrity whether that is through seeking to mitigate or eliminate negative incentives that platforms might have to, for example, route information away from quality news media or to create additional incentives in favor of quality in the information discourse, the broader impacts need to be considered.

Likewise, it is important to carefully consider the incentive structure an intervention may place on news media organizations who we rely on to hold our powerful institutions accountable, including big tech companies. Speakers that we've hosted here at UCLA have noted that it's somewhat incongruous with that function to expect journalists to negotiate for revenues with online platforms and then, once the negotiation is completed, to act as an aggressive oversight mechanism over these very companies.

From that perspective, a clear and legislatively mandated formula for compensation seems more appealing than a negotiation-based model. Though of course, if the fee structure is set out as a matter of law, it becomes extremely important to arrive at a fair evaluation. Some journalists have also raised concerns that subsidy programs could further erode public confidence in their reporting by creating a perception that they are beholden to their government or big tech paymasters.

Transparency is likely the best counter to these concerns, but these are all tradeoffs that need to be considered against the foundational importance of the press to a functioning democracy and the sustainability crisis facing newsrooms around the world. Third, I think that it's crucial to learn from elsewhere. I think that it's fantastic that today we're going to be hearing folks who can share stories from Canada, potentially from Australia, from the EU, from other jurisdictions that are tackling this.

But context is also important, including when one considers the totality of the legislative framework surrounding a particular intervention. I would also add that there is likely a certain California exceptionalism at play, given the state's role as the cradle of the digital revolution and the home to many of these companies. The people in this room potentially have a bigger stick to wield to compel compliance than, say, even the Canadian or Australian governments. And finally, I think that it's important for any legislative process here to be the start of a conversation, as opposed to an expectation that challenges facing journalism or the information economy, or democracy are going to be resolved in one fell swoop. Progressive iteration is the formula for strong policy.

And I think that that has been one of the critical lessons from California's important moves to regulate privacy. And there is an important role not only for California leadership in this space but also for California to be an important hub for discussion on structural improvements to remedy these challenges going forward. And I look forward to opportunities for my institute to be a partner in the ongoing dialogue. Thank you again for the opportunity to be here, and I very much look forward to today's discussions.

Did you want this passed out too?

Yes, please.

You know, how you see it- So how so how do you see AI playing a role in this development in all these issues? I mean, could you kind of give us kind of a 30,000 foot view of-

AI is going to have an interesting impact both on journalism and on information integrity. To deal with journalism, first, the profession is going to need to adapt to the growth of large language models in the way that a lot of parallel professions are going to.

These are tools that have an enormous amount of potential in order to be a force multiplier for journalists, in order to develop research, to develop first drafts of stories, to do a basic kind of research and analysis that would potentially take a lot of man hours. At the moment, obviously, there needs to be a significant amount of oversight of that work to make sure that they're not just pumping out garbage.

But if you assume that challenges related to hallucinations are going to be resolved at some point, then it's clear that these tools are going to have a transformative effect on the profession, not only in terms of how journalism is practiced, but also in terms of the way that people learn how to be journalists. Because if those entry-level sort of research and analysis positions are now being done by machines, it raises interesting questions about what entry to the profession is going to look like.

These are parallel in a lot of ways to the questions that we're asking about law in terms of their- Oh, yeah

The technologies can get so much better, I guess, because right now it's so clearly not a decent research tool for the caliber of journalism that we expect out of our newspapers.

Right? Well, yes, there's an assumption that it's going to get better over time and that challenges around, say, hallucinations are going to be about resolved, but mitigated.

Not just hallucinations, but perspective and depth of understanding. But certainly hallucinations.

Right. I think it depends on your framework and what you're expecting from these tools, right? I don't think that, certainly not anytime soon, we're going to move to a point where you just have a staff of AI journalists. But as a research tool, that, for example, is developing a first draft of a particular story or rewriting a story in order to impact a particular tone that you want to see changed, or just grabbing research instead of forcing individual reporters to be digging through archives. I mean, that in itself is potentially a force multiplier for individual staff within a particular newspaper.

Well, if we ensure that they're actually drawing upon a really diverse range of sources and archives.

Well, that's a different question, right?. So there's a question of can machines do the job? And then there's a different question of do we want machines to be doing these jobs and are there additional challenges that come from that? And is the response that we try to find ways to mitigate those challenges, or do we decide that there are certain types of work that we just prefer that humans are doing as opposed to being automated away? Right?

And what that value added is ultimately from- I mean, I think getting to your earlier comments about just all these newspapers that have shut down, one thing- I was hearing a piece about this not too long ago, not only is there enormous impact on the community in so many different ways I think we can all know, there's a financial impact. Apparently communities that don't have a local newspaper pay a premium in their borrowing on the bond market.

You literally pay a higher percentage of interest on your municipal or school bonds if there's not a local newspaper in place, because the market recognizes that the lack of a local newspaper means that there's more likely to be shenanigans, people are not checking their work quite as carefully, there's less of a sense of oversight. The board members or the council members know that there's no one listening to them or paying attention to what's happening.

And literally, there's a direct cost to ratepayers the taxpayers, the citizens, when they've lost a local newspaper that is actually built into the borrowing costs for public works projects and school construction and all the rest, which is, I think, kind of extraordinary, but actually makes so much sense if you think about it.

To be clear, I'm in no way trying to suggest that AI is the solution to these problems. That's absolutely not the narrative that I'm trying to drive. All that I was intending to say is AI is going to, over the next five to 10 years, transform the way the workflow works within these professions the same as it does in law, I think, same as it does in any number of professions where generating written works is a significant part of the job.

Okay, last question. You just passed, I haven't had a chance to review this yet because you just gave it to me, but Sustaining Journalism Sustaining Democracy: A Policy Guide on Platforms in the Press. We're legislators, it's our job to come up with new policies, vote for new policies. What would be something that you would really encourage us to consider for new legislation in this space, given all of your research?

Yeah. So the publication looks at four different structures of legislative intervention, either designed around antitrust-based interventions, intellectual property-based interventions, subsidy-based interventions, and transparency-based interventions to examine their relative benefits and the challenges in implementation. One of the key takeaways is that it's important to think carefully about how these different models of legislative intervention interact with one another, and that oftentimes there can be a requirement for multiple avenues to move forward on a similar track in order for them to be effective.

So I mentioned in my remarks that transparency is extremely important in order to combat perceptions of capture as a result of this legislation. That's been a weakness of some legislative models that we've seen.

That's one example, is the need to consider multiple areas of intervention or the way that any kind of subsidy-based program, for example, would need to be considered in light of other potential interventions that might be necessary in order to ensure it is having the targeted effect and to avoid potential negative consequences or collateral challenges as a result.

Can you give us your sense of the state of the negotiations? I'm sure you read about the negotiations and the fight between-

In Canada?

No. Well, yes, in Canada as it relates to the legislation that was considered here. You know, some of the same issues and debates were happening and, of course, the Bill was stalled, but it's largely kind of built out of the conversation in Canada.

Well so, in Canada I'm sure you're going to hear later and I'm sure you're actually already aware, Google just came to a settlement with the Canadian government. I have no insight into the negotiations there. I think you'll hear from Canadian folks later today. But it's good to know that these things are potentially being resolved.

The threat from the platforms to pull out of offering news in Australia, similarly, eventually a settlement was negotiated to that. So, I think, you know, in terms of the platform's complaints or sort of threats around the legislation, it's important to understand them in two ways. On the one hand, there's concerns around platforms just withdrawing from the jurisdiction entirely. I don't think that's practical in a California context.

Frankly, I don't think that was ever practical in an EU context or an Australian context or a Canadian context where similar threats were made. But, you know, as I was trying to allude to in my earlier remarks, there's a broader challenge around incentivization and gaming out what the likely practical response to moderation and content amplification is going to be to this kind of legislation, right? So the idea that platforms are going to refuse to carry any news is sort of the extreme end of that.

But there are also likely scenarios where if the news snippets cost the platforms money and the pictures of your dog are free, then the platforms are going to trend towards emphasizing more content that's pictures of your pets and your families and less content that involves news just because that's the best way to take care of their bottom line.

But unless you have folks that are willing to offer their quote unquote news for free.

Well, or if there are parallel legislative interventions that can be made in order to impact those or to consider those potential incentive structures, right? So in the EU, I think it was in France that one of the platforms responded to legislation around a copyright-based intervention by withdrawing from distributing news altogether and they were hit with a fine from the competition regulator, the antitrust regulator, claiming that it was an abusive market position.

That's one example of parallel legislative interventions that can be done to ensure that the incentive structure that you're creating is not undercutting the ultimate goal of your legislation. Now, obviously, that's obviously not the kind of thing that you can do. That's not a structure of intervention that can be done here. But my point is that it's important to game out likely responses and to think through and ensure that the incentive structure that's being created is one that promotes education and information integrity.

Yeah, okay.

All right, well, we're going to have an opportunity to talk to a lot of folks. All right. Thank you, Mr. Karanicolas, thank you. A couple of things. One is, thank you, Senator. I was unaware of the second and third order impacts in terms of financing when there's a lack of local journalism.

One point, and perhaps others later on can address this, is that I take your point that platforms can threaten to basically vacate the space, but it looks like in Canada that Meta at least it wasn't just threats-

Google. Sorry, meta. Sorry, my apologies.

My understanding was Meta that actually vacated the space, and I don't know if they're coming back or not, but it was more than a threat. So others can talk about that a little later on. But thank you very much. All right, we're now going to go to our next panel. Our next panel, Technology in the News Industry. And we're going to play musical chairs of sorts. We've got four chairs and we've got five panelists. So the first four of you that come up, you're the winners.

What we'll do is, as I mentioned, after we hear from all the panelists, then we'll proceed to questions and we'll just ask whomever it is that actually didn't get a seat to come to the podium. So let's start with Mr. Kressin. Mr. Kressin, floor is yours.

Mr. Chair, Members of the Committee, thank you for giving me the time to speak with you today. By way of background, I'm an antitrust attorney in private practice, and I represent the News Media Alliance and several news publishers. And I've been involved in antitrust matters involving the dominant online platforms for more than a decade. Today, I want to help demystify two crucial processes that form the background of our Internet experience crawling and indexing, the silent workhorses of any search engine and other online platform.

How do the Internet giants get content from the Open Web? What controls do content creators have, and what determines how the Internet giants use that content? Imagine the Internet as an ever-expanding library with billions of books. But there's a catch. This library has no central filing system. How do you find the book you need? And that's where crawling and indexing come in. Crawling is the discovery process.

Search engines send out robots known as crawlers or spiders, which move from page to page, website to website following links. In practical terms, we're talking about a computer program that opens a version of a browser, navigates to web pages, and copies the content of those pages to its databases before linking to the next page. Now, if crawling is about discovering content, indexing is about organizing it. After a crawler visits a page, it hands off the information to the search engine or digital platform to be indexed.

Indexing is the process of taking all that content, those billions of pages, and organizing them in a way that allows the platform to utilize it. Both processes are dynamic and ongoing because the Internet is not a static entity, it's constantly changing, with new content being added, old content being removed, and existing content being updated. Google's Web crawler, known as the Google Bot, is an Internet bot that is particularly sophisticated.

Unlike simpler crawlers, Googlebot uses a complex set of algorithms to determine which sites to crawl, how often, and how many pages to index from each site. It considers factors such as page rank, site updates, links and site traffic. Googlebot's purpose is to build a more organized index for Google's search engine and its other products. So I've explained how crawling and indexing work from search providers or digital platforms perspective. But how do things work from a web publisher's perspective?

Can publishers opt out of having their content crawled and indexed? And if so, what effect does that have? How realistic an option is it? The key to answering the first question how publishers can opt out is the thing called robots text and robots text is a text file that webmasters can use to instruct web crawlers how to crawl their pages on their websites.

It's a part of a group of web standards that regulate how robots crawl the web access and index content and serve that content to users. In essence, Robots text sets rules for engagement. It can tell crawlers which areas of the site should be avoided. And as you can see from the slide, the robots.txt file is relatively simple.

The particular example here is a mere four lines, and it basically allows the Google bot to crawl every page on the site and index its content, but disallows all other form crawlers. It's crucial to understand, however, that robots.txt is directive non-enforcement. While reputable crawlers follow the instructions in a robots.txt file, it does not physically prevent access to the files and directories on its site.

Search engines, like Google, use the robots.txt to decide whether to crawl or index a site, but it does not control how they utilize the content that they access. For example, publishers often want to have their content crawled and indexed by the Google bot so that their pages appear in Google search results. Many have described Google search results as the gateway to the Internet and failing to appear there can be the death of a website.

But while publishers may want to appear in Google's organic search results, ie the 10 blue links that we usually think of as the content of Google Search results page. They may or may not want their content to be used by Google, for example, to train its AI models, or to appear in specialized elements of the search page designed to keep users on the search results page rather than navigating to publishers sites.

The problem is that robots.txt essentially gives publishers only a binary choice, allow the Google bot to crawl and index your content or don't. What Google does with the content it indexes is left entirely up to its own policies, and individual publishers lack the market power to bargain over the conditions by which dominant platforms utilize and index their content. For most publishers, then, this is a Hobson's choice.

They can block Google's web crawlers and effectively disappear from the web, or they can give the dominant platforms access unfettered access to their content. So I'd like to finish some slides explaining why some publishers might not want Google or other dominant platforms to have unfettered access to their content. Here's a screenshot of a recent mobile search on Google for the query 'Actors strike'. And this is a real screenshot. We haven't manipulated it or adjusted it in any way.

As you can see, the top of the page is mostly occupied by a Top Stories box, which includes high resolution images from news articles arranged in a horizontal carousel that users can swipe left and right through. Below that section is a relatively new feature called People Also Ask. This section provides detailed answers to common questions on the query topic. Google gets these answers by excerpting content indexed directly from news articles. In this case, it's excerpted content from Vulture.com and also the Associated Press.

The next section contains an about and Quick Facts section which provides more direct information about the topic directly on Google Search Results page. And finally, after scrolling well down the page, we get to the organic search results. These are no longer 10 blue links. Now they include high resolution photos from the articles and again, lengthy snippets. And while I don't have an example of Facebook's page here, their display of news content is similar.

It often includes even lengthier excerpts than the ones shown here, and even higher large resolution images that are scraped from the site. In each case, the platform designs the segments of the Search Results page and the other platforms to keep users on the page, obviating any need or desire for the user to click away to the content creator who has actually published the articles.

And this example does not include Google's newcoming or forthcoming AI features, which are still in beta but will likely soon occupy the priority position at the top of Google's search results page. Publishers may wish to prevent Google from using their crawled and indexed content for any one of these segments, though Google generally does not give them that choice. The choice is to give Google effectively unfettered use or to disappear from the search page altogether.

So one final point I'd like to emphasize and finish on is that this is an issue about access programmatic access to content. It's not about copyright. I'm not taking a position on whether any of this unlicensed use of content is an infringement or fair use. Copyright discussions in this context are actually a red herring. The actual issue is the terms on which publishers give online platforms programmatic access to their content through crawling and indexing.

In a competitive market, one in which Google and the other dominant platforms face real competition for viable alternatives, publishers would be able to negotiate over platforms'ability to access their content programmatically through crawling and indexing. They might say, you can index our content for appearing in organic search results, but not for use in AI. The illustration on the left hand of the slide shows what a competitive market- Sorry, I'm just going forward. But today, these negotiations don't take place.

What we instead get is something that looks like the illustration on the right slide up here, where essentially you have a choice of whether to grant access to the crawler or not, and then the platform gets unfettered use for any of the products that it might utilize that content for. As Dr. Singer will testify shortly, this problem has severe consequences for the news industry and society more broadly. Once again, thank you for giving me this opportunity to speak, and I look forward to your questions.

I have questions that I'm going to withhold till the end. I know you look forward to them. So Professor Singer.

All right, well, thank you so much to the Judiciary Committee for inviting me and hosting this very important discussion. I wear several hats as the slide shows. I teach economics at the University of Utah, and I also serve as an expert in antitrust matters or arbitration disputes. But today I'm here as a consultant to the News Media Alliance, the NMA. My views importantly do not express the views of the University of Utah.

In the interest of disclosure, I was commissioned by the NMA to write a white paper on the economics of the relationship between news publishers and dominant platforms. And I would hope that in the interest of fairness and openness, other discussions on today's panel similarly disclose their relationships with interested parties, particularly with the dominant platforms. Our country is suffering a crisis in the local news industry.

As local news publishers are shuttering their doors and the number of jobs in the news industry plummets, the Medill School of Journalism at Northwestern has been tracking the disappearance of local news outlets. This figure shows a map of the United States color-coded by the number of local news outlets. Yellow means zero local news outlets, and per Medill's counting, there are more than 200 counties nationwide that have zero local news outlets. And when a county loses a news outlet, the void is often filled with misinformation.

There are a host of other local economic costs that I won't get into here, but I have a white paper and now an article in the Columbia Law and Entertainment Journal, if you're interested. Now, the problem of disappearing news outlets also plagues California. According to the same study, California has four counties without a news source and 11 counties with only one. And the Bay Area is among the 20 metro areas that have lost the most news outlets per capita since 2005.

Now, Pew Research has been charting the number of jobs in the news industry, and the stats are sobering. Since 2008, the number of jobs at newspaper publishers has declined from 71,000 to 31,000. Now, that 40,000 reduction in jobs has been partially offset by an 11,000 gain in digital native jobs, including internet publishing and broadcasting, but the net loss is still significant. A critical role of news publishers is to hold local representatives accountable and to prevent abuses by the government, as the Chairman explained.

I think all sides in this debate recognize that market forces cannot be counted on to protect the news industry and to protect our democracy, and that some intervention is warranted. The relevant policy question is, what is causing this decline in newspaper revenues? An obvious candidate is the conduct of Google and Facebook, which have come to dominate online advertising markets associated with search and social media, respectively. This figure charts the demise of newspaper revenues against the meteoric rise of Google's online advertising revenues.

The green line represents newspaper advertising revenues which begin to decline, not coincidentally, right around the time that Google's ad revenues from search, shown in blue, begin to take off in 2005. We know the two offerings are competing for the same set of eyeballs and advertisers. And as the next slide explains, there is a causal nexus between the two series. Survey evidence reveals that news content in large part drives audience and hence impressions on the platforms.

We can study the percent of users who rely on platforms for news and how many times per day they go to the platforms for news. The platforms, as Mr. Creston explained, scrape and repackage news content, which they then display on their own websites. The platforms can then monetize this impression data when selling advertisements. Impressions are also valuable to the platforms because they capture user preferences when users look at content on the platform.

Importantly, this value is appropriated from news publishers well before, well before there are any click throughs to news publisher content. In many cases, a user can read a snippet of content on the platform and never click through to the underlying source. And the reason why platforms can appropriate this value from key input providers is the massive power imbalance. A single newspaper cannot credibly threaten to delist itself from Google search if they don't receive payments from Google. Google has a 95% share of search.

Now, a new study by Columbia University's Institute for Policy Dialogue estimates the pay shares or the share of platform advertising revenues attributable to hosting news content on their sites. Right now, that pay share is essentially zero. Google and Facebook pay next to nothing. To repackage and use news content on their sites, the authors estimate news publishers would capture 17.5% of Google's U.S. search ad revenues in a competitively supplied search market and 6.6% of Facebook's U.S. ad revenues in a competitively provide social media market.

Put differently, for every dollar of advertising value that Google generates on search ads, 17.5 cents would go to publishers under competitive conditions per the study. Now, if one were to apply the pay shares from the Columbia study to Google's and Facebook's advertising revenues in California, one would get a $2.1 billion annual payment from Google to the publishers and a $0.3 billion annual payment from Facebook to the publishers. This slide explains the methodology undergirding the Columbia study's findings.

Now, the authors estimated Google's pay shares from the Fehr study, which calculated what share of searches were information searches on the Google platform, and within information searches, what share of user demand for results comes from news media publishers? The authors estimated Facebook pay shares from a study in the American Economics Review, which examined the percent of time users spent on Facebook consuming or interacting with news content. I myself have performed original valuations of the publisher's pay shares in a competitive market.

For example, I oversaw a survey of U.S. Consumers on Google and Facebook, asking how much time they spent consuming news on the platform and how much less time they would spend on the platform if there were no news. I've also studied the percent of impressions on Google and Facebook attributable to newspaper content. Now, while my estimates of the pay shares tend to be more conservative than those of the Columbia study, I conclude that the methodology employed by the study's authors is reasonable.

I also thought it would be helpful to provide estimates of what has been paid by the platforms to news publishers in other jurisdictions where governments have intervened to replicate competitive outcomes. I estimate that Google has paid about 134,000,000 U.S. dollars to Australian news publishers, or about 4.1% of Australian Google search revenues. That this pay share would translate into roughly $0.5 billion per year in California.

I also estimate that Google has paid about 74 million U.S. dollars to Canadian news publishers, or about 1.7% of Canadian Google search revenues. This pay share would translate into roughly $0.2 billion per year in California. These numbers are certainly lower than the $2.1 billion payment in California implied by the Columbia study, but it bears noting that these pay shares in Australia and Canada likely understate the full amount that has been paid or would be paid to all eligible news publishers under the California Bill.

For example, the eligibility requirements in Canada excludes lifestyle or sports publications. The Columbia study, which showed a much higher pay share, relates to all news publishers. Finally, the Canadian figure is the result of a political process and was not the result of an arbitration. Now, given the power imbalance, and given the overwhelming dependency of individual publishers on Google and Facebook, market forces cannot be counted on to remedy this problem.

The solution that makes the most sense to an economist is to impose mandatory baseball style arbitration to replicate the payments to news publishers that would be made in a competitive world. Under this process, the publishers would submit their best estimate of the publisher's added value to the platforms. Then the platforms would submit their presumably lower estimate of the publisher's contribution to value. And finally, the arbitrators would pick the estimate closest to fair market value. This technique is used by many copyright tribunals around the world.

My last slide presents some criticisms of alternative solutions. First, with regard to a tax credit, we already know the cause of the missing advertising revenue, the platform scraping and indexing content for free. Hence, this alternative does not address the cause of the problem or the market imbalance and the fair market value owed by the platforms and others propose more antitrust interventions. The current publisher, this also won't work, the current publisher antitrust suit against Google is aimed at reducing the take rate for click throughs.

Remember, the value that's being appropriated here happens before a click through even occurs. That lawsuit would seek to unwind certain exclusionary restraints that are contributing to an inflated take rate. But the compensation being sought under this legislation is unrelated to the take rate. It is the competitive payment for accessing newspaper content in the first instance. Also, antitrust moves slowly. Sorry. Thanks. Thanks for having me.

All right, thank you so much. All right. Next, the Vice President of news for Google, Richard Gingras. Thank you for being here. By the way, just a note for those who are observing is that all the witnesses here today are here voluntarily. We've not subpoenaed anyone to appear at this hearing. We did ask for a representative from Meta, and they have declined to provide a representative. So having said that, Mr. Gingras, the floor is yours.

Good afternoon, Chair, Umberg, state Senators, Assemblywoman Wicks, and Members of the Committee. And I thank you very much for the opportunity to be here and delighted to be here. My name is Richard Gingras. I am Google's Vice President for News. I have served in that role for over a decade, working in close collaboration with the journalism community to guide our efforts to drive innovation, to provide new tools, and to train a half-a-million journalists on subjects ranging from journalist security to audience development.

I'm also a former publisher. In 1995, I provided the initial funding for the Web's first digital news offering in Salon.com and led Salon as publisher for several years. So I'm keenly aware of both the challenges and the opportunities the Internet presents to journalists and publishers. Today, we are considering serious questions regarding the future of news. It's important to understand both how we got here and where we might go.

The Internet, as you know, made it easy for anyone in the world to access a world of information. It also put a printing press in everyone's hands, enabling a diverse voices to express themselves to every person in the world, or more precisely, to anyone willing to listen. Not surprisingly, the existence of the Internet has changed the world of publishing. The competitive Internet environment brought challenges for print and legacy news publishers.

The vast marketplace of information that is, the Web, changed the information seeking behaviors of all of us. Daily regional newspapers went from being the Internet of their communities in 1985 to being one of hundreds of thousands of sources available from around the world. The Internet also changed the marketplace for advertising. Before the Internet, a typical American metropolitan newspaper derived roughly 90% of its revenue from advertising. But as consumer behavior changed, advertising dollars also shifted.

That means that the ad revenue generated by classifiers, for example, department store ads, supermarket ads, which was a majority of a traditional newspaper's revenue, is no longer what it once was for news companies. Since 1998, thank you. Since 1998, Google's mission has been to make the world's information universally accessible and useful.

Yeah, sorry, I'm trying to take that down, but I can't.

Thank you.

Sorry about that.

I don't know if this folks trepidation that we're responsible for legislating things related to the Internet and technology and we can't take this down.

I'll be pleased to help with that if I can. Connecting users to news that matters to them and supporting journalism are consistent with Google's mission. Every time someone searches for news via Google, we provide links to web pages and a short snippet of text that the user can access after clicking on the link and visiting the publisher's website.

Website owners, including News publishers, decide whether we are able to link to their site in a fairly granular fashion and what, if anything, can be used in the extract. While news seeking queries on Google Search account for under 2% of total queries, search and Google News drive billions of interactions with news content globally. Furthermore, news queries very rarely attract the interest of advertisers.

In fact, we don't run ads on Google News or on the News Results tab on Google Search. Nearly all the ads people see on Google are on searches with commercial intent, like buying shoes or kitchen appliances or finding a plumber, and not from news seeking queries. We only make money also, if ads are useful and relevant and clicked on by the user, you can think of search as the largest newsstand on Earth.

And unlike the world of print, where 30% of a publisher's operating expenses go towards distribution, including paying newsstands, Google sends this traffic to publishers for free, connecting users to news websites more than 24 billion times per month. This traffic in turn helps publishers make money by showing ads or attracting new subscribers. Deloitte estimates that each click on a link from Google Search is worth five to seven cents to a news publisher.

If you do that calculation, those 24 billion visits are worth well over a billion and a half dollars per month to publishers around the world. For over two decades, Google has worked collaboratively with journalists and publishers by providing tools, training and resources to grow audience drive revenue and support the work of journalists. Today, Google is one of the biggest financial supporters of journalism around the world, and our efforts have a singular theme, innovation.

Google works to promote consumer engagement with news by developing tools to highlight useful and relevant news sources. We've worked to elevate original reporting and search, and to improve how we present results on developing news stories to help people better understand fast moving topics. We've developed tools for publishers like Reader Revenue Manager, which helps publishers drive new subscribers and engage existing subscribers across the Web.

Today, this tool is used by more than 900 publishers around the world and supports their efforts to connect with more than 900,000 new paid subscribers. Our licensing program and product experience for news organizations, Google News Showcase, operates in 24 countries and has more than 2,500 participating publications. In the United States, we've signed a significant number of publications across 42 states, over 95% of which are local publishers. We also offer tools and services to help news publishers generate income from their content.

Publishers can opt to use Google's advertising technology as well as the technology of others to sell ads on their websites and apps to advertisers. Under these agreements, publishers retain the vast majority of the digital advertising revenue up to 95% for the largest publishers. We continue to collaborate with the news industry to help tackle new opportunities posed by the ever-changing digital environment. Through the Google News Initiative, we've partnered with more than 7,000 news publishers around the world, including 200 news organizations and 6,000 journalists in California alone.

The GNI provides training tools and funding to journalists and newsrooms to help strengthen their work in our digital age. This year, the Google News Initiative launched partnerships with five local news associations in the United States, providing financial grants and training to nearly 1,000 local publications. This funding helped local publishers overcome tech challenges and create strategies for growing audiences and driving revenue. Just last week, the GNI funded KQED's Pilot tool to help local publishers across California grow audiences and revenue opportunities.

As part of the GNI, we also created the Local News Experiments Project, which aims to create sustainable all digital news organizations in communities currently under-served by local news. Recently, the GNI provided funding to two local nonprofit news outlets the Oakland side and Richmond side, both part of cityside whose mission is to produce trusted and independent local journalism. Despite this, we often hear that our perspective on regulatory efforts to promote the publishing industry reflect a general opposition to regulation of any kind. This is not true.

We share the goal of strengthening the news ecosystem in California. However, proposals that institute a link tax like we've seen in other jurisdictions will not achieve this goal. Instead, they would decentivize program platforms from sending traffic to news publishers and make it harder for us to direct users to helpful content and to combat misinformation.

We believe collaborative approaches like Google News Showcase not only build trust between tech companies and news publishers, but respect the basic link framework of the open Internet and the tremendous societal benefits it has enabled. Further, these approaches support the digital transformation and long term commercial sustainability of local news. Allow me to summarize the key points Google drives a massive amount of valuable traffic to publishers at no cost, which they use to grow their businesses.

The disruption of the newspaper business model was the result of the competitive dynamic of the Internet, with its vast array of content sources and new opportunities for advertisers. A link tax as proven elsewhere would be counterproductive, making it more difficult for users to find diverse sources of news, reducing the opportunity for news publishers to build new audiences, and making it harder for Google to direct users to helpful content.

Google is already providing tremendous value to news publishers and has rolled out programs in the United States like Google News Showcase, which is the same program that underpins our commercial agreements with publishers in other countries, including Australia. Google is committed to enabling a sustainable future for news in California. And across the country. As both a former publisher and a proud Californian, I am committed to a sustainable future for news in California and across the country.

I appreciate Assemblymember Wicks and Chair Umberg's efforts to work and listen to stakeholders. We want to work together to find a path forward that supports California news publishers, especially local publishers, providing local coverage to their communities and helps connects Californians with the information they need to understand the world around them. I thank you.

Thank you, Mr. Gingras. All right, next. Mr. Lance Knoble.

Chair Umberg, Senators, Assembly Member Wick. Wicks. Good afternoon. I'm the CEO and co-founder of Cityside Journalism Initiative, a nonprofit news organization providing local journalism to cities in the Bay Area. It's my pleasure to speak to the Committee today about some of the issues facing local journalism. Together with two other journalists, I founded the digital local news site Berkeleyside 14 years ago because we saw that most of what was happening in our city was not being covered.

It was rare for a reporter to be at the City Council, even rarer for one to attend the school board and planning disputes, community events, business openings and closings, town-gown tussles were occurring in a near news void. Being digital from the start helped us in numerous ways. First, we don't bear the costs of paper printing and distribution. Second, we can respond instantly to breaking news.

It's unthinkable today that people would have to wait until morning or, for weekly newspapers, until that weekly publication comes out to find out what's happening. We've also had the advantage of being digital news natives from the start. Most legacy news organizations have had to manage enormous internal cultural change to adapt to a digital world. Almost all expect to abandon print in the not too distant future.

Three years ago, we built on our decade of experience with Berkeleyside and launched an even more ambitious news operation Oaklandside. Since the closing of the Oakland Tribune in 2016, California's 8th largest city was woefully undercovered. Now, our newsroom of 12 editors and reporters is easily the largest in the city. We cover the staples of daily journalism, city hall, schools, arts, housing, local business, as well as deeper dives into issues like road safety, police reform, the achievement gap in schools, and more.

All of our content is free to read. We believe that it's probably more important that someone who's housing insecure has access to policy debates in City Hall than a wealthy homeowner in the hills. Like your local public radio station, we don't make people pay for the news, but we allow them to pay for the news through donations to our nonprofit organization between Oakland and Berkeley, nearly 8,000 of our readers do donate.

We also cultivate major gifts, get foundation support, and get advertising and sponsorship from local and regional businesses. In a typical month, Berkeleyside reaches over 300,000 users. Oaklandside, after only three years, reaches 250,000 users. A month, our newsletters go to over 50,000 readers daily. Our two sites publish over 1,500 news stories a year. It's a model that's being widely imitated nationally with recent launches like Signal Cleveland, Houston Landing, and Indiana Free Press,

More and more places are understanding how local journalism is a vital part of our civic and democratic infrastructure. Social science research has shown that in the absence of local journalism, voting rates decline, corruption goes up, bond rates go up, misinformation thrives. We're determined to continue to play our part in building a healthy future for local news, so we're expanding. We recently announced our third newsroom Richmondside.

Local independent journalism that matters for our communities is at the heart of our mission. But if our work is to have any impact, we need residents of our cities to become readers. I think it's important for the Senators on this Committee to understand how profoundly the tools we use to win new readers have changed in a handful of years. When we launched Oaklandside in 2020, Facebook in particular was a powerful platform for what we call discovery.

Through both organic and paid posts on Facebook, we were able to reach a large number of Oaklanders to tell them about, say, our coverage of City Council races or our detailed tracking of local COVID statistics. That allowed us, with a modest budget, to build a strong audience for Oaklandside by the end of our first year. That audience helped our reporting have greater impact, certainly, but it also enabled us to get on a path to sustainability. Those readers become small dollar donors, a few become major supporters.

Local businesses want to advertise to reach our readers, and being able to demonstrate our healthy reach into our community convinces foundations that our work deserves backing. As we're now planning the launch of Richmondside, I have to tell you that Facebook doesn't figure in our plans at all. A change in the Facebook algorithm to de-emphasize news means that it no longer serves as a good platform for discovery of our work.

Other social networks the former Twitter, Snap, TikTok threads, Instagram have at times been good for engaging our audiences, but at best, they generate a minor trickle of traffic to our sites. So what do we do? More than anything, the answer is search. On Oaklandside and Berkeleyside. One third of our readers find us through search. If you search Oakland school board or Berkeley City Council or Berkeley mayor race, you're likely to end up on our news sites.

So far from finding the tech platforms a threat, we see them as essential to our existence. We've also benefited directly from the support of the Google News initiative, which, together with some national foundations, provided the launch funding for Oaklandside. And now they're helping with Richmondside. Total philanthropic funding for journalism in this country is around $150,000,000 a year, a sum I understand is about equal to the support for ballet companies nationally.

A recent drive by some major foundations looks set to raise that funding to perhaps 250,000,000 a year. But recent research by media consultants Neal Zuckerman and Nathan Micon estimates the cost of sustaining local news is somewhere between $750,000,000 and 1.75 billion annually. So we're a long way short of what's needed. We truly can't afford to lose the support of ventures like the GNI. I know there's a lot of doom and gloom about local news. You've heard plenty of statistics today.

But on the basis of our experience, I'm optimistic about the future if we can continue to rely on an open, free Internet. California is, I'm happy to report, a hotspot for our kind of innovation. There are enterprising nonprofit entrepreneurs in many parts of the state. There are about 60 nonprofit news organizations in California employing over 700 journalists and other staff. I'm heartened that our state Legislature has recognized both the importance of local journalism and is exploring ways to help it.

I hope your work helps you find ways to support the journalism that truly matters in California communities. And I hope you'll start by considering how Californians can get the information they need, not by considering what publishers want or need. Thank you for your leadership in tackling this key issue for our Democratic society.

All right. Thank you, Mr. Knoble. Next? President, Matt Pierce of the Media Guild of the West.

Let me just ask also the witnesses to identify themselves before they begin.

Excellent. Thank you. Good afternoon, Senators. My name is Matt Pearce. In my day job, I've been a reporter for the Los Angeles Times for the past decade, but I'm in hearing here in my capacity as President of the Media Guild of the West for a local union of the NewsGuild-CWA that was founded in 2018. I represent about 1,000 working journalists, including the L.A. Times, L.A. Daily News, Orange County Register, Desert Sun, and some other major newsrooms in Arizona and Texas.

A lot of the news that Californians read every day is produced by NewsGuild journalists at dozens of publications, and in fact, in Brandon's presentation, he showed Google, and it's sliding down the list of publications that Google sites--or most of that work on the screen was produced by NewsGuild journalists. We're also part of the Communication Workers of America District Nine, which includes Google employees at the new Alphabet Workers Union Local 9009.

Before I start, I want to express my gratitude to this Committee for inviting me to speak. Out of the many excellent advocates and experts appearing today to testify about journalism, I appear to be the only speaker from a labor union that represents the interests of journalists rather than publishers or another group. No one's paid me to be here, by the way.

Earlier this year, my Local's rank and file members voted unanimously to support the California Journalism Preservation Act which is now also supported by the Communications Workers of America, California Labor Federation, and other unions representing media workers. Like to thank Assembly Member Wicks for her careful consideration of Labor's concerns on this bill. We think the digital advertising market is broken and journalists will never be able to collectively bargain with publishers for pay that reflects our worth if big tech is capturing an unfair share of the value that our journalism creates.

But today, Committee staff has asked me to testify about artificial intelligence in journalism, which is another area where powerful tech companies once again want to scrape and profit from our journalism without paying for it. I'm sure you've already heard concerns from my counterparts at SAG-AFTRA and the Writers Guild of America.

Journalists have similar but unique concerns about this technology and the negative impact it could have if deployed poorly. As quick background, the reason we're all talking about AI these days is because of the rise of what are called generative AI models like ChatGPT. They can quickly produce synthetic text visuals or audio that seem authentic and human-made. The way that these models work is they ingest huge amounts of data--could be newspaper stories, speeches, books, or paintings--and then these models study that data for patterns.

I could have asked ChatGPT to produce about ten minutes worth of Senate testimony about AI and journalism, and within just a few seconds, it could have produced something that sounds a lot like Senate testimony about AI and journalism. It's just fancy text prediction. I wrote every word of this, by the way. Unlike previous versions of machine learning, generative AI today has an amazing breadth of potential economic applications.

That's the big revolution, but this technology does not benefit everyone equally. Actors are concerned that if studios scan their voices, faces, and bodies, they've given away their livelihoods forever. For writers, if you've ever seen shows like Friends or Frasier, you know that a lot of screenwriting works with creative formulas that these models could copy and imitate faster and much more cheaply. The unsettled question of how Hollywood used AI is one of the big reasons why we saw a couple of the longest strikes in Hollywood's history.

Journalism is a little different from creative industries in that we're purely a fact-based profession. Generative AI models famously hallucinate and struggle with accuracy. If you ask, 'what's two plus two,' a generative AI model could answer five. That's because of how they're built. Generative AI models aren't built to think or reason like a person does. They're statistical guessing machines. In journalism, you can't guess.

If I leave this hearing to go write a front page story for the L.A. Times about Israel and Gaza, I have to be able to explain every single word that I use, every source that I cite, and why I made those choices as a journalist, and if I get something wrong, if I make an error of fact or an error of judgment, I'm ultimately accountable to my editors, and I'm accountable to my readers. I'm a human being.

Everybody knows how to reach me, but generative AI models are black boxes. We just don't know what's going on in there. The model might be trained on biased or incomplete or even fabricated data. We wouldn't know. We don't know how the model chooses the word that it chooses. The machine will never feel the knot every journalist gets in their stomach when they get the facts wrong. A machine will never feel bad about libeling a human being. This is what we call an alignment problem.

Unfortunately, our guild has strong concerns about the destructive, careless, and borderline fraudulent ways that generative AI has already been deployed in our own industry, and I'll give a few examples. When I was growing up, Sports Illustrated, one of the best magazines in America--it's fallen on hard times. Last week, Sports Illustrated got caught using AI-generated authors who don't exist. We're talking fake writers, fake portraits, fake author biographies. There are very real and very human journalists who still work for Sports Illustrated.

They're unionized with the NewsGuild, and to their employer they responded, quote, 'these practices violate everything we believe in about journalism. We deplore being associated with something so disrespectful to our readers.' Let's take Gannett, which is now one of the largest owners of newspapers in America. Two months ago, a USA Today-owned publication called Reviewed got caught using authors with names, pictures, and biographies who don't exist anywhere else on the Internet.

Gannett's human journalists--also unionized with the NewsGuild--responded, and I quote, 'Gannett's AI posts are a violation of Reviewed's own ethics policy. They put money over editorial integrity and are a betrayal not just of workers, but of readers who count on the site for consumer reviews they can trust.' I can go on. Three months ago, Microsoft News aggregation site MSN published an AI-written obituary for former NBA player Brandon Hunter with the headline quote, 'Brandon Hunter useless at 42.'

This time, MSN's journalists didn't have anything to say. Maybe that's because MSN reportedly laid off its journalists in 2020 and replaced them with AI. So what these disasters have clearly demonstrated is that there's no such thing as journalism without journalists. It wasn't trust and safety teams in Silicon Valley that exposed or prevented these abuses on the front end. It was journalists who blew the whistle on unethical AI publishing practices, either from inside their own company or at other publications.

My parent union, the NewsGuild, recently conducted a national survey of NewsGuild members. A majority said they had little to no faith in their employer to use AI responsibly and ethically. Most members think generative AI is likely to make our lives worse instead of better. 90 percent of responding members said that our unions have a strong responsibility to enforce ethical and responsible use of AI. Now, I do want to be clear about something. We are anti-tech.

The NewsGuild's members include coders and engineers who are critical to modern journalism's success, and over the centuries, journalists just like me have always adapted technology and explored new ways to connect with our communities and support our democracy. Think about the rise of the telegraph and the wire services, steam press and penny papers, broadcast radio, television, the PC, the smartphone. These were hardware revolutions that changed how journalism was produced and delivered. Each advance meant the news could move faster and reach more of the public than before.

But arguably, the bigger story for local journalism over the past 20 years are the software revolutions that have had just as dramatic an impact. They include the search engine, social media, surveillance-based digital advertising, and I don't think it's a coincidence that the last 20 years have seen a massive shift in the balance of power from publishers to massive tech companies that are far less invested in journalism survival.

The question today is whether generative AI is another software revolution, is going to transform journalism, and whether it's possible to do so for the better. Right now, the reality is that generative AI is moving us toward a world where the cost of producing propaganda, the cost of producing fabricated content, the cost of producing lies is falling close to zero. Our view is that local journalism needs right now is more journalists.

Human journalists are the first, last, and still the best line of defense against the vast wasteland of garbage that's already coming right at us. That's why we support the California Journalism Preservation Act and its requirement that 70 percent of revenues go toward payroll. There's a little point in crafting journalism policy that doesn't support the hiring and employment of journalists.

In the future, our guild is likely to take a tougher stance on policy ideas that either enable tech giants or unethical publishers to undercut journalists and publishers who are trying to produce journalism the right way. Thank you so much.

All right. Thank you, Mr. Pearce. Now we're going to turn to the Members for questions or comments. Senator Ashby.

Thank you, Chairman. I have a couple of questions and one comment. For the record, I think the ballet and all forms of art also play a critical role in our collective community engagement. Also woefully underfunded, sure, but my two questions are for you two gentlemen and both should be pretty easy.

The first one, Mr. Singer, could you just tell us what--first of all, I thought on your map I saw three California counties, but then in the second slide, you said four California counties. Could you tell us what those counties are that you stated have no media outlets?

I could get that for you on the Web in two seconds, but I don't have it in my notes. I'm sorry.

You can search that up for us and maybe let us know. Okay, great, and then, Mr. Kressin, quick question for you. The data that you talked about--you put up the screen that showed the opportunities to click-through and obviously the natural ones were at the bottom which is a statement in and of itself, but do you have any data on how many people actually click through the publisher's content after they've read the content that's visible to them on the page?

So in other words, they see the thumbnail picture that you've described, they read the first paragraph, how many of them actually click through from there? Do you have that data?

I don't have the specific data for different categories. I believe there was some numbers in the slides pointing for particular parts of the page, the click-through rates which tend to be lower and lower based on how much content Google puts on the page.

Meaning more content, the fewer clicks?

Right. So I think the most egregious example in the slides that I showed was the one where it's called the People Also Ask feature where on particular questions, it excerpts the portion of the article and then highlights the answer to the user's question in the article. Essentially, it's republishing not just a snippet for the entire article, but particular portions that answer that question.

Really, once you get that information, there's no need to click through, and in those situations, the publisher isn't going to get any kind of advertising revenue or anything other than the small link at the bottom showing where the content actually came from.

Great. That's all from me.

All right. Thank you. Senator Glazer.

Mr. Singer, I just don't know if you've answered her question, though. She said, how many times do readers click to it? The representative from Google asserted that they send, quote, I think, quote, 'massive amounts of traffic.' So can you codify what that means? Is he wrong? And if not, what are the facts?

Well, I'll say the term 'massive amounts' talking in absolute numbers may be true. I mean, Google has billions of users coming to its site every day. In terms of the relative number of users who go to its site who then click through to a link, unfortunately, that data is opaque to us. We don't necessarily know when a user goes to Google Search results page, sees the publisher's content on that page, and then decides not to click through. Google doesn't report non-clicks to the news publishers.

So you can't ascertain whether that traffic comes from a Google Search? Is that what you're saying?

No, we can ascertain what percentage of the publisher's traffic comes from Google Search. They can't ascertain what percentage of Google's traffic it gets when it passes the--.

I got it. No, no, but I'm focused on the claim, I guess, underlying it is that they're providing links, clicks, revenue to journal publications, right? Are you saying--you're saying that yes, we do get some. You know how much comes that way.

How much comes from Google?

Yeah. Google Search. Yeah.

Well, I believe the answer is that because Google is considered the gateway to the Web--it's the dominant way that users find any kind of content online--that most publishers are reliant on Google News. Google Search for--

No, I get it. We're trying to understand whether you can monetize it because that's part of the question that's before all of us here is assertions about the benefits, and we're going to discuss policy options there, and it seems that from the representative of Google, they feel like they're providing a lot of revenue.

Well, I will say that when a user goes to search results page, it consumes our content there. Google monetizes it. The publishers don't. When they click through to the publisher's actual site, as Google said, they offer tools where publishers can monetize through advertising. Now, the advertising market is also controlled by Google, so they get a large portion of that revenue as well, but publishers ultimately only monetize their own content when users go to Google Search results page, ultimately decide to click through to the publisher's site, and then see advertising there.

All right, and I'll close my question with just this observation that part of our challenge in making good public policy are to get the facts, and so for all the participants today and beyond, we want to make good choices. So we're not trying to have an obscure space. We are talking about revenue and benefit, and the more detail we can get on that, the better.

Thank you. Senator Allen.

I'd like to just ask Mr. Gingras, and I really do appreciate you being here today. Don't you think that they ought to get at least something for--the readers usually ask--I'm a regular user of Google. I refer to that function frequently without clicking through. Isn't there a credible claim that--you may disagree on the amount--I mean, that's their bread and butter, that information, those excerpts that are being utilized by the search engine.

Actually, I don't agree with that. I think we do, Senator, provide significant value. First of all, when someone executes a search on Google, it's not clear necessarily what exactly they're looking for. Are they looking for news about the topic or are they looking for other information? So yes, they see an array of results and they might choose one or two, but not all.

In a sense, much like I made the comparison to a newsstand, you go to a newsstand, you would look at a number of titles. Maybe you would buy one, maybe you browse a few and walk away and buy none, but the truth is, we do send an immense amount of traffic, as indicated by Mr. Noble. Most publishers see roughly 30 percent of their inbound traffic coming from Google, and that has tremendous value. And I also want to clarify--

That's depressingly low given how much of a market share you guys have left for Search.

No, no. 30 percent of their inbound traffic. Actually, his objective, and I don't want to speak for my clients, but his objective is to get people to come to his site directly. So that's actually a very healthy--

But I guess my point is you're providing--your bread and butter, right, is getting a lot of eyeballs to have a credible place for people to do search to find out information about a massive range of different topics. You are turning to the high credibility sources that are represented here by our kind of blue chip news media and taking advantage of their journalism and their credibility to help the user experience, a better information-gleaming experience on Google which helps your brand, which helps your users.

I totally understand you may quibble about the amount of money that ought to be used to compensate the newspaper publishers and the journalists for the use of their material, but I am having trouble--your idea about the newsstand is so different, right? When you go to the newsstand, you're just looking at the wide range of topics that are presented to you by the newspapers.

In this case, they're using--basically you've searched their newspapers, you've searched their articles to provide a very direct and responsive piece of information in response to the user's query, and so that's the difference here. It's not just kind of a scan of the headlines. If you had like a news section with just a bunch of headlines, maybe that'd be one thing, but we're talking about you scanning all of the newspapers' information to provide a direct response to your user. It's very different than just scanning headlines at a newsstand.

Actually, I would respectfully continue to disagree. First of all, as I noted, news queries are a very tiny percent, two percent of overall queries to Google.

I didn't understand. What did you say?

News queries are a very small percentage of Google Search queries, only two percent. We do obviously analyze those sites to provide, as best we can, guidance to the user and where they can find the best information and find it from diverse sources. That's extraordinarily important to us, but I also want to clarify that we don't make any money unless a user either clicks on an ad, and they don't make money unless the user clicks and goes to their site. So if someone is just scanning the results page and walks away, we don't make any money either.

But you'll make money by being the big dog in access to the Internet with regards to Search and basic information. I mean, your market share is extraordinary. We as a society have granted you this extraordinary trust over one of the most important things that exists right now: the Internet. Sure, you may not make money from that individual search, but it's part of your business model that makes you extraordinary amounts of money.

The idea that people come to you for credible access to information and the newspaper publishers and the journalists provide a really important service as part of that broader business model. Meanwhile, they're going bankrupt and you guys have record profits. Once again, I keep coming back to the idea. I'm not quibbling about the amount of compensation which ought to be the subject of negotiation and everything else, but I'm struggling with your unwillingness to accept that there ought to be any compensation.

But indeed there is. There is in the value of the traffic and there is certainly from Google in the extensive efforts that we make in the United States and around the world to support these organizations, but I would agree with your point. We all feel that journalism is important to our societies, and by the way, the disruption of the news industry, as I pointed out, is the result of the competitive environment of the Internet, not Google.

So yes. We all as institutions, Google and many others, should be concerned about this. In fact, what I would suggest in these kinds of discussions is that we consider in support of those institutions, where does that come from? Why is it the notion that it specifically is Google or Facebook for that matter? Why isn't it a broader class of interested parties, including for instance, those who now have online marketplaces or anyone else?

You're the front door for most people to the Internet. That's why. That's why you're so important and so powerful and so lucrative.

And we provide value back for what we receive, unlike other participants in the environment.

Other questions?

I appreciate the colloquy very much. Look. These folks--as it is, they've got a major monetization problem. Just to put it all on the paywall is a broken idea--with so much--they're trying their best, but all it does ultimately is send the majority of the population to less credible sources, which quite frankly, the tech industry has continued to--less Google than others. Less Google than others, but certainly some of your colleague friends have used a set of algorithms that are not helping with the dissemination of credible information to the vast majority of the population.

I guess part of what Assembly Member Wicks is trying to do here is try to find some middle ground to address this broken business model for an industry that we know needs saving combined with the power and the money that's coming into a company like yours, and I guess I would just say, clearly your counterparts in Australia and Canada, under duress, found a way to create some sort of compensation model. Can't we do that here? A compensation model that went beyond just the traditional click-through paywall?

Well, indeed, it already exists here. As I mentioned earlier, among the many programs we've brought to the United States, this is the Google News Showcase program which is how we address the situation in Australia, and we're already doing that here. We're already supporting publishers across the United States and that effort will continue and expand. So the mechanism--

Do you disagree with the professor's numbers about--he was juxtaposing the 0.2 billion versus the zero here?

If--I would love to address that. One of the things I feel--because I've been doing this a long time and around the world--and these discussions about the importance of the future of journalism and fact-based, evidence-based reporting are extraordinarily important, which, frankly, makes it quite sad when I see some of the kinds of reports and analyses done. First of all, the report that was cited there was not done by Columbia University. It was done by a contracted consultant in Switzerland.

It was a professor from Columbia who was a coauthor of a draft working paper that included that data, and that data from Switzerland includes A: a survey instrument for which the results and methodology was never released, and another analysis which was debunked by the Swiss government itself. So I think it's very important, as you indicated, if we're going to have these discussions, we be very careful about the factual basis of the information we're receiving.

I think we've tried to be very clear and we respond to governments around the world and obviously challenging environments to make sure they have the right information to us, and I think that's important we have that same information from others.

I'll respond just very quickly. I certainly didn't testify that it came from Columbia University. My exact lines said 'a new study by Columbia University's Institute for Policy Dialogue.' That is on the cover page of the study that I'm citing, and it is citing a study by Fehr, F-E-H-R, and the Fehr did a survey looking at why people went to Google Search, what they did when they were searching, how much of it was information-related, of information, how much of it was Search. It was news-related. I'd like to just answer Senator Glazer's question very quickly. We have data.

Unfortunately, we have a number of witnesses. I'll let you go. Go ahead and go--

I'm very quick. I just want to get back to Senator Glazer on the percentage you're asking about. I think we have data. The answer is the majority of the searches do not result in click-throughs, and we'll get you a survey.

That's not my question, just to be clear. That's not my question.

Oh, you're asking the percentage? I'm sorry, I thought you're asking the percentage.

Wait, wait, wait. Senator Glazer.

My question is not a percentage. My question is: of those that take advantage of it, of those who click to a news source, what are those numbers? Because that's the revenue--

We have it. We have that, and that's not--

A percentage of those who--

I can get you that too, and that's not what's being sought after here. In fact, that's the subject of the antitrust suit brought both by the DOJ and a class of publishers. They're alleging that when they are lucky enough to get that click-through, when the snippets don't steal away the eyeball, when they're lucky enough to get that click-through, it's being taxed at a super competitive rate because Google is a monopolist and Google is employing certain exclusionary tactics that cause the take rate to be too high, but that's not what we're seeking in this proceeding.

Got it. Got it. Okay. Senator Ashby, you have a question? I have some questions. Go ahead.

Okay. I'll be brief, and I really appreciate you being here too. I think that's great and very helpful and very informative for all of us, and like I said, I'm one trying to take in as much information. I don't have the answer, but I am a little bit compelled as I sit up here and think about your newspaper stand analogy. Keeps playing over and over in my head, and I keep thinking about it, but you're comparing the news groups to the buyers of the paper.

And the reality is the person who owned a small bookstore or--don't really have newsstands anymore--but a small bookstore, let's say, that sold newspapers and some periodicals and things and the type of information that they would get when they Google, generally enter into some type of agreement with those publications to be able to sell those entities from their shop. Otherwise, they would just be an intermediary.

In fact, even the little newspaper boy like my dad used to be would get paid to deliver that newspaper, and so I think at the heart of Senator Allen's question was, even if it's a much smaller amount, doesn't the newsstand guy deserve to--you're the newsstand guy--doesn't he have to pay Time Magazine to be able to sell Time Magazine from his stand?

He makes the investment on the front end and then gets the profit from selling. So I'm honestly just trying to take it all in, but your own analogy would assume that the newsstand received all of the news for free, and they don't. They have to enter into agreements with the New York Times or the whoever to be able to sell that information.

But it's actually the reverse, right? The publisher is actually paying the newsstand. In fact, in France, for instance, it's actually a dictated 23 percent of the cost of the publication as it's sold, right? So the newspaper can sell it directly, say for two dollars, but the newsstand is going to be giving the publisher a notable percentage of that.

I think that was the case back in the day when, say, for example, Sacramento Bee might put a vending machine out in front of your business, but now I know that not to be true, but that people do pay. They enter into an agreement to pay to be able to sell the product that they have, and maybe I'm thinking a little broader than newspapers.

But it's standard at any store. You might buy it at a wholesale price, but obviously the seller in that case, the publisher, is literally giving the newsstand a piece of that revenue for the benefit of the newsstand selling that product, and such, the money is going to the newsstand.

Thank you.

All right. A couple other questions. One of you testified--I think Mr. Kressin--that Google is 95 percent of the market share. Did I hear that correct?

I don't think that was my testimony, but with the numbers that I've seen, for example, that came out in the Google Search trial, put their search market share at around 90 percent, north of 90 percent.

And what was it ten years ago? Do you know?

About the same.

How about 20 years ago?

About 20 years ago would be 2003. I think that time would have been different, but certainly over the last 15 years at least, Google has had persistent, durable market share more than 90 percent.

So it's 90 percent then. Does Meta occupy the other ten percent?

No, Meta doesn't compete with Google in the search space. Instead, Google--or Meta has dominant products in the social media space. Google's primary competitors in the search space today would be Bing. Microsoft Bing. Microsoft search engine. If you haven't heard of it, unfortunately, you're probably not the only one.

Okay. My expression probably reveals how dumb you think we are. All right. So, if we as legislators--we craft a solution that says, what we're going to do is we're going to require the platform basically to pay the publishers a certain amount of money.

Either we say we designate a certain amount of money or we craft a mechanism, arbitration, whatever it may be, and the platform says, 'you know what, it's not worth it for us. Not worth it for us, so we're just not going to participate.' Maybe--let me just ask each of you what happens then? What happens in terms of our goal with respect to the dissemination of credible information? So if Google pulls out, Mr. Singer, Professor Singer, what happens?

Well, it would be an unfortunate outcome, but I think that if the arbitrator or if you--if it's dictated in the statute--get the number right, Google will have--

I'm not talking about the statute, no.

Oh. Either one.

What I'm talking about is just broadly, I think we're going to craft policy, and if we craft a policy that Google believes is too onerous and they pull out, what happens to newspaper publications or other credible sources of media?

Well, I think they would be hurt. Newspapers would be hurt, Google would be hurt, but newspapers would be hurt as well because newspapers are dependent on Google for the traffic generation--

Mr. Kressin, what do you think happens?

I agree that newspapers would hurt. I would fight the hype a little bit. Google would be damaging itself enormously if it decided to stop using newspaper content. The issue is that today, all the value that's generated by that content goes straight to Google and not to the publishers at all. So they would be cutting off their nose despite their own face to do that.

According to Mr. Gingras, that's not true that very little of the revenue comes from publishing credible journalism, and I suppose the marketplace will make that determination. The marketplace will make--that if we craft something that's particularly onerous, and Google says we think that we don't benefit from this and they pull out, then as I understand it, now in terms of President Pearce, what happens in your world?

Could mean layoffs, and I'm going to say something really controversial here, but since I'm the union, I don't think that government officials and policymakers like you should respond to corporate threats in deciding what's good public policy for our democracy. NewsGuild also represents a lot of Canadian journalists and there, the context different. Google and Meta threatened to pull out of the market. Same sort of threat, same sort of possible economic damage by publishers, but I have to say, like, this whole debate looks different here in America because these are American companies, but when you look at--sorry. Just do your thing.

I hear what you're saying. We only have facts, and I'm not an expert, so I only have the information that's provided to me, and I have to make a decision based on the information that is provided to me, and I'm not a publisher nor do I have a platform, so if we get it wrong, I'm just trying to figure out what the consequences are. I'm not going to ask you, sir, but I will ask Mr. Noble.

If Google turned off news, as it were, we would certainly have to layoff journalists. I think we'd find it very difficult to survive. What would certainly be the case--our ability to launch in new places like Richmond--and California has 75 cities of over 100,000 people. The vast majority of those cities do not have good local news, and so the ability to go to new places would be deeply, deeply, deeply harmed.

Thank you. All right. I'll give you 15 seconds.

We have no desire--we have no desire to stop including news in Search. The situation in Canada was a difficult one, and we have been working very closely in Canada. I specifically work very closely in Canada, and for almost two years had advised them of the unworkability of the legislation that we're proposing, the unworkability of a link tax, the unacceptability of financial demands that were far exceeded the logic of our own business, and thus, recently, we seem to have come to a good outcome in Canada.

Not final. The regulations haven't been issued, but as a result of those discussions, the solution that we have come up with is one: there is no link tax; is one where we will be contributing 72 million dollars to the Canadian news industry, but unfortunately, the nature of that process had unintended, unfortunate consequences, right? Meta is no longer including news in its product.

Thank you, sir. All right.

Thank you.

So we're going to turn the next panel, but I know it's inconceivable to Californians, but sometimes we get things wrong. I've been around long enough to experience the energy crisis in the early 2000s and other times when we've gotten things wrong, so we want to do the best we can to get it right. So, all right. Next panel, please. Thank you. State of News and Reporting Today.

First up, Mr. Argentieri. Mr. Argentieri, I'd ask you to approach the podium. And then we have Ms. Wilson, Mr. Gillitt, Ms. Diaz asghanazi Mr. Carmona and Ms. Schauffenberg.

Thank you, Mr. Chairman and Committee Members, for giving me the opportunity to speak today. I'm Chris Argentieri. I'm the President and Chief Operating Officer of the Los Angeles Times. So at a time when our nation and state are so divided, and when democracies around the globe are facing dire consequences that are imperiling their ability to function, the press is absolutely in crisis. You've heard some of the statistics earlier. According to Northwestern study, we're losing two and a half newspapers per week in the United States. More importantly, we've lost two thirds of working journalists over the past couple of decades following the pandemic. Both of those statistics we can expect to accelerate these trends have been visited absolutely on California. Professor Singer talked about some of that earlier. And given the economics of news organizations such as my own, the Los Angeles Times, California faces the very real risk of the entire state effectively becoming a news desert, a reality that already exists for one fifth of the nation's citizens. So many would argue that this is just the ebb and flow of capitalism and that we should let these legacy businesses die off, or management in these companies has been so poor, we've done this to ourselves. Too many of these newspapers are owned by vulture capitalists that have bled them dry, and all of these theories not only misrepresent, but certainly oversimplify the facts. I'm sure there's some truth to each of these premises, but they're outdated tropes that don't begin to address the problem. The first thing I think we can all agree on, or we wouldn't be here today, is the important service this industry provides. For much of the country's history, the world has looked at the US as a bastion of a functioning democracy, as evidenced largely through an independent, free and diverse press. But we've fallen behind other nations who are addressing a key contributor to demise the woes of the news industry, and that is the market imbalance that exists between the news companies themselves and the large digital platforms. We're here today looking for the great State of California to once again, as it has many times in its history, take a leadership position in the United States. We're asking that the digital platforms be required to compensate news companies for the content they produce. We've fallen behind other democracies of the world in supporting journalism. You've heard some already. But Australia, Canada, the European Union have taken various steps to bolster news gathering operations and address the harm caused by Google and Meta, cornering the digital advertising markets. The news media bargaining code in Australia led to significant number of journalists being retained at publications both big and small, and all sorts of agreements between publishers and the platforms that would not have existed without the introduction of legislation. The Los Angeles Times employs more journalists than any news organization west of Washington DC. We have one of the most diverse newsrooms of any organization in the country. We have a leadership team in our newsroom that is majority female and majority people of color. We have one of the most longstanding fellowship programs giving opportunities to young and less experienced journalists of color. We have one of the Berkeley local fellows working with us as well. We have as large of an audience as we've ever had at any time in the heyday of the print business. This year we were awarded two more Pulitzer Prizes. One for breaking news related to the Los Angeles City Council and another for photography which brought to light the plight of an unhoused mother. This marked the fifth year in a row we've been awarded a Pulitzer Prize and secured our place as the winner of more breaking news Pulitzers than any news organization in the country. We produced a daily local television show and special programs that have not been nominated and won multiple Emmys. We've produced some of the largest and most critically acclaimed podcast, narrative podcasts since the beginning of the history of the medium. The list goes on and on. And I don't say all this to tout the wonders of the LA Times. I do believe in the wonders of the LA Times. That's not the point. It's instead to make the point that we can achieve all the success cross platform, do all the things that we're supposed to be doing as an organization. We're still unable to achieve anywhere near a sustainable business. We continue to lose money, we're burning cash at an unsustainable rate. And as we sit here today, Los Angeles, California and the American West are at the risk of losing a great news organization because we have no way of knowing how long we can survive. What we can definitively say is that it won't be long without significant changes and there are things that can be done to address the crisis cannot be done without legislation being a part of it. Critical contributor to our economic woes grossly inequitable market position news organizations have compared to the large digital platforms. Just to understand the difference in market dynamics, just consider that Google earns enough advertising revenue to pay for the cost of our newsroom in less than 3 hours. The annual cost of our newsroom. Google's revenue for a month or two would cover the costs of all working journalists in California. And I raise this not because I begrudge their success, quite the contrary. It's success like this of California companies that I think we should celebrate. I mention these statistics because they're relevant. Large digital platforms like Google and Meta use our content to generate billions of dollars in revenue and do not compensate us for it. The size of the companies makes it impossible for us or anyone in our industry for that matter. To have a seat at the table to resolve this issue through normal business channels. Google's vertical integration of the digital ad marketplace, which is subject to action by nearly all 50 states, including the United States Department of Justice, and their amassing of the world's consumer data, combined with its scale, make it laughable to think they have any incentive to negotiate. When publishers started making their content available for search years ago, there was a value exchange. Mr. Gingris referred to it. It's a bit outdated. However, publishers made content available on Google search engines. People would enter a search, Google would return results, and in cases where the results included a news article, people would click and be sent to the publisher's site. The publisher would then have the opportunity to monetize through advertising or self subscriptions. Over time, Google has leveraged news content to advance the accumulation of consumer data. And as technology has advanced, they have created a walled garden. They have organized the world's data, which is not an overstatement, in such a way that when somebody enters a search term, there's often no reason to leave Google. As Brandon illustrated earlier, many times the answer to the query comes at the top of the page in a full paragraph of text, images, a chart, a list eliminating the need to go to a publisher site. The majority of search queries don't leave Google, which has eliminated the value exchange. An example of this would be if you were to enter into Google words along the lines of what was the Anaheim corruption scandal about? Someone which somebody may do to learn more about the issue that transpired last year that the Chairman referred to earlier, involving the former mayor of Anaheim. The user would see results that would start with a summarized paragraph from a story from one of the news organizations that reported on it, most likely the Voice of OC. You would see a paragraph explaining what the issue was about. And again, let's remember you asked what was the Anaheim corruption scandal about? Summarized paragraph telling you exactly what it was about. You scroll down the page, the user would see question boxes that would include things like, what is the issue in Anaheim? And if the user hits one of those, dropdowns again. Another summary of a news story, this time from the Los Angeles Times, would come up explaining the key points of the issue. Scrolling down further, you would see videos, mostly from Google-owned YouTube, yet originating the content itself originating with news organizations with more on the scandal. And only when you scroll all the way down the page would the user find original reporting from the LA Times, the Voice of OC, or the Orange County Register and other news organizations in Southern California. And even when people leave Google's walled garden or they come to us directly, Google gets a piece of virtually all that revenue. Google controls the entire digital advertising technology stack they earn from virtually every dollar of digital advertising we sell. Some 70% of digital ad revenues go to two dominant platforms like Google and Meta.

I'm gonna have to ask you to summarize here.

Okay? Well, look, I mean, in a state where some of the most valuable and innovative intellectual property is created, I just ask very simply does anybody think it's okay for a corporation to use somebody's product that takes time, resources and money to create, particularly one as important to society as this one, to generate billions of dollars and not pay for it? I'll leave you with that.

All right, Ms. Regina Brown Wilson.

Somebody's glasses. No, there's glasses up here. So I just don't know, I might need them, actually. Anyway, good afternoon, Chair, Umberg, and Committee Members. I'm Regina Brown Wilson, Executive Director of California Black Media, and I'm going to read my statement because I want to make sure I stay within my time frame. So, CBM is an advocacy organization working to protect the sovereignty of over 30 print, digital, radio, and streaming African American owned news outlets in our great State of California. I have been at the helm for the past 12 years and I'm a proud HBCU graduate. I have worked for my own family's black owned newspaper, and I've also had the honor of being a Gubernatorial appointee under two governors. First, I want to acknowledge the pioneering spirit of the self representation of truth that was captured nearly 200 years ago. We wish to plead our own cause. Too long have others spoken for us, and too long has the public been deceived by misrepresentations and things which concern us dearly. These profound words were printed in the Freedom Journal, the first African American owned newspaper in 1827. It stands as a testament and a commitment to black media owners who continue to wade through these challenging, changing media landscape, that we must continue to plead our own cause for inclusion and our fair share of resources as we honor the historical foundations laid by those who came before us. It's equally important to recognize the pioneers of today's ethnic media landscape. I pay tribute to Sandy Close, who is a partner who is the Director of Ethnic Media Service and a partner to California Black Media who serve hundreds of in language and minority other communities of color as an advocacy organization as well. I also want to pay tribute to Hardy and Cheryl Brown, co founders of California Black Media, all of the esteemed and all of our esteemed California African American news publishers who are here today and maybe watching online. That also inspire me to advocate for their future and for their businesses to thrive. So throughout our history of incredible turmoil and unspeakable hardships, as well as victorious momentous joy, black news media have played a vital role in the health, healing, livelihood, survival and safety of our community. Here in California and around the United States. We have served as a conscience, counselor, convener and campaigner. The work we've done to fight injustice, promote civic engagement, encourage responsible citizenship and create economic opportunity for the people. For our people has made us the most trusted, reliable source of information for black Americans everywhere. As our nation faced racial reckoning following the George Floyd protest in 2020, numerous mainstream media news publishers around the country apologized for their role they played in stoking racial violence, hardening negative stereotypes among black Americans, and turning up a blind eye sometimes on stories of injustice. The black press has existed as a counternarrative to those damaging portrayals of our communities that have over time, been imprinted into the national consciousness. Journalist, educator and civil rights advocate Ida B. Wells once said that people must know before they can act, and there is no educator like the press. Black media's news reporting fills critical gaps overlooked by mainstream coverage, promoting democratic participation and informed engagement among African Americans. It also provides context for communities that is not a monolithic. The digital age has brought forth major transformations in journalism. We can all be glad we can publish news faster, use multimedia to enrich our stories telling, and provide remote access to information for black Californians and communities who become more dispersed and disconnected due to numerous factors, including the high cost of living in housing. But the digital age has also redirected ad revenue from local newspapers to digital giants like Google, which further exacerbate the financial challenges faced by local news media organizations. This trend has not only diminished local news availability, but has also led to joblessness in journalism sector, severely crushing the foundation of robust local reporting and holding our government institutions accountable. Something that wasn't said earlier is that the digital age has also led to national laws like Section 230 of the 1996 Communication Decency Act. While aimed at fostering online freedom, some laws have inadvertently tilted the scale in favor of large tech companies over smaller news organizations and and their broad legal immunities provide the online platforms often are able to undermine the ability of local news outlets to compete, further hindering our survival in the digital age. So the digital age has brought about an easier ability to spread information, threatening the strength of our democracy and ability to build consensus on issues that divide and affect all of us. Sensational TikTok reels, I'm sure that you guys may have seen, can create believable information rooted in bias and falsehood also compete for the attention of our audiences. The pandemic exposed our digital divide most evident among most vulnerable Members of our community the elderly, the differently abled and people at the lowest end of our socionomic spectrum. This digital divide prevents a large segment of our communities from accessing information that may be critical to their lives. In this disorderly and involving media landscape, the challenges for black and ethnic media can overwhelm even the savviest business owner. As traditional newsrooms face financial strains with layoffs and shrinking coverage, black and ethnic media have been consistently been compelled to do more with far fewer resources. However, black and ethnic media, while underinvested in, have been working in these same conditions for a very long time. Our ingenuity and trust among our community is what allows us to continue publishing weekly, producing events like the First Ladies High Tea that's here in Los Angeles, and also The Taste of Soul, the largest one day street festival that I will add, I think hit about 500,000 people. No incidents at all, that was produced by the Los Angeles Sentinel. We've even celebrated the 60 years in Senator Ashby's district with the Sacramento Observer and their long commitment to telling the stories of that community in Sacramento. As I observed two emerging challenges. The first is that solutions to preserve news in digital age needs to be tailored to the needs of different news entities, because we're not all the same. And the second is to ensure the needs of ethnic media outlets are addressed. Equitably. So, as we discuss our legislative endeavors, it's crucial to recognize that we must solve problems without creating unintended consequences. We must design policies that my mom likes to say a lot with the equity baked in and not just sprinkled on top. And we must realize that there's not just one solution to Fund journalism. Let me be clear. The revenue requirements and mode of operations for national and global media conglomerates are different from the revenue requirements and operations of familyowned, communityowned newspapers and media companies. We all want to report on important issues, create jobs, and generate wealth by doing what is our historical legacy compels us to do. But the tools we do it may look different. As we navigate the digital age, our focus remains rooted in the black and ethnic journalism, emphasizing the challenges faced by journalists and the media outlets. Today, local and ethnic news outlets, including California Black media, must play a pivotal role in upholding accountable journalism, reflecting the concerns and voices of various communities across our state. So, in conclusion, it is imperative that we address the financial challenges faced by black and ethnic news outlets. We must also include their perspective and experiences. And I'm committed in partnering with the Legislature and all stakeholders to make sure that all media thrives in this digital age. Thank you.

Thank you. Ms. Brown Wilson, you were exactly at eight minutes, an example for all here present. All right, thank you. All right, Mr. Gillitt.

Good afternoon. Thank you, Chair, Umberg, Senators and Assembly Member Wicks, for the chance to speak today on a topic that is so vital to us and the community we serve. It's an honor to be here today to tell you about our experience as a hyper local, nonprofit news site. My name is Adam Gillitt and I am the founder, President and publisher of the Alameda Post. We cover the City of Alameda only. We're still young. December 15th will mark our second anniversary. Paradoxically, Alameda is a small town located in the middle of a big city metropolitan area. Our population is about 78,000, while the Bay Area is home to 7 and 3 quarter million people. In other states, a City of our size would be a major city. Instead, we're the smallest of our neighbors. Our city has two parts the main island of Alameda and Bay Farm Island, which, despite its name, is not an island. However, Alameda as a community is an island due to our geography and our history. But no freeways or major state roads pass through our city. Alameda is a destination or a place you chance upon, not somewhere you stop on your way somewhere else. When it comes to finding local news that affects the residents and business owners of the city, choices are slim. Despite being next to Oakland and San Francisco and Berkeley, our city's issues and interests are unique. Coverage of Alameda by media outside the city often focuses on mawkish and incendiary clickbait, not on everyday concerns that matter to the community. For decades, the city got local news from a series of print newspapers that got acquired and folded into larger chains. Only one weekly newspaper remains in Alameda, but its local coverage has dwindled. Most of its content comes from other cities around the East Bay. It doesn't have its own website, and the print version is available primarily to those who have a driveway they can deliver it to. Alameda also had an independent weekly newspaper for over 20 years. Well, they just published their last edition on Thursday and they have ended all of their operations. COVID hit them hard. They stopped home delivery, which lost a great deal of their circulation, paired back staff, and cut coverage while printing costs skyrocketed, and now they're gone. It became with two diminished weekly papers and few other reliable options, Alameda was in danger of becoming a news desert. This city might not be considered an underserved or underrepresented community, but a local newspaper is a vital conduit for information, whether in print or online. I started researching what it would take to start a new local newspaper. I had consulted with some friends who had decades of newspaper publishing experience and convinced them to join our Nascent board while planning the budget. It was obvious that the cost of a printing and distributing a weekly paper would be far out of our reach. And news consumers are no longer willing to wait to find out what happened last week. They want to know what's happening now. Just about everyone has access to a digital device that can get on the internet a phone, a tablet, a computer, laptop, et cetera. Digital media allows for an immediacy that print can never provide. Plus, the advantages of being online are clear. Multimedia offers much deeper illustrations. No worrying about cutting articles to fit available column inches. Being online allows for real time updates, and readers don't have to wait for a paper to be delivered. They can consume content on any device, at any location. Yes, there are some going to miss holding a newspaper, seeing their name or face in print, having a physical keepsake, but at this point, digital publishing is the best option. So at the end of 2021, alamedapost.com launched to the public. We provide daily local coverage not available anywhere else. Most local topics hold little interest for those living outside Alameda, so being a source for unbiased news and information for Alameda is a huge responsibility. And as of this week, Alameda Post is the only local newsroom covering our city. Although we're a hyper local small town news site, we embrace the strategy of distributing our content everywhere news is available online. We use our strength as a digital platform to meet our readers where they look for their news to keep them informed. We don't use obstacles like Paywalls to block access to our content. Alameda Post articles are available daily in Apple News and in Google News, as well as in aggregator, sites and apps. Every week we send out an email roundup of the week's news to thousands of subscribers. We produce the city's only weekly news podcast, a 10 minute digest every Friday morning. We optimize our content to make it more discoverable in search, and we rely on social media. Every story published to our website gets posted to our accounts on a half dozen social media platforms. The combined reach we have on these platforms exceeds the traffic we see to our website. We depend on the ability of our readers to find and post and share our news articles to help get our stories out even further on social media. Our staff is made up of journalists with decades of experience in reporting, writing, editing and publishing, as well as newer voices and some in between. We all recognize the importance of a well informed community and have made the commitment to serve the needs of Alamedans, even if it means making sacrifices to do so. Those of us behind the Alameda Post are contractors and freelancers or like me, volunteers. Our dedicated reporters and staff produce journalism on a limited budget and still manage to produce news articles every day. As we endeavor to grow, we continue to appeal to benefactors and apply for grants and newsroom fellows. For now, the resources to Fund our first full time employee are still out of our reach. But our newsroom is not an outlier. This is the State of Local News in many small communities, and half of Californians live in communities of 100,000 people or less. Fundraising for nonprofit news is a major challenge, but the buy in from our readers has been encouraging. We chose to be a nonprofit organization because we understood the importance of being an independent service to the community. But we are operating on a shoestring budget. We don't have unlimited growth potential. We will most likely never have an audience larger than 100,000 people, and we're not going to make a profit off reporting the news. Advertising dollars are limited in a City of our size and shrinking by the day. We're trying to establish a sustainable newsroom that people can rely upon for accurate, unbiased information about our city. In the age of twisted facts, unreliable sources, and outright lies, Alameda deserves news that it can trust. Residents need to know what City Council and boards are considering or what they've decided and how it will affect them. They want to learn about our rich history, read reviews, share opinions, and celebrate their neighbor's accomplishments. Our readers are interested in scouts who donate food to the Alameda Food Bank. They want a chance to say goodbye to a revered local artist. And they want to know when the lighted yacht parade is going to take place on the estuary. Last year, we held the only in person forums for candidates running for mayor and City Council. We recorded the videos, indexed them, and posted them to YouTube for those who couldn't attend in person. 2024 is another election year, and we're strongly committed to informing Alamedans about local issues and candidates on the ballot. This is local journalism. It's not always Woodward and Bernstein, but it matters a lot to the people who live in our city. Being a small newsroom doesn't mean our standards are any lower, nor our attention to detail any less exacting. Digital publishing allows us to produce news coverage that's as urgent or necessary as any statewide or national publication. But we need reliable resources to continue publishing. Local news needs investment and committed funding to ensure that the needs of smaller communities will continue to be served. When 2000 residents read one of our articles, that means a significant portion of Alameda learns about a local issue that would otherwise go unreported. But those same 2000 impressions on social media sites are a drop in the bucket compared to the millions generated by clickbait from publishers with greater reach. Getting more clicks and impressions does not accurately correlate to the value of content to smaller communities. There are better ways to allocate revenue big tech companies gain by advertising against other publishers content. We suggest taxing advertising revenue to create a public fund that would support publications based on need and value to the communities they serve, with guaranteed minimum payments instead of based on the number of clicks and impressions they receive. And we encourage creating tax credits for newsroom payrolls as well as for small business advertisers. These solutions would provide real funding for local news and support for smaller communities. Journalism in the digital age is equally as important and fraught with peril as it was in the print era. Local news is in crisis. People always want to know what happened and how it affects them. The steady extinction of local news media has not quenched that thirst. Small communities need local news sources like The Alameda Post that they can truly rely upon, or the vacuum will be filled by those with less civic minded intentions. Digital publishing and unrestricted access to digital content are essential to providing reliable, trustworthy journalism to all communities, not just the City of Alameda. I urge you to join us to support and foster the growth of local news throughout California. Please prevent out of state publishers and the largest platforms from gaining a financial windfall at the disadvantage of the smallest newsrooms. Instead, we encourage you to create solutions that will Fund local news throughout the state. Gillett. Yes.

Gillett. Thank you, Mr. Gillett. Thank you very much. All right, next up.

Good afternoon, Chairman and Members of the Committee. My name is Martha Diaz Aszkenazy, and I am the publisher of the San Fernando Valley Sun El Seoul newspaper, a free, community, bilingual weekly newspaper that circulates in the San Fernando Valley and has been doing so since 1904. So it's been around for a long time. Witnessed the birth of the San Fernando Valley. I am also the treasurer of the National Newspaper Association, I'm a board Member of the California News Publishers Association, and I'm a Member of the Latino Media Collaborative. I purchased the paper 20 years ago, and in that time covered countless important news and really have wrapped around this model that this is a mission driven type of endeavor. You have to love what you do, and you have to respect that it is a living kind of organism that I have inherited for now and that I'm the caretaker to compete. We've done what people have said we should do. We created a website, I think, which looks pretty good, and we get some traffic, but, I mean, it's probably 25,000 people, but that's not enough to make money. We have Facebook, and yes, Meta shut something down because we used to get all kinds of traffic before, and I don't understand why. Some stories get a ton of visibility and others don't. If you want to get any customer service, you write to somebody and you hope they get back to you. So as a little guy in this big ecosystem, I kind of don't stand a chance. I need some help. I'm doing the work that needs to be done. But I can't understand why somebody tells me, zero, you got to do impressions. Impressions are the thing to go, because everybody makes money on that. So we don't write for clicks, never will. But we get the impressions. The money's not there. I make money off of display ads if I didn't print my paper. And if you haven't seen a printed paper in a long time, they do exist. Here it is, everybody. All right? I brought two issues, and I brought some for everybody. Okay? So, I mean, we are here, and we are really important in our communities. But again, on Facebook, we used to make money, and then they invited me to a bonus program, which bonus means absolutely at their discretion. So I'm all in, said, okay, I'm going to do the bonus program. And what happens? I think I made $192 in one month. Then I made another 200 another month, and then I made close to 300, and then they shut me down. I don't know why. I can't ask them why, but I'm no longer in the program, so maybe I did something wrong. My staff has written all kinds of stories about a lot of different issues, and they are mighty, and they are so courageous. They cover all the news that come our way during a news cycle. And that's tough, because that means that my small and mighty staff has to cover all kinds of beats, and that's not something that other larger newspapers have to do. And we are holding the line. We are covering our community. If not for our paper, the northeast San Fernando valley stories would go unwritten and untold. You would not know that perhaps in our community during the pandemic, we were the epicenter for deaths in the nation. That was big. The community that we concentrate in, which is the northeast valley, has been deemed at risk by the State of California. So I think you all know what that means as well. So we're there to tell the stories day in and day out of what happens. And just recently, we had national ugliness come to the City of San Fernando. Pickle, the drag queen, was going to read to children in a public library, and she was denied because a group of people came in from outside the community and shut us down. They didn't let her read, and they were people with records. I was doxed. I didn't even know what docs meant until I got doxed by a proud boy. I didn't know I was facing down a proud boy until later. And so these people came in to change the narrative that this community is anti LGBT, gay, and they didn't LGBTQ, and they did not want pickle to be there. But that's not true. It wasn't them. Because of our coverage in a subsequent meeting at the City Council, the other side of people came and shut them down. And then I know we're doing our job when I go to the panaderia, and if you don't know what panaderia means, it's a Mexican bakery. And the lady there says, hey, can I ask you a question? And I said, yes. She says, those people, they weren't from our community, were they that you reported on? I said, no, they aren't. She says, because I didn't recognize any one of them. So I know that you're doing the right thing. So to me, that's validation that I'm doing the right thing, that I'm bringing the news to the community. But I can't do that without money, okay? My staff needs to get paid. I have three reporters and one from the fellowship from Berkeley. Thank you very much. Much appreciated. I get some grants. I have gotten some grants also from Google and meta. In fairness, during the pandemic, and they came with no strings. It's great. $5,000 here, $5,000 there. It really did help. Recently, I was invited to join an organization because I was told that if I joined, I would get $20,000 from Google. Recently, that same organization voted to oppose any legislation that came their way, and I thought, well, I can't promote that, because I think there's some money left there. So I am, like I said, at the mercy of you all to help me out. I am a trusted messenger. People look to us for coverage. We're boots on the ground. People recognize me and my staff when we're out there, and they write to us, and they tell us, how about covering this, covering that. If I'm not there, if our paper is not there, I think this community's very important stories would go untold. So thank you for what you do. I don't have a lot of answers. I have a lot of questions, and I need a lot of help. So thank you very much.

Thank you. Ms. Diaz. Ashazi, I actually know how to operate the item you hold up, you held up for some of our younger Members. You may want to illustrate. All right, I'm going to exercise the chair's prerogative, and I'm going to call the next witness out of order. I'm going to ask Ms. Schauffenberg to testify now. And the reason being is that Senator Glazer thank you very much, Senator Glazer for traveling down here has to leave, and he is the author of the fellowship program that I think we're going to discuss here in just a second. So thank you.

I'm Christa Scharfenberg, Project Director for the California Local News Fellowship program at Berkeley Journalism. Thank you for inviting me to speak. Today, local news continues to fight for its life. As referenced in the last panel, Northwestern University's 2023 State of Local News report maps news deserts in 204 counties across the country and identifies hundreds more at risk. Like the nation, California's local news ecosystem is fragile. As you've been hearing today, the same report reveals that four of our state's 58 counties have no news outlet, but another 11 have just one. And it's all going in the wrong direction. Unlike much of the country, California is testing out a promising new model to support local news, one that could be a solid first step for skeptics of public financing of journalism. The California Local News Fellowship, based at the UC Berkeley Graduate School of Journalism, launched a year ago with $25 million in state funding. It was spearheaded by Senator Glacier. Thank you very much. We're all grateful. The fellowship aims to directly meet information needs in communities across the state and to support the next generation of journalists as they launch their careers. Current funding covers three cohorts of up to 40 journalists, for a total of 120 fellows to work in local newsrooms for two years each. The University offers full time salaries and benefits, along with extensive training, mentoring, and support. To guide the fellows. To lead the program and help select the cohort, we built an advisory board of 17 leaders from newsrooms and journalism education programs across the state. This September, we sent the first cohort out into the field. Our partner newsrooms include ethnic media outlets, newspapers, nonprofit digital sites, public radio stations, and two newsrooms that train young people to report alongside professional journalists. Many of our advisory board Members and partner newsrooms are here today, including four fifths of this panel. The Fellows are all early career journalists. They generally mirror the racial and ethnic demographics of our state. Nearly all of them attended public universities in California for their undergraduate and or graduate degrees. Many are the first in their families to have attended college. Most are in their 20 s and 30 s. But a few Fellows have spent decades in other fields and are now switching careers. In our application, we ask Partner Newsrooms to identify the Fellows reporting beats or coverage areas. The only restriction we place is that the Fellows must be focused on local public affairs reporting, the kind of journalism that provides citizens and voters with the information they need to effectively participate in civic life. The fellows are covering city councils in Silicon Valley and San Diego, environmental and labor issues in the Inland Empire, disaster preparedness in the San Francisco Bay Area, marginalized communities in Arcada and Orange County. The ending the American diaspora in San Jose, racial disparities in Sacramento neighborhoods, and farmworker communities in Gilroy and Half Moon Bay. In just a few months since the first cohort launched, the fellows have written and produced hundreds of stories reporting on a proposed new jail in Santa Cruz, violations of state and federal health and safety standards at the now-bankrupt Madeira Community Hospital, the race to control vast lithium stores under the Salton Sea in Imperial Valley, and disparities in public parks investment across neighborhoods in San Diego. Many of the fellows move to new cities and towns for this program. They're keenly focused on accurately representing and reaching the people they're there to serve. At our September orientation, the number one hope the Fellows expressed was that they would be able to, as the Fellow who's at Martha's Outlet said, "portray the people in the way they deserve to be portrayed." The Fellows are a source of deep hope and inspiration at a time when trust in journalism is at an all-time low. Selection of the next cohort is underway now, so by this time next year, we'll have approximately 80 Fellows working in 80 outlets around the state. But how will we know the program is making a difference? This month, we're launching a formal evaluation to track our impact on the Fellows in Newsrooms, but most importantly, on the communities where the Fellows are serving. Are information needs being better met? Are there signs of increased civic participation? Are there specific impacts we can point to that are a direct result of the Fellows reporting? We'll be answering all of those questions and plan to share our findings as we learn more to ensure the program is fulfilling its promise to Californians. So it's still early days. The Fellows have been in their newsrooms for just three months, but I wanted to share a few reflections that we've had so far. First, the journalism sector's comfort with public funding options, I think is increasing concern about editorial integrity and Independence has long fueled resistance to government funding of news in this country. But when I set out last year to speak with news outlets across the state, I was deeply surprised by the degree to which this publicly funded program was embraced. And I think there's two main reasons for that. The first is that people seem to trust a public University journalism program to provide a firewall between the funding source and the reporting process. But second, as you've heard today, newsrooms are being gutted, and this program is aimed directly where the need is greatest at paying for full time on the ground local reporters. The second thing we've noticed is that all newsrooms are struggling to maintain their local reporting ranks. We're working with a broad range of outlets, from one to two person shops to large papers serving major metro areas. All of them are facing the same extreme financial and human resource pressures. Around the time our program launched this fall, two of the newspapers we're working with were undergoing or managing the aftermath of major layoffs. One public radio station was and continues to face an ongoing, very public financial crisis. And some of our smaller partner newsrooms in some of our smaller partner newsrooms, the local news fellow is the first full time reporter they've had in years. Every outlet, whether they're corporate owned, nonprofit or family run, is facing the same core challenge which the fellowship program seeks to address of maintaining enough reporting capacity to fulfill their core mission. Finally, we've really seen the ways that locally run newsrooms understand their community's information needs best. Where national or regional news organizations often swoop in to report on only the most sensational or controversial stories and leave before the true impact on a community unfolds. Local newsrooms know what stories matter most to their residents, and they stay on them over time. This is true for community and ethnic media outlets that were founded to serve audiences often overlooked by mainstream media, but it's also true for the larger mainstream outlets. Most are deploying the fellows from our program to reach audiences that they haven't traditionally served. The fellowship program provides resources to expand and deepen coverage, to take on new reporting beats, and to cover previously ignored communities. So there's no one size fits all solution to the crisis facing the industry, as we've heard today. That said, the fellowship model is gaining traction beyond California and appears to be a promising way to test the role of public financing in shoring up local news. With the right guardrails in place, concerns about editorial Independence can be assuaged, I think, just as the influence of corporate advertisers has been managed in newsrooms for decades. Inspired by our project, Washington State and New Mexico funded similar programs this year, and reporting fellowships are under consideration in other states as well. Our hope is that as policymakers, news leaders and citizens begin to see the journalistic fruits of these efforts to invigorate local news, there will be a growing desire to develop a range of public policy measures that address the news crisis from a variety of angles. So, as Senator Glazer has said, there's no built in constituency for democracy or for journalism. It's up to those of us who care to explore and test all possible business model inputs in order to ensure a thriving news ecosystem. And we hope the California Local News Fellowship is a meaningful start to that.

Thank you, Ms. Scharfenberg. All right, so I'm going to again, exercise the chair's prerogative. We're going to do things a little differently here. I'm going to turn to Senator Glazer. Then after Senator Glazer, I'm going to ask for Assemblymember Wicks to provide public comment. And my apologies. Thank you for your patience, Mr. Karma. So. Senator Glazer.

Thank you, chair. Umberg, I just want to say a couple of brief things. One, to the Director of this program, Director Scharfenberg, thank you for your leadership. Thank you to Dean Arnan from the Berkeley Journalism School for her leadership. And of course, the journalism schools throughout California have been partners of yours and your advisory board. And I think the point that you made earlier, it deserves to be reinforced. No government involvement in the choices that you've made in the newsrooms you've selected, that these fellows are out there really making a big difference. And I'm so excited about the program, and I know it's part of the solution. There's a lot that goes into us trying to figure out what we're going to do going forward. But I know at the heart of it for me is what this program is doing civic journalism on the ground, in communities, providing the eyes and ears and Independence that our democracy needs and requires. And so as we work together on that and I'm excited about working with Assembly Member Wicks, chair Umberg and others, that for me, this is the heart of it. Stay focused on this. This is what we need to support, and there's lots of ways to figure it out and do it, but we have to do it. Thank you.

Thank you, Senator. Thank you for your leadership in this space. All right, so here's what we're going to do. Now I'm going to ask Assembly Member Wicks, who's here to provide public comment, thank you. And I would do this even if you weren't newly appointed Chair of Assembly Appropriations. Maybe. I don't know. But I don't know since I don't.

I appreciate that. It was fun to sit in the jury box and sit sort of in judgment of everyone during this whole thing. First time I've ever been in a jury box. First of all, I want to thank the chair for this conversation. I know these things aren't easy to do. We're all busy during interim. So I just really deeply appreciate it. And I know in our conversations as we were discussing these topics, we ultimately held a Bill that's in this space. And the conversation was, well, let's keep the conversation going publicly because this is so important for all the reasons that have been discussed. I think the one thing I'm optimistic about is there's general agreement that something's not working here with regard to our publishers and our news medias and our outlets and that we have to do something. I also want to thank Senator Glazer for your work in this space. There are not a lot of legislators who actually are legislating in this and prioritizing it from a budget point of view. So thank you for that and obviously Senator Ashby and Senator Allen for being here today. You are some of the very thoughtful legislators. And so I implore you all to work in partnership with me and others on trying to find the right solution. And I don't come to this trying to be punitive towards tech companies. I'm not in the pocket of the publishers. I don't care about Rupert Murdoch and hedge Fund papers. What I care about is our democracy. And when we have 100 publications in the last 10 years who no longer exist, we have these bright spots of hope here. And Lance, I want to do a shout out to Berkeley side and Oakland side and New Richmond side. Those are in my district. The work that they are doing is incredible. There's also incredible work being done by the LA Times. And I think there's room and space for all of these publications to thrive. And in fact, I want them all to thrive and exist. And what I've discovered in this conversation is the fact that the media landscape is not all on the same page on this, but we have to create an environment where we have not just the big publications, but the small nonprofit publications. The ethnic media, the black media who, by the way, the ethnic media and the black media play such an important role in our communities. And in many communities, they don't trust anyone else but their local ethnic paper. And so that is very critical to have them at the table when we're having these conversations. And so I'm not going to come here with all these answers. I come here with a lot of questions, but I do believe I'm optimistic, seeing what has happened. We can learn from what has happened in Australia, we can learn from what has happened in Canada and what our federal policymakers are attempting to do to create the best public policy here in California that ensures that our newsrooms are thriving. And that is what I am committed to. And I want to work with everyone here and all the stakeholders towards that and to make sure that we're doing exactly just that. And I also want to thank Google for being here. This isn't an easy place for you all to be, and you and I have had some of these conversations stations. And I even wrote down you said you want to work together. I quoted that. And I want to work with you as well on what the solution could be. It's unfortunate Meta is not here today. I have an open door, as always with Meta and implore them to come as well, because ultimately, at the end of the day, you all have to hold people like me's feet to the fire. That is your job. And we're not seeing that at the local level right now. And I get a lot of my Bill ideas from things that I read in your publications. I did a Bill this year, which you were part of, Mr. Umberg, trying to end the proliferation of child sex, sexual abuse material on our social media companies. I read about that in the paper, and that's why I got involved, because families needed solutions. And so who uncovered that is reporters. Reporters are the one doing this work that drive the ideas that I and many of us work on. So I appreciate you going out of order with public comment, and I look forward to working with you all, everyone here, towards landing this plane.

All right. Well, thank you, Assembly Member Wicks. Thanks for your leadership in this space. Now the very patient, Mr. Carmona. zero, I'm sorry. Let me ask Senator Ashby. I know that I'm grateful for our colleagues who have come from Northern California this important hearing, and I know they've got to catch a plane. So Senator Ashby,

I'm so sorry. I'm LA traffic. Right. Or else I could stay a little bit longer. I'm so sorry. But I did want to just say before I rush off and the Assemblywoman and I catch some flights and Senator Glazer are back up to Northern California, that I am deeply enriched by the dialogue today from all of you. It's really helpful. And my team is back in Sacramento watching the live stream. They'll continue to watch this and take good notes for me and fill me in on what I miss while I'm in transit. But thank you to you, Senator Umberg, and Senator Allen and for everyone who took the time to be here today, and particularly the panelists. And to the three ladies who spoke on the panel. Now, I know there's one more coming. I'm always counting how many women are in the room on those panels. So thank you for choosing to be here today. I appreciate you.

Thank you. Thank you so much, Senator Ashby, for coming down. All right, now, Mr. Carmona, thank you again.

Good afternoon, everyone. My name is Arturo Carmona and I'm here today in my capacity as President of the Latino Media Collaborative. I also want to thank you, Chairman Umberg, for putting this critical conversation together, as well as Assemblywoman Wicks and Senator Glazer for their leadership on this issue, as well as Senator Caballero and Durazo, who are Members of the Committee that are not here today. But they've been firmly committed to advancing a key message of mine today which is around equity in the State of California. The Latino Media Collaborative is an organization committed to advancing Latino journalism and media through advocacy, capacity building and content creation. For decades, leaders in the Latino media community have complained of not being given a fair shake of getting pennies on the dollar when state resources are distributed for communications and outreach. They complain of the lack of equity in the way our state advances its policies and communications operation. Latinos now account for 40% of California's population. California is the most diverse state in the nation. California is arguably the most nuanced state to communicate with, with a media ecosystem that's geographically complex, rural, coastal, urban suburbs layered with multilingual and multicultural dynamics that are unique. This is on top of a rapidly changing news media sector and like the sector more broadly and other communities we've heard about, Latino media and our broader media ecosystem have suffered greatly over the last two decades as a result of the Internet. Similarly to others, thriving outlets have struggled to stay afloat and now operate with thin staffs and countless others, such as Eastside Publications servicing East Los Angeles and Southeast Los Angeles have had to close their doors. I wanted to make two main points today. First, I want to speak more broadly about the urgent need to integrate equity into this conversation. As we work diligently to protect diversify funding streams and turn the tide on journalism and local news in California, equity must be at the epicenter of any solution. We cannot repeat the mistakes of the past and develop a media ecosystem that excludes communities of color, particularly Latinos in California. On this first point, we recognize that the state has taken focused measures to integrate Governor Newsom's equity platform and agenda on many other sectors, including health and education and others. Unfortunately, equity in the media and communications sector remains broken with a lack of focused statewide strategy that integrates departments, agencies and advances a coherent statewide strategy to effectively reach communities of color, particularly Latinos. Too often do we see tens or even hundreds of millions of dollars in communications and outreach efforts without a focused equity strategy. Most of the time, decision making power is delegated to private companies and marketing firms to decide what communication values and principles to advance for our state. Too often do we see fragmented Department by Department communication strategies to engage in communities with little statewide coordination, cohesive training and basic standards so that agencies fully understand the complexities of effectively communicating in this very complex media ecosystem. This is why the Latino Media Collaborative is advancing policy through a two year Bill to ensure that ethnic and community media has a role to play in the delivery of California's public information campaigns to our communities. While we've seen progress, government agencies continue to underutilize the state's rich Latino and ethnic media, as well as community media, which has hurt the state's ability to reach California's diverse and hard to reach populations. Since 2021, California has been working to track the advertising and outreach spending by state government agencies, identifying the communities at which those messages are targeted. Unfortunately, those figures show that despite Latinos accounting for a much larger State of the population, less than 10% of outreach dollars are spent in Latino media that focus on our communities. Other jurisdictions, like New York, Chicago and others, are taking leadership to address this same exclusion and under resourcing of ethnic and community media by committing 50% of their advertising outreach budgets accordingly. The legislation that we're seeking to advance creates an ethnic and community media program within government to help maximize and use ethnic and community media in carrying the state's advertising and outreach messages. My second major point focuses on the main topic of today's conversation, and we believe that the legislation that Ms. Wicks is looking to advance is very well intended, that it seeks to support the idea of fairly resourcing media outlets for the content that they create. We think that's fair, and we think it moves the needle forward, but we think that it also gets one major thing very wrong. It would largely leave out Latino media outlets and those who need it the most. The data shows it, and we believe that any solution needs to have equity baked into these solutions. We believe that any equity solution that sets aside or redistributes funding for media outlets needs to create an equity set aside of at least 33% to Fund economic relief for ethnic and community media that are left out of this legislation or this policy solution or conversation. We believe that this could be accomplished in different ways to ensure that Latino ethnic and community outlets play a robust role in the solution to inform California. There's been different solutions put on the table, including minimums for smaller and regional outlets that we think need to be strongly considered. We believe that including a centralized process to collect, procure and distribute this equity set aside to media outlets most in need, particularly ethnic and community media, is a must. These are outlets that are in the process of transitioning into the digital media ecosystem, often with lower digital traffic, with building up their capacity to be able to master this new platform. Our organization has been investing significant time to build their capacity, but they're not there yet. I think the data shows that the outlets that we represent will benefit in a minuscule way. So we believe that the collection of this equity set aside must follow a progressive model so that the vast majority of the set aside and these funds that are generated must be generated from top performing platforms that account for at least 50% of California's traffic. We hope that these recommendations can be integrated into this proposal and. The bottom line. Similarly to other speakers, any program created to help California journalism should distribute any support broadly and make sure that it reaches the ethnic and community media who are most vulnerable and most important to the communities that depend on objective and accurate information. Thank you very much for your time.

Thank you. Mr. Carmona. Let me follow on to your point. I have a question, and the question may be best answered in writing later on, and I appreciate you being here. The question is, as we're crafting a solution, what the differences are between major media in terms of the impact of digital platforms. In other words, is the impact different on ethnic media versus local media? Is the impact different on the major publishers? We're trying to, I believe, create some sort of support that is fair to ethnic media, to local media, to major media outlet lists that are credible. So let me give you just a quick shot, and then, contrary to conventional wisdom, many of us can read in the Legislature, and many of us do read. I know Senator Allen can read, so let me start with you, Mr. Carmona.

Digital age has impacted smaller.

But is it different between local and ethnic media? Do we need to be cognizant? Okay, if you come to the podium, do we need to be cognizant of any differences in impacts between, for example, local media and ethnic media?

I think Martha would be also a very good person to answer this. But based on my interaction with ethnic media in particular, the impact has been significant, particularly in all kinds of revenue streams that ethnic media, Latino media in particular, have received, whether it's obituaries, or classifieds, or all kinds of local advertising, that they've been impacted by the shrinking of that revenue. They've been forced to, I think, in a healthy way, pursue different alternatives, different funding streams, advance their digital skills and move in that direction.

But there's no question that they've been impacted.

Maybe I'll defer to later on, but okay, go ahead, Mrs. Brown Wilson.

Well, I want to just say that and I'll speak for Black media, and I think I can speak to, Sandy will tell me if I can speak for ethnic media as a whole. But we had over 300 ethnic media, 200 ethnic media, and then government agencies August 31 for the first Ethnic Media Awards and one day conference. I will tell you that.

Most of. The resistance, even in most communities around being digital is you can't make the revenue, right, off of digital. So the way I believe most, and I can speak for the Black media, the way they see it and are still surviving, are looking at still continuing with their print, maybe smaller amounts of that print. They're digital and events.

And so when you're crafting something, it is different because the audience universe size, if you just go off of clicks or you just go off of impressions, it's not going to be the same because the universe is smaller, but still very very important. So I think that it's just a side conversation. We are working on some research ourselves, our researcher, to bring us here, and she's going to be working with us to be able to look at what some of those solutions could look like. And we're going to be happy to share those with the Committee.

Thank you. And maybe we'll get responses later on. But what I'm looking for is, for example, are the impacts greater or different on ethnic media versus local media? So just by way of example, I represent or historically represent a Vietnamese community that has an incredibly vibrant print and electronic media. I don't know quite why that ethnic media market is so vibrant versus other ethnic media markets. So go ahead.

I think as a small local outlet, our problem is that we don't have a lot of bodies to do a lot of different things. So if we need to take a new project on and we don't have that skill set to do it, it's very difficult for us to manage it. So if we have more revenues, we can do a lot of things.

So right now, I think it's limited access to folks that can actually do some of this work that's coming our way, like some of the grants that come with all kinds of strings attached. Now you have to have this whole new revenue stream, a whole new way of doing business. We can't do it. We can't launch that. But as far as I have the same problems I'm sure that the L.A. Times has and maybe even worse, because we're still challenged by that.

I just wonder whether you have different problems than others, but that's okay.

And can I say one one thing really quick? Because they're talking about being fact-based. The person actually can actually answer this question for you is Sandy Close. I mean, she works with if you look at the Vietnamese population, they already know the publication that is there to be able to answer that question for you. So I just want to make sure you know that.

Got it. Thank you. All right. Thank you very much. I really appreciate your participation. This is a conversation that will continue well beyond today. So let's now turn to the next panel. And this is lived experience in other venues in the international arena. So international measures. Is it Radsch? Radsch. All right. Ms. Radsch, then Mr. Michale, then Thorin Kozlowski, then Ryan Adams. Thank you very much. Okay, ma'am, the floor is yours. Thank you.

All right. Thank you so much for the invitation to appear before the Committee today. My name is Courtney Radsch. And having spent the past 20 years as a journalist, scholar and practitioner, writing, speaking and working on tech policy and news media sustainability around the world, I am grateful to have the opportunity to bring my expertise to this Informational hearing on issues facing digital news media, especially as a 6th generation Californian who got my start in journalism at Berkeley's Daily Cal Paper

As the Director of the Center for Journalism and Liberty at Open Markets Institute and a fellow here at the Institute for Technology Law and Policy. I researched the way that technology policy impacts information ecosystems and co-authored the report that you have on your desks.

Over my two decades of experience in the media sector and academia, I have never received any funding from a tech platform for my research, and Open Markets Institute does not accept any funding from technology companies, making us a rare independent voice on technology policy and journalism. To begin, the crisis facing journalism is not a problem of the news industry's own making or of the Internet, and it affects all news outlets, not only digital ones.

It is a result of legal regulatory frameworks that privilege tech platforms over the press and give the former unfettered power to set the rules. As you design policies to support news, please keep in mind big tech platforms, specifically Google and Meta, but likely soon, several AI companies play an integral and inescapable role throughout the entire news value chain.

They set publishing protocols which publishers must adapt to and which can be changed on a whim with significant costs to publishers as well as repercussions for news visibility and monetization. They own and control the tools and services journalists use to do their jobs, including email, web hosting, cloud services, messaging, archiving, the cloud services especially important to investigative journalism, and with AI rising in importance in journalism as well as cybersecurity services,

They determine the rules for reaching audiences and content moderation while also controlling the most popular online spaces those audiences use, meaning that they shape the business models, the editorial strategies, production and dissemination throughout the sector. Big tech monopolizes the entire digital advertising ecosystem, from ad servers, to ad exchanges, to auctions as well as the app stores where news outlets sell their subscriptions.

Publishers face a coerced choice set when it comes to platforms that is compounded by a lack of interoperability and data portability between platforms. Asking journalism to opt-out of them is not realistic or feasible, nor are proposals to wall off news content and prevent it from being scraped or used in large language models and AI products. Removing quality information from LLMs and information retrieval services will only exacerbate myths and disinformation, reinforce generative AI harms like hallucinations and undermine a host of downstream applications.

The news crisis is not because of the Internet. Craigslist did not destroy and co-opt the business model platform monopolies did. Despite the fact that a handful of U.S. tech monopolies are infrastructural to news media around the world, our laws and regulations have not caught up with this reality. And these tech platforms enjoy unprecedented exemptions from U.S. Libel law and anti-discrimination requirements and privacy constraints, which has an impact on media around the world.

Nor do they pay their fair share of taxes in the countries where they are headquartered, much less where they operate. And perhaps most consequentially for news media globally, platforms claim unparalleled rights to use copyright protected material like journalism without permission or compensation. However, policymakers are waking up to this fact around the world and the fact that these tech monopolies form the backbone of the modern media system.

Especially with the generative AI revolution, this could further exacerbate the crisis facing journalism and democracy, and they are exploring ways to make big tech pay for the news they use. Australia's pioneering 2021 News Media, and Digital Platforms Mandatory Bargaining Code required designated platforms to negotiate with publishers by establishing an arbitration process.

Although no platform has been designated yet, the mere existence of this legislation has resulted in Google and Meta paying more than $200 million to Australian news media, including small, local and specialized media and leading to the creation of hundreds of new journalism jobs with job ads rising 46%. A dozen countries and all EU Member states are actively exploring or enacting policies to address fair compensation according to CJL's Technology and Media Fair Compensation Frameworks Global Tracker.

These have primarily focused on trying to rebalance the playing field between big tech platforms and news organizations by exempting publishers from antitrust restrictions on collective bargaining, requiring relevant platforms to come to the negotiating table and thus creating a forum for negotiations or granting explicit ancillary copyrights to publishers. For example, Canada's recently passed Online News Act allows publishers to collectively bargain with large digital platforms. Meta, of course, has censored Canadian news rather than comply. Others are going to talk about Canada in depth.

Brazil's copyright law reform seeks to tackle power imbalances between various digital platforms and artists and creators, including news publishers. The EU Copyright Directive created a right for news publishers to receive remuneration from tech companies for scraping and reusing their content while leaving the specifics open to national interpretation. So what we've seen in Denmark, for example, as they seek to transpose the directive, is that virtually every news publisher has joined a new collective.

So they've managed to kind of get over their differences to collectively negotiate what this is going to look like for their country and consider that AI companies and large language models as well as big tech platforms should be required to pay.

In India, reforms are expected to include a news media bargaining framework rescind overly broad intermediary liability exemptions for platform intermediaries, which, by the way, we export Section 230 through our trade laws, which is very problematic and address copyright protected uses of news content to train LLMs. New Zealand's Fair Digital News Bargaining Bill creates a safe harbor and compels platforms to negotiate. South Africa and Taiwan are both in initial exploratory phases of similar frameworks.

Meanwhile, however, Google and Meta have tried to buy off news media around the world and head off regulation through direct assistance, grants, fellowships, inclusion in special news products, as you heard Richard Gringas testify, and by scaring smaller publishers with the idea that they'll lose out on any crumbs of funding that they may have received from the platforms, for example, Google News Initiative, or be cut off of their products entirely.

These paltry sums not only undervalue news, but also make journalism beholden to the benevolence of the tech platforms that they cover. Collective bargaining and a regulatory framework that creates a forum for negotiations to take place increases the power of local and smaller news outlets. Currently, there is no forum where tech platforms are compelled to negotiate with all outlets, not just the largest ones, other than in Australia.

Creating a forum for negotiations is a critical yet often overlooked aspect of this type of legislation, especially since publishers could also leverage to negotiate for use of their data and content in AI systems. Furthermore, the fact that large news organizations benefit is not a bad thing. They employ thousands of people, they have foreign correspondence, they generate the most traffic. But indeed, one of the biggest challenges these policies face comes from small publishers who feel like they are losing out.

And they are right if we acquiesce to how big tech has narrowed the discussion to focus on referral traffic amid vast informational asymmetries. Unfortunately, many publishers have bought into this narrow conception of value that equates value with traffic metrics and excludes generative AI companies that use news content to build and improve their models and services. This myopic focus disregards the way that journalism improves the platform for all users, even if they don't click through on a headline. Recall Brandon's earlier testimony showing screenshots from Google search.

You heard about this study from Switzerland. It rightly hypothesized that people might engage in different types of behavior if their search results didn't include information from news publishers. Researchers in Switzerland found that the value of news is far, far higher than policymakers or publishers think it is on Google search, which accounts for the majority of Google's $280,000,000,000 annual revenue. Click through rates, by the way, I was researching that question, is around 30% maximum and often down to 1% on Facebook.

U.S. economists, accounting for additional value created through complementary transactions between tech platforms and publishers, meaning they're both benefiting, found that Google, if you split that, owes US. Publishers more than $10 billion a year. Meta should owe 7% of its ad revenue, or just under $2 billion a year. Furthermore, a narrow concept of value ignores the public interest served by journalism and the tax that big tech imposes on the public.

When local businesses can't survive, when civic life is reduced to engagement metrics and corruption proliferates because there is no watchdog holding those in power to account. Establishing value and building trust between publishers and with the public requires transparency. Effective policy interventions must include transparency and data access requirements that enable publishers to ascertain value and thus develop more informed bargaining positions, as well as some level of transparency for the deals themselves.

The global principles on fair compensation lay out 10 principles, including transparency, accountability and collectivity, that should guide these policy interventions. They were adopted in South Africa in July by media practitioners and experts from around the world.

Thank you, Ms. Radsch.

Thank you.

If you would wrap it up. Thank you.

All right. So, just to conclude, journalism is a particularly valuable source of training data for large language models making up half of the top 10 sites. I'm happy to go into that in more detail, but want to leave you with the idea that this is not fair use. It wasn't fair when the tech titans used it in the social media era. It's not facing fair now. Thank you.

Okay, next. Mr. Michale.

Thank you. Good afternoon, Chair Umberg, Members of the Committee. Thank you for welcoming me today for the opportunity to speak. My name is Jonathan Mchale and I serve as Vice President of the CCIA, the Computer and Communications Industry Association which represents internet technology and communication firms. CCIA was founded in 1972 to promote open markets, open networks in the computer and telecommunications industry, goals that we continue to champion today.

No one, least of all CCIA, questions the importance of quality journalism to the civic life of a country and to the maintenance of a vibrant democracy. Nor is there disagreement about how difficult it has been for news to develop a viable business model in the face of technological change. But what kind of government intervention will support a sustainable market environment for all participants?

I would like to offer some observations on approaches several other countries have taken and are planning to take with parallels to what you are considering in California. Interventions in foreign markets have taken different forms creation in Europe of a pseudo intellectual property right beyond existing copyright intended to facilitate news businesses' ability to bargain to negotiate licenses for their content and Australia and Canada introduction of a mandatory bargaining code governing the commercial relationship between news businesses and specific internet companies.

What unites these two approaches is a controversial theory that fragments of text or even just links shared online should generate a claim of compensation. Not only does this upend longstanding international copyright law, but it also points a dagger at the very nature of the Internet as an information sharing ecosystem. These approaches are essentially a private tax in support of a business model under stress.

There's no certainty that either approach will provide a long term solution and much evidence that they will harm the quality of news in the digital ecosystem that they need to survive. First the European approach, for over a decade, Europe has been experimenting with providing news intellectual property rights for news publishers, focusing on news aggregation services. This started with voluntary approach to licensing in Germany in 2013, a mandatory compulsory license in Spain in 2014, and now in 2019, an EU-wide law being implemented among member states.

Germany's effort in 2013 failed. Companies offering news aggregation services simply pulled out of the market, where publishers demanded compensation for mere links or short extracts. Large publishers behind the effort reportedly suffered a 41% decline in traffic, and they eventually agreed to issue a gratis license to be able to continue to gain indexing. The takeaway was clear. Indexing and carrying of extracts of news were much more valuable than the publishers would admit, and if forcing compensation resulted in firms leaving the market, the publishers were worse off.

Spain's effort had more dire consequences. Unlike Germany, it made compensation mandatory even if the publishers did not ask for it. It was essentially a compulsory license for news links for what is often called a link tax. Smaller sites most dependent on referral traffic opposed this law. The main target of the law concluded that it could not justify maintaining a news aggregation site and shut it down at the end of 2014, before the law took effect. Other sites followed suit, and the results were predictable.

Their traffic to news websites overall dropped more than 6%. For smaller publishers, who were even more dependent on referral traffic, it dropped 12%. Dropped 14% sorry. One concerning takeaway from Spain was evidence that it led to an increased fragmentation of readership where consumers clustering around narrower sources of news. As one study noted, this undermines one of the most important conditions of democracy, which is access to a common and rich informational space.

In 2019, the EU passed a new copyright directive, including an EU-wide right for publishers. Unlike Spain, this right excluded acts of hyperlinking and very short extracts of press publication. In France, the first member to implement this, it created uncertainty about the scope of what short extracts meant. And so, due to concerns about liability, online suppliers required publishers to opt in if they wanted their content indexed.

But publishers convinced French authorities to make indexing mandatory and issued massive fines for allegedly not bargaining in good faith with publishers who were seeking compensation. In the end, commercial deals were struck, but the end result was an imposition of a heavy-handed must-carry, must-pay regime that is arguably inconsistent with both EU law and France's international obligations. Australia, Australia's approach to market involvement began in 2017 with the Digital Platforms Inquiry.

It focused on not on copyright or related rights, but broader dynamics in the online market, including advertising. As in other markets, newspapers in Australia have long struggled to build a sustainable business model. In fact, on a per capita basis, circulation in Australia has declined since the 1950s, so over 50 years, and the classified advertising the mainstay of this business plunged 90% in the last decade. The government candidly admitted in 2019 that this was the heart of the problem.

It asserted that there was no suitable alternative to advertising-based model of news production. So what did they do? Their solution was a government-sanctioned mechanism of revenue extraction, targeting the one set of companies who were developing new advertising markets. This started as a voluntary code to facilitate bargaining between news businesses and digital intermediaries, but was suddenly abandoned in 2020 in favor of legislation of a mandatory code. It was highly controversial law.

Critics included the smaller publishers, the inventor of the World Wide Web, the United States Government, the Australia Taxpayers Alliance and the former Prime Minister Kevin Rudd. Even the Financial Times opposed this legislation. Opponents saw a punitive and highly prescriptive intervention in the market on behalf of a select group of companies. The government's justification was that certain online companies qualified as, quote, unavoidable trading partners, and their alleged bargaining advantage justified government intervention.

The market analysis has been refuted by the OECD, where a recent review of the issue noted that bargaining power imbalances are not uncommon in competitive markets, and this fell short of the typical competition trigger for intervention, which is substantial market power in a credibly defined market. One fundamental question in this context was is there a bargain to be had?

The notion that one should be forced to bargain in the first place for payments for snippets or links that the news companies allow to be indexed or postings that news businesses themselves initiate defies logic. Australia's approach willfully ignored strong evidence that the relationship between news businesses and digital service suppliers is complementary rather than competitive. Companies have documented hundreds of millions of dollars of benefits voluntarily channeled to news sites, the very targets of the legislation.

As one small news publisher opposing the Bill explained, it relied on the two targeted companies for 75% of its readership. During the debate, several compromises were introduced, and the final product was touted as a market-oriented solution. But it was nothing of the sort. The specter of arbitration designed to assign compensation with no grounding in economic reality meant that pressure to conclude deals lacking sound commercial bases would be the norm.

In the end, two targets of legislation did conclude deals with a number of news businesses and thus so far have avoided designation. Predictably, up to 90% of the payments went to the traditional media businesses, with the lion's share going to News Corps, the biggest advocate of intervention, and a company that controlled 50% of newspaper revenues. But these deals will soon expire, and at least one of the targets of the law has cast serious doubt on the long term effectiveness.

It called them an untidy short term and unsustainable compromise. Fundamental questions remain unresolved whether deals will continue, whether if designated targets will remain in the market, how the bargaining code would work if actually implemented, and whether if designated targets would remain in the market. In short, Australia's experiment remains just that, an experiment has yet to prove its worth. As for meeting the goals of saving news, the initial data are not encouraging.

News production initially increased in urban areas, but plummeted in non metropolitan areas by 2023, It declined even in urban areas and in nonurban areas, even at higher rates. In short, it is unlikely that forced payments are a silver bullet for the deep structural issues surrounding the economics of news production. On the other hand, the negative effects in Australia are significant, with increased media concentration likely I'd like to turn to Canada quickly.

Canada's Online News Act passed June 23 and will come into effect on December 19 in just two weeks. Modeled on Australia's law, it is a bargaining code on steroids. It dramatically expanded the base of potential beneficiaries. And while there's a mechanism for platforms to avoid designation discretion in granting the exclusion from mandatory bargaining is much more circumscribed. Implementing.

Mr. Mchale, Im gonna ask you to wrap it up. Although I'm gonna ask you a question about Canada.

Okay, one final point. Canada has announced the compromise approach for avoiding being designated under the law, but the policy appears to do more harm than thank you very much. Thank you.

All right, Mr. Klosowski. From the Electronic Frontier Foundation. Thank you, sir.

Yeah. Good afternoon, Senators. My name is Thorin Klosowski. I'm a security and privacy activist at the Electronic Frontier Foundation. I am also a former journalist and have worked for both legacy media and new media companies. EFF is a nonprofit that works to ensure that technology supports freedom, justice, and innovation for all the people of the world. On behalf of our nearly 35,000 active donors, including thousands here in California, thank you for allowing me to speak here today.

I'm here to speak specifically to some of the quirks we've seen in Australia's news Media Bargaining Code, which was passed in 2021. The elevator pitch, as you just heard for this law, is relatively straightforward. Facebook and Google should pay media organizations for sending them web traffic. Before we get into it, there's some background here that I find useful in understanding how some of the decisions were made. First off, Australia has no constitutional First Amendment protections like we do here in the US.

This is important to consider when we think about what protections media companies have and how that may impact the deals media companies make with the tech companies. In order to qualify as a news source, media companies must complete a registration with the Australian Communications and Media Authority, which sets out a series of four tests around content, professional standards, revenue, and location.

The government defining what journalism is is already a potential issue, but regardless of whether a news organization is deemed eligible, there's no requirement that tech platforms negotiate with them. This De facto puts the digital platforms in charge of defining what journalism is. If an organization and a tech platform can't come to a deal, the news organization could appeal to the Australian treasurer. This would set forth a process where the tech platform and the news organization would submit offers, then an arbitrator would pick one of those.

No one has gone to arbitration in Australia yet, so we don't actually know how that's going to work. Likewise, no platforms have been specified under the code, which makes this unenforceable against Meta and Google, essentially. Currently, the NMBC is only acting as a threat, not as an enforceable policy. Regardless, public records indicate Meta and Google brokered deals totaling around 200 million in Australian currency across 34 separate three to five year deals.

And in its first review, the Australian Federal Treasury found that Meta only made deals with 13 media companies, whereas Google secured 23 deal. Since it was passed in 2021, we still don't know much about the financial specifics of deals brokered because the Australian News media bargaining code lacks an early transparency requirement that would have forced information about how tech giants, price, use and allocate ad space to be made public was struck from the final version and not replaced with anything meaningful.

This sort of transparency could have provided regulators and publishers of all sizes significant information to help level the playing field. Instead, the code has resulted in several completely secret side deals with publishers. A report from the Judith Neilson Institute indicates that the agreements signed very wildly and disfavor smaller publications. For example, News Corp. is believed to have landed a deal worth 70 million per year, and market sources tagged to the Guardian penning a deal with Google for 5 million per year.

Meanwhile, a consortium of 160 smaller news publishers got a much worse deal. While loaded with confidentiality requirements, research shows that one of the tech platforms will pay local newspapers roughly 31,000 to 62,000 per year, depending on their size and how many stories they generate. These contracts can also depend on how much a media organization posts in a week, and for smaller newsrooms, multiple stories a day, seven days a week is not feasible. This can lead to trivial news posts or so-called clickbait.

In a study published in Policy and Internet, Misha Ketchell, managing editor at The Conversation, a newsroom that employs around 30 people, described how its negotiations went with both Google and Facebook. Google only offered it enough money to fund one or two journalists. Facebook refused to deal with them at all. This seems to be a trend for meta in general. Ketchell also noted that while larger news organizations have been able to add more positions, they fill them by poaching staff.

He said "Even though the news Media Bargaining code is meant to help public interest journalism, one of the slightly perverse outcomes is that it is probably done more to help big established players than actually promote media diversity." Australia's News Media Bargaining Code illustrates the weakness of a proposal written without considerations, without considering the resources or needs of small independent publishers, which are often the ones working hardest to bring a diversity of voices, local coverage, and quality news for marginalized communities to light.

These newsrooms have less capacity to bargain and less leverage in the cases companies even agree to sit at the table with them. There are some other concerning trends with Australia's law that are worth noting and keeping track of. There are no rules about how a media organization spends the money it gets or even acquires it and invests it in expanding the newsroom,

The code gives media companies who've signed deals notification about the change of algorithms, which will give these media companies, which already often have resources to hire search engine optimization and social media experts, more inside knowledge, leaving out smaller media companies who cannot afford these experts to broker these deals. Even good news appears to come with a catch when deals are often around specific content types.

The Guardian noted that Google quote "wanted certain types of content and that aligned with the type of content we wanted to expand, to produce. We've seen what happens when tech platforms want certain kinds of content before, when Facebook pushed video in the US. Which turned out to have nothing to do with supporting newsrooms, but did appear to mislead advertisers."

It is still unclear if this changes how the news organizations cover Facebook and Google, but it's not difficult to imagine scenarios where the structure of these deals could cause issues with editorial Independence. To conclude here, like others have mentioned, today we believe in finding ways to support journalism. But Australia's law has shown how doing so without considering smaller publishers and alternative newsrooms can jeopardize the very type of investigative news we're trying to save.

As long as the two tech companies have the ad duopoly behind behavioral advertising, tech platforms will also have the leverage over the news industry as a whole. Worse, Australia's law has given Facebook and Google more power, since they can now choose the winners and losers of their contracts and define what journalism is. Thank you.

Thank you very much. All right, Mr. Adam. Thank you so much. I think you get the award for traveling the farthest.

Thank you. Chairman, Umberg, distinguished Senators, Assemblywoman Wicks, thank you again for the invitation and thank you for the opportunity to talk a little bit about the Online News Act, which, as many of my colleagues and other participants here today have indicated, comes into force on December 19 2023 a mere two weeks from now. So we are very literally at the very end of the very end here in Canada.

Following Australia's example, in 2021, we set upon finding a Canadian solution for the fundamental problem with the tech monopolies that we experienced as you are experiencing here in the United States. We essentially pursued five values in the creation of the Online News Act. One, news is a public good, and it is in crisis. Two, news costs money. I noticed there was another participant here from the labor union, and 90% of our journalists are unionized in Canada, and we are happy that they are unionized.

We are happy to compensate them, but it is impossible to ignore that their salaries cost money. Creating news costs money. Number three, news is essential to democracy. It is absolutely critical that we can still come together and internalize facts and agree on the truth. It is the central component of a reasonable conversation in any company from any perspective. And so we believe that news sits right in the cradle of democracy. Number four, news has value.

For too long, for over 15 years, news was essentially entered into some sort of an arrangement with tech companies whereby we trade the expertise, we trade the investigative work we do, we trade the sort of cynicism and evaluative properties of our work in exchange for more eyeballs, in exchange for more views and clicks. The reality is that proposition has not been equal, and it needs to be addressed. And the fifth value for us and it is essentially a summary of what we've heard today,

Is it's fairly clear to anybody who is participating in this conversation the status quo is not working. You would not have endless streams of companies, large, small, ethnic, in our case in Canada, indigenous, rural, remote, coming through to discuss policy options and asking government for policy solutions if the status quo was working, I had to shake my head and full transparency. The Toronto Star, we do have a Google deal, we do have a deal with Meta and we are thankful for it.

And there is incredible value that they can provide us as we move forward. But the reality is there are monetary and non-monetary values. And if the status quo was working for us at The Toronto Star or at Torstar, the parent company, we would not have to have laid off 600 of our brothers and sisters a mere couple of months ago. The reality is this industry is on the brink.

It requires, in my opinion, leaders and lawmakers to address some of these solutions, but that tech does have a role to play in the solution. And so I'm here to bring you greetings from the future. I am here to talk a little bit about the value of news because there's been a lot of discussion of it in the abstract. My colleagues here have discussed Australia behind closed doors, et cetera, et cetera.

I have brought essentially government slides to discuss how the government in the case of C 18 or the Online News Act will calculate value. And I'm hoping I'll have one of my colleagues help me load the presentation. What you will see throughout this presentation is a few things that I think are really worth underlying. Number one, tech had to be compelled to pay. There were deals struck before the legislation was introduced.

But the reality is, as my esteemed colleague here has talked about in Australia, where they are a couple of years ahead of us, we are looking at deals not being renewed in that situation. And so that was a great fear for us at Torstar, was that we have a deal.

But in two or three years, when the government turns its eyes to something else, that these tech platforms will say thank you for the temporary relationship and now we move on and move back to using your content for free.

The second, and it's a great point that a number of folks have made, I won't belabor it, but in the Online News Act, small local, ethnic and indigenous publishers will disproportionately benefit more per reporter than large companies like Torstar, like the Globe and Mail, et cetera, et cetera.

The way that the government has consistently underlined for the tech platforms and for us that small local publishers need additional support has been admirable, in my opinion, because the creation of News Deserts, as we've seen and heard here today leads to vacuums, leads to a swirl of misinformation and leads to a lot of disservice of the public utility of news for communities that are now deserts, essentially.

So I will go very quickly, I promise, as seeing as I am the last person between you all and your families. But the online public comment, okay. All right. So a brief overview is that the Online News Act creates a bargaining framework, and it incentivizes voluntary commercial agreements. The reason I underline incentivizes voluntary commercial agreements, it is because no taxpayer money changes hands. These are agreements between private tech companies and private publishers. Second, the regulatory framework provides clarity for participants.

To which platforms does the act apply? We've had a lot of conversation today about Google, well deserved, a lot of conversation about Meta, well deserved. But I'm asking, which version of Meta are we really discussing? Are we discussing Facebook? Are we discussing instagram? Or are we discussing threads, which by all accounts is a place where news could be distributed and thriving. And so while Meta, our colleagues in Canada, have, as has been indicated, shut off news in Canada, what about threads? What about instagram?

What about screenshots? And so we went to the government and asked them, what happens if a screenshot is shared as substitute to a link? $10 million fine for Meta if that's the case. So we have been very happy with the government setting up a framework that will allow participants to be clear, to have platforms be clear about their roles and obligations under the law and also for emerging platforms.

So we all had a good laugh about Microsoft earlier, no offense to anyone here who works at Microsoft, but in Canada in a few months, they will be compelled under this law. TikTok is an emerging place where news is traveling quickly, also potentially compelled under this law. I will go in the next slide here and talk about how the act is applied to these companies, to be specific about how they will evolve and grow over time and be compelled.

But it is important for us to talk about and I always shake my head when they call us legacy media. So I'll do it, I guess, a good turn and trick legacy tech versus new super cool, forward looking tech like TikTok, for example, where these emerging tech platforms are now also needing to be regulated in a way that makes up for the lessons learned and can apply lessons to the future.

So the application of the act, as per the Canadian government is $1.0 billion or more in calendar. A year of revenue operates in a search engine or social media market in Canada. And here is the key designation 20 million or more Canadian average monthly unique visitors. So they are not out to crush innovation in Canada. They are not out to crush competition to these platforms.

Essentially, they are saying if you reach market share, if you reach impactful market share, you are going to be designated under the act. And these folks have 30 calendar days to notify the CRTC, which is the Canadian regulatory body, upon meeting these criteria, at which point they are compelled to start negotiating deals with platform or with publishers. The rest of this is quite common sense to me. They have a 60 day open call process.

It is important to note that these regulations are not final, so this presentation is ever-evolving. As we saw with the recent announcement of the Google and Canada arrangement with over $100 million. Those conversations are still ongoing, but it is important to underline that compensation can include both monetary and non monetary contributions. Again, I am not anti-Google. We have benefited at the Toronto Star greatly from our partnership with Google. They have taught us a lot and have enhanced our value as a platform.

We are simply looking for what we constitute as a fair share or, as others have called, a leveling of the playing field. So here now, we're going to get super granular about the dollar amount.

Unfortunately, Mr. Adam, you're going to have to get super granular in response to my questions.

No problem, no problem. I will just say one last thing, which is that we fought hard within the content of this Bill to support local, indigenous and official language minority community newspaper businesses. And the last slide I'm showing you is we are literally at the last box. In the next two weeks, we will find out exactly how this legislation has worked out for us quite soon.

Thank you so much.

Okay.

Senator Allen.

Okay. I'm unfortunately not going to my family right now. I wish I got to run down to Venice for a keynote and traffic's bad. So I'm going to be listening to the rest of the conversation on my phone. I know that Tom will be asking some really good questions. I know there's going to be some good public comment as well. So I really do appreciate all the participation of the panelists, and it's been really fantastic. Really do appreciate it.

Thank you.

Thank you.

Senator Allen one of the worst things about being a Legislator in California, being stuck in traffic, is you want to say, somebody should do something about this. Senator Allen and then you call yourself right. There you go. So I have several questions that I'm particularly interested in the Canadian model. First, somehow I understood there was a tax credit component to whatever was done in Canada. Is that accurate?

So there is a journalism labor tax credit that is separate and independent from Online Use Act. Currently it is tax subsidy.

It does seem like that it is the government supporting, in a way, the media. And I get your point, it's not linked, but there's certainly. It's uh.

Complementary.

It is complementary, and it's not unbeknownst to participants. All right. Also, you said you had a deal with Meta. I was under the impression that Meta was no longer providing content in Canada. Is that accurate or not accurate?

It's funny how that comes out. So we struck a deal with Meta a couple of years ago. The escape clause within our deal, without being able to discuss the particulars under NDA, is essentially when a Bill like the Online News Act comes into force, they are then able to essentially nullify the deal because the Bill and the enforcement of it comes into place on December 19. They are unable, thus far to kind of withdraw. We are expecting them to do that.

But so far, we have, yes, enjoyed a deal for content licensing and other projects with both Google and Meta.

But maybe I didn't hear this. Is Meta currently providing media content, journalism content online? They're not. But you anticipate they will?

We anticipate that now that the Google Canada situation has been resolved, that Facebook or Meta has a couple of weeks to decide whether they are truly leaving the Canadian marketplace with respect to news, or that this was a negotiating tactic designed to lower the defenses of the Canadian government and subsequently terrify small publishers moving forward.

So time will tell whether it's a threat or whether this is an actual decision.

Correct. Now, there are plenty of international evidence, as our colleagues have discussed here, that they are potentially moving as a company away from news. However, my personal belief is that Canada is a very valuable marketplace to them. News has value, and therefore this could be to lower the price.

And Mr. McHale, has Google pulled out of any country?

Spain.

Spain. So Google no longer provides any journalism content in Spain?

That was for the news service, not search, but the specific news service that Google offers. They pulled out when there was a mandatory fee for every link that was provided. Spain subsequently implemented the EU wide act that I had mentioned, and they are no longer subject to a mandatory license. It is a voluntary negotiation. So based on the fact that it's a voluntary negotiation, my understanding is they've come back in.

Okay, so if I search Google and I'm looking for something that may be in a Spanish publication. I could find that today?

You would always be able to find it on search. They didn't have the dedicated Google News service, but now my understanding is that's back up in Spain.

All right, so other than Spain, any place else that Google has pulled out of?

They thought about it in Australia. They did not.

I know about Canada. How about Meta? Any place that Meta's pulled out?

They tried in Australia. That was the only other alternative. And in Canada they're currently out.

So currently only Canada is the only place that Meta is out.

Because it's the only country that has had this mandatory you must pay regime. So until you're faced with a mandatory you must pay regime, there's no incentive to leave if they are gaining value.

I see. All right. In terms of lessons learned and I realize that this is a work in progress in Canada, what lessons learned do you have for us here in California? And understand, it's different. We're one state among 50. Quite an argument for federal legislation intervention versus state-by-state intervention. But go ahead.

I would say it's appropriate not to classify all tech in the same way. As we've heard through the rest of the day, there are different ways in which tech interacts with news in different ways. So it's important, as you contemplate your Legislation, to do, that. The second is be prepared for a lot of theatrics there is a lot of working with small publishers to enhance their fear and threaten an existential sort of news-free environment. Be prepared for that. The third is be bold.

As Legislators, it is very difficult to imagine the free market essentially regulating itself in this way. And so without government intervention, the status quo remains. And the fourth, you have as Californians as the homes of these tech companies, I believe, a unique voice insofar as you employ people in California. These companies, some of them were invented in California.

And so therefore, as legislators, you know the complete origin story and I think can appropriately ensure that journalism is protected as well as tech companies are appropriately sort of thought of as positive actors.

Those are useful comments, although we don't have a monopoly on tech here in California and companies can and do move. So thank you. Okay, other lessons learned. I'm going to ask each panelist, if you were in our position, what other lessons should we learn from the international experiences? I'm going to start with Mr. Klosowski.

Sure. I think Australia really shows how important transparency would be, especially for smaller publishers in knowing whether they're getting a good deal or a terrible one.

Okay. Thank you. Mr. McHale.

One of the things that was notable in Canada and Australia is they targeted the measures to the costs of the company. And so when you do that, whether it's the number of existing journalists you have or your installed base of equipment, et cetera, you are going to benefit the legacy companies and you are going to disincentivize other folks that don't have that legacy cost structure because they won't get payments because they were keyed to a cost structure.

The other thing I think that is notable in many of these markets is it does increase media concentration.

The big companies the way these are set up in order for them to be implementable end up being the ones that get the funds and therefore you are crowding out other innovators that could have entered the market and provided a competitive alternative and a more technologically and market driven alternative rather than just perpetuating a business model that is under stress but may not be the best one going forward.

Thank you. And Mr. Adam, we just got this. I opened it up and I see the very first chapter says what does it say? It makes reference to Frenemies, best of Frenemies. So I look forward to reading it. What lessons would you suggest that we learn?

Yes, I would reiterate the idea around transparency, but also transparency into the data that is held specifically by platforms enabled to allow both policymakers and journalistic outlets to correctly assess value because right now the information asymmetries do not allow that. I think similarly, these specific interventions, policy interventions, did not take place in a vacuum. This is not a silver bullet. These policies we'll see what happens in Canada, but initially is designed based around traffic. Larger news outlets have traffic. Yes, they benefit larger news outlets.

The key point is in Australia there were like 23 other policy interventions to support journalism. In Canada, there are a host of other subsidies, tax credits, et cetera that are going to support journalism. So I know in the U.S. we have a challenge with our politics and our congressional system. But we cannot look at like we don't only get one chance, we need this to be a package. I would also say there is zero evidence that this has led to media consolidation.

And in fact, when I have spoken with publishers, including an LGBTQ publisher in Australia and like a property journal publisher, they are very happy about this. They have benefited. So I think that the evidence contradicts that. Also, I think that you need to be very careful about the manipulation and intimidation tactics that the big tech companies will convey during this process. I just testified this morning to the Canadian parliament about intimidation and subversion by big tech to evade regulation.

And one of the things that they did in Australia was during parliamentary deliberations over the bargaining code, as part of their negotiation tactics, they impeded sharing links during that time on Meta, we know that from a whistleblower and that they have pressured journalistic outlets to kill stories that are covering, for example, Anya Schiffrin and the Columbia study that we mentioned, they've killed coverage of that story in order to impede our ability to have an informed conversation.

So I would say be very careful and that as you're considering more broadly legislation beyond just this, make sure you're bringing in other representatives from tech companies, not just the big guys, so that you're really hearing from a wide variety of entities. And finally, make sure that you include generative AI crawling and use in large language models. Otherwise we're only fighting last year's battle.

You're right. And in terms of AI, that's a whole nother hearing and a whole nother kettle of fish and a whole nother set of challenges that we face in many different aspects. All right, well, let me thank all of you here for coming. I've learned a lot. I've got a lot more to learn. This is an incredibly important issue for those of us, and I think everyone in this room cares about our democracy.

And as we've seen the proliferation of misinformation and how that can impact the electorate, how that can impact our way of life, how that impact our health. And so we really want to get this right. And so we'll be endeavoring for some period of time to work on that. So I hope you'll provide us opportunity to reengage with each of you as we're on this journey. So thank you. And I'm going to turn now to public comment. So, public comment.

If you'd approach the microphone, we can line up. I think the sergeants are going to be here to assist us. If you'd identify yourself and your organization. And you have 1 minute.

My name is Cheryl Brown. I am the Chair of the California Commission on Aging. I'm speaking today because I sat through the whole hearing and nobody really looked at anyone who's in the aging space. I think it's very important that we include our older population and not exclude them in this whole conversation because they're the ones that are really hurting and they made it possible for you to be here to do all of this. Thank you.

I appreciate it. I'm only 39 years old, but I'm married to someone that's a little older. Okay, thank you.

Hi. Good afternoon. I don't represent anyone. I've been working with sustainability, Mariana Pena. I live in Temple City. I'm a local resident in California. But I have an international perspective because I've been working with Open Society, with MDIF, with international organizations that are funding independent, community, mission driven journalism all over the world. My perspective is international.

And what I would say is if we change the perspective and see that we're not here protecting news business, we're protecting people's right to know. Information, and journalism is a public good. If that's the case, then we're talking about three aspects funding, availability, and the business model. And the problem is that those three things are colluded. Right. I think that if the CGPA, which is right now in the works, let's talk about a quick win.

I think that the quick win could be both an advertising neutral tax forget about the business and the revenue, it's such a huge problem that you're not going to solve it now, but if you want to allocate on funding, the easiest way, the shortest way to help.

Thank you, ma'am. And as I said before, we actually can read, so I know that many people don't believe that, but we can. So if you submit something to us in writing, I'll read it. Okay, thank you. Thank you very much.

Hi, I'm Sandy Close. I've worked in the ethnic media sector for about 25 years, and I wanted to address the very important question you asked. What is different about ethnic media? What was great about today's hearing was that there was recognition that ethnic media is indeed a distinctive genre, a separate segment of American journalism. So long it's been I would say the biggest difference is that it is invisible, it is isolated, and it is misunderstood.

If overnight, suddenly ethnic media were to disappear, 40% of the state would kind of go silent. They'd be cut off because so much of ethnic media serves immigrant, newcomer, recently settled. The newest ethnic media outlet I know is Mongolian. 10,000 Mongol.

Thank you very much.

Living in the Bay Area.

Point is well taken. Thank you.

And so would love to follow up. It's a distinctive genre.

Thank you very much.

Okay.

My name is Julian Doe with Ethnic Media Services, and we represent nearly 300 ethnic media outlets in the state. And as my previous speakers spoken is that right now, the majority of the population in California is actually ethnic majority, and this number would only increase, and they have been instrumental in combating misinformations. So one can say that without ethnic medias that many communities of color will still be struggling with the COVID right now. So it's indispensable and thank you.

Thank you. Next, please.

Hi, I'm Yari Yancei with Media Alliance. While the California Journalism Preservation Act aims to redress these inequities and uplift community based media, we have reservations about the CJPA's ability to achieve its stated objectives. As currently structured, the CJPA benefits larger, entrenched incumbents who have greater resources at the expense of California based, community centric media outlets. It incentivizes the proliferation of clickbait content and disincensivized quality journalism. And it'll further exacerbate already dwindling local accountability journalism and further erode public trust in media.

Two aspects of the CJPA that create these problems are the broad definition of an eligible digital journalism provider and siphoning revenue from links. So we propose legislation structure that's more targeted solutions so that incentives ameliorate the issues and help reinvigorate diverse equitable and much needed independent community media outlets. Thank you.

Thank you very much. Next. But before you go, I have another question for Mr. Adam. What platforms have qualified under the act in Canada so far?

Thus far, Meta, Google, and Bing and TikTok are on the cusp.

Okay, so two have qualified, the others are on the cusp. Okay. All right, thank you. Go ahead.

Thank you, Mr. Chair. Jessica Gonzalez. I'm the co-CEO of Free Press Action. I'm also a resident of District 24. Free Press is a nonprofit, nonpartisan media advocacy organization. We're so glad that this conversation is happening and want to keep it going. We do have some concerns about the CJPA.

We had a report that we issued a couple of weeks ago, Crumbs for California, finding that CJPA would result in a windfall for big out of state broadcast TV firms, hedge fund owned media outlets, and corporate chains. Some of the very same actors who've contributed to the news and information crisis we're in today, and who've spread hate and lies to millions. So independent local and ethnic media would be on the outside looking in. We have some serious concerns about that.

We look forward to working with you all. We submitted written testimony as well. Thank you.

Thank you so much. All right.

Hi, my name is Alicia Ramirez, and I'm the founder and publisher of The Riverside Record, a nonprofit, paywall free digital news outlet serving Riverside County. Thank you for taking up this important issue and hearing our comments. My coverage most of the time is of little interest to people who do not live in the communities that I serve.

For example, I doubt if very many of you in this room care about the City of Eastvale's, fight to secure their own zip code, but for the people there who don't receive their mail in a timely manner, it's of vital importance.

As state legislators, you have a mandate to act in the best interest of people of California, and any potential legislative solution to the local news crisis must put the information needs of your constituents first, meaning that small, independent publishers like myself must have a seat at the table during the drafting process. Thank you so much for your time today.

Thank you very much.

Hi, I'm Chris Jennewein, editor and publisher of Times of San Diego. And first of all, thank you very much for holding this hearing and now, close to a four hour long period of time. We are an independent online news website that has been publishing for 10 years. We are a free access site that publishes an average of 20 articles daily and now has 600,000 readers.

And I'm speaking from the perspective of 50 years in media, first at newspapers around the country and then at digital media startups in California. Times of San Diego is an example of the new voices that have appeared in California. Thanks to the growing Internet ecosystem, without search traffic from Google, links from Facebook, and real time bidding for online advertising, we could not publish. My message for today's hearing is that it's vital to protect this ecosystem.

As the Legislature considers bills like AB 886 and similar measures, I hope nothing is done to stifle innovation. The growth of independent news publishing is good for readers, good for California, and ultimately imperative for democracy. Thank you for this forum.

All right. Thank you.

David Bolog, [inaudible] Alliance. Everything that was said today about Google is absolutely true. Google, just like Meta, in my opinion, is trash. So I don't use it. You don't have to use it. I subscribe to a dozen online media. One I pay up to $275 a year for. Why do I pay that much? Because it's valuable. They don't use Google. They don't use Meta. None of the subscription services I do use it, and they are thriving now.

L.A. Times, they gave you their story. They are media. They are legacy. They have a brand name. Anytime I see something from the L.A. Times, I'm biased because of how much bad information I've got from them in the past. So I look at them with a jaundiced eye and try to avoid them. San Fernando Sun today, they told you a biased story of what happened. They said themselves are true.

I know the majority of the people that were at the Pickles event, it was portrayed as people from outside the community. Half those people live in San Fernando. The rest, except for two, live in L.A. County. L.A. County is a public library for the whole county, and that's where it was happening at.

All right, thank you, sir.

Thank you.

Good evening, Chair Umberg, Committee Members, Staff. My name is Robert Singleton. I'm the Director of Policy and Public Affairs for Chamber of Progress, a center left technology trade association that believes in innovation or believes that innovation can help us realize a progressive vision for the future. There's been a proliferation of new hyper local and issue focused journalism initiatives, many of which wouldn't have existed without the decentralized way of sharing information that has now become the norm. So if the landscape of journalism has fundamentally changed, then so should the means of financially supporting it.

Thankfully, there are a dozen. A lot of options here, a host of case studies to learn from and a number of wonderful organizations and advocates looking to do exactly this. The coalition Rebuild Local News has proposed a series of options, from favorable tax credits to incentives for local hiring. Others have proposed legislation that would prioritize government advertising, spending for PSAs and other formal noticing to local news groups. And there have been efforts to create larger industry wide funds to support journalism.

However, we can also learn from our neighbors to the north about what may not work. The Canadian News Act, which took the form of a link tax, led to a loss in news access and sharing and laid the groundwork for platforms and news publishers to negotiate separate deals with each other.

Thank you very much. Thank you

Hello. My name is Alexandra Leal from California Common Cause. We have appreciated the conversation today. As several speakers have said, local news is a public good that is essential to a healthy, inclusive, and multiracial democracy. In order for a free press to thrive, we need a network of media policy solutions that intersect and support one another. California Common Cause has been working at the local level to test how local experimentation and innovation in local journalism policy can shape statewide efforts.

Our current effort is exploring how an equitable redistribution of San Francisco's existing city advertising spending could benefit community specific and ethnic media. There's a wide world of policy ideas that are worth exploring. Several of them have been mentioned at this hearing.

Additional ideas that could apply statewide may include replanting, which gets to the systematic issue of consolidation, with the goal of keeping news outlets independent and community based, and a news voucher program that would include residents being issued vouchers to use at qualifying news outlets of their choice. We look forward to further exploring how public policy solutions can help make our communities healthier and more informed in 2024 and beyond, especially as we enter a new digital age filled with misinformation and disinformation and an important election year. Thank you.

Hi there. My name is Matt Tanoko. I'm the founder and publisher of Los Angeles Public Press. I think, having listened to everything today, the thing that I would like to speak to the state Legislature is to do this slowly and intentionally, which is opposite of my words for people who give money to journalism where the need is immediate and funders need to be cutting the checks yesterday. For the public policy question, getting it right in a field that is so technically complicated.

Everybody here has different business models. Things are changing all of the time. It's not something that's going to be resolved in a single Legislative session. And the best thing that I can think to say is that whatever next year's Legislative session results with is to be mindful that it's a problem that is going to take everybody in this room working for the rest of our lives to resolve. That's all. Thank you. There are some sunglasses up here from somebody. Thank you.

All right, thank you very much.

Good afternoon, Senators and esteemed panel here. I hope you'll consider the unintended consequences of.

So your name is and your organization?

I'm not with any organization. My name's Nancy Hall. Yes, I hope you'll consider unintended consequences of trying to decide what is credible sources and facts. And if you can't question science, is it really science? The truth is like a lion. You don't need to defend itself. You can just set it free. Please keep that in mind. Stop making these panels of everyone's going to have the same truth and that's it. We need to be able to discuss these things. Thank you.

All right, thank you very much.

Hi, my name is Jill Hawkins, and I'm really concerned about the censorship and just controlling information coming out. I mean what is credible sources? Like, are we only allowed to watch the CDC or FDA? The FDA wanted to wait 75 years to release the safety data on the COVID vaccine and Icandecide.org I Can Decide sued them and released the safe data, and it shows that they knew before they released the vaccine that it caused heart attacks, strokes and deaths.

So anyway, I'm really concerned about our media because I handed this to some people leaving the media and they wouldn't take it. And so the media are you afraid of information? We have to have an open discussion. Thanks so much. I gave you a copy to your.

You can give it to the sergeant.

I already gave it to someone in your office. Yeah. Thank you. And if anybody else here wants a copy, I have a box of them outside. So please see me outside.

All right. Thank you.

I figured I can adjust it since I'm pretty confident the microphone doesn't have COVID and neither do I.

I'm sorry, your name?

My name, my name is Andrea Hedstrom. I represent myself and my four children and my organization called Goat Farmers for Good Government. And I'll leave you with some final reflections from Laird v. Tatum, 408 US 1 1972. Those who already walk submissively will say there is no cause for alarm. But submissiveness is not our heritage. The first Amendment was designed to allow rebellion to remain as our heritage.

The constitution was designed to keep government off the backs of people. The Bill of Rights was added to keep precincts of belief and expression of the press of political and social activities free from surveillance.

Thank you very much, ma'am.

The Bill of Rights [inaudible] and official eavesdrop.

Your time has expired. Thank you very much. So we're going to have to go ahead. If we'll turn my microphone back on with that, we're going to conclude here, let me thank some folks here. A lot of work has gone into this. Thank you, Alison Maris. The background paper is excellent. You should read it if you haven't. Thank you, Chief Counsel. Marge Estrada. Thank you to the sergeants. Thank you to the tech folks.

Thank you to all the witnesses have traveled so far to be here. Again, this is a continuing journey and we will be calling upon you. Thank you. This concludes the hearing.