In what could only be described as a Hail Mary pass, Google has agreed to cough up $250 million over five years to fund journalism and AI research in California. This deal was announced with much fanfare, and some might say a dash of self-congratulation. But before we start throwing confetti, let’s take a closer look at what’s really going on here.

The Big (and Not So Big) Picture

On the surface, this deal looks like a lifeline for local journalism. California’s newsrooms have been on life support for years, hemorrhaging jobs and revenue as the digital era reshaped the media landscape. The fund, administered by UC Berkeley’s Graduate School of Journalism, promises to inject much-needed cash into these struggling institutions. 

It helps Google paint itself as the savior of the free press while avoiding a dreaded “link tax” that could have forced the tech giant to pay publishers for linking to their content. This brings to mind California’s Journalism Preservation Act, which proposed to make Big Tech pay for news.

But here’s the kicker: $250 million over five years sounds like a lot until you consider that Google’s ad empire rakes in over $200 billion annually. To put it bluntly, this deal is a drop in the ocean for Google — a PR move dressed up as corporate responsibility.

Why It Matters: The Real Cost of Free News

For years, publishers have watched in horror as their ad revenues dried up while Google and Meta (Facebook’s parent company) turned into digital juggernauts. The relationship between tech platforms and news publishers has always been lopsided. Publishers create the content that drives traffic, but the platforms get the lion’s share of the ad dollars. This new deal doesn’t change that dynamic; it merely delays the inevitable. 

The idea of a “link tax” has been gaining traction globally, with Australia and Canada leading the charge. In those countries, Google and Meta were initially resistant, but eventually, they caved — well, sort of. In Australia, Google opted to pay selected publishers, while Meta briefly blocked news altogether before returning to the table. In Canada, Google agreed to pay $74 million annually to keep news content in its search results, while Meta decided to go the nuclear route and block news links entirely. The global push for Big Tech to pay for news mirrors what’s happening in California.

Google’s deal with the state allows the tech behemoth to avoid the more stringent regulations that would have come with the now-shelved CJPA. The CJPA would have forced Google and other tech giants to hand percentages of their ad revenue over to news publishers. Instead, we get a voluntary fund that’s easier for Google to swallow and far less beneficial for the publishers who need it most. The CJPA could have significantly shifted the balance of power, much like similar legislation in other regions.

The AI Angle: A Trojan Horse?

Then there’s the $62.5 million earmarked for AI research. Let’s not kid ourselves — this deal might seem like a bonus, but it’s worth asking whether it is really about saving journalism. Could it be more about Google bolstering its AI capabilities under the guise of public good?  While the idea of using AI to solve “real world problems” sounds noble, including AI funding in this deal is more about securing Google’s future dominance than helping the news industry.

As Google continues refining its AI-driven search features — like its Search Generative Experience — publishers are experiencing a decrease in traffic from organic search results, directly impacting their revenue. The rise of AI in search is reshaping the landscape, with AI-powered engines like Perplexity.ai offering revenue-sharing models that starkly contrast Google’s approach. 

Google’s move to include AI in this deal is less about journalism and more about maintaining its dominance in the search market. As Scott Messer recently pointed out in his analysis of Google’s latest SEO shake-ups, Google is playing a different game altogether. The company is not optimizing for sending traffic to publishers; instead, it’s focusing on maximizing its ad revenues, often at the expense of the very content creators it claims to support.

Critics, including journalists and labor unions, have called out the deal for what it really is: a backroom agreement that benefits Google far more than it does the struggling newsrooms of California. The Media Guild of the West, representing journalists in Southern California, Arizona, and Texas, was notably excluded from the negotiations, leading them to denounce the agreement as a “shakedown.” This isn’t the first time Google has been suspected of using its financial might to navigate legislative pressures.

Connecting the Dots: What Publishers Need to Know

For publishers, this deal is a double-edged sword. On one hand, any funding is better than none, especially in an industry that’s been in a death spiral for years. On the other hand, this deal sets a dangerous precedent. By allowing Google to dictate the terms of its support for journalism, California has effectively ceded control to a tech giant with little incentive to change the status quo.

Publishers should be wary of becoming too dependent on these kinds of deals. The digital landscape is shifting rapidly, and while Google’s money might keep some newsrooms afloat for now, it won’t fix the underlying issues that have led to the decline of local journalism. With AI companies like Perplexity.ai and OpenAI entering the scene with revenue-sharing models, publishers might need to start exploring these alternative sources of revenue to stay afloat — or, maybe not. The real solutions could lean more towards finding sustainable business models that don’t rely on the whims of Silicon Valley.

The Bottom Line: Google Wins Again

So, what’s the takeaway? Google has once again managed to sidestep regulation while presenting itself as a benefactor of the public good. The $250 million might help some newsrooms in the short term, but it does little to address long-term challenges. This deal is more of a Band-Aid than a cure.

As the dust settles, it’s clear that Google got the better end of this bargain. By agreeing to a voluntary fund, the tech giant has avoided the much larger financial obligations that would have come with the CJPA. Meanwhile, California’s newsrooms are left to grapple with an uncertain future, their fate still largely in the hands of the very platforms profiting from their decline. 

In the end, this deal is a stark reminder of the power imbalance between tech platforms and the news industry. Until that changes, we’re likely to see more deals like this — ones that look good on paper but ultimately fail to address the real issues at play.

The post Google’s $250 Million ‘Gift’ to California News – Is It Really a Gift or Just a Clever Tax Dodge? appeared first on AdMonsters.

Introducing Capital B, a new nonprofit newsroom founded by two mainstream editors, Akoto Ofori-Atta and Lauren Williams, who launched the pub after leaving leadership positions at The Trace and Vox. Their digital media startup is dedicated to publishing hard news, investigative journalism, and practical information written by Black journalists, for the Black community.

At a time where niche and local publications seem to be evaporating, Capital B recently launched with an impressive $9 million in philanthropic backing for its national hub and local newsroom in Atlanta. The Ford Foundation, American Journalism Project, John S. and John L. Knight Foundation, and Yellow Chair are among their largest donors, along with $95,000 received from 550 small donors.

This backing has allowed the publication to quickly expand from just two co-founders to a news team of 16. They hope to grow to 27 employees along with opening another local newsroom before the end of the year. Outside of donor funding, Capital B does have a paid membership program and paid advertising to support their local newsrooms.

A Steady Decline

Capital B boldly comes to the marketplace at a time when local journalism is climbing its steepest hill and many publications are falling to their end. Over the past 15 years, 2,100 U.S. newspapers have ceased publication, resulting in 1,800 communities without a local news outlet since the beginning of 2020. Just when you thought it could not get worse, the Coronavirus came causing 30 additional newspapers to close or merge in April and May 2020, and that domino effect is only continuing.

Ironically, this happened at a time when local coverage was and probably still would be at its peak viewership. The decline in local news options could be the reason why so many have opted out of viewing the news altogether due to a lack of connection with what’s happening right outside their door.

The Nonprofit Way

However, Capital B approached its launch methodically, steering away from becoming a for-profit publication and opting for a nonprofit revenue model diversified with philanthropic funding, donations from individuals, corporations, and members, as well as advertising and sponsorships.

This is a growing experimental trend, as more nonprofit newsrooms are popping up around the country including The Ohio Local News Initiative and Houston Local News Initiative also backed by the American Journalism Project. This approach gives local news organizations the opportunity to cover hard topics fully and unapologetically without relying so heavily on ad dollars.

It’s important to note that while these nonprofit publications are largely funded by philanthropic organizations in the beginning, it is up to each outlet to “keep the lights on” going forward with direct monetary support from the local communities they serve.

If nothing else, the nonprofit-funded local news media model is, for some, a welcomed alternative to the private equity investment option.

The Forgotten Cities & People

While organizations like American Journalism Project have made a significant promise to help end news deserts and aid local nonprofit news, it’s somewhat limited to well-known metropolitan areas. There’s a higher likelihood that publications in larger markets will have a more immediate impact which equates to minimal risk. This focus leaves out the underserved local communities (that are usually predominantly Black) who likely need a high-quality news source right in their backyard that they can trust.

Although Capital B is still in the infancy stage, its national hub could provide a localized feel for Black readers, as the narrative will be controlled by reporters and editors who can closely relate to the issues they’re covering.

We admire the tunnel vision and dedication that local news outlets have on the areas they serve and Capital B is no different. They are laser-focused on reporting the good, bad and indifferent pertaining to the Black community and that is what journalism is all about isn’t it?

The post Local Journalism: Down, But Not Out — Nonprofit Media Models Kindle Hope appeared first on AdMonsters.