Tax Online Ad Revenue to Fund Local and Independent Journalism

Originally published in the New York Daily News

The past year has been a bumpy ride for Facebook — and even worse for its users. But in 2019 we have a chance to clean up some of the mess Facebook has made by taxing the company to support local journalism.

In the spring of 2018, news broke that data firms and troll farms, including Cambridge Analytica and Russia’s Internet Research Agency, had misused Facebook data to spread misinformation and divide U.S. voters.

In November, an investigation revealed that Facebook executives had orchestrated a multi-year effort to cover up evidence of widespread abuse of their platform and enabled an anti-Semitic smear campaign against the company’s growing list of critics. And just last week, another investigation found the company allowed advertisers to target messages to people with an affinity for Holocaust perpetrators and neo-Nazi propaganda.

Despite the backlash, Facebook rode a year of nonstop scandals to record profits, reporting a net 2018 fourth-quarter income of nearly $6.9 billion, up 61% from the same period in 2017.

After every scandal, Facebook CEO and founder Mark Zuckerberg promises to fix the problem, whether that means hiring more fact-checkers or purging bad actors from its network. But if we’ve learned anything over the past year, it’s that Facebook in particular, and Silicon Valley in general, are incapable of fixing themselves.

Now government officials, the media and the broader public have awakened to social media’s vast potential for abuse — and people are clamoring to do something about it.

But what exactly should be done to rein in powerful online platforms? As much as anywhere, the platforms’ harms are felt in journalism. As social networks and search engines dominate more of the online world, the independent and local journalism that people need to participate in democracy continues to disappear from communities. Nationally, newsroom employment dropped 23% between 2008 and 2017.

On Tuesday, Free Press released a report calling for a tax on the targeted ads that are the milk and honey of companies like Facebook and Google. We believe such a tax should be used to fund the kinds of journalism that serve as an antidote to the spread of misinformation.

In 2019, Silicon Valley’s online-advertising economy is set to reach an inflection point: New eMarketer estimates show U.S. advertisers will spend more than $129 billion on digital advertising — more than the $109 billion they plan to spend on the broadcast and print advertising that once sustained traditional journalism. And just a few companies are dominating the industry.

The massive redirection of wealth to Silicon Valley has occurred at a time when journalism is in crisis. Since 2004 (the year Facebook launched), about 20% of U.S. newspapers have stopped printing, leaving nearly 200,000 newsroom employees without work and at least 900 communities without anyone covering local news.

Without a radical rethinking of new-media economics, we’re likely to see waves of newsroom layoffs continue through 2019 and beyond — further decimating the ranks of journalists whose job is to separate fact from fiction.

This calls for a small but simple and powerful redirection of money. A 2% ad tax on all online enterprises that earn more than $200 million in annual digital-ad revenues would yield more than $1.8 billion a year. This money should be put into a new and independent Public Interest Media Endowment that would hand out grants to a range of news-and-information projects, including local-news startups, investigative endeavors and civic-engagement initiatives.

Making the platforms pay follows the logic of other levies. Via a carbon tax, many countries have succeeded in making the oil industry pay to clean up toxic emissions. The United States should make online platforms pay a bit more to help clean up our civic climate, counteract the ways they undermine journalism and amplify content that’s polluting democratic discourse.

Our plan is ambitious but achievable through an act of Congress. If we want to get serious about confronting the power of corporate giants and reversing local journalism’s downward spiral, this is where to start.

— Karr is the senior director of strategy and communications at Free Press. Aaron is Free Press’ president and CEO.