Rebuild Local News Calls on Congress to Act as AI, Big Tech Squeeze Local Newsrooms

On Feb. 10, Rebuild Local News President Steven Waldman testified before the Senate Committee on Commerce, Science, and Transportation in a hearing on broadcast media ownership rules titled “We Interrupt This Program: Media Ownership in the Digital Age.”

His full written testimony below:

Thank you Chairman Cruz for inviting me, and for your salient comments in the past about the importance of local news. And thank you Senator Cantwell for your strong leadership in trying to advance public policies to help local news.

Rebuild Local News is a nonpartisan group that develops and advocates First-Amendment-friendly public policies that strengthen community news. The Rebuild Local News Coalition includes 55 publisher associations, foundations, labor unions, journalists groups and civic groups. Together they represent 3,000 newsrooms and 15,000 journalists around the country – though the views here are my own and don’t necessarily represent those of the member associations.

As you know, local news has collapsed. Approximately 3,500 newspapers in the past twenty years have disappeared, representing more than 40 percent of the total which have closed. On average, two newspapers close each week. There’s been a 75 percent drop in the number of reporters in the past 20 years. In 2002, there were about 40 reporters per 100,000 people. Now, that number is 8.2. According to the Local Journalist Index, 184 of Texas’s 254 counties, about 72 percent, fall below the already anemic national average, while 20 of Washington’s 39 counties, just over 51 percent, are in the same position.

And of course, just to underline that no place is immune, last week we learned that The Washington Post would be reducing its metro staff by 70 percent, as part of a massive cut to their newsroom. The local news crisis is spreading.

As a result of the drop in the number of reporters and outlets, many communities have little or no local reporting on government, schools, courts, or public safety. This collapse has real consequences for how communities govern, how public dollars are spent, and how residents stay informed.

There are financial impacts. Communities with less local news had lower bond ratings, higher financing costs, and higher taxes. They have more government corruption and more government waste. Communities that suffer from a loss of local news are also linked to increased regulatory violations and organizational wrongdoing.

The civic life of communities is undermined. The contraction has contributed to a significant drop in local civic knowledge and participation in the United States. Those who follow local news closely are more likely to engage in activities with civic organizations such as sports leagues, church groups or charity organizations’ civic activities. Evidence also suggests that the decline of local news is linked to higher loneliness, especially in rural communities.

The basic health of the political system declines. Declines in local news result in less knowledge about public officials and less civic knowledge, voters are less likely to have an opinion about their member of Congress, less likely to be able to name things they like or dislike about their representative. In 1966, 70 percent of voters could name their mayor. In 2016, only 40 percent of voters could. Communities with less local news have lower voting rates, and those that do regularly vote are more likely to follow local news. The members of Congress who get less coverage in the local press are less likely to appear as a witness before a congressional committee to advocate for their district.

Just as important, studies have also shown that this contraction has exacerbated polarization and the nationalization of all news and disputes. The vacuum created by the loss of local news tends to be filled by national media and social media (which fuels polarization and is more polarizing and prone to spreading inaccuracies.) In communities with less local news, voters are more likely to vote on a party line basis and have more polarized views. As Senator Moran recently said, in speaking movingly about its recently-merged local newspaper, the Plainville Times, “I saw first-hand how the newspaper supported the community and brought neighbors, friends and even strangers together. Community journalism pulls us together. National journalism has the habit of tearing us apart.”

There are multiple causes to the contraction. Some of it was self-inflicted by the news industry. As local papers were bought up by hedge funds or private equity firms based in New York, they cut reporters out in the rest of the country. Mega mergers financed with massive amounts of debt contributed, too, as news organizations used profits to pay off loans instead of investing in digital transformation or local coverage. We have even seen the rise of local newspapers that have no local reporters at all. In the case of both newspapers and local TV, consolidation and nationalization in many cases has aggravated the local news crisis, leading to fewer reporters in communities and less, or more superficial, coverage of school boards, economic development, elections, social problems and civic activity. Indeed, the revival and reformation of local news will require not just new business and editorial approaches – but new ownership models. We have seen that family-owned news organizations, smaller chains and nonprofits tend to do better on the local level. It appears that local news often does better when it is in local hands.

But the primary reason for the collapse of local news business models is the rise of the internet. Local and regional advertisers shifted from local media to Google, Facebook and other tech platforms. Some 85 percent of local advertising now goes to non-local companies, Google, Meta and Amazon. Not all Big Tech behavior was malicious. Some of these trends happened because the tech companies provided better services to local businesses. But it is also true that they then used that market clout to squelch competition and provide less revenue to local publishers.

And blame aside, the reality remains that the digital disruption had many great benefits and also some serious downsides – one of which is the tragic undermining of community news. It’s only fair that the big winners of the digital revolution help repair the damage, whether it was intended or unintended.

Unfortunately and amazingly, the local news business models are once again feeling another body blow – this time from artificial intelligence.

To be clear, AI will provide many truly amazing opportunities for publishers who use it ethically and creatively. Right now newsrooms across the country are experimenting with how to reinvent themselves – providing more coverage for less money, thanks to AI. We applaud and support that innovation.

But when it comes to AI and local news, there are also several overriding – and ominous – trends.

 

The first order economic impact is likely to be further erosion of the local news business models – yet another blow to community information and news.

Americans are indeed using AI search to get information about their communities. Last week, OpenAI reported that “the demand for reliable local news is already visible inside ChatGPT at a rate of about 1 million prompts per week.”

Unfortunately, under the current system, local news outlets will again end up financially wounded. AI companies hoover up content created by local news outlets – content that came about as a result of paying a human being journalist. The AI companies use that to train and ground their models. The AI assistants can replace referral traffic by providing summaries instead of links – so users don’t have to click through to some other website. That’s the key difference. In the olden days – like, a year ago – even though there was a clear power imbalance in favor of big tech, they did also at least give a prominent link, so the user might sometimes click through to the news site. That provided traffic that the news outlets could convert to revenue.

AI will grievously wound, if not kill, the click-through. In announcing its layoffs, the Washington Post editors noted that their search traffic had dropped by one-half in just three years.

And, by the way, this phenomenon is nonpartisan: conservative sites are seeing major traffic declines too.

Whatever the ultimate outcomes in the courts on questions of fair use, the fact will remain that the AI companies extract tremendous value from local news providers without giving much back to newsrooms – at a time when local news is already in an existential crisis.

 

If unaddressed, the collapse of local news will actually make AI lower quality and ultimately spread more misinformation.

AI struggles when there’s a dearth of information on a topic. It is more likely to be inaccurate and spread misinformation. The local news ecosystems in many communities suffer from this “information scarcity.” We’ve invented whole new terms – “news deserts” and “ghost newspapers” – to capture how barren some of these areas are. Not surprisingly, AI has struggled to get local information right. Studies have found that AI assistants often flubbed local elections including information about how to register, where to vote, the positions of candidates, and how disabled people could vote. In another study about elections in Switzerland and Germany, one-third of answers included “wrong election dates, outdated candidates, or even invented controversies concerning candidates. Chatbots are generally not well suited to adapt to the local context or language.” In Australia, a mayor sued OpenAI when ChatGPT declared, falsely, that he had been convicted of bribery. The fact-checking and data analytics firm NewsGuard reported that the error rate for AI search had actually gone up in the past year, and regularly picked up material from fake local sites created by Russia.

 

Without local reporters, the deepfakes and malicious uses of AI on the local level will be much harder to combat.

A survey of thousands of AI researchers found that 86 percent had a “substantial” or “extreme” concern about the “spread of false information e.g. deepfakes,” and 79 percent worried about “manipulation of large-scale public opinion trends.” We’ve seen how easy it is to concoct videos or stories that seem real. At the national level, on big stories, news organizations may be able to catch them. But on the local level, if there are no watchdogs, deepfakes will run rampant. In addition, AI will accelerate the rise of “pink slime” local news websites, misleading sites that have been created to look like legacy local news outlets while sneakily promoting bought-and-paid-for content by partisan activists. Newsguard has already identified 631 “unreliable AI-generated news” sites.

We have a vicious cycle. AI undermines local news; the lack of local news, in turn, makes AI’s quality worse.

Fortunately, a virtuous circle can be created: if AI helps revive local news, it will make its results higher quality. The AI industry ought to view itself as having a stake in reviving local news.

Some companies are working with news organizations to help them use the technology to better equip their reporters. For instance, OpenAI is working with the American Journalism Project to train newsrooms to better use AI to reach new audiences.

But the AI industry needs to go far beyond providing journalists with training on how to better use their products. It needs help to reverse the financial crisis.

 

First, they need to compensate local news organizations – including medium- and small-sized outlets – for the use of the content that they use to craft their answers to consumers.

Some major publishers have made deals with AI companies for the use of the content but notably these companies have not made deals with the thousands of small and independent media, especially on the local level. We’re concerned that medium and small sized players will be once again left out. Policymakers could consider ideas like those proposed by the Center for Journalism and Liberty such as allowing small publishers to bargain collectively and requiring AI companies to provide detailed summaries of training data sources.

 

Second, local efforts around the construction of data centers should include the health of local information and journalism in the discussions.

Communities are understandably concerned about the impacts of data centers on electricity prices, water use and other impacts. Some are trying to block data centers entirely, which is their right. For those communities that want data centers – but only if certain benefits are guaranteed – here’s a modest proposal. In addition to remediating the effects on those other major issues, ask for something simple: the money to hire a couple of local reporters. The reporters can help ensure that the commitments from the tech companies are met, and in general make communities better functioning – covering everything from small businesses to city hall to high school sports.

This can be done in a way that preserves editorial independence. Each data center would provide a one-time donation to create a perpetual endowment at a local community foundation. The independent community foundation would place two reporters in a local news area newsroom. Some companies have pledged special efforts to help the areas where data centers are based. But if the AI companies don’t do this themselves, communities should consider requiring that these be included in the Community Benefit Agreements.

 

Third, we should ask AI companies and other social media platforms to pay mitigation fees to help pay for the revival of community news.

A few years ago, Sen. Cantwell sponsored an excellent bill that provided tax relief for news outlets that hired local reporters. A similar bill was proposed by Republican Rep. Claudia Tenney in the House of Representatives.

Since then, state legislatures have been experimenting. Illinois and New York passed employment credits. The one in Illinois is off to an excellent start, having provided help for 120 newsrooms in the state. Two thirds of them have 6 or few employees.

Sen. Cantwell and Rep. Tenney also proposed tax relief for small businesses that advertise in local news – a way of helping both restaurants, hardware stores and local papers. Recently, Republican lawmakers in Kansas and New Hampshire have proposed state versions of that plan.

In other states, including Washington, the local governments have helped support fellowship programs, managed by the state universities, that place journalists into local newsrooms.

These are all approaches that don’t involve the government creating a board of people who give out discretionary grants. They use objective standards, without consideration of editorial direction – they are relentlessly focused on local coverage.

To pay for these, we suggest Congress and state legislatures consider applying a mitigation fee on the biggest technology and AI companies. Several bills have proposed assessing fees on advertising, which makes sense, but the advent of AI requires some new thinking, possibly a mitigation fee based on the number of active unique users too.

In general, we have entered a world in which national media, big tech and local news are all becoming more concentrated in a smaller number of very powerful companies. In terms of the ownership of TV channels, the main topic of this hearing, our coalition has not taken a formal position about the appropriate levels of ownership caps but we would urge this: seek policies that will definitively maintain or increase the number of local reporters in a community. Don’t just look at the number of stations or the hours of coverage. More hours of coverage with fewer local reporters is a recipe for more superficial news. Look at the actual investment in reporting capacity.

Sen. Cruz once wisely said, “big tech exercises a concentration of power that I believe is unknown in the history of mankind and that concentration of power is regularly used to trample on the little guy. To trample on companies they do business with and this instance to trample on local media organizations, whether you are talking about small town newspapers, whether you’re talking about local broadcasters, anyone in the journalism spaces that is producing content… the idea that we would see monopoly control of public discussion in America to three or four billionaires in Silicon Valley, modern day American oligarchs, is profoundly dangerous.”

When it comes to local news, our hope is that local news will be in local hands, as much as possible. Public policies should gravitate toward that philosophy – a media system in which local news ownership and control is diffuse, fragmented and local.

Despite all of the destruction, we have also seen a tremendous amount of innovation – hundreds of new local news startups (See INN, LION, AJP). They don’t yet come close to filling the voids in information. But they do give some hope that if we can continue to improve the business and editorial models, draw in more money from philanthropy – and have smart public policy, we can construct a better local news system than we’ve had before.

Technology can help. But we also need actual human beings, living in their communities, accountable to and listening to their neighbors. To have that kind of revival of community news, the biggest technology companies will need to play a much bigger role in reversing this local news crisis.