Publishers Striking AI Deals Are Making a Fatal Error
6 min read
In 2011, I sat at the Guggenheim Museum in New York and watched Rupert Murdoch announce the beginning of a “new digital renaissance” for news. The newspaper mogul was unveiling an iPad-inspired publication called The Daily. “The iPad demands that we completely reimagine our craft,” he said. The Daily shut down the following year, after burning through a reported $40 million.
For as long as I have reported on internet companies, I have watched news leaders try to bend their businesses to the will of Apple, Google, Meta, and more. Chasing tech’s distribution and cash, news firms strike deals to try to ride out the next digital wave. They make concessions to platforms that attempt to take all of the audience (and trust) that great journalism attracts, without ever having to do the complicated and expensive work of the journalism itself. And it never, ever works as planned.
Publishers like News Corp did it with Apple and the iPad, investing huge sums in flashy content that didn’t make them any money but helped Apple sell more hardware. They took payouts from Google to offer their journalism for free through search, only to find that it eroded their subscription businesses. They lined up to produce original video shows for Facebook and to reformat their articles to work well in its new app. Then the social-media company canceled the shows and the app. Many news organizations went out of business.
The Wall Street Journal recently laid off staffers who were part of a Google-funded program to get journalists to post to YouTube channels when the funding for the program dried up. And still, just as the news business is entering a death spiral, these publishers are making all the same mistakes, and more, with AI.
Publishers are deep in negotiations with tech firms such as OpenAI to sell their journalism as training for the companies’ models. It turns out that accurate, well-written news is one of the most valuable sources for these models, which have been hoovering up humans’ intellectual output without permission. These AI platforms need timely news and facts to get consumers to trust them. And now, facing the threat of lawsuits, they are pursuing business deals to absolve them of the theft. These deals amount to settling without litigation. The publishers willing to roll over this way aren’t just failing to defend their own intellectual property—they are also trading their own hard-earned credibility for a little cash from the companies that are simultaneously undervaluing them and building products quite clearly intended to replace them.
Late last year Axel Springer, the European publisher who owns Politico and Business Insider, sealed a deal with OpenAI reportedly worth tens of millions of dollars over several years. OpenAI has been offering other publishers $1 million to $5 million a year to license their content. News Corp’s new five-year deal with OpenAI is reportedly valued at as much as $250 million in cash and OpenAI credits. Conversations are heating up. As its negotiations with OpenAI failed, The New York Times sued the firm—as did Alden Global Capital, which owns the New York Daily News and the Chicago Tribune. They were brave moves, although I worry that they are likely to end in deals too.
That media companies would rush to do these deals after being so burned by their tech deals of the past is extraordinarily distressing. And these AI partnerships are far worse for publishers. Ten years ago, it was at least plausible to believe that tech companies would become serious about distributing news to consumers. They were building actual products such as Google News. Today’s AI chatbots are so early and make mistakes often. Just this week, Google’s AI suggested you should glue cheese to pizza crust to keep it from slipping off.
OpenAI and others say they are interested in building new models for distributing and crediting news, and many news executives I respect believe them. But it’s hard to see how any AI product built by a tech company would create meaningful new distribution and revenue for news. These companies are using AI to disrupt internet search—to help users find a single answer faster than browsing a few links. So why would anyone want to read a bunch of news articles when an AI could give them the answer, maybe with a tiny footnote crediting the publisher that no user will ever click on?
Companies act in their interest. But OpenAI isn’t even an ordinary business. It’s a nonprofit (with a for-profit arm) that wants to promote general artificial intelligence that benefits humanity—though can’t quite agree on what that means. Even if its executives were ardent believers in the importance of news, helping journalism wouldn’t be on their long-term priority list.
That’s all before we talk about how to price the news. Ask six publishers how they should be paid by these tech companies, and they will spout off six different ideas. One common idea publishers describe is getting a slice of the tech companies’ revenue based on the percentage of the total training data their publications represent. That’s impossible to track, and there’s no way tech companies would agree to it. Even if they did agree to it, there would be no way to check their calculations—the data sets used for training are vast and inscrutable. And let’s remember that these AI companies are themselves struggling to find a consumer business model. How do you negotiate for a slice of something that doesn’t yet exist?
The news industry finds itself in this dangerous spot, yet again, in part because it lacks a long-term focus and strategic patience. Once-family-owned outlets, such as The Washington Post and Los Angeles Times, have been sold to interested billionaires. Others, like The Wall Street Journal, are beholden to the public markets and face coming generational change among their owners. Television journalism is at the whims of the largest media conglomerates, which are now looking to slice, dice, and sell off their empires at peak market value. Many large media companies are run by executives who want to live to see another quarter, not set up their companies for the next 50 years. At the same time, the industry’s lobbying power is eroding. A recent congressional hearing on the topic of AI and news was overshadowed by OpenAI CEO Sam Altman’s meeting with House Speaker Mike Johnson. Tech companies clearly have far more clout than media companies.
Things are about to get worse. Legacy and upstart media alike are bleeding money and talent by the week. More outlets are likely to shut down while others will end up in the hands of powerful individuals using them for their own agendas (see the former GOP presidential candidate Vivek Ramaswamy’s activist play for BuzzFeed).
The long-term solutions are far from clear. But the answer to this moment is painfully obvious. Publishers should be patient and refrain from licensing away their content for relative pennies. They should protect the value of their work, and their archives. They should have the integrity to say no. It’s simply too early to get into bed with the companies that trained their models on professional content without permission and have no compelling case for how they will help build the news business.
Instead of keeping their business-development departments busy, newsrooms should focus on what they do best: making great journalism and serving it up to their readers. Technology companies aren’t in the business of news. And they shouldn’t be. Publishers have to stop looking to them to rescue the news business. We must start saving ourselves.
