SB 5400 was a significant piece of proposed legislation. It envisioned a state-funded grant program that could have provided crucial support to journalism organizations.

However, the bill didn’t make it past the Senate Fiscal Committee, preventing it from reaching the Rules Committee and subsequently the Senate floor. As a fiscal bill, there was always a possibility of its sudden reappearance, but that didn’t happen.

One of the most encouraging aspects of any bill, including this one, is the community of support that rallies around it. In this case, the wide range of individuals and groups who testified in favor of SB 5400 presents a valuable opportunity to organize and advocate for more profound reform of public media in Washington State, especially as federal support diminishes.

Surprisingly, the most impactful development regarding public media in Washington State was the unexpected creation of a digital ad tax, an idea I suggested in my original testimony supporting SB 5400.

This development apparently stemmed from Governor Ferguson’s resistance to a general wealth tax, which led the legislature to seek alternative revenue sources.

Digital Ad Tax

Washington lawmakers passed SB 5814, a bill that imposes state and local sales taxes on a broad spectrum of advertising services. This includes digital ad creation, campaign planning, performance analytics, and online ad placement.

The tax aims to generate revenue by treating advertising services similarly to other taxable professional services. The bill defines “advertising services” broadly but specifically exempts those offered to newspapers, broadcasters, and billboard advertisers.

I’ve encountered criticism suggesting that our tax will “suffer the same fate” as Maryland’s pioneering digital ad tax. However, this seems like unwarranted pessimism, as Maryland’s ad tax appears to be faring well in its legal challenges.

It’s worth noting that Maryland’s digital ad tax has performed favorably in the courts so far, winning its only decision to date.

Last summer, a federal judge in Baltimore dismissed a First Amendment challenge to Maryland’s Digital Advertising Tax Act (DATA), which taxes digital advertising revenue. U.S. District Judge Lydia Kay Griggsby ruled that the plaintiffs, including the U.S. Chamber of Commerce and major tech trade groups, failed to demonstrate that the law’s prohibition on passing the tax on to customers through line-item fees or surcharges was broadly unconstitutional. She emphasized that the law had numerous constitutional applications and therefore did not violate the First Amendment on its face.

This decision followed earlier dismissals of other legal claims against the law, including those based on the Internet Tax Freedom Act and the Commerce Clause. Despite the court’s repeated upholding of the tax, tech companies continue to challenge it in Maryland’s Tax Court, hoping for a favorable ruling by fall.

Fundamentally, a digital ad tax addresses the core of the journalism crisis. Legacy publishers, particularly local newspapers, have overwhelmingly lost the advertising battle against online ad technology. Giants like Google and Meta, in particular, have used monopolistic tactics to dominate the entire advertising ecosystem, making it difficult for marketers to make sound business decisions while also supporting journalism.

Aside from dismantling the ad tech monopolies (which I will discuss later), taxing their perceived ill-gotten gains for the public good is the next most logical step for a state government lacking monopoly enforcement power. While the revenue from this tax isn’t currently earmarked for supporting public media, that’s a focus we can pursue in the future.

Change in Rhetoric

The most disappointing aspect of SB 5400’s journey was the noticeable shift in rhetoric among its supporters during the second public hearing and afterward. I began to see proponents argue that users posting links to news stories on social media platforms somehow constituted theft by these companies. The League of Women Voters’ summary of the second SB 5400 hearing stated: “(Tech giants are)..taking content the outlets produce without providing compensation and by siphoning off critical ad revenue from them.”

While the second part of this statement is true (they are indeed harming journalism by capturing ad revenue), the narrative surrounding “taking content” significantly misses the mark and establishes a policy objective I find deeply problematic.

This is the same rhetoric I’ve seen used to justify a link tax, similar to the California Journalism Preservation Act (CJPA).

Jeff Jarvis offered an excellent critique of the failed California link tax. He argues that the premise behind the CJPA and similar legislation is the false notion that linking to and quoting news constitutes theft. In reality, links benefit publishers by driving audience to their content, acting as free promotion. These laws fail to acknowledge the value that platforms’ links provide to publishers.

If platforms benefit from links to journalism, why did Meta reduce links to hard news in 2023?

Jarvis also emphasizes that links are fundamental to the internet’s architecture, enabling conversation, community, commerce, and collaboration. He agrees with Tim Berners-Lee, the inventor of the World Wide Web, who testified that charging for links undermines the principle of free linking and could render the web unworkable. Vint Cerf, another internet pioneer, also stated that requiring payment for links undermines the internet’s fundamental principles. He concludes that making links a bargaining chip ill-serves users and citizens and that a link tax could fragment the web, isolating California’s internet from the rest of the world.

When the link tax was debated in California, it created a division among supporters of public media, pitting for-profit legacy media, especially newspapers, against largely digital non-profit upstarts.

Without a united front, we are likely to see corporate interests prevail, as they did in California, where they essentially created a donation scheme instead of meaningful public media support.

Here are two other takes on links taxes that are worth your time:

Why Link Taxes Like Canada’s C-18 Represent An End To An Open Web

Why Google and Facebook Don’t Owe Publishers $14 Billion a Year

Google Ad Case

I want to briefly acknowledge that the once-distant possibility of the federal government breaking up ad tech monopolies may be drawing closer. Amidst all of this legislative action, a federal court ruled that Google is indeed a monopolistic actor in digital advertising.

A federal judge determined that Google unlawfully monopolized key digital advertising markets, specifically the Publisher Ad Server and Ad Exchange sectors, violating Sections 1 and 2 of the Sherman Act. The Department of Justice and 17 states alleged that Google employed exclusionary practices to stifle competition and maintain its dominance. The court agreed, finding that Google harmed rivals and limited publisher choice, but rejected a claim related to advertiser ad networks due to a lack of market definition.

The court will consider remedies next fall, with the DOJ likely seeking structural separation and behavioral restrictions, such as prohibiting self-preferencing. Judicial oversight is also anticipated.

Back to the Link Tax

A link tax system implicitly assumes that the ad tech monopoly held by Meta, Google, and other large programmatic systems will persist and that news organizations will be content with receiving a small portion of the revenue to keep journalists employed.

The true objective should be to dismantle the ad tech monopolists and enable publishers of all kinds to sell their own advertisements without any single organization controlling the entire ad tech stack. Failing this, taxing revenue from online ads and distributing it to support journalism is a much more direct policy approach.

Why are legacy media outlets more inclined to support a system that allows monopolies to endure? Why are newspapers specifically seemingly okay with monopolistic behavior, as long as it provides financial support?

Because they have been in the past.

Consider the Joint Operating Agreements (JOAs) of the 1970s, which supported journalism by creating local monopolies.

Joint Operating Agreements (JOAs) were effectively exceptions to U.S. anti-monopoly (antitrust) law, established through the Newspaper Preservation Act of 1970. These agreements allowed two competing newspapers in the same city to merge their business operations while maintaining independent editorial control. Typically, such collaboration between competitors (on printing, distribution, advertising sales, and other business functions) would violate antitrust laws designed to prevent collusion and preserve market competition.

Here’s how JOAs functioned as legal exceptions to monopoly laws:

Under traditional antitrust law, direct competitors cannot legally combine business operations (like ad sales or production) because it reduces competition, risks price-fixing, and often leads to monopolies. Such behavior would typically be considered anti-competitive under the Sherman Act or Clayton Act.

The Newspaper Preservation Act (NPA) specifically exempted newspapers from antitrust enforcement in certain cases. Lawmakers argued that the decline of newspaper circulation, especially in evening editions, meant that in many cities, only one paper would survive unless cost-cutting measures were allowed. The Act permitted competing newspapers to enter a JOA that pooled their business functions but maintained distinct editorial voices.

As documented in “The Chain Gang,” the era of JOAs was also marked by the decline of smaller newspapers that tried to operate alongside growing national chains, often aided by JOAs. During that time, local newspaper giants used predatory pricing, exclusive advertising deals, and the spread of false rumors to eliminate smaller rivals.

While the Act was intended to protect small or struggling papers from closure, critics argue that large media chains benefited the most, often absorbing or outlasting local competitors within JOAs. Over time, many JOAs dissolved as readership declined, digital media grew, and chain consolidation continued. In several cases, the supposedly “competing” papers ended up under shared ownership or folded entirely.

The Act created a rare legal space where business collaboration between competitors was explicitly allowed—a direct exception to the norm of antitrust enforcement. However, instead of safeguarding editorial diversity in the long run, the result was often further media consolidation and the eventual disappearance of the very newspapers the law aimed to protect.

If we continue down the path of proposing a link tax, the likely outcome is a deal that no one on the pro-journalism side desires and that primarily benefits the tech giants.

After journalism advocates disagreed over approaches (dividing their efforts between a link tax and a digital extraction tax), tech giants found a backdoor. A closed-door agreement between California lawmakers and Google to support local journalism fell short of expectations, benefiting Google by shelving more impactful legislation in exchange for a comparatively small financial commitment. This agreement has been widely condemned by journalists, community publishers, and advocates who argue that the funding is insufficient, lacks focus on localism and diversity (especially for ethnic media), and includes unrelated initiatives like an AI accelerator.

By prioritizing a less burdensome solution for the tech giant over the significant needs of a struggling local news ecosystem, the deal leaves many supporters of journalism feeling disappointed and under-served. The outcome underscores the power imbalance between Big Tech and community voices in shaping policies related to the future of news.

Therefore, when we revisit the idea of public media in Washington next year, the focus should be on unifying the potential division developing between the different approaches.