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Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
News organisations have repeatedly failed to gain the upper hand when dealing with the US tech sector. Social media extended journalism’s reach but upended the business model, hoarding digital advertising revenue. Artificial intelligence threatens to devalue content creation altogether. Axel Springer’s deal with OpenAI is a temporary fix to a long-term problem.
The German publisher, which owns titles such as Politico and Business Insider, will receive “tens of millions of euros” per year by licensing news content to OpenAI. This follows complaints from media organisations about the way in which their content has been used to train the large language models that power generative AI chatbots such as OpenAI’s ChatGPT.
The deal puts a high price on news that sets a useful precedent for other media organisations. But there is a chance that Axel Springer is putting its future subscriptions and advertising income at risk. If news content is available via summaries on ChatGPT, subscribers may bypass news sites altogether.
So far, readers have reacted poorly to AI news experiments. Gannett and Arena Group have both been criticised for publishing dull, sometimes incorrect, AI-generated content. Arena’s financial situation shows why it might be tempted. Print advertising revenue and digital subscriptions have fallen. The company is focused on cutting costs as it tries to reduce a net loss that exceeded $11mn in the last quarter. AI-generated content may be low quality and unoriginal, but it is cheap.
OpenAI will hope the Axel Springer deal makes it look responsible as it navigates global regulation. It may come with an expiration date. Something similar occurred when social media companies were accused of allowing misinformation to go viral. Meta and Google partnered with newsrooms but the deals did not last. Following laws in Australia and Canada aimed at forcing tech companies to pay news publishers for excerpts, Meta now prioritises content from friends over news.
Nor did partnerships boost media revenue long term. Researchers at Columbia University argue that news-related searches and content are worth $12bn per year to Google and Meta. Gains in traffic are equal to a tiny fraction of this. The annual State of Local News Project shows the repercussions of this lopsided relationship. Over the past 20 years, the US has lost about one-third of its newspapers.
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