18.2.1 News Facts as a Public Good

Two other important features of information are that by nature, information is non-excludable and non-rival.Footnote ⁷ The non-rival nature of information means that the consumption or use of a specific piece of information by one person or company does not affect the use by another: it cannot be ‘used up’. If a person watches or reads the news, it does not prevent others from watching or reading the same news.

Non-excludability means that access to (published) information via its copying and distribution cannot be controlled. Together, non-excludability and non-rivalry define a public good.Footnote ⁸ Private provision of public goods is usually problematic, primarily as a result of their non-excludable nature. Oftentimes, this means the government has to step in to provide such goods.

Of course, many types of information are in fact excludable. Keeping information secret or keeping access limited to a secure digital or physical environment is one solution to create excludability. While this may work for the Coca-Cola recipe and for data sets and algorithms, it does not work for information which must necessarily be exposed to create value, as is the case for works of art and literature and for news. From an economic perspective, copyright protection of literary and artistic works can be seen as a legislative intervention to make such works excludable, both in their physical form and in their digital form, and by doing so to create a potential market with room for private provision and for recouping investments.

Copyright protection applies to the free, creative choice of words – the journalist’s individual expression – forming a news article printed in a newspaper or online.Footnote ⁹ Recordings of radio and television broadcasts are also protected as intellectual property. The information itself, however – the news facts that are disclosed in an article or a broadcast – are unprotected.Footnote ¹⁰ Therefore, news facts possess two defining characteristics of public goods: non-rivalry and non-excludability.Footnote ¹¹ With that public good character comes the perennial private investment puzzle for news.

18.2.2 Externalities of News

What makes the public good nature of news facts more pressing is that news is important in a democratic society. News consumption by an individual has benefits that stretch beyond that person. In economic terms, this is referred to as positive externalities of news consumption.Footnote ¹² Chandra and Kaiser write: ‘Policymakers have long recognized that newspapers have a unique role in the civic discourse of a country, and have important consequences for informing the citizenry, encouraging electoral participation and providing a check on powerful forces in government and business.’Footnote ¹³

Arguably, there are positive externalities of news production as well. This argument relates to the aforementioned public good nature of news facts and the lack of intellectual property protection for facts as such. However, it focuses on the news production sector. While uncovering news facts may require substantial and long-term investments in research and sources, other news media are free to report on these facts themselves once they have been made public and can engage in ‘cream skimming’ by making selective investments in follow-up news production that repeats the facts and avoids copying of the individual expression used in the original news story.Footnote ¹⁴ In view of the positive externalities of news consumption, this is a good thing – the more media can report about certain news facts, the more people can learn about them – but it undermines the incentives to invest in news production, in particular when it involves costly investments such as foreign correspondents and investigative journalism.

Strömberg discusses the ‘mounting empirical evidence that the media play a key role in enhancing political accountability.’Footnote ¹⁵ One such piece of evidence is a study by Oberholtzer-Gee and Waldfogel, who find that Hispanic voter turnout in the United States increased by 5–10 percentage points in markets where Spanish-language local television news became available.Footnote ¹⁶ Strömberg concludes that ‘[a] number of surveyed studies find that an increase in media activity is associated with better policy outcomes, some of which use methods that reasonably convincingly identify causal media effects. There is some evidence that these media effects occur because the media transmit information to voters, which improves both the incentives and the selection of politicians.’ Next to such positive externalities of news consumption through better-informed voting behaviour, one may add the positive effect of informing others at the water cooler.Footnote ¹⁷ At a macro level, Parcu and colleagues cite graphs that show the striking correlation between the economic freedom of countries and their freedom of the press, and between the corruption index of countries and their freedom of the press.Footnote ¹⁸ More press freedom goes along with more economic freedom and less corruption. While proving causality in such analyses is difficult and effects may well run both ways, it remains relevant to acknowledge such correlations.

Going one step further, Ali argues that journalism, in particular local journalism, is not just a public good but also a merit good, which individuals should have access to regardless of their preferences and consumer behaviour.Footnote ¹⁹ His arguments for taking this more normative stance mostly coincide with the points made here about the positive externalities of news consumption.

18.2.3 Commercial Financing of News

As mentioned in Section 18.2.1, the public good nature of news facts, in combination with the lack of intellectual property rights over them, in itself tends to lead to underinvestment in news production. On top of that, positive consumption externalities tend to lead to underinvestment in the consumption of news, as consumers take these externalities into account insufficiently in their own decision making. In economic terms, this leads to a willingness to pay for news, both in money and in time, that is lower than is desirable from a welfare perspective. The demand curve for news, which news producers and news publishers have to engage with to recover their investments in news production, insufficiently reflects consumption externalities.

These observations are, however, not new. In fact, news media have been confronted with this private investment puzzle since time immemorial. Besides public funding or subsidisation, which will be dealt with in Section 18.2.4, there have been three main market-based mechanisms to address this issue.

The first mechanism is cross-subsidisation from advertising. The concept is simple: advertisers want their ads to attract attention and are willing to pay for access to places that have consumer attention. News media are one such place where consumers spend time on a daily basis. This enables news media to charge advertisers for access to attention and to use the receipts as a supplementary (or their only) source to cover their investments in creating news. As it is sometimes phrased by cynics: ‘The news is printed on the backside of the ads’.

Although advertising has been a staple ingredient of news media for ages, the underlying concept of a two-sided market, where news media serve as a platform enabling interaction between two groups of interest, consumers and advertisers, has only been theorised in the economic literature since around the start of this century.Footnote ²⁰ A more recent overview applied to media markets is provided by Anderson and Jullien.Footnote ²¹ One factor that determines the outcomes in different settings is whether or not consumers multi-home: that is, whether they are loyal to one platform/news medium or combine many in their media diet. Another is the extent to which consumers dislike (derive disutility from) advertising. In particular in audio and audiovisual media, ads that cannot be avoided or skipped are likely to be perceived negatively by consumers, and the more consumers dislike advertising, the more the advertising side of the market will have to cross-subsidise the news consumers. In printed media, research is not conclusive about whether and to what extent consumers dislike ads.Footnote ²²

The second is the friction of time. This is reflected in Shapiro and Varian’s bon mot: ‘Information is like an oyster: it usually has the greatest value when it is fresh.’Footnote ²³ While there is no copyright protection of news facts, there is value in being the first to bring them. For as long as other news media have not started reporting about the same news facts, this grants the initial news medium short-lived monopoly power over the news item, which can to some extent be monetised by selling newspaper copies or access, or by attracting more viewers that allow for generating more ad revenues. Although this does not resolve the underinvestment caused by positive externalities of news consumption, it does to some extent – and for a short period – mitigate the public good nature of news facts.Footnote ²⁴

The flipside of this mechanism is that reducing this friction will also change the proposition of investing in news production. This was the subject of the famous historical case International News Services c. Associated Press from 1918, in which Associated Press (AP) complained that International News Services (INS) was pirating its news items. INS claimed it purchased AP’s newspapers legitimately on the east coast of the USA. Exclusive news information in these papers was wired to the west coast so that INS could bring the news there simultaneously with AP. The Supreme Court of the United States ruled that this was a case of unfair competition and that AP’s news could only be used as ‘tips to be investigated’.Footnote ²⁵ Although this case is no longer a binding precedent, it illustrates how a reduction of time friction is relevant to the business of news producers. By only allowing AP’s news to be used as leads for further investigation, the Supreme Court basically reintroduced the friction that the telegraph had removed.

The third mechanism used by traditional media is bundling.Footnote ²⁶ Economic theory offers various motives for providers to bundle. For example, offering products that are often purchased together in packages can reduce transaction costs: payment and selection only need to be made once. It can also be attractive to bundle products that are complementary in terms of their utility value and where demand for one increases demand for the other, such as left and right shoes, or sushi and soy sauce. A third, intuitively less obvious reason for bundling is described in detail by Adams and Yellen:Footnote ²⁷ bundling can be a very effective way of skimming consumer surplus when the preferences of individual consumers for the components of a package are negatively correlated or unknown. In many cases, bundling is then considerably more profitable than charging prices that maximise profits per component. Thus bundling general interest news, sports news, financial news, and fashion news in one print newspaper or one subscription can generate more revenues than selling access to these areas of interest separately.

18.2.4 Public Financing of News

Public funding or subsidisation was already briefly mentioned in the previous section. It follows from the public good character of news facts and the positive externalities of news consumption that some level of public financing or subsidisation of news production and news consumption will be welfare-enhancing. Also, one can think of public provision of news media as analogous to the public provision of other public goods.

Indeed, both direct and indirect subsidies for, as well as public provision of, news media are common practice in most EU Member StatesFootnote ²⁸ and also outside Europe.Footnote ²⁹ Parcu and colleagues discuss direct and indirect subsidies as means of state support for media companies in the European Union, as well as public provision of media.Footnote ³⁰ As a form of indirect subsidy, they mention the reduced VAT rate that applies to (news) media in many countries. State advertising can also function as a form of state support for media.Footnote ³¹

Naturally, the hard question is what level of financing, subsidisation, or public provision is optimal, and how to implement this without weakening the incentives for private provision and recoupment of investments. Parcu and colleagues discuss various drawbacks and risks of public support mechanisms and public provision of news media. Importantly, selective subsidies or support for certain news media and not for others can distort competition in the media landscape. The same applies to public provision of news media in a market where there is also privately funded supply. This can make the business case for independent and unsubsidised news media even more problematic. Also, support can be used to gain undue editorial influence and thereby undermine the independence of news media. Public provision of news can raise similar issues concerning independence, or may even be perceived as an intervention leading to news that lacks independence.Footnote ³² One can add to these concerns the possible risk that public service television and radio funding may be poorly targeted, as the money can also flow to entertainment productions with no wider public value.

18.3.1 Disruptions by Aggregator Platforms

Aggregator platforms compete with news media for the attention of consumers with an interest in news. To the extent that consumers have a time budget for news that is (more or less) fixed, or insofar as consumers want to inform themselves about specific events, this implies that aggregator platforms will cause a substitution of consumer attention away from news media. Less time spent on traditional news media will lead to less advertising revenues for them, even if the aggregator platforms themselves do not run ads. If they do run ads, the effect on advertising revenues for traditional news media is worsened.

A potential opposite mechanism assumes that consumers’ time budget for news is not fixed and that aggregator platforms generate additional traffic to traditional news media websites, which they can monetise in the form of ad revenues. Note that this latter effect would likely enhance positive externalities of news consumption. By extension, aggregator platforms may direct consumers to news media that they are not aware of or would not go to spontaneously. By doing so, they can lead to more variation in consumers’ media diet, thus enhancing media consumption plurality.Footnote ³³

In an experimental study, Dellarocas and colleagues primarily find evidence for the first, negative, effect on news publishers. They write: ‘the more information is provided by the aggregator, in the form of longer snippets and accompanying images, the more time users spend on the aggregator and the less likely they are to click through to original articles. One way of interpreting our findings … is that anything that aggregators display in addition to an article’s headline, decreases click-through rates.’Footnote ³⁴ Furthermore, the study finds that snippets placed high in a topic group are more likely to be clicked. This gives aggregators ranking power over traditional news media.

In addition to enhancing competition for consumer attention and advertising budgets, aggregator platforms also unbundle traditional news media by selectively choosing and presenting ‘snippets’, typically consisting of a headline, a short excerpt and a link, based on their own algorithms and often making use of user data. This implies that the traditional strategy of bundling different types of news to maximise revenues is circumvented by aggregator platforms as well. Lastly, the time friction that traditional news media benefit from is also removed, in the sense that an aggregator platform can publish such snippets instantly once an article is published.

In sum, aggregator platforms undermine the three market-based mechanisms mentioned in Section 18.2.3 that news publishers have used over time to overcome the public good problem of news and recoup private investments in news production. At the same time, these aggregators do not make investments in news production themselves.

By doing so, aggregator platforms aggravate the downward trend in advertising revenues that has long plagued news publishers. Their ad revenues have declined dramatically in the past few decades in most developed countries, especially those of local news outlets,Footnote ³⁵ in sync with the rise of the Internet and large online platforms. Note that a decrease in newspaper advertising revenues due to the emergence of an alternative technology is not uncommon. Chandra and Kaiser mention that in the United States, newspaper advertising revenues declined by 28 per cent between 1929 and 1941, linked to the mass introduction of the radio in the 1930s, while the introduction of television in the 1950s led to a further decline.Footnote ³⁶

However, the current decline is different in two ways. First, it is a result of cannibalisation of ad revenues by media that themselves invest little or nothing in news production. Second, the decline appears to be of unprecedented proportions. In the United States, newspaper advertising revenues are reported to have declined by more than 80 per cent between 2000 and 2020: a drop from 48.7 to 8.8 billion USD.Footnote ³⁷ In the EU (plus the UK), advertising revenues in newspapers and magazines fell by almost 60 per cent between 2010 and 2020.Footnote ³⁸

A simultaneous – albeit slightly less dramatic – drop in paid subscriptions leads to a double dip in revenues. In the United States, daily newspaper circulation (print plus digital) in 2022 was about a third of its fairly stable level between 1960 and 1990.Footnote ³⁹ In Europe, daily circulation declined by 23 per cent between 2015 and 2021. A steady growth in digital circulation could not make up for a sharper decline in print circulation.Footnote ⁴⁰

18.3.2 Disruptions by Generative AI

A second and even more recent disruptive force comes from generative AI. As was mentioned in the introduction to this chapter, the role of generative AI is twofold. On the one hand is AI journalism: the use of generative AI tools by traditional news media to produce news articles, reducing the involvement of human journalists in the process of news production. In March 2025, the Italian newspaper Il Foglio took this to the extreme by publishing the first fully AI-generated (four-page) edition.Footnote ⁴¹ While one may have serious concerns about the effect this will have on employment for journalism and the very nature of journalism (see Chapter 21 by Martin Senftleben in this volume), from an economic perspective the use of AI by traditional news media is not a disruptive development in terms of market failure. As long as news media continue to make editorial choices, do fact-checks, and take editorial responsibility for their content, as the editor of Il Foglio did in their experiment – and which in the foreseeable future will require at least some involvement of human journalists – it can be seen as an innovation or tool that reduces the costs of news production at a time when efficiency gains are direly needed.

The second role of generative AI concerns its use by third parties to create news articles based on other news articles and information the AI system has access to: AI news digests. There can be various ways in which this may enhance or improve news consumption and by doing so contribute to the positive externalities of consumption. Think of a generative AI tool that one can ask to write a 2,000-words summary of today’s news, based on the websites of the Washington Post, The Times, the Frankfurter Allgemeine Zeitung, and Le Monde, and to read it out loud on one’s commute – a tool that one can subsequently ask to elaborate one of the items or to rephrase it in simpler language. Clearly, this can increase news consumption and comprehension, help reach new markets of news consumers, and tailor news in a way mass news media cannot. Different from the use of generative AI by news media to reduce production costs, this can alter the way in which news is consumed much more fundamentally and disruptively than aggregator platforms did.

There is no need to stress that this is hardly science fiction. In January 2025, Apple temporarily suspended an AI tool that provides short summaries of news stories because it was found to be inaccurate – hallucinating – in some of its reporting,Footnote ⁴² but it is likely to be only a matter of time before such start-up problems will be resolved. Online, there are already other tools on offer that claim to provide similar services. Bearing in mind that human journalists also make mistakes, there will be a margin of error for such tools that is acceptable for practical purposes.

These developments are likely to be even more disruptive than aggregator platforms for investment incentives in news production and by extension for traditional news media. Generative AI tools can harvest news facts that are not protected as intellectual property without any interest in the text of the article that is protected. Unlike aggregator platforms, AI news digests have no need to apply restrictions to the length of snippets to avoid violations of copyright. Instead, such tools can generate independently readable articles of any desired length. As long as they explain news facts in their own words – and avoid substantial copying of protected individual expression of source articles – no copyright infringement occurs. Therefore, the public good market failure will be more pressing than ever.

Some mitigation could be provided by access fees that traditional news media may charge to AI tools, but it is unlikely that such fees will be of any significance towards recouping the investment required for the production of news. Current news is often available via different sources, many of which do not have paywalls or other access restrictions, as a result of which news media will have limited negotiating power individually. In addition, and bearing in mind the positive externalities of news consumption, it would be socially undesirable if all news media were to place all their content behind paywalls.

To make things worse, the market-based financing strategies traditionally employed by news media will be further eroded by AI news digests. They will compete with news media for the attention of consumers and for advertising revenues even more fiercely than aggregator platforms. Meanwhile, time frictions that used to provide some short-lived monopoly power over news items will be negligible and bundling will be irrelevant. Combined, these effects will further undermine the investment incentive for news production.

20.2.1 Platformisation

A major digital shift has altered the ways in which news is produced, distributed, and funded in both positive and negative ways. There is abundant literature and ongoing research on this ‘digital shift’ in both cultural and news production and dissemination.Footnote ⁷ This shift is not going away anytime soon. We must accept, for example, that print will continue to dwindle. Then, there is reintermediation via major tech platforms, a phenomenon referred to as ‘platformisation’. In a nutshell, news, however it is produced and by whom, is now more often accessed via global platforms such as Google and Facebook.Footnote ⁸ In what has been dubbed by many an ‘Age of Giants’, global super-players thus serve as the main venue for commercialising digital content and reaching an audience. Research shows that the digital shift has directly affected national information sources and cash flows.Footnote ⁹ To that extent, the diagnostic part of the recitals of the CDSM Directive creating a right for press publishers, which the chapter will discuss in detail in what follows, is spot on.

Search engines and the AI-based algorithms that power them play an ever greater role in deciding which information a user gets,Footnote ¹⁰ making platforms a ‘gateway to readers’.Footnote ¹¹ Platforms are not merely performing a distributional function; they are also allocative (attention allocation). A veritable reengineering of news is afoot: specific content is pushed to a user by an AI-powered algorithm based on the user’s personal data, a phenomenon encapsulated under the term ‘personalised news’.Footnote ¹² This applies both to advertising and to news content. One of the important drawbacks is that users may see very little material that forces them to rethink existing beliefs and assumptions.Footnote ¹³ This is especially true in the political field, where the typical internet user sees ‘more of the same’, often accompanied by a demonisation of people who hold a different view – the so-called echo chamber effect, the exact scope of which is disputed.Footnote ¹⁴

Many news media now plan strategically to make the news suit the platforms.Footnote ¹⁵ This involves the use of data analytics to target specific audiences as well as long-term strategies on how to gain and keep platform users. The content is constantly changed or tweaked to be optimised for platform distribution and monetisation. Nieborg and Poell point out, for example, that news organisations spend more and more resources on platformed distribution of individual stories (‘large-scale content unbundling’). Combined with platform companies’ efforts to develop native hosting and monetisation programs such as Facebook’s Instant Articles, this development may ‘reduce news organizations to mere content developers’ instead of focusing on highly curated content packages (i.e. newspapers).Footnote ¹⁶ This is self-evidently liable to produce deep impacts on democratic processes, as news is disseminated by platforms based on user preferences and ad revenue maximisation.Footnote ¹⁷ The well-known US scholar Victor Pickard even suggested in that context that ‘Tweaking market mechanisms and scrambling for new business models is futile when the market itself is a core part of the problem.’Footnote ¹⁸

Digital journalism researchers have investigated the relationship between news organisations and platform companies, and specifically how competition among them affects the incentives for investigative and other forms of journalism.Footnote ¹⁹ There is also good research on how digitisation and a more global advertising market have changed the competition between legacy news organisations themselves.Footnote ²⁰ From this research we learn among other things that platformisation directly affects the production of certain types of quality journalism, especially investigative and economic reporting (both of which often involve extensive fact-checking and analysis) and local journalism, all of which are particularly important in fulfilling the press’s ‘Fourth Estate’ role in a functioning democracy.Footnote ²¹

The ongoing shift to global platforms has had positive impacts as well, and in some cases positive implications for democracy. For example, global platforms such as Facebook have made content more accessible and manageable, opened up popular participation in democratic processes, and stimulated innovative ways of producing news. Yet there have been undeniable major negative impacts on financial flows to legacy news organisations, which typically had a dual business model relying on the sale of copies and on advertising. The latter source of income was essential for many organisations. That stream has shifted from legacy media with high content-production costs to platforms with little or no content-production costs.Footnote ²²

The problem goes deeper still. There is a potential conflict of interest in that platforms do not share the professional journalists’ and news organisations’ desire and indeed their social responsibility to produce fact-checked, free (independent) news based on a norm of objectivity, which the CDSM Directive, like this chapter, refers to as ‘quality journalism’.Footnote ²³ The idea that basic fact-checking, for example, may be subordinated to the need to generate more revenue seems hard to reconcile with the notion of objective quality journalism.Footnote ²⁴ Put simply, for global digital platforms, generating or providing access to information that meets journalistic standards is unimportant or much less important and certainly not mission-critical. In some cases, platforms might even see it as squarely unproductive, as it may drive a user away from their site or platform because for that user stepping out of the comfort of the echo chamber may require a greater mental effort and the user might click away to avoid it. One example of the potential outcomes of this conflict is the generation of unverified news by machines, so-called robot reporters.Footnote ²⁵ The use of AI creates a second structural disruption distinct from platformisation: revenue displacement and epistemic substitution.

In sum, the literature points to a potentially dramatic deterioration of the ecosystem for both professional news organisations and journalists and thus of the very existence of quality journalism. Identifying the proper response is about maintaining and rebuilding an ecosystem in which professional news organisations, including local ones, can survive and ideally thrive in the Age of Giants and can keep producing quality journalism.

20.2.2 What Is the Objective That Policy Should Pursue?

If platformisation describes the transformation, the next question is normative: what exactly should regulation seek to preserve? In their influential work Comparing Media Systems, Hallin and Mancini, addressing some of the criticism raised against Siebert, Peterson, and Schramm’s well-known Four Theories of the Press (1956), make empirical inquiries and comparative analyses to identify ideal media systems.Footnote ²⁶ Focusing on media systems in Canada, the US, and Western European countries, they construct a framework for analysis based on four dimensions: the degree and shape of development of media markets, the degree and nature of links between political parties and the media, the degree of development of journalistic professionalism, and the degree and nature of state intervention in the political system. They identify three models: the liberal model, the polarised pluralistic model, and the democratic corporatist model. In all three models, journalism is seen as a normative practice, anchored in social responsibility theory, whereby news media are guided by a ‘social contract’ between the state, the people, and the media. The social contract metaphor also explains the necessity of journalistic ideology to maintain the function of the press within this system.

Scholars and media practitioners have discussed the reality and future of this approach as well as its paternalistic leaning. As an alternative, a more ‘neutral’ public or civic model of local journalism (with emphasis on mobilisation and encouragement of popular participation in local matters) has gained prominence, stimulated by the interactional possibilities afforded by the new media.Footnote ²⁷ That said, the social responsibility ideal continues to play a central role for the public, professional, and scholarly understanding of news media’s value in a Western liberal democracy.Footnote ²⁸

Independently of the exact model chosen to explain its role, however, media pluralism (assuming that news organisations abide by the ‘social contract’) is unquestionably desirable. As the CDSM Directive notes, a ‘free and pluralist press is essential to ensure quality journalism and citizens’ access to information. It provides a fundamental contribution to public debate and the proper functioning of a democratic society.’Footnote ²⁹ We need journalism that both holds power to account and informs and provides context for public discussion of policy issues.Footnote ³⁰ This implies the ‘institutional/political imperative of independence’.Footnote ³¹

When Article 11 of the Charter says that media pluralism must be ‘respected’ and, correlatively, that EU citizens have a right ‘to receive and impart information’, this has key implications. First, why do EU citizens have those rights? In the view taken in this chapter, it is because, combined with the right to vote and stand for elections also guaranteed by the Charter, the rights in question place the people as the ‘symbolic locus of power’ in the EU.Footnote ³² This in turn provides democratic legitimacy to the legal order, a theory espoused in various forms by Hobbes, Locke, Rousseau, and Kant, to name just those intellectual heavyweights.Footnote ³³

One should define pluralism in this context. There is a complex relationship between media pluralism and other forms of pluralism, in particular value pluralism. The link between value pluralism and political pluralism can be made convincingly, as Isaiah Berlin demonstrated. That link explains why media pluralism can serve as a basis for democratic institutions to function. As Berlin explained:

Other than the dated gendered language, this seems entirely correct. For citizens to be able to ‘give answers’ to social questions, and be confronted with the values of other citizens, quality journalism and socially responsible news seem essential. Journalists make mistakes, but they should aim to inform as best they can, checking sources and correcting their mistakes when, for example, scientific advances show that previously held scientific fact is incomplete or even incorrect. Journalistic intent and a commitment to aim for objective ‘truth’ should matter.

20.3.1 A Menu of Options

There have been various regulatory responses around the world to the ‘digital shift’ in news production and dissemination discussed in Section 20.2. Those efforts have often aimed to strengthen the position of legacy news organisations, where much of the expertise in news production still resides.

Existing research on those regulatory responses to the digital shift is fragmentary at best. Scholars have discussed possible changes to copyright law and related rights;Footnote ³⁵ the desirability and impact of state subsidies to news organisations;Footnote ³⁶ exemptions from competition law to allow price-fixing;Footnote ³⁷ the creation of new cooperative (citizen-owned) models in various areas;Footnote ³⁸ improvements in the operation and regulation of copyright management organisations;Footnote ³⁹ and changes to labour laws.Footnote ⁴⁰ Some very tailored regulatory proposals target how global platforms prioritise and choose information and in doing so create possible conflicts with freedom of the press.Footnote ⁴¹ Courts, legislators, and policy makers have also struggled with how to define and separate journalism from other types of publication. Research has shown that legal definitions vary among countries.Footnote ⁴²

In what follows, the first point of focus will be the EU press publishers’ right. Section 20.3.2 examines alternative responses that are more likely to achieve the objective described in Section 20.2.2.

20.3.2 The Press Publishers’ Right

The press publishers’ right (PPR) contained in Article 15 of the CDSM Directive was presented as a way to save the media. The CDSM Directive builds on what seems an unassailable normative foundation, particularly in its recital 54, already quoted, which refers both to the essential role of a ‘free and pluralist press … to ensure quality journalism’ and the role of the press in ‘the proper functioning of a democratic society’.Footnote ⁴³

The push for the PPR comes from a belief that the media need ‘saving’ from platformisation, the phenomenon described in Section 20.2.1, namely the drastic and rapid changes to financial flows brought about by the central role of global digital platforms (not just Google and Facebook – Alphabet and Meta if you insist – but also TikTok and others) in providing access to news seen as a public good.Footnote ⁴⁴ The CDSM Directive basically sees the issue as one of licensing for both legacy organisations and new entrants, the latter described as ‘new online services, such as news aggregators or media monitoring services’.Footnote ⁴⁵ According to the CDSM Directive, they face essentially ‘problems in licensing the online use of their publications to the providers of those kinds of services, making it more difficult for them to recoup their investments’.Footnote ⁴⁶ Hence the Directive creates a new related right to allow for better licensing of press content, asserting that the ‘organisational and financial contribution of publishers in producing press publications needs to be recognised and further encouraged’.Footnote ⁴⁷ It seems, in other words, that generating revenue for ‘publishers’ of news will maintain their business model, which in turn will maintain their above-mentioned role in a democratic society. Will it work?

As the research summarised here suggests, there is a huge amount of amassed expertise in generating quality journalism, which requires professional journalists equipped with proper resources. The research examined in Section 20.2 also suggests that without quality journalism, democracy is in peril.Footnote ⁴⁸

The PPR will not directly affect the transition to personalised news, but can it help maintain existing news organisations? Empirically, the effects thus far are not impressive. Like in Australia, where major news organisations obtained a lion’s share of the deal with Facebook, the same has reportedly happened in Germany and Spain after the introduction of the PPR.Footnote ⁴⁹ Indeed, the PPR seems to have increased media concentration. This is not liable to increase media pluralism and puts the CDSM Directive potentially at odds with Article 11 of the Charter.

20.3.3 The Key Problems with the PPR

Here is the crux of the issue: the PPR does not guarantee that the news organisations receiving extra income will (continue to) produce quality journalism, nor does it operationally distinguish between news organisations that produce this type of journalism and the other ones. The PPR keeps organisations afloat, not journalism, and there is a difference. Now, this quandary was admittedly unavoidable. The Directive cannot select which news organisations are ‘good enough’ without a risk of running afoul of Article 11 of the Charter. This means that the PPR can maintain or enhance financial flows to both ‘quality’ and ‘non-quality’ news organisations. It maintains part of the institutional status quo, though not preventing new players from qualifying. What will matter in the end is what news users actually access, and the PPR will not directly affect this. If AI is used to target users using their preferences, it is those algorithms that will ultimately decide who lives or dies in this new environment. As on Apple Music, Spotify, and the like, the number of streams is the coin of the realm, and so it will be with news. If users do not want quality journalism in sufficient numbers – and want it enough to override what is chosen for them – then the PPR will end up being un coup d’épée dans l’eau. If users prefer low-quality echo chambers to the idealised quality journalism extolled by the CDSM Directive, what can copyright and related rights actually achieve? After all, those rights are, and have always been at bottom, market-based incentives.

Then comes the rights duplication issue. As the Directive notes, authors of journalistic content have authors’ rights in their work, which may be transferred to the publisher, thus making the publisher the effective right-holder. For example, reprographic rights organisations generate significant income for holders of rights in journalistic content.Footnote ⁵⁰ This is said to be unaffected by the PPR.Footnote ⁵¹ This then begs the question why a second layer of right was required, as almost all content is produced by human authors whose literary or other productions are already protected by law. There is, as Christophe Geiger noted, a risk that ‘the grant of rights to ever more actors will decrease the economic value of each right covering essentially the same economic use’.Footnote ⁵² As I have argued elsewhere, one clear step we can take to avoid putting the full force of the market behind the replacement of journalists is to continue to recognise that authors’ rights are based on human creative choices, what the author of this chapter has referred to as a human ‘cause’.Footnote ⁵³

It gets worse. In what seems an unintended consequence, the PPR likely protects AI-produced content that would otherwise be denied copyright protection due to a lack of originality. Ironically, a right justified as protecting journalism may create economic incentives to automate it. As Eleonora Rosati notes, the PPR ‘reflects the investment made by the concerned press publisher, irrespective of how much has been copied and whether what is copied is original in a copyright sense’.Footnote ⁵⁴ This could create an incentive for publishers to use more AI and fewer journalists – a perverse result to be sure. Because the right protects content whether or not it is produced by human journalists, and because human journalists are more expensive (and need time off, work/life balance, and all those petty human things), a neoclassical economist might expect publishers to rely on humans less and less to produce the news, unless they be guided by high ethical principles of quality journalism or subject to regulatory interventions meant to keep journalism human – at least to some extent.

The reference in Article 15(1) of the CDSM Directive to ‘the rights provided for in Article 2 and Article 3(2) of Directive 2001/29/EC’ could, one might argue, incorporate by reference the notion of originality in EU copyright law, but the intent, it seems, was to refer to the right just to define its scope, not its subject matter.Footnote ⁵⁵ The notion of ‘press publication’ in the Directive is not limited to literary works of a journalistic nature, as recital 56 refers explicitly to ‘other subject matter’.Footnote ⁵⁶ Certainly, the Directive does not expressly require that PPR recipients work exclusively with human journalists. Incentives created by the PPR may pull in the opposite direction. Without authors to share with, the publishers would keep more of the (new) revenue stream generated by the PPR. True, one might say that publishers would want copyright (and, therefore, human authorship) to benefit from protection in addition to the PPR because the PPR has a very short term of protection compared to copyright, but that argument can be discarded because two yearsFootnote ⁵⁷ is longer than the actual shelf life of almost all press publications. For many press publications, economic relevance rarely extends beyond days or weeks. In that light, a two-year term already exceeds their practical market life. Which news item needs a term of protection covering the life of the author plus seventy years? To limit the PPR to human-created news, one would have to adopt a purposive interpretation and argue that if the PPR’s purpose is the survival of quality journalism, that cannot be accomplished without journalists. In determining whether the PPR will accelerate the elimination of jobs for human journalists, the future may reveal how loud money can talk.

There are other issues with the PPR that will not be addressed here as they are less directly relevant to the topic, but they do matter; they include the Directive’s variegated implementation in Member States.Footnote ⁵⁸

20.3.4 Alternative Legal Tools

The PPR is but one way for legislators to respond to the shift to digital news. Other avenues to explore include platform-specific content regulation, competition law (e.g. Australia’s ‘forced’ negotiations of revenue-sharing arrangements),Footnote ⁵⁹ taxation of tech platforms (discussed by the OECD),Footnote ⁶⁰ state subsidies, media ownership rules, and regulations to support the use and prevent the circumvention of paywalls. Regulatory limits on the financial and ownership relationship between global platforms and legacy news organisations have also been proposed. The purchase of the Washington Post by Jeff Bezos (founder of Amazon.com) provides, indirectly at least, an example of such a potential role for the regulator.Footnote ⁶¹

This chapter shares Neil Netanel’s view that the problem will not be solved by creating a related right (the PPR) in links to news because the problem lies elsewhere: it ‘stems primarily from the duopoly control over digital advertising held by Internet giants Google and Facebook’.Footnote ⁶² A better response, from that perspective, would rest on competition law. A perverse impact of the PPR is that it could delay or even prevent recourse to competition law. A competition law remedy could take the form of Australia’s rather weak and ill-formed – but nonetheless noteworthy – mandated bargaining approach.Footnote ⁶³

Another solution would be more public funding, an option alluded to in Section 20.3.3. This chapter expresses some sympathy for this approach, as many European countries have public broadcasters and other publicly funded (including local) media. The hard question is how to fund the media at an appropriate level while maintaining the independence they require to function as producers of quality journalism. Scholars have suggested a tax on digital advertising revenue to generate the necessary funds.Footnote ⁶⁴ This option would be worthy of further research in a European context.

21.2.1 Parasitic Usurpation

First, it can be said that journalists should be compensated for the parasitic usurpation of the market for human news and media content production. The machine is capable of mimicking human press and media content only after it has had the opportunity to derive patterns for its own productions from myriad human creations that serve as training resources, including journalistic texts, photos, illustrations, and audiovisual material.Footnote ²¹ Journalistic training material can be of particular importance in the development of AI models that can be used in the press and media sector, as it reflects typical stylistic elements of journalistic work. Newspaper articles, for example, may contain valuable data points that offer information on specific writing styles, word choices, and expressions that readers expect from a journalistic text. From this perspective, it is only fair that human journalists – providing important elements of the source material for AI ingenuity in press and media contexts – receive a remuneration when AI productions finally kill the demand for human journalistic work.Footnote ²² This line of argument plays a central role in the lawsuits that several US newspapers, including the New York Times, have brought against OpenAI and Microsoft.Footnote ²³

Admittedly, the parasitic usurpation argument appears less convincing when considered in light of the full spectrum of literary and artistic content that may be used for machine learning. AI models capable of eroding the market for human journalistic productions may have been trained with work repertoires that go far beyond journalistic texts, photos, and videos. The spectrum of writings used for an AI model that generates natural-language text may be much more diverse than newspaper articles. It is unlikely that photo libraries used for the training of an image-generating AI model are confined to press photographs. Hence there might be an incongruence between general training resources (works created outside the journalistic domain) and the specific circle of beneficiaries – human journalists – who should be entitled to remuneration to soften displacement effects. However, this incongruence need not pose insurmountable hurdles when considering further arguments in favour of remuneration for journalists.

21.2.2 Improvement of Societal Conditions

More concretely, there is a second argument which, instead of looking at the source material used for AI training, emphasises the particular importance of journalistic work to society as a whole. From this overarching policy perspective, it can be stated that remuneration for the supply and use of generative AI systems in the press and media sector should be due to human journalists because their work has particular societal value. It would be undesirable if despite displacement effects in the press and media sector, providers and users of generative AI systems could escape the obligation to remunerate journalists by simply going beyond journalistic productions and diversifying the spectrum of literary and artistic material used for AI training. As demonstrated in the cultural sciences,Footnote ²⁴ literary and artistic productions made by authors of flesh and blood provide important impulses for social and political changes. Human expression not only addresses shortcomings of present society and defects of social and political conditions; with critical commentary and alternative visions of society, it also prepares society for the transition to being a better community.Footnote ²⁵ The work of human journalists can serve as an example. AI-generated productions in the press and media field are incapable of providing comparable impulses for the improvement of societal conditions. An AI system may manage to imitate human journalistic productions.Footnote ²⁶ But AI systems do not perceive and experience social, cultural, economic, and political conditions as humans do. They are not affected by societal conditions in the same way as humans.Footnote ²⁷ Problematic developments offer starting points for human journalists to analyse reasons and origins; criticise responsible groups, leaders, and institutions; propose alternatives; and bring all this to the attention of readers, listeners, and viewers in order to change society for the better. Investigative journalism can pave the way for changes by revealing scandals and shortcomings in societal subsystems, such as the fields of political and economic power.Footnote ²⁸ As has been pointed out, AI systems may support the work of journalists. Providing superhuman possibilities of data analysis, they may give journalists unprecedented powers of discovery.Footnote ²⁹ AI systems operating independently, however, cannot free themselves from the data input fuelling their algorithms.Footnote ³⁰ Instead of arriving at valid criticism and alternative visions of society, they simply recombine the data used for training purposes. While, for example, a generative AI system will have little difficulty in producing endless variations of known press and media content, it cannot be expected to interpret its societal impact and evaluate the desirability of potential societal changes. Even highly problematic false, harmful, and extreme messages may be multiplied and amplified without consideration of their societal repercussions.Footnote ³¹

To preserve the central societal function of human journalistic work, it is thus important to ensure that journalists survive the dethroning of the human author. The introduction of a remuneration system that channels money to human journalists makes sense from this perspective. It prevents the loss of important impulses for the improvement of social and political conditions. By leaving press and media production to AI systems, society weakens its ability to evaluate and renew itself. With the introduction of an AI remuneration system, society can reverse this trend. Offering financial support for journalists, such a system can preserve the important function of human journalistic work in providing ongoing impulses for the improvement of societal conditions. Hence, there is substantial reason to introduce remuneration mechanisms that focus on journalists.Footnote ³²

21.2.3 Socio-Political Need to Cushion Displacement Effects

If AI systems in the press and media sector are trained on a broader range of literary and artistic works – not only journalistic texts, photos, and videos – it can be argued that a remuneration system focused on journalists allows authors in the press and media sector to obtain benefits that result, at least in part, from the use of creations made by authors in various other sectors. As already indicated, this objection should not free providers and users of AI systems in press and media contexts from the obligation to pay remuneration. It is an issue of distributing AI revenue – and of solidarity among authors. Arguably, journalists exposed to displacement effects in the press and media sector have a stronger and more direct entitlement to remuneration for AI use in that sector than authors in other sectors whose works an AI crawler has amassed to maximise training resources. Conversely, it can be said that remuneration for AI use in other creative sectors should be due to authors struggling with displacement effects in these other sectors. It should not be paid to journalists even if journalistic works played a role in the training of AI systems that are used in these other sectors.

Based on this premise, a stronger, more direct entitlement of journalists to revenue accruing from the use of AI systems in the press and media sector can finally be derived from a broader socio-political consideration that has particular importance. Inevitably, the displacement of journalists and the disruption of the market for human press and media productions require adequate countermeasures and investment. Journalists who lose their jobs will need financial support. Investment in training activities will be necessary to enable them to obtain new skills and credentials. The introduction of a remuneration system that focuses on journalists is an important and desirable step against this backdrop. If the remuneration for the use of AI in the press and media sector were more widely distributed, the potential of this measure to cushion the disruptive effect on journalists would be reduced. Admittedly, general tax money could be used to enable journalists to adapt to the challenges of increasing AI use. In comparison to a tax-based model, however, the copyright framework offers crucial advantages. It does not raise the spectre of censorship and is more resilient. While the next economic crisis may lead to cuts in the use of taxpayers’ money, copyright measures can weather market cycles. By imposing a journalist-centric remuneration obligation on providers and users of generative AI systems in the press and media sector, the legislator adopts a targeted approach: the industry players – in both the AI sector and the media sector – causing the disruption are required to contribute to the financing of measures that mitigate the corrosive effect on human journalistic work. With collecting societies and their remuneration and repartitioning schemes, the copyright system offers a well-established infrastructure for the appropriate distribution of collected money – in the sense of a distribution scheme that ensures a direct money flow to human journalists.Footnote ³³

Hence, there are several good reasons for the introduction of remuneration mechanisms that ensure the payment of remuneration for the use of generative AI systems to replace human journalistic labour.Footnote ³⁴ As already indicated, this insight gives rise to the question of how best to implement remuneration mechanisms in practice. On the one hand, the focus could be on the input dimension: the use of human journalistic content for AI training purposes. On the other hand, the final output – the offer of generative AI products and services in the marketplace and the use of these systems by press and media organisations – could serve as a reference point for payment obligations. To identify the preferable implementation strategy, it is necessary to embark on a closer inspection of both approaches.

21.3.1 Money Flow from the AI Industry to the Press and Media Sector

In the case of commercial AI training falling under Article 4(1) CDSMD, this configuration of the right of reproduction also means that EU copyright law brings TDM activities within the reach of copyright holders in the press and media sector seeking to receive a remuneration for the use of human journalistic works in AI training.Footnote ⁵¹ Referring to the opt-out mechanism in Article 4(3) CDSMD, the AI Act confirms the intention to give rightholders the opportunity to exercise control over the use of their works for AI training purposes in Article 4 CDSMD scenarios: ‘Where the rights to opt out has been expressly reserved in an appropriate manner, providers of general-purpose AI models need to obtain an authorisation from rightsholders if they want to carry out text and data mining over such works.’Footnote ⁵² In accordance with Article 4(3) CDSMD, rightholders can exclude TDM via a machine-readable rights reservation. This means that AI trainers must take into account metadata, such as robots.txt files, but also the terms and conditions of a website or online service, such as online portals of press publishers and other media outlets, in order to assess whether TDM is permitted with regard to a particular work.Footnote ⁵³ In principle, rightholders in the press and media sector can thus rely on technical safeguards, such as robots.txt files, to prevent the use of human journalistic works for AI training purposes.

As in other cases where copyright holders can refuse permission for a given form of use, this veto right can pave the way for negotiations and licensing agreements.Footnote ⁵⁴ It is conceivable that the rights reservation option in Article 4(3) CDSMD leads to machine-readable rights reservation protocols that express different rightholder standpoints. One standpoint could be robots.txt that signals an outright exclusion of any use of human journalistic content for AI training purposes. Using this version of robots.txt, rightholders can express their preference for an outright prohibition. They can altogether prevent TDM of their press and media content. An alternative standpoint, however, could be robots.txt that prohibits use for AI training purposes only if the AI trainer behind the crawler is reluctant to pay remuneration. Using this alternative version, rightholders can thus express their willingness to permit the use of human journalistic content with the payment of remuneration. In other words: in an ideal world, the rights reservation option in Article 4(3) CDSMD serves as a catalyst to arrive at generally agreed, machine-readable remuneration protocols in the press and media sector that trigger an automated process for the payment of remuneration.Footnote ⁵⁵

Unfortunately, it may be quite difficult to achieve this ideal result in the real world. Even if standardised rights reservation protocols – capable of expressing remuneration wishes and modalities – become available, it is unclear whether copyright holders in the press and media sector will manage to create efficient, pan-European rights clearance solutions that offer reliable and well-functioning payment interfaces with the technical safeguards – robots.txt files for example – that express the electronic remuneration caveat. As long as the automated, machine-based identification of rightholders and the automated processing of payments remains complicated or unreliable, the rights reservation option in Article 4(3) CDSMD is unlikely to pave the way for a remuneration system that covers a broad spectrum of news and media providers.Footnote ⁵⁶ The training of generative AI systems requires the availability of vast amounts of journalistic work. The moment AI trainers are obliged to check rights ownership, observe specific payment conditions, and obtain permission at the level of individual works or databases, the burden of rights clearanceFootnote ⁵⁷ can easily lead to a situation where licensing takes place only between big players: AI companies entering into umbrella licensing agreements with content majors – the biggest rightholders – in the press and media sector.Footnote ⁵⁸

21.3.2 Extra Income for Individual Journalists

It is foreseeable that the rights clearance obstacles described here – and the potential predominance of licensing deals at the level of big press and media companies – will make it difficult for individual journalists to benefit from new AI training revenue. If rights clearance solutions become available, these solutions will most probably be the result of industry collaboration: the press and media industry agrees with the high-tech industry on conditional rights reservation protocols that make use of human journalistic content possible the moment the desired remuneration has been paid. As with all types of industry collaboration, this approach raises the question of whether the new revenue stream accruing from AI training will ever reach individual journalists.

In the press and media sector, copyright relating to human journalistic works will normally be in the hands of press publishers and other media content producers. Freelance journalists will hardly ever have sufficient bargaining power to negotiate exploitation contracts that allow them to keep copyright. Instead, these contracts will require the transfer of copyright in its entirety – for the entire term of copyright, with regard to all territories, forms of exploitation, types of use, and so on. This means that AI developers have good chances of acquiring valid permissions for AI training from press and media companies without there being any need to approach individual freelance journalists or their collective rights management organisations (CMO). The only exception would be in copyright systems that contain specific safeguards to protect authors against an overbroad loss of exclusive rights. Copyright contract law in Germany and the Netherlands, for example, follows the maxim in dubio pro autore: a freelance journalist is deemed to have granted press publishers and media content producers only those exclusive rights that are explicitly mentioned in the exploitation contract. In case of doubt, the law assumes that the contract covers only the rights necessary for the envisaged exploitation. All other rights remain in the hands of the journalist.Footnote ⁵⁹

This configuration of copyright contract law impacts rights clearance for AI training when it is assumed that the use of copyrighted works for AI training purposes is a new, formerly unknown type of use. As already indicated, the discussion on TDM offers several reference points to build this argument, as TDM copies have a specific nature. They fall outside the concept of reproduction in the traditional sense.Footnote ⁶⁰ As Rosanna Ducato and Alain Strowel have explained in the European TDM discussion:

Hence there are good reasons to assume that copying human journalistic works for the purposes of automated, computational TDM constitutes a new, formerly unknown reproduction category that falls outside the scope of exploitation contracts concluded prior to the AI revolution in copyright systems following the principle in dubio pro autore.Footnote ⁶² Rightholders in the press and media sector escape this conclusion only when they use exploitation contracts that cover all types of use – now known or hereafter devised.Footnote ⁶³ In such a case, a journalist’s chances of being remunerated for use in AI training depends on further provisions in copyright contract law that specifically address the grant of rights relating to unknown forms of use. For instance, Section 31a(1) of the German Copyright Act stipulates that an author may revoke the grant of ‘rights in respect of unknown types of use’.Footnote ⁶⁴ Paragraph 2 adds that ‘[t]he right of revocation does not apply where the parties, upon becoming aware of the new type of use, have agreed on remuneration in accordance with section 32c(1)’. This latter provision clarifies that authors – journalists in the case of press and media productions – are entitled to ‘separate equitable remuneration where the other contracting party commences a new type of use of the author’s work pursuant to section 31a which was agreed upon, but still unknown, at the time the contract was concluded’.Footnote ⁶⁵

Under German copyright contract law, freelance journalists may thus have the chance of obtaining an additional remuneration if TDM is qualified as a type of use that was unknown at the time of concluding the exploitation contract with a press publisher or other media company – a ‘separate’ remuneration that comes on top of the initially agreed remuneration under the contract.Footnote ⁶⁶ In copyright systems without a comparable cascade of provisions seeking to generate an extra flow of revenue, the success of remuneration claims after the transfer of copyright to an exploiter of the journalistic work depends on more general provisions of copyright contract law. Harmonising copyright contract law in the EU, Article 18(1) CDSMD obliges Member States to ensure that ‘where authors and performers license or transfer their exclusive rights for the exploitation of their works or other subject matter, they are entitled to receive appropriate and proportionate remuneration.’Footnote ⁶⁷

In the absence of decisions of the Court of Justice of the European Union (‘CJEU’), however, it is unclear what impact new, formerly unknown types of use may have on the assessment of whether the contractually agreed remuneration constitutes an ‘appropriate and proportionate remuneration’ in the sense of Article 18(1). Under Article 20(1) CDSMD, journalists can demand a contract adjustment ‘when the remuneration originally agreed turns out to be disproportionately low compared to all the subsequent relevant revenues derived from the exploitation of the works or performances’.Footnote ⁶⁸ However, this threshold appears relatively high in TDM cases – despite the intention to relax the disproportionality test in comparison with traditional, so-called bestseller clauses in domestic Member State legislation which, for example, required evidence of ‘gross’ disproportionality.Footnote ⁶⁹ Even if TDM licenses lead to extra income, it remains to be seen whether this new revenue stream will ever become such an important income component that, factoring TDM fees into the equation, the originally agreed contractual remuneration (which did not consider this new, unknown type of use) appears ‘disproportionately low’ within the meaning of Article 20(1) CDSMD.

In addition to these unresolved issues of copyright contract law, empirical studies show that freelance journalists may fear negative reactions in the press and media sector when they insist on their right to fair remuneration or, more specifically, additional remuneration for formerly unknown TDM use.Footnote ⁷⁰ Facing a relatively small circle of press and media producers, a journalist may be concerned about seeing their name being added to a ‘blacklist’ of ‘difficult’ persons with whom press and media organisations do not want to work because of past disputes about insufficient remuneration.Footnote ⁷¹ If a journalist does not work as a freelancer, but as an employee, copyright rules on fictitious employer’s authorship may moreover stipulate that the employer acquires copyright directly. In national systems with this fictitious authorship rule, press and media organisations become the first owner of copyright – without any transfer or licence.Footnote ⁷² Extra TDM income, then, depends on the employee’s chances of receiving a pay rise.

On balance, copyright contract law does not offer journalists a particularly powerful arsenal of legal tools. Instead, it is an open question whether freelance journalists will have success when they try to obtain a fair share of TDM revenue that may accrue from the reservation of copyright under Article 4(3) CDSMD and subsequent high-level licensing deals between the AI industry and press and media organisations. Considering the legal uncertainty surrounding claims for additional remuneration, it seems much more realistic to assume that new TDM income will predominantly fill the pockets of large press and media companies that own impressive repertoires of journalistic works.Footnote ⁷³ Individual journalists whose works form part of these repertoires, however, will not necessarily receive higher honoraria or an appropriate share of the TDM income.Footnote ⁷⁴ Copyright legislation focusing on the input/AI-training dimension may thus generate a new flow of revenue from the AI industry to the press and media sector. The opt-out mechanism in Article 4(3) CDSMD – now flanked by the provisions of the AI Act – can serve as an example. Individual journalists facing displacement effects, however, are unlikely to benefit from this new revenue stream.

21.4.1 Towards an AI Levy System

Following this alternative approach, providers of generative AI systems and users in the press and media sector would be obliged to pay remuneration for the production of content that has the potential to substitute for human journalistic works. Surveying the canon of copyright rules, it becomes apparent that a lump-sum remuneration approach is not entirely alien to the protection system. The existing legal obligation to pay remuneration for the use of phonograms could serve as a blueprint for this new remuneration regime. Using Article 8(2) of the Rental, Lending and Related Rights DirectiveFootnote ⁷⁶ as a model, the rule could take the following shape:

Admittedly, this text may require further refinement and clarification before it can be adopted as a legal basis for the introduction of an AI levy system that supports journalists. Potential definition hurdles, however, seem surmountable.Footnote ⁷⁹ As to the question of what output quality is necessary to assume a substitution risk, it must be considered that this new rule would aim at establishing a lump-sum remuneration system. It does not require a fine-grained, precise analysis that determines meticulously what specific amount of remuneration can be deemed appropriate for each and every human journalistic contribution that is affected by the use of generative AI systems. Nor does it require evidence that a specific human journalistic production has not taken place because of the use of generative AI. Instead, all that is needed is a general, abstract assessment of whether, in principle, an AI system is capable of substituting for human press and media content. If such a system is offered or used in the press and media sector, this should be sufficient to confirm a disruptive effect and impose a payment obligation.

The general conceptual contours of the proposed lump-sum remuneration approach would be as follows. The system would serve the overarching purpose of creating a new revenue stream to support the work of human journalists. Revenue accruing from the payment of remuneration for the offer and use of generative AI systems in the press and media sector would be channelled to collecting societies that would use the money to support journalistic work. If this revenue system is combined with inescapable, mandatory collective rights management, the repartitioning schemes of CMOs can ensure that, in compliance with their statutory purposes and rules for social and cultural funds,Footnote ⁸⁰ individual journalists can benefit directly from the extra income accruing from remuneration payments. To achieve this result, they do not have to invoke the complex rules of copyright contract law discussed in Section 21.3. Perhaps more importantly, they do not have to run the risk of blacklisting.Footnote ⁸¹ The distribution machinery of CMOs ensures that journalists receive a share of AI revenue automatically.Footnote ⁸²

21.4.2 Extra Income for Individual Journalists

In contrast to the industry collaboration that is likely to arise from an input/AI-training-based approach and the reservation of rights under Article 4(3) CDSMD, this output-oriented remuneration approach does not give rise to concerns that collected levies will hardly ever reach individual journalists.Footnote ⁸³ By imposing an obligation to pay remuneration on both ‘providers’ and ‘users’ of generative AI systems, the proposed remuneration mechanism addresses the internal tension between the interests of the press and media industry on the one hand and the interests of individual journalists on the other. Press and media organisations may embrace AI to reduce production costs.Footnote ⁸⁴ Individual journalists, by contrast, have a strong interest in compensation for the reduction of their market share and income.Footnote ⁸⁵ Taking these divergent interests into account, the explicit reference to generative AI ‘users’ in the proposed provision solves this tension in favour of journalists: the moment a press publisher or media company employs generative AI technology to replace human journalistic labour, the proposed remuneration system ensures that this press or media organisation is bound to pay remuneration for the use of AI. Under the remuneration rule developed here, not only the offer of generative AI systems by the high-tech industry (providers) but also the use of such systems in press and media productions (users) triggers the payment obligation. As a result, the obligation to pay remuneration rests on both AI companies offering generative AI systems and media companies using these systems in the press and media sector.

21.4.3 Focus on Public Interest Journalism

More concrete guidelines for the use of collected revenue can be derived from the three objectives described here. Following the argument that the remuneration system offers compensation for the parasitic use of human works for the purpose of enabling AI systems to kill the market for human creativity in the press and media sector (first argument), collected money could be used broadly to support human journalistic productions. A more targeted approach, by contrast, follows from the insight that AI-generated press and media content leads to a loss of human journalistic works that uncover societal problems and provide impulses for improving societal conditions (second argument). To allow human journalists to continue their socially valuable work, the establishment of funds seeking to promote human journalistic productions – in particular in the area of investigative journalism – seems warranted. Finally, the general socio-political goal of supporting journalists who lose their jobs due to competing AI content (third argument) justifies the establishment of social funds that serve as insurance against displacement effects caused by generative AI systems. The three rationales developed here offer a basis for different measures ranging from the establishment of a general repartitioning scheme to more specific, targeted investment in social and cultural funds.

Importantly, the repartitioning schemes of CMOs may even offer room for using AI revenue to subsidise socially valuable public interest journalism.Footnote ⁸⁶ In Amazon – a case about the payment and repartitioning of private copying levies in Austria – the CJEU confirmed that EU law offers considerable flexibility with regard to the use of collected funds for social and cultural purposes. One of the questions asked by the Austrian Supreme Court was whether a collecting society lost its right to the payment of fair compensation if, in relation to half of the funds received, the collecting society was required by law not to pay the levy income to the persons entitled to compensation but to distribute it to social and cultural institutions.Footnote ⁸⁷

Answering this question, the CJEU held the view that EU law did not contain an obligation to pay all the lump-sum remuneration collected via levy systems, such as the levy system for private copying, directly to rights owners in cash. Instead, a Member State was free to provide that part of the lump-sum remuneration be distributed in the form of indirect compensation through social and cultural institutions set up for the benefit of authors and performing artists.Footnote ⁸⁸ The fact that the remuneration had to be regarded as recompense for a specific harm did not constitute an obstacle to the establishment of such an indirect payment mechanism through the intermediary of social and cultural institutions.Footnote ⁸⁹ The Court also stated that a system of indirect distribution of collected funds was conducive to ensuring that European cultural creativity and production received the necessary resources. It further safeguarded the independence and dignity of authors and performers.Footnote ⁹⁰ The Court made it a condition, however, that the social and cultural establishments involved actually benefit those entitled to the lump-sum remuneration (journalists in the case of the AI levy system proposed here). Moreover, it was necessary that the detailed arrangements for the operation of social and cultural institutions were not discriminatory. Benefits had to be granted to those persons entitled to remuneration and the system had to be open to nationals and foreigners alike.Footnote ⁹¹

Arguably, this decision makes it possible to adopt measures to offer extra support for journalistic work with particular societal relevance. If it is legitimate to use half of the revenue accruing from AI remuneration for social and cultural purposes, it also seems possible to devote particular attention to the furtherance of public interest journalism when taking decisions on the distribution of this substantial share of the collected money.Footnote ⁹²

However, the decision of the CJEU in Amazon sheds light on two potential obstacles. First, the Court made it clear that the use of funds by social and cultural institutions had to constitute an indirect form of payment for those entitled to the collected remuneration. In the Amazon case, the remuneration was the result of private copying legislation providing for the payment of fair compensation for the damage caused by acts of private copying.Footnote ⁹³ Against this background, the question arose as to what extent the partitioning of collected funds had to relate directly to the losses suffered by individual groups of authors. A similar question can be formulated with regard to AI remuneration: Is it necessary to align the distribution of collected AI levies strictly with the degree of displacement effects in different branches of journalism? If a strict link to the loss of job opportunities in a given segment is necessary, it seems difficult to spend a higher proportion of the collected remuneration on programmes supporting public interest journalism unless this type of journalism is also affected by replacement effects to a greater extent.

In Amazon, however, the CJEU referred to the fact that it was very difficult, if not impossible, to calculate the individual damage that an author suffered because of private copying. Considering this difficulty, the Court underlined that Member States enjoyed wide discretion in determining the form, the detailed arrangements, and the possible level of lump-sum remuneration.Footnote ⁹⁴ In the exercise of this wide discretion, Member States were free to establish a system of indirect remuneration via social and cultural institutions.Footnote ⁹⁵ Hence the Court itself did not insist on a system that distributes collected money meticulously on the basis of the individual harm suffered by an author because such a detailed calculation of individual damage was hardly possible. A parallel between this aspect of the Amazon case and output-based AI remuneration can easily be drawn. As in the case of private copying, it is hardly possible to calculate the exact damage that the offer and use of generative AI inflicts on an individual journalist. Hence the criterion of substitution effects underlying the proposed remuneration system for AI-generated output need not constitute an insurmountable hurdle to setting up social and cultural programmes with a particular focus on public interest journalism.

Second, the CJEU made it clear in Amazon that a system of indirect remuneration via social and cultural institutions must not be discriminatory. This further requirement could also be seen as an obstacle to the establishment of a system favouring public interest journalism. Stronger support for journalistic work with particular societal value could be regarded as an unfair discrimination against other forms of journalism, such as the rainbow press with glamorous and entertaining celebrity news. This conclusion, however, need not be the last word on the matter. Social and cultural funds can arrive at a distribution scheme that offers stronger support for public interest journalism while basing their sponsoring decisions on objective criteria, such as the extent to which extra financial support is necessary for a certain form of journalism in the era of generative AI systems that displaces human journalists while enhancing the risk of misinformation and disinformation.Footnote ⁹⁶ Arguably, the need to foster human content production as a countermeasure to displacement effects caused by AI is stronger in the area of public interest journalism than in other fields of journalism, such as the tabloids.

Moreover, it must be considered that even if discrimination in favour of public interest journalism was found, this discrimination could be justified. Given the fundamental importance of public interest journalism – revealing societal problems and providing impulses for the improvement of societal conditions (the second remuneration argument developed in this chapter) – there is a sound justification for lending stronger support to journalists working in this area.Footnote ⁹⁷ In fact, there is a strong tradition of positive discrimination for the benefit of public interest journalism in European media policy.Footnote ⁹⁸ Following this tradition, the CJEU’s Amazon decision can be understood not to preclude the partitioning of collected AI remuneration in line with specific social and cultural objectives, such as the aim to ensure the survival of public interest journalism in the era of generative AI.

21.4.4 Foundation in Copyright Law

In addition to these conceptual considerations, the proposed AI levy system raises the legal-doctrinal question of whether copyright law offers a sufficient basis for a remuneration claim relating to AI output. Press and media content produced by a generative AI system need not display protected traces of a human journalistic work.Footnote ⁹⁹ Compared to the AI training (input) perspective, the situation is different. During the AI training phase, protected human works are used as learning resources for the AI system. Hence there is a direct link between the machine-learning process and the use of protected works. Qualifying copies made for AI training purposes as relevant reproductions, the lawmaker can create a legal basis for a remuneration claim in copyright law.Footnote ¹⁰⁰ With regard to AI output, the copyright basis for remuneration is less clear. Instead of reproducing individual expression – protected free, creative choices by a human journalistFootnote ¹⁰¹ – AI output may merely reflect unprotected news of the day, facts, concepts, and styles.Footnote ¹⁰²

The absence of protected human expression in AI output, however, does not pose an insuperable obstacle. In fact, a copyright concept that, by analogy, can be invoked as a legal-doctrinal basis for the introduction of a lump-sum remuneration system focusing on AI output was developed in the last century. In the discussion on the so-called domaine public payant, Adolf Dietz explained in a landmark 1990 article that, in addition to traditional exploitation and remuneration rights of individual authors, it was consistent and advisable to recognise in copyright law a new right to which a different rightholder – the ‘community of authors’Footnote ¹⁰³ – was entitled as a collective. Dietz pointed out that this step could be regarded as a corollary of a modern understanding of copyright law ‘as part of a more comprehensive concept of culture law’.Footnote ¹⁰⁴ Once this broader role and responsibility of copyright is taken as a starting point, the law is no longer condemned to accept ‘harmful discrepancies’Footnote ¹⁰⁵ between substantial profits made by exploiters of public domain works on the one hand, and precarious working and living conditions of current authors on the other.Footnote ¹⁰⁶ Instead, copyright can be employed as a legal tool to introduce a remuneration right for the community of living and creating authors as a means of redress:

As this statement indicates, Dietz developed his concept of a new right for the community of authors with a focus on the exploitation of works in the public domain. He placed his proposal in the context of the discussion on the domaine public payant that had gained momentum after the Second World War.Footnote ¹⁰⁸ From his perspective, soaring prices and income from the exploitation of public domain works in the field of literature, music, and art should, ‘at least partly and proportionally, also serve the living and creating generation of authors’.Footnote ¹⁰⁹ Evidently, the introduction of a new – collective – right to participate in revenue accruing from the exploitation of public domain works begs the question of how this new right of the community of living and creating authors might be exercised in practice. Dietz solves this problem by relying on the well-established system of collective rights management in Europe:

Before turning to parallels between this remuneration concept and the AI remuneration system discussed here, it is noteworthy that in the second half of the last century, the proposal of a domaine public payant did not remain a mere theoretical option. In Germany, it formed part of the official government proposal for new copyright legislation that was discussed in 1965.Footnote ¹¹¹ Although the German legislator finally refrained from introducing a new remuneration right for the community of authors in the 1965 Copyright Act,Footnote ¹¹² the fact that the domaine public payant was included in the government proposal shows that the concept and the underlying objective of improving the working and living conditions of authors had broad support in Germany.Footnote ¹¹³ An international UNESCO/WIPO survey conducted in 1982 also brought to light several starting points for implementing the domaine public payant in copyright law.Footnote ¹¹⁴ In more recent debates on recalibrating copyright, Rebecca Giblin confirmed the concept’s continued relevance and importance. In a critical assessment of the term of copyright protection, she qualified the domaine public payant as a useful reference point for her proposal to draw a clearer distinction between incentive and reward goals and introduce an opt-in ‘creator-right’ that would give authors access to remuneration systems in return for the registration of their works after an initial term of protection.Footnote ¹¹⁵

The parallels between the domaine public payant and the proposed output-based remuneration system in the area of generative AI are striking. Both concepts concern creations that fall outside the scope of the exploitation rights of copyright holders: literary and artistic works that never enjoyed, or no longer enjoy, copyright protection in the case of the domaine public payant; general news of the day, facts, concepts, and styles in the case of AI output that does not reproduce the individual protected expression of a human journalist. The precursor of the domaine public payant thus shows that potential legal-doctrinal concerns need not thwart the introduction of a remuneration system focusing on AI output. Even if AI output merely reflects unprotected news information, concepts, and styles, it is still possible and consistent to incorporate a lump-sum remuneration right in copyright law as a collective right of the community of journalists: a new right that is subject to mandatory collective rights management. As a new rightholder in copyright law, the community of journalistsFootnote ¹¹⁶ should be entitled to benefit from payments made under this new system. As explained, the collective remuneration right should be administered and enforced by CMOs that distribute collected money through repartitioning schemes and social and cultural funds.

Alternatively, it is possible to forge a link with the input/AI-training dimension and focus on the use of human training material as an indispensable precondition for AI output that resembles human press and media productions. As already pointed out, generative AI systems are capable of mimicking human press and media content only because the works of human authors have been used as training material at some stage.Footnote ¹¹⁷ Even in the case of AI systems trained on synthetic, machine-made literary and artistic material, the system’s capability to mimic human journalistic work can only be explained by the fact that human training resources played a role somewhere in the whole chain of training processes leading to the generative AI system producing output that resembles a human press or media production.

Considering this connection between input and output, it can be argued that remuneration for journalistic AI output must be paid because, directly or indirectly, this output is the result of the use of human works, including journalistic texts, photos, and videos, for AI training. AI input and output are two sides of the same coin: the payment of remuneration at the output level simply constitutes a deliberate choice of the legislator. Instead of placing heavy administrative and financial burdens on AI trainers,Footnote ¹¹⁸ the lawmaker can leave the training process (input dimension) unencumbered and take measures to compensate journalists when final AI products and services are offered in the marketplace and produce press and media content (output dimension). Using AI output as a reference point for remuneration, the legislator can also establish a strong link with the press and media sector: the remuneration for human journalists can be aligned with the extent of AI use in the sector. Even if an AI model has been trained on a broader spectrum of literary and artistic works – not only journalistic creations – the generation of AI output in press and media contexts ensures a clear connection with displacement effects that affect journalists. As discussed in Sections 21.2.2 and 21.2.3 (second and third arguments), this connection justifies the development of a remuneration system in favour of journalists – instead of aiming at compensating all authors whose works may have been employed for AI training purposes.

The detachment of the act triggering the payment obligation – the generation of AI output – from the act that provides the legal basis for the compensation claim – the use of human works for AI training – is not unusual in the area of lump-sum remuneration systems. In the context of private copying, for instance, the CJEU has explicitly recognised that EU Member States are free to impose an obligation to pay compensation for reproductions made by private users on manufacturers and importers of relevant copying equipment, devices, and media. Even though the act with copyright relevance – the private copying – will occur only after the equipment, devices, and media have reached end consumers, the payment obligation can be imposed on manufacturers and importers:

In the light of this existing configuration of levy systems in the area of private copying, it does not seem unusual – and perhaps even less unusual than a legal-doctrinal solution based on the domaine public payant – to simply delay the remuneration payment and take the AI production of press and media content as a reference point for compensating journalists for displacement effects caused by AI training with human works that enables the machine to become a competitor. This alternative legal-doctrinal approach also forges a link with proposals in the AI remuneration debate that seek to establish a lump-sum remuneration system at the AI training stage.Footnote ¹²⁰ Arguing for the payment of remuneration later – when AI products and services are finally brought to the press and media market – it offers a practical solution that integrates all global remuneration approaches focusing on the use of human creations as training material for generative AI systems. It shows that there is common ground for all lump-sum remuneration proposals that seek to compensate human authors for the use of their works in AI training.

In sum, there are thus two legal-doctrinal avenues that can lead to the introduction of a lump-sum remuneration system focusing on the offer and use of generative AI systems in the press and media sector. On the one hand, the concept of domaine public payant offers a basis for establishing a collective right of the community of journalists – a new right that is subject to mandatory collective rights management – to receive remuneration for AI output that has the potential to replace human journalistic work. On the other hand, the focus can be on the use of human journalistic material as an indispensable precondition and training resource for AI systems capable of producing output that resembles human press and media productions. Following the example of levy systems in the area of private copying, it is possible to uncouple the act triggering the payment obligation from the act that provides the legal basis for the remuneration claim. Hence the legislator is free to delay the remuneration payment and take the production of AI press and media output as a reference point for compensating journalists.