As the rise of artificial intelligence threatens the revenue and reach of legacy news brands, can media executives have their cake and eat it, too?
Leaders at McClatchy Media, the company behind local newspapers like the Miami Herald and The Kansas City Star, hope so. During a contentious “town hall” meeting, as Straight Arrow exclusively reported this week, executives warned reluctant journalists to embrace AI-written articles or watch their jobs evaporate.
Then, without taking a beat, the executives turned their attention to AI’s harms.
They used the same meeting to detail a court battle against tech giant Google, accusing the search engine of using AI to steal McClatchy’s content, decimate its web traffic and run its advertising revenue into the ground.
The meeting offered new insight into how the tech giant’s embrace of AI has harmed the bottom line of McClatchy and other legacy media companies as they struggle to adapt to a dramatically changed business environment.
“Google has forced us to participate in the AI Summaries or they will take us off of search,” McClatchy CEO Tony Hunter told staff. “So that, we believe, is an anti-competitive, monopolistic action.”
Executives’ statements during the meeting — a recording of which was shared with Straight Arrow — haven’t been previously reported. The company didn’t respond to Straight Arrow’s requests for comment.
For some McClatchy journalists, Hunter’s comments were tinged with irony. For the bulk of the meeting, Hunter and other company leaders touted a tool that places journalists’ bylines on AI-generated articles and pleaded with journalists who have protested the company’s AI initiatives. As the company struggled to attract readers and make ends meet, executives said, its embrace of AI tools was critical to keep the lights on.
“Tony wants to be this big hero in challenging Google for ‘stealing’ page views but also wants his employees to accept the fate that AI-generated stories are somehow going to save local news,” said a McClatchy employee who spoke to Straight Arrow on the condition of anonymity over concerns about retribution. “Which is it?”
How is Google affecting publishers?
For decades, Google has presented search results as a list of links to third-party websites. For online news websites like those owned by McClatchy, this served as a key source of web traffic.
That began to change over the last few years with the rollout of AI Overviews, brief summaries that appear at the top of search results. The “zero-click” environment means people can get the gist of an article without having to actually visit the news outlet’s site — threatening the business models of publishers that rely on clicks to generate advertising revenue.
Last month, Google Search underwent its biggest facelift in more than two decades, further adopting AI Summaries as the search engine transforms from a portal to the internet into the final destination for many users.
McClatchy filed a federal antitrust lawsuit in January against Google’s parent company, Alphabet, alleging the tech company “rigged” the online advertising market in its favor at the expense of online publishers. USA Today Co. and Penske Media, which publishes titles such as Rolling Stone and Variety, have made similar legal claims.
McClatchy has asked federal regulators “to take a look at” Google’s business practices, Hunter said during the town hall, but “we’ve got no support.” He told staff the company has “a very strong case” and that it “will prevail” should the matter go to trial. In the meantime, Hunter said he expects that Google will drag out the case for “as long as possible.”
Hunter said changes at Google have led to a 40% dip in web traffic across the websites of its 29 daily newspapers in 14 states. Other brands in the industry, he said, are in a “similar situation.”
“Search for Google is down 20% as the new answer engines have been launched, so that’s taking search down by 20,” Hunter said. “And then we’re down another 20, I believe, as a result of AI Summaries.”
Google didn’t respond to requests for comment from Straight Arrow about McClatchy’s lawsuit. Last month, a Google spokesperson said its generative AI Search features were “designed to provide people with a useful overview of a topic while prominently surfacing relevant links to content across the web.”
The company recently published a guide to help digital publishers optimize their web content for AI Search. To succeed in the new era of AI Search, the company advises content creators to develop material that’s helpful to humans — rather than crafting content to perform well with algorithms — and to produce original work that web users can’t get anywhere else.
On Wednesday, Google announced it would allow publishers to opt out of inclusion in AI Summaries and other generative features to comply with new regulations in the United Kingdom. The company said the change is being rolled out with “a subset of website owners” in the U.K.
“Google has said they will give us the option to opt out of that like they have been forced to do in European countries,” Hunter said. “But I’ll not hold my breath on that.”
AI prompts industrywide disruptions
McClatchy isn’t the only legacy media brand that has embraced AI while warning of its existential threats to the industry.
In a speech Monday at the WAN-IFRA World News Media Congress in France, New York Times publisher A.G. Sulzberger urged news organizations to fight back against AI companies that have failed “to ensure the public has access to trustworthy news and information.”
“Their hijacking of the public square is made possible by the original sin that animates their AI products — a brazen theft of intellectual property that has occurred at an unprecedented scale,” Sulzberger said. The outcome, he warned, is a future with fewer journalists.
The Times filed a lawsuit in 2023 against OpenAI and Microsoft, accusing them of copyright infringement through the unauthorized use of the newspaper’s published work to train AI tools.
“Tech giants strip-mine news websites without permission or compensation,” Sulzberger said. “They repackage these stolen goods as their own, siphoning off the audiences and revenue that otherwise would go to the news organizations that created this work. And this happens not just once during the training process, but countless times every single day.”
OpenAI didn’t respond to Straight Arrow’s requests for comment.
The comments come as the union representing Times staffers accuses the company of using AI to monitor workers on the job. Last month, rank-and-file workers took legal action against the company on allegations it used “AI technology to monitor and surveil the performance” of some employees in violation of their collective bargaining agreement.
“Workers everywhere are under attack from the unethical use of artificial programs by bosses,” Susan DeCarava, president of The NewsGuild of NY, said in a news release. “Sadly, New York Times management has proven themselves to be no different, rejecting both transparency and accountability for how artificial programs are being used against the very workers who help make the company successful.”
In a statement to Straight Arrow, Times spokesperson Danielle Rhoades Ha said the company disagreed with the union’s characterization of its AI use. She said the union failed to detail the specific contract provisions it accuses the company of violating.
“It also misstates how these tools work and how we use them,” she said in an email. “These are not surveillance tools, and we have no work quotas.”
Many news organizations prohibit the publication of AI-generated articles. Others, such as The Associated Press, use AI to produce routine content, such as corporate earnings reports and sports box scores. Bloomberg and The Washington Post use it to create summaries that accompany news stories.
Straight Arrow uses AI to help produce features such as Media Miss and Media Landscape, which analyze coverage from multiple news outlets. However, editors review all AI content, and AI is never used to write news articles.
McClatchy maintains its AI tool helps newsrooms improve efficiency and cut costs. But some reporters have refused to use the tool, which they say has actually cost them time as they work to fix errors introduced by AI.
A day after Sulzberger urged publishers to band together against Big Tech, Varun Shetty, OpenAI’s vice president of media partnerships, took the stage at the same conference and fired back.
Shetty said the ChatGPT maker had no plans of sharing revenue with the publishers whose work powers the chatbot, according to the Press Gazette, a U.K-based trade publication. Shetty said the company aims to “strike the balance” between providing chatbot users enough information to answer their questions while directing them to original reporting.
“Broad, generalizable brush strokes” about ChatGPT’s effects on publishers, Shetty said, “fail to capture so much of the progress that we’ve made together.”
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