What's Happening?
Artificial intelligence is significantly jeopardizing the business models of local news organizations, according to an amicus brief filed by Rebuild Local News and other groups in The New York Times lawsuit against Microsoft. The brief argues that AI
companies scrape journalistic content without compensation to train their models and provide answers, reducing the need for readers to visit news websites. This practice has led to a nearly 50% decline in web traffic for the top 100 newspapers since ChatGPT's release in 2022, with smaller publishers experiencing even steeper drops. Consequently, consumers are less likely to subscribe or donate to news outlets if they can access information for free via AI chatbots. Furthermore, AI often makes the creators of journalism invisible, undermining the ability of news organizations, especially nonprofits, to demonstrate their value and secure funding. This situation is exacerbated by AI's accuracy issues with current events, with a 2025 NewsGuard study finding major AI tools repeated misinformation 35% of the time, a problem likely to worsen with local news due to scarce information.
Why It's Important?
The decline of local news due to AI has profound implications for communities. Academic research indicates that a lack of local news correlates with increased corruption, fewer solved violent crimes, less accountability for polluters, municipal governments paying higher interest rates on bonds, and a less informed populace regarding local issues. It also contributes to worsening polarization and an increase in local misinformation, as AI struggles with scarce local information and areas with few journalists are less effective at combating deepfakes. Conversely, a strong local news presence leads to reduced corruption, less government waste, more responsive elected officials, and less misinformation. The current trajectory discourages investment in local news, as investors see little financial incentive to back outlets whose content is freely exploited by AI companies. Philanthropic efforts to support local news are also undermined, as donations effectively subsidize AI companies that benefit from the journalism without contributing to its creation.
What's Next?
State legislators and members of Congress are expected to consider various proposals for taxing AI companies in the coming months and years. These proposals aim to mitigate the damage caused by AI, with potential taxes on power consumption, data scraping, or computer power used. The revenue generated could be substantial, potentially funding initiatives to support local journalism, such as employment credits for journalists. California has already enacted a law providing refundable tax credits to news outlets that hire and retain local journalists, a model that could be adopted nationally or in other states. Advocates suggest that AI companies should contribute to the revival of local news, arguing that responsible AI use can benefit newsrooms, but only if supported by human journalists. Policymakers may also consider requiring data center developers to fund local journalists to cover their operations, ensuring accountability and transparency.
Beyond the Headlines
The ethical and economic implications of AI's impact on local news extend beyond immediate financial concerns. The uncompensated scraping of journalistic content by AI companies raises fundamental questions about intellectual property rights and fair compensation in the digital age. The invisibility of content creators in AI-generated summaries erodes the public's understanding of where information originates, potentially diminishing trust in journalism and civic institutions. This shift could lead to a long-term decline in informed civic engagement and democratic accountability at the local level. Furthermore, the potential for AI to exacerbate misinformation, particularly in areas with limited journalistic oversight, poses a significant threat to the integrity of public discourse and electoral processes. The debate over AI taxation and its allocation to support local news highlights a broader societal challenge: how to harness technological advancement while preserving essential public services and democratic functions.
