Should Government Save Journalism?

Robert G. Picard, RISJ Director of Research writes:

In recent years there have been many calls for government action to save journalism and news organizations, with observers blaming the Internet and the changing economics for contemporary challenges.

Although it is clear that there is an economic crisis in news industry, it did not happen unexpectedly and its solution will not be easily found. The crisis has been developing for 40 years because of social and technological changes, because of changes in media use, and because of changes in the ways advertisers market their products.

This problem was masked, however, by an unusual era of wealth in the 1980s and 1990s, that made many journalists and managers believe well-heeled news organizations were the norm rather than the historic exception. When the industry’s problems became all too readily apparent, they laid the blame on the Internet and the recession.

Unfortunately, most of the problems being experienced result primarily from self-inflicted wounds. They were caused by journalists who didn’t want to be involved in any commercial decisions in the industry and were happy to stay out of them as long as wages and benefits increased; they were caused by poor management choices and lack of strategic vision in many company offices; they were caused by large publicly financed firms that primarily wanted to milk the cash cows that newspapers became in the 1980s and 1990s; they were caused by publishers and editors who never prepared for economic downturns and held back few reserves; and they were caused by ignoring the body of research on economics and financing of news organizations that was available.

For 4 decades research showed the industry was facing fundamental economic challenges and that government policies in the UK, US and elsewhere were doing little to solve them. In the 1970s research showed that audience and advertiser choices were fundamental to the conditions of the news industry and that public policies toward the press rarely saved dying newspapers. In the 1980s research revealed that competition laws and subsidies were not very effective in addressing the challenges because they did not address the ways in which revenue was generated or the cost structures of the industry itself. In the 1990s research showed how the general economy was affecting the press and that there was a growing debt crisis in news companies.  During the last decade research showed that unreasonably high dependence on advertising revenue (especially in the US) was becoming a threat to the press.

Such research was generally ignored by journalists and managers of news organizations, but it was not completely ignored by policymakers and social observers who have at regular intervals made efforts to support the press.

Despite knee-jerk claims denying state involvement, democratic governments have supported the provision of journalism for more than two centuries. Types of support have ranged from postal rate advantages to exemptions from sales taxes, and exemptions on excise taxes to direct cash payments, and from funding public service broadcasting to council newspapers.

I am not very encouraged about the prospects of governments saving the press today, however. Historically, government policies to support the press have tended to come too late, tended to be quick fixes, tended to support the interests of established media companies, and tended not to address the underlying economic problems. I see nothing in current proposals to indicate they are being fashioned differently.

No matter how well intentioned, governments can’t make people pay attention to news, read newspapers, or use it on any distribution platform. Governments can't make advertisers choose to advertise in newspapers or other news providers or to keep spending money in advertising when they want to use it for other kinds of marketing.

There is good deal of evidence and research about effects and effectiveness of state intervention in journalism, about alternative ownership forms, and about some of the government fixes that have been proposed recently. In summary, they show the limitations that government intervention encounter:

  1. Policies based on competition law exemptions—such as permitting price collusion or the US Newspaper Preservation Act—don't preserve papers except in the short- to mid-term and they tend to work against the fundamental objective of having a competitive press.
  2. Fiscal advantages—such as tax exemptions or reductions—help reduce costs for existing providers, but don’t solve the underlying economic problems of journalism OR create sufficient incentives to promote new providers to appear.
  3. Direct subsidies help pay production or distribution costs and keep existing papers viable for the short to mid-term, but ultimately fail to save papers.
  4. Charitable and trust ownership works best when it involves commercially operated media such as The Guardian in UK, The Toronto Star in Canada, and Ouest France in France. Most charitable and trust owned media, however, have been non-commercial and relatively undistinguished, with the exception of some public service broadcasters.
  5. Governments have not been very successful in spurring startups of new journalism organizations, but the private sector and foundations have been much more successful in generating start-ups

Nevertheless, government intervention can sometimes be useful for the government to become involved if it actually serves its stated purposes and is not merely a plaster applied to a profusely bleeding artery.

Government needs to do more than merely provide freedom from state content interference as a means to supporting democracy; it can help structure, regulate, and support media to have the effective capability for democracy to operate.

It is not a question of whether there is a role for the state, but how the state should become involved so that it does not waste money on lost causes or on policies that don’t target the fundamental problems. It should not merely protect the investments of those who own media or the jobs of journalists. What it should do is ensure the public has access to the kinds of information needed to support democracy and community involvement. This involves a range of media and communication policies, not merely press support.