Larry Magid Calls For News Tax To Fund Failing Newspapers

from the uh,-why? dept

I usually find Larry Magid’s columns pretty reasonable, so I’m a bit surprised to see him calling for a special “news tax” to fund failing newspapers. Most of the column is a decent enough explanation of how the newspapers are losing subscribers and are having trouble making as much money as they used to. He even notes (as so few in this debate do) that subscriber revenue to newspapers has never really been about funding the news operations, and has always been a very small piece of the revenue puzzle. And he suggests, as we have many times, that it’s quite unlikely that a paywall solution will work.

But, right towards the end, he writes the following:

Maybe we need to find another model? I realize there would be a lot of objections to using tax money to finance journalism, but I wonder if we should take a look at the British model that finances the BBC’s TV, radio and online programming with a $237 tax on whatever device you use to watch TV, be it a computer, personal video recorder, mobile phone or TV set. In Britain, according to the British government’s TV licensing Web site, “watching TV without a valid license is a criminal offence.”

I’m quite sure that criminalizing unlicensed Web surfing or TV viewing would be even more unpopular with Americans than mandatory health insurance. But unless media companies can find another way to stay in business, we may very well see some serious proposals along these lines.

Magid is, certainly, not the first person to call for government funding of newspapers, but he does little to actually explore the idea — such as looking at the recent report talking about how as more government money goes to funding newspaper activities, the coverage of gov’t corruption drops. On top of that, there are serious practical issues here. The BBC setup, involves funding a single national operation, not many different newspapers (which is what the rest of Magid’s piece is about). It seems odd that he would effectively be suggesting that we wipe out local newspapers in favor of a gov’t funded national news organization.

And, of course, there are all sorts of questions about whether or not this is even needed. Certainly, many newspapers are struggling, though in many cases it’s not due to trouble funding operations, but due to the massive debt loads they took on a few years back when management stupidly thought that they were invincible to market changes. At the same time, we’re seeing new and innovative startups hiring journalists and doing good work. Shouldn’t we let the system work itself out before we suddenly decide to have the government intervene?

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Comments on “Larry Magid Calls For News Tax To Fund Failing Newspapers”

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cm6029 (profile) says:

There is an even bigger flaw in his argument: Here in the UK, the BBC is not our only media source. In fact, there are so many cable channels and newspapers that they are all fighting over the same consumer that the BBC does only a mediocre job in serving. Further, the model that force-funds the BBC is one that is commonly recognised as being unsustainable. Throw in some recent scandals that the BBC has managed, notably that about 80 of their top managers make more money than the Prime Minister, and you begin to see the forming of an inevitable unwinding of this structure. Where is Larry’s logic in recommending a system that is failing elsewhere?

ChrisB (profile) says:

Re: Re: Re:

> Many people recommend socialism over capitalism …

USA is a socialist country; socialist for corporations. 90% of the Fortune 500 have received government subsidies. The pentagon is a subsidy for high-tech and the military is a subsidy for weapons manufacturers. Your grandchildren will be paying for the bailout to financial institutions who bet that poor people could repay $500,000 mortgages.

DS says:

Re: Re: Re: Re:

“socialist for corporations. 90% of the Fortune 500 have received government subsidies”


Until you realize that corporations don’t pay taxes, the last person to buy a service or a product does, you’ll be angry for all the wrong reasons. Raise taxes on a provider of goods/services? The end user will pay more. EVERY TIME.

Don’t believe me? Stop considering taxes some strange separate stand alone cost to companies. Consider it part of it’s standard operating costs, like raw materials, labor, etc. And then it will all start becoming clearer.

Anonymous Coward says:


As a fellow Uk’er I must disagree about the BBC. The BBC model is not failing it is working better than ever. All the comments about “unsustainable models” actually come from business AND government representatives who are complaining because the BBC publicises their own weaknesses. In othere words complaints in general don’t come from the mass of the public but from competing vested interests. In a funny sort of way these comments actually prove that BBC news is doing a good job!

Having said that it doesn’t mean that Larry’s argument holds any water. The BBC is pretty much a unique organisation in the world, with a specific history that just didn’t happen anywhere else (Lord Reith being one unique factor). You can’t create that history and organisational culture overnight somewhere else.

To take a garbled copy of the funding model (which has some careful checks and balances to keep direct government influence at bay but without allowing the BBC itself to simply set its own licence fee) and use it to subsidize failing commercial organsiations is even less likely to work.

John Doe says:

Why is tax always the answer?

Why is it new and increases taxes always seem to be the answer to every problem? Soon we will all be handing our pay checks over to the government. In return they will give us porridge, a small shack to live in and wool clothing to wear and wonder why we aren’t satisfied with that.

Remember, that government that is big enough to give you everything you want is also big enough to take everything you have.

Nick Coghlan (profile) says:

A government funded news source can be valuable

Australia has a somewhat similar setup to the BBC in our ABC (Australian Broadcasting Corporation, largely government funded, nothing to do with the US ABC network).

The value lies in having a news source that isn’t beholden to *advertisers* for its ongoing operations, and hence is in a position to investigate corporate issues that the commercial newspapers may be reluctant to bring up for fear of jeopardising major sources of advertising revenue.

So if the commercial news sources can get stuck into the government, and the government funded news source can get stuck into the corporations, there’s an outside chance major issues in both areas will at least be picked up and covered by *somebody* (even with the rise of the internet, an awful lot of information is still conveyed through the mainstream news networks).

Anonymous Coward says:

Other do it

Sounds like a plan like the BBC (from UK) and CBC (from Canada) already implement – granted not current for printed news but for TV. The problem with large transfers of CASH from the government to a news organization is amount of influence implied – sometime you get a real dumb ass politician that things it is actually the governments money and they should be able to control/influence the news (instead of it being the people TAX money for the benefit of unbiased NEWS).

For the US, a country that hates any for of socialist idea and the absolute free business model (unless the business is to big to fail), the government subsided news might come across as to socialist.

The government supported media is not entirely bad as long as it servers a point and is not in direct competition with profitable commercial media sources. The BBC and CBC strongly support local TV series and try to do things that are in the best interest for their clients (the tax payers) even if it means it is not immediately or ever profitable – but needs and should be done by someone.

BTW: I grew up on CBC and one other channel. Still love the CBC and some of the very original programming and a non-USA view of the world (especially with respect to NEWS).

John Fenderson (profile) says:

Re: Re:

“Tax money does already go to fund a “public” information source. It’s called PBS/NPR.”

True, some tax money does go into that system, but it’s a small percentage of their total revenue. All tax money flowing into PBS/NPR accounts for 17% of their income. 10% from the Corporation for Public Broadcasting, 7% from all other government sources (National Endowment for Arts, National Endowment for Humanities, National Science Foundation, U.S. Department of Education, state governments.)

29% of their income comes from fees they charge to member TV stations (and the vast majority of that money comes from viewer contributions & donations from businesses), and 22% comes from corporations. Here’s a convenient chart:

It’s not really an 800lb gorilla. More like a 136lb gorilla.

Anonymous Coward says:

Re: Re: Please more taxes

I can choose not to buy the newspaper without repercussion. If I choose not to pay taxes there will be repercussion, the IRS won’t just let it go. Why not just give the gonvernment all of my money and then just accept whatever I get in return? Because of course industry and government have my best interests at heart, on doubt about it.

philgomes (profile) says:

Digital Pennies / Print Dollars

It’s clear to most that online attention to journalistic content is increasing in real value while print is declining. And, yet, digital advertising costs pennies on the print dollar.

Media folks take it on faith that if they buy a print ad in a paper, the thousands of people claimed as circulation MUST have seen the ad. An online ad, as we all know, is actually measurable.

At some point, advertisers, buyers, publishers, and the whole shebang will have to blink. It’ll be bloody, but necessary.

But getting the government involved is most certainly not the answer. Perhaps someone might remind Larry that the country was actually founded on the concept of a free and independent press.

To crib from Thomas Jefferson, “If I had to choose between government without newspapers, and newspapers without government, I wouldn’t hesitate to choose the latter.”

ervserver (profile) says:

much ado

Larry Magid’s piece says nothing new, in fact its just a scramble of bits and pieces of what many others have been saying. He like many others tend to avoid the obvious, letting those media organizations who can’t compete go out of business. That is how it works in every other business segment of American society, why should the media have it different ?

Larry Magid (profile) says:

My article on funding news

Thanks for following up on my column on funding news. I wasn’t so much calling on a news tax as saying that it’s something to explore. On balance, I’m not in favor or it but I think it’s worth having the discussion and appreciate your weighing in. At the end of the day, the idea is fraught with problems — most notably the risk of government censorship — but I still think it’s something that should at least be talked about.

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