The Public May Need to Subsidize Itself

Clay Shirky is entirely right about the uncertain future of journalism and the critical importance of subsidy in the emerging world of news and public controversy. Money, it is true, will come from somewhere because news has value, but where it comes from — and under what conditions — will matter for the kind of journalism and public life we have.

Consider, for example, one aspect of the shift now taking place as a result of the financial crisis of the press. Many regional papers in the United States have cut back or shut down their Washington bureaus, reducing coverage of their region’s representatives in Congress and the implications of federal policy for their area. The analogous process has also happened within the states; in the past five years, according to surveys by the American Journalism Review, the number of reporters covering state government has dropped by one-third.

Meanwhile, trade publications for particular industries and other forms of niche journalism continue to thrive, and some laid-off reporters are finding work in that sector. Instead of keeping track of government on behalf of the general public, more journalists are working for special interests that are willing and able to pay for the same service.

Will non-commercial patrons step in to rectify this imbalance and finance more public-service journalism? Perhaps, but I see no reason to assume so. Newspapers at the local and regional level have already retrenched, but the resulting decline in original reporting has not been offset by growth in other media.

The Internet encourages the idea that the loss of traditional journalism will be self-correcting. Professor Shirky writes, “The logic of the internet, a medium that is natively good at helping groups communicate at vanishingly low cost, is that the act of forming a public has become something the public is increasingly doing for itself …”

It is a bewitching thought the public will assemble itself. The idea is analogous to the perfect free market, and there is no question that by drastically reducing transaction costs, electronic communication and exchange have created new possibilities for both markets and publics. But law and therefore politics, as well as the unequal distribution of resources in society, shape the kind of markets and publics that develop. The contrasting fortunes of niche and public-service journalism illustrate that point. Those who follow trade publications can afford to pay top prices, and they can also usually write off their subscriptions as a business expense, whereas most subscribers to daily newspapers and political magazines bear the full price.

Public policy in the United States didn’t always put the public press at a relative disadvantage. Beginning in the 1790s, when most papers were partisan, Congress subsidized their development through postal policy. The postal rates for sending newspapers through the mail were set below cost, and editors could exchange copies with one another at no charge. Congress also refrained from taxing newspapers, a legacy of colonial opposition to Britain’s Stamp Act. These postal and tax policies — unlike the subsidies that the president and other officials gave their own party papers through printing contracts and government advertising — benefited newspapers across the board. In the language of modern First Amendment law, the postal subsidies were “viewpoint-neutral.” As Madison and other founders envisaged, they didn’t just promote newspapers; they also helped to knit together the young republic and sustain its political life.

By the Civil War, newspapers had gained a firm footing in the market, and as advertising grew, more papers became wholly independent of the patronage of political parties. Until recently, that framework — commercial and nonpartisan — has been the norm not just for newspapers, but for the broadcast news media that developed in the twentieth century.

Now that pattern has begun to change. On radio, original reporting has virtually disappeared from commercial stations, and a split pattern has emerged. Public radio has become the last refuge of journalism on the dial, while commercially sponsored talk radio is intensely ideological. On television, the decline of network news and the rise of cable have brought a shift toward a fiercely partisan journalism, and on the Internet as well, ideologically oriented news sites on both the right and the left have assumed a central role.

Partisan journalism has a legitimate role to play in news and public controversy. When the press was partisan in the early nineteenth century, the United States had a vibrant democratic life, and the return of partisanship to the news may be stimulating more interest in politics today. After decades of falling political participation, voter turnout increased sharply in 2004 and 2008. Though widely bemoaned, the partisan edge of contemporary politics and journalism may well have contributed to that upturn.

But while partisan journalism has a legitimate place, we also need sources of reported news that can be widely trusted. The Internet allows access to a diversity of opinion, but it hasn’t yet provided the economic basis for financing the professional reporting of news on anything like the scale of newspapers. This problem is especially acute at the state and local level because of the difficulty of aggregating a large enough public and thereby generating sufficient revenue from advertising, charges to readers, syndication, or some combination of sources.

Nonprofit financing is part of the answer, but grants often come with strings. Where there are patrons, there is dependency. Newspapers have enjoyed considerable freedom because the sheer number of advertisers has enabled publishers to avoid becoming dependent on any single one. The risk of a new age of patronage is that the sources of money are likely to be fewer and the power of sponsors correspondingly greater.

Curiously enough, government subsidies that are viewpoint-neutral and that do not give officials any discretion may be a less constraining method of supporting journalism than leaving it to dependence on patrons. Today, any such subsidies should be not only viewpoint-neutral, but also platform-neutral. We need the modern equivalent of the postal subsidies of the early American republic, except that there ought to be no bias in favor of publications that appear in print.

At this point, I am not advocating any specific form of subsidy — only that we should be open to the idea. There may be lessons for America in the experience of countries that have subsidized the news media without controlling them. Many European countries, for example, exempt news publications from the value-added tax; we have no VAT, but we do have a payroll tax, and one possibility might be to exempt not just newspapers, but all recognized news gatherers from that tax in whole or part.

For the past three decades, surveys in the United States have shown, particularly among the young, not just a decline in newspaper readership, but diminishing attention to the news and politics when taking all media into account. The financial crisis of the press is yet a further threat to the system of public accountability that democracy requires. That is what ought to concern us. What the public may need is to subsidize is itself.

Also from This Issue

Lead Essay

  • Not an Upgrade — an Upheaval by Clay Shirky

    In his lead essay, Clay Shirky argues that the old models of journalism are broken primarily because in today’s online environment, self-created publics can parse the news however they like. The biggest failure of journalism in the online age is the failure to reproduce the front page – the news that everyone saw together and first. Today, individuals who want specialized or even personalized news can get it instantly. Readership has become impossible to control.

    In this massive upheaval, one thing that may be at risk is the provision of “serious” journalism – news stories about the city council, or about events on the other side of the globe. These stories aren’t being subsidized anymore, as they had been in the past, by getting bundled in with coupons and stories about sports. To provide serious journalism, new forms of patronage may be necessary, and Shirky’s essay concludes with a brief look at some models that may work. Yet no upheaval of this magnitude is really predictable, and the future will probably surprise us all.

Response Essays

  • Some Patterns in the Chaos by Philip Meyer

    In his response essay, Philip Meyer argues that while newspapers may be in financial trouble, journalism is on the move. In particular, citizen journalism, done by individuals who may have other careers or life paths outside of full-time journalism, is a key trend for the future. Certification for these journalists – whether through reputation metrics or through a formal certification process – will become increasingly important. Evidence-based journalism, specialty niche journalism, and journalism done through philanthropic foundations are some of the other key trends that are accompanying the decline of the generalist newspapers that dominated the twentieth century. Evidence-based journalism is more open to ordinary citizens, who may not have the contacts of traditional newspaper reporters. Niche journalism had a hard time finding an outlet in the old days. And, although the prospect may be unsettling, philanthropy is increasingly an important source of funding for these projects.

  • Abandon Old Strategies to Survive in a New Era by Steve Yelvington

    Steve Yelvington argues that much of the hype about the death of the newspaper business is simply the product of journalistic myopia, in two different forms: First, the news business as a whole made a series of bad business decisions that left it ill-prepared for the information age. And second, the effects of these decisions are all too apparent to reporters, who see them up close in their professional lives. Yet let’s be skeptical of the claim that the newspaper is dying, he says: We are in the middle of a very serious recession, and many other industries are also suffering. No one, however, suggests that we will stop banking, say, or driving cars. Tax breaks, subsidies, bailouts, and laws forbidding hyperlinks to copyrighted content are not only unnecessary – they are harmful, because they will prevent the news industry from developing the new strategies it desperately needs.

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