New FTC report: can the government save newspapers?

The FTC has released a report on the state of the news media, in preparation for a meeting on June 15. The FTC draws heavily on previous reports by the Pew Center for Excellence in Journalism and the Columbia Journalism School.

To new media evangelists, the report suggests the government should protect old media organizations against dangerous digital forces, i.e. the evangelists themselves. And the FTC’s focus is traditional, The report defines journalism as original reporting in real, or very recent, time. This means newspapers and online news sites, but it does not include magazines or opinion blogs or most TV news.

Some bloggers think this line is arbitrary, but I disagree. Aggregators and analysts are beginning to find sustainable business models online, but the raw news they rely on hasn’t. Raw newsgathering is inherently inefficient, and has never been profitable. But in print, you can bundle in the money-losing news with the profitable commentary, the spinach with the candy. The web breaks the bundle. It’s no surprise that no one has figured out to monetize raw beat reporting—on its own—online. The FTC has not only chosen the most essential segment of media, but the one that, demonstrably, the market hasn’t figured out. That’s what the state should do.

The web-istas say the state has no business in journalism. But for most of history, and especially at times when new technologies were emerging, American journalism has relied on government support. Done wrong, of course, this is propaganda. But done right, it’s great. Jim Lehrer is still the best evening anchor. Enough said.

As for the FTC’s actual recommendations, I have mixed reviews:

Changing copyright laws to let news organizations sue aggregators. I think this is a bad idea. Some aggregators do edge close to theft, but IP law is pretty skewed in favor of big rightsholders (like newspapers) already. So I resist doing anything like this piecemeal to correct one small problem that could get in the way of a more comprehensive review. Plus, it won’t work (see RIAA, history of).

Federalizing the doctrine of ‘hot news’ to create an intellectual property right in specific facts, not just articles. I’m pretty sure that this is a bad idea, on the legal theory. But I also think that IP law is something pretty significant, that (see above) should be handled in a uniform way. So some federal clarification of ‘hot news’ would be good, but I don’t think I want that clarification to expand the right beyond what is currently the norm in most states. Essentially, you want a law that bars profiting from plagiarism, but doesn’t preclude responding to and commenting on other people’s work.

A licensing tax that would allow ISPs to give users news ‘credit’ to spend like micropayments on news sites. This is an indirect way to make readers pay for a micropayments system. I’m open to micropayments, especially if done by a metered system. But the notion of making it indirect—and forcing those who don’t actually use the web for news to pay it—is absurd. Bad idea.

Drop antitrust opposition so news organizations can collaborate on pricing models. I’m an antitrust hawk, as readers know. Given how weak our ATR law is already, and that the FTC exists to police competition, this strikes me as ridiculous.

Establish a journalism division of AmeriCorps that could fund young journalists’ work in newsrooms. This is a great idea. The reinvention of media is going to have to come from young reporters, but right now, we aren’t training a lot of them, because there are next to no jobs and college debt is mounting. Moreover, this is a way for the FTC to plug a hole in the market—how to pay for reporting—without having the choose between old and new media. An AmeriCorps for journalism would field proposals on a case by case basis, and allow graduates to make the case for subsidized jobs at a variety of old and new outfits. In the words of a wise man, I like.

Increase funding for the Corporation for Public Broadcasting. Not a game changer, but if the state can afford it, I can’t see why not.

Create a fund for local news from the tax revenue that the Federal Communication Commission already uses to support telecom infrastructure in underdeveloped areas. This is not a bad idea, per se, but I think it’s unnecessary. I think sites like MinnPost and Voice of San Diego show that local news is actually the area of raw newsgathering most likely to survive this transition. I’d keep this on the backburner and see how those sites do.

Provide a tax credit to news outlets for each employee. Unlike the AmeriCorps suggestion, this would give the government no control over which outlets got money, but it would also allow news outlets to avoid making tough staffing choices and allow them to deny jobs to young people. That’s bad for innovation, and therefore bad for the industry long term.

Give people news vouchers to spend on their favorite news nonprofits. This is silly. Firstly, as with all vouchers/rebates, the money is diffused across the economy so thinly it has little impact. Secondly, it’s a pretty significant overstep of the state’s role to make people consume news. It’s fine to help it get produced; it’s not okay to make people buy it.

Give grants to universities to produce investigative journalism. There are a number of universities that already dabble in this sort of thing. When I was in college, there were several journalism classes taught out of the English department that worked on investigative pieces for the local paper. Universities get plenty of government funding as it is. This seems like an extension of something that already exists, like the expansion of the CPB. Can’t hurt.

New incorporation laws. This is the most important of the recommendations in the report. Essentially, the FTC suggests we should encourage news outlets to either incorporate as nonprofits or as hybrid corporations with a tax status that allows them to blend social purposes with profit. The Guardian in the UK is run as a trust, so there is a precedent for this. Moreover, it’s optional. It’s giving news outlets a new option, not forcing them to take it up. I particularly like it because it
recognizes and works with the inherent inefficiency of newsgathering. If pure reporting isn’t really lucrative enough to pay shareholders when it’s not augmented by commentary and entertainment, then let’s stop trying.

The rest of the report focuses on ways to fund these programs, all of which focus on taxing communications infrastructure, from ISPs to the broadcast spectrum. All of these seem wrongheaded to me, but I can’t think of better ones. Can you?

This article is cross-posted from Instant Cappuccino.