FTC Future-of-Journalism Inquiry Wraps Up With Little Momentum for Major Intervention

I’ll be among the 30 participants in the Federal Trade Commission’s roundtables Tuesday in Washington, D.C. evaluating proposals for government action “to support the reinvention of journalism.” I expect a stimulating discussion, but not a run-up to landmark regulatory action or legislation.

 

Over the last year, the steam has gone out of any movement toward major federal intervention that would shape a media mix in rapid transition. Since spring of 2009, newspapers and traditional media have grown markedly healthier, at least in the short run. Concurrently, there has been an explosion of new digital media experiments, with philanthropists and private capital providing ample start-up funding, absent any push from government.

 

Equally important, the exploration of possible government action by the FTC and others turned up a host of problems. Subsidies or anti-trust assistance for newspapers would appear to prop up fading for-profit enterprises over new media alternatives. On the other hand, it is less than clear that government could be skilled and disinterested in picking worthy recipients if it threw money behind new media, non-profit news units.

 

And fatally, there is no consensus among news companies themselves, let alone Congress or the public, about what would constitute appropriate help, as FTC Chairman Jon Leibowitz and Rep. Henry Waxman pointed out at the first of the FTC’s workshops in early December. Crisis or no crisis, sentiment still prevails for keeping media fully independent of government, except perhaps for postal subsidies and tax treatment.

 

I talked by phone Friday with Pat Schultheiss, who put together the roundtable meeting, and she confirmed the disclaimer included in the draft: FTC staff inventoried the ideas presented, but has not recommended them. The draft is simply a compilation of proposals that came up in workshops and other FTC staff research, Schultheiss said. It is not even a selection of ideas the staff thinks most worth considering, she added. Some of them may be terrible and perhaps Tuesday’s participants will say that.

 

The ideas are grouped in four categories:

The last of these categories includes such options as quicker and less costly responses to Freedom of Information Act requests, provision of interactive data by governments at all levels, and government investments in information technologies that journalists and others could use.

 

In my view, the best of the proposals is a modest one: IRS or legislative action that would clarify that news ventures could operate as non-profits and still accept advertising. This would allow a local group of individuals and/or foundations to purchase a newspaper intending to run it as a non-profit and to accept tax-deductible contributions. Similarly, local non-profit start-ups would not be left guessing, as they are currently, whether they are courting objections from the IRS as they develop advertising as one revenue stream.

 

I don’t think (as some advocates seem to) that non-profits are inherently better. Indeed, as I wrote recently, several of the most interesting start-ups — like Civil Beat in Hawaii and TBD in Washington, D.C. — are structured as for-profits. But it would seem good policy for federal tax law to accommodate as many options as possible.

 

Even without a dramatic resolution, I wouldn’t write off as a waste of time government exploration of journalism’s future. The staff’s statement in the draft’s opening pages on “The Current State of News” strikes me as concise and on target, though Jeff Jarvis is correct in saying it is newspaper-centric (it draws some on my work at Poynter and on the State of the News Media 2010 annual report).

 

Tuesday’s discussion, an ongoing study by the Federal Communications Commission, and future work could turn up different and better ideas. Opinion among lawmakers and the public may settle as the situation ripens, especially if the provision of serious news takes another significant turn for the worse.

 

Right now is a great time, though, for letting nature, creative destruction and innovation take their course. Will newspapers and other traditional media recommit to an adequate news effort and find new revenue streams as advertising budgets continue to move to all things digital? Which of the start-ups will demonstrate financial stability and success with news audiences and marketers?

 

With these free market dynamics playing out at warp speed, later is the better time for deciding whether government invention is needed and if so, what kind.