Academics craft a plan to infuse billions into journalism: Give every American $50 to donate to news orgs

September 5, 2019
Category: Business & Work

Here is a novel idea for saving serious journalism: Give every adult American $50, via an income tax checkoff, to donate to a favorite news outlet.

This is not the work of the proverbial crackpot blogger in her pajamas but rather a white paper from a group of seven well-credentialed academics, led by Guy Rolnik of the Stigler Center of the University of Chicago Booth School of Business.

They have been studying the economics of journalism in the age of giant platform companies over the course of the last year and, credit to them, went past a diagnosis of what’s gone wrong to propose a cure.

With the president and U.S. Senate not all that cordial to journalists, I would not look for a speedy adoption. Besides, fully funded, it would cost $13 billion a year. But there is precedent for the scheme, cited by the ad hoc group as a model: For the last two local election cycles, Seattle has given citizens tax-funded vouchers to pass on as campaign contributions to a city candidate of their choice.

The group anticipated some likely objections. And so they suggest some qualifiers and options:

  • Only outlets that predominantly run serious news would be eligible. A panel of experts would determine that.
  • The $50 voucher can be split several ways.
  • Since not every taxpayer would have a favorite outlet or choose to participate, the balance of the money appropriated would be distributed pro-rata to those outlets that were selected. (The Seattle experiment has a different approach — a pot of money is available first come first served, so those who are indifferent to the opportunity simply are not funded.)
  • No one outlet could receive more than one percent of the total — thus likely favorites like Fox News and The New York Times would be capped.
  • Given that the crisis in the news business is acute for local newspapers and digital sites, some or even all the money could be designated for them.

I reached Rolnik by phone in Israel, where he grew up and spent most of his career, and he explained that the voucher idea was different by design from other subsidy plans, aiming to take politics out of allocations and instead let the end users of news decide.

“We think journalism is a public good that has always been underfunded, and that has only gotten worse,” he explained, “… but we did not want to go toward rebalancing the power between publishers and platforms.

“We don’t like that thinking for two reasons — there is a risk that it will create incentives for the wrong kind of content (e.g high-traffic clickbait) and the wrong kind of control.

“Second, if you subsidize an unholy alliance between monopolies, you are really just changing the rent and still beholden to the current market structure.”

Better the flow of the money be controlled by “the public at large.”

The proposal makes no distinction between broadcast, print and digital-only news sites. So, for instance, Americans who prefer TV as a source for local news might direct their contribution to a favorite local station that is prospering rather than to a struggling local newspaper.

The academics steer away from plans like the News Media Alliance’s proposal for a waiver of antitrust regulations to negotiate payment for its members’ content from the likes of Google and Facebook. Still, the platform companies come in for heavy criticism.

Touching on a current debate over so-called Section 230 protection — which, generally speaking, protects platforms from liability for anything users upload — the group proposes that the Section 230 waiver only be continued if the companies meet a set of conditions, such as making their algorithms transparent. They note that the regulation dates to 1996, comparing the state of the internet then and now to a scooter versus an automobile.

The paper has not been published, though Rolnik said he had no objection to my writing about it. I was tipped by my friend James T. (Jay) Hamilton, director of the journalism program at Stanford.

Besides Rolnik, co-authors of the paper are Julia Cagé of Sciences Po, Paris; Joshua Gans of the University of Toronto; Ellen Goodman of Rutgers University; Brian Knight of Brown University and Andrea Prat and Anya Schiffrin, both of Columbia University.

Direct government subsidies to journalism have been common in Europe for decades, and more recently in Canada. European countries have been trying to put in place tough privacy regulations and liability for fake news for the platforms, with huge fines for violations.

But with the exception of a small grant program in New Jersey and appropriations for public broadcasting, direct government support has been anathema in the U.S., opposed by most publishers on First Amendment grounds.

My own take is that the right kind of government help should not be unthinkable, particularly now that we are deep into a time of news deserts and ghost newspapers.

Back during the crash of 2009, Len Downie and Michael Schudson floated the idea of a pool of federal funds for journalism administered at arm’s length — as are National Science Foundation grants for research projects and the work of state-based humanities councils.

The plight of the newspaper industry has also caught the attention of presidential candidate Sen. Bernie Sanders. In a position paper published on Columbia Journalism Review’s site last week, he lays the troubles at the feet of greedy capitalists. And proposes anti-merger regulation, growth of the nonprofit sector and employee ownership plans at for-profits.

As the caustic Jack Shafer and others have already written, this is solid doctrinaire socialism but not especially clear or on point. (Employee stock ownership plans, or ESOPs, at papers have been in decline for the last 20 years. They were a match for growing and highly profitable businesses but not for an industry in decline.)

Even if solutions the academics and Sanders are offering should prove to be non-starters, I credit both with not only restating the problem forcefully but beginning to shift the conversation to solutions.

News company results for the first half of this year and their projections for 2020 show only a little financial progress — a good deal of that from cost cuts.

A fadeout of the benefits vigorous local journalism makes to informed democracy is becoming a reality even as public help remains taboo.

Rick Edmonds is Poynter’s media business analyst. You can reach him at redmonds@poynter.org.

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