05 May 2009

Fit To Print?

(Sorry, this is really long, but I didn't have time to write a short post.)

I watch very little TV. Nothing noble about this, there is simply not all that much I find interesting. But one place I do see it is at the gym, where every treadmill and elliptical is equipped with a screen. And this morning, as I was trudging along at 5 mph on a 3.5% incline, I watched a cable news conversation about the near and still possible demise of the Boston Globe.

That brought back memories from the 1980s when I lived in Mass. and subscribed to the paper for some of those years. It was a very good paper then, intellectually hefty, with real news and real writing. After I left it was absorbed by a syndicate, the NYTimes in fact, which was part of a general trend in newspapers back then.

Anyway, what got my attention was that the folks on TV were saying that the web and the economy are making the Globe (along with other papers including our near neighbor the Detroit Free Press) financially untenable. Now, in a pure free market world this would be sad but acceptable, as companies come and go like restaurants in Manhattan. But unlike restaurants, newspapers have a vital social and political function as well as an economic function.

So the conversation on TV revolved around the industry as a whole and how a city without a newspaper has no ‘tribune’, no institution that keeps its eye on those in power and calls them to account on behalf of the populus. Who will ferret out the sweet heart deals, the sold votes, the cheating and deception that tempt every politician? Cable news won’t. (This coming from a cable news station by the way, so I thank them for their honesty.) Google won’t. Comcast and Wikipedia won’t.

But how can newspapers, which are the only thing that have or can perform this function, going to survive in this new electronic information economy?

I am no economist, but it seems to me that newspapers are sort of like electric companies or health insurance companies. They provide an essential service that thus cannot be allowed to fold up entirely. So we should protect them from purely economic failure through the law, but then make sure this protection (which sometimes amounts to a virtual monopoly) does not give them unfettered power to raise prices or defraud.

I guess I propose creating a new sort of corporation, a 'news corporation' say, that would stand halfway between a pure profit making enterprise and a pure non profit.

As I walked home from the gym I thought, again being no economist but a thinker of sorts, that a news corporation might be allowed to make only as much profit as current T bills plus 1%. Anything up to that would be tax exempt, say, but if they made more, the profit would be doubly taxed at the for profit rate, to discourage corporate cheating.

Stockholders would likewise earn tax exempt interest up to that rate, meaning the price per share if it rose, but were it to rise above that the capital gains would be higher than for profits. A ‘limited profit’ corporation, which is what utilities used to be. Boring, but reliable.

Now (my walk is long so I can think at length) let’s make it better yet by allowing stock holders to claim as a charitable deduction any dividends they earn but return to the corporation in a given year, encouraging them to reinvest instead of taking dividends or selling the stock. The whole idea is to attract investors who more likely will keep the stock rather than selling it. Either the tax free earnings or the tax deductible reinvestment would make it useful to individuals and companies and pension plans, depending on their needs.

Finally, like old fashioned utilities, they would be licensed or chartered in states to serve communities in that state. There could be no national limited profit news corporations. The whole idea is to make local news possible.

I know this does not address the other factor, the explosion of national information services like cable and satellite and web based sources. But none of these can provide the essential local coverage and attention cities and counties and states need to assure the honesty democracy requires.

For two centuries we protected the press from the power of government. Now it is time to protect the press from the power of the market. Without real news, impartial news, local accessible and reliable news, we cannot survive as a free people. Something must be done, something more than praying to the gods of the free market.


Steve Best said...

I really like the thought of this, but am not sure that this would address some of the specific issues that newspapers are facing anyway in that their readers are finding other venues for the information they provide. For whatever reasons (and I know there are many), readers are going to the internet for their content, whether it is from the same news paper and network they are no longer subscribing to in terms of a daily paper, or local bloggers who are now providing a semi-journalistic role in covering local events, albeit with a decided slant, in many cases. Much as I hate to say it, I think there was a wave of decisions back in the late 90's or so to provide free content. The newspapers shot themselves in the foot, and that injury is finally causing their demise. As the individual newspapers in our country all were building an Internet presence, they decided that the content they would provide there would be free (most likely fed by ad revenue). However, they didn't count on Google and their lesser competitors being able to drill down to individual articles within a particular paper, which is now what most people seem to do. They let Google do the browsing for them, that the papers thought would happen on their sites (and thus drive up the page hits and general readership, and with it, the ad revenue).
I think for such a plan as Fred's to work, they would also need to create some form of subscription model which would provide access to full content of the articles. Perhaps there would be a way to differentiate content to provide free, limited content access to all, and a paid subscription model to allow access to all premium content for a modest fee. And, for the local articles that they know will generate a huge amount of hits among a broader audience (i.e. some of the Detroit Free Press reports on specific aspects of the auto-sector demise), the internet news sites could elect to keep these free and simply ramp up the ad placement, whereas other articles of limited interest would be accessible on a per article payment or through the subscription.

Anyway, these are, as Fred said about his post, thoughts on a problem with no simple solution. I'd love to see what others think...

WFW said...

I am with you, Steve, but I focused on the economics of the news business because that aspect can be managed more effectively (and quickly) than the sociology of news - i.e. how people get information.

My gut instinct tells me that people will always use multiple sources for informaation in the future - tv, internet, etc. What will get lost (because of the economics I believe) will be local journalism because the cost of maintaining it is too high to justify a business. The 'tribune' function of the newspaper is at the mercy of the commercial purpose so long as the paper needs to make money.

Put it this way - would we have a police or fire department if they could only make money every time they made an arrest or fought a ifre? No, the infrastructure of protection is too costly to be business worthy. (I would say education is the same, but that's another subject).

If democracy needs impartial or at least disinterested eyes and ears to keep an eye on things, then we must not allow that function to die because 'the market' didn't support it. The market did not end slavery or child labor. Indeed, it would rather have them both, as outsourcing tells us. But society deems some things too 'sacred' to leave to purely market choices. I contend democracy is one of them.

Darla said...

Fred I wish you had heard the first hour of the Diane Rehm Show on Michigan Radio yesterday and called in as well. What Steve describes was discussed as well as possibilites for government protection but nothing quite like what you propose. There was discussion of difficulties of pricing internet services when they have been given free and related antitrust issues. Thanks for your (long) post, that first line is funny, understood.

Steve Best said...

I guess I am not quite understanding the way in which this economic structure would work though, purely from a stockholder's perspective. I guess (especially in troubled times) that a rate of inflation + 1% profit plus tax incentives would help, but what was running through my head was a more direct level of support, and quite possibly from government. I was trying to get there with other means (the subscription model I mentioned), but I could still see a local news organization making decisions about cost cutting measures if the readership wasn't there to even make that capped profit. Whereas, if the local news were, in part, owned by the community with a locally selected board that decided that they needed to keep some set number of local reporters and set a publicly outlined agenda for what would be covered, I think that would be good - both for democracy and the local communities. Ideally, the board wouldn't just select specific events to cover the matched individual interests - that's more or less what bloggers often do. Rather, following the logic you mention about the fire and police protection, there would need to be some public governance. I don't know much about the BBC, but my naive and simplistic view of it's publicly held structure (that can actually earn a modest profit of a sort) would seem a similar model (that's probably why I listen to NPR, BBC, and read the Guardian for world news for the same reasons - the recognition that having too much local (national) focus in the news is a bad thing too.

Sorry for my late evening ramblings. I just think this is an interesting discussion, and am glad you brought this up. As always, I am glad to hear your points and read your posts to help me think about such things outside of my own areas of specialization. And, I'm even happier to have a place to share ideas as opposed to the snippy and angry posts on most of the comment pages of our local news organizations.