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Should Newspapers Be Funded By the Government?

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Moral of the day: Selling access to government officials who are willing to contribute their time and power to the media's cause is a bad revenue model for newspapers. Another way of saying that is that newspapers should not be funded by indirect government subsidies. But the whole brouhaha confirms my long-held belief that newspapers should be funded by direct government subsidies.

The story of the decline of the newspaper business model can be expressed pretty simply: The things we have traditionally sold have become less valuable. Real estate agents are less interested in our listings. Classified advertisers have migrated toward Craigslist. Advertisers do not pay as much to appear in our pages.

The search, now, is for what we can sell that is valuable but that doesn't destroy our business. Take advertising. It used to be sufficient to give companies access to space in our pages without offering them any access to the newsroom. That was a weird convention, but it worked out pretty well. Unfortunately, it dropped in value. And so the trend now has been to sell things with more value. And those things are in the newsroom.

It's not just the half-baked salon idea that proved such an embarrassment this morning. The New Republic has "advertorials" in which, say, Saudi Arabia will pay money for articles on current events. The sections are labeled as advertisements but they are designed to mimic the magazine's core product. In recent years, they've gotten even closer to the basic brand and frequently feature discussions including New Republic writers who usually appear elsewhere in the magazine. For a short time, the magazine also had the energy company BP sponsor its environmental blog.

The National Journal frequently holds discussions that bring together the newspaper's core talent with major newsmakers. Its forum on health-care reform, for instance, paired Ron Brownstein with, among others, Andy Stern and Sen. Bill Bennett. The event was sponsored by Regency Blue Cross Blue Shield, the Peter G. Peterson Foundation and the American Heart Association.

The Politico, meanwhile, has begun the Politico Pulse, a daily round-up of health-care news that is sponsored by health advocacy organizations. The American Prospect runs special sections on policy issues that are edited in-house but funded by outside foundations. The Atlantic Media organization frequently holds corporate-sponsored events -- like the ideas festivals -- where its talent performs directly.

All of these efforts are, in their various fashions, somewhat like advertising. But they are all much closer to the actual writing shop than traditional advertising. When you're on a stage talking health insurance and your company is cashing a check for the event from a health insurer, you know perfectly well that you're not supposed to muck up this business model for your employer. When Saudi Arabia is funding your advertising insert, the point of the exercise isn't to say mean things about Saudi Arabia.

And even all this isn't keeping the various media organizations financially afloat. The more desperate their need for money, the more pressure they'll be under to sell access to their most valued assets. The salon-scheme was a very bad idea for this newspaper, but it wasn't a crazy strategy if you don't think of newspapers as occupying a special role in American life. In fact, the worst thing about the proposal was how perfectly rational it was. Newspapers can, of course, protect against such blatant violations of their ethical codes. But the greater the pressure, the more likely those codes get cut up on the margins. And how much of its code will a newspaper protect if the alternative is closing down? How much of its code should it protect if the alternative is closing down? And those, eventually, will be the options faced by many outlets.

The question, then, is whether we want newspapers (and magazines, and so forth) so agonizingly vulnerable to these pressures. The news, after all, is not a market good. Among other things, it is not profitable to sell it. But we think society needs it. Cross-subsidization from advertising and classifieds worked so long as they worked. Those days are over.

Thankfully, society has developed models for funding things we deem important but don't entirely trust to the private market. We have public universities and public centers for disease research and public firefighting departments and a public military and public roads. Why should news be different?

You can argue that it must be oppositional to government, of course, and so government funding is a conflict of interest. But many European countries have solved that problem by developing automatic funding structures free of government influence. Meanwhile, it's not as if NPR or the BBC seem particularly concerned about criticizing their respective governments (nor, for that matter, do professors at public universities seem particularly cowed). And those funding mechanisms can, at the least, be transparent, predictable, and partial, which would be better than newspapers quietly trying a thousand things, many of them far from the public eye.

That's not to dismiss all the concerns about this approach. But there is no perfect model. There are only bad models. And the pressures of the advertising model are getting rapidly worse: News-gathering institutions are closing, sensationalizing, selling off their news-gathering capabilities or losing their souls. At what point do the drawbacks of a partially public model become less than the drawbacks of a fully private model?

Uodate: Hoo boy. I had forgotten about this.

Photo Credit: Gerald Herbert -- Associated Press Photo.

By Ezra Klein  |  July 2, 2009; 3:05 PM ET
Categories:  Journalism  
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Comments

So Ezra, the real question on people's minds is whether or not YOU were invited to the Health Care Salon event? Inquiring minds want to know.

Posted by: awktalk | July 2, 2009 3:12 PM | Report abuse

I answered that in my first post in the subject. And on my live chat. The answer, categorically, is no. And if I had been, I would have refused.

The first I heard of the salons was in Allen's story this morning. Maybe I should be insulted!

Posted by: Ezra Klein | July 2, 2009 3:27 PM | Report abuse

Ahhh, nevermind my question. I see you addressed it first thing this morning, and no you were unaware of the event.

Posted by: awktalk | July 2, 2009 3:28 PM | Report abuse

Ezra writes: ****That's not to dismiss all the concerns about this approach. But there is no perfect model. There are only bad models*****

I don't think the models are really so bad. We're in the middle of a very severe economic crisis. It's not surprising that a few newspapers should go out of business. But is this such a bad thing? I don't see why the republic can't survive and thrive with ONLY 2,315 newspapers instead of 2,784. Especially when TV stations and network news outlets put their content on the web. As do foreign news organization. And let's not forget the emergence of pure web journalism products like Huffington and TPM. I know local news is what tends to be the concern here, but local news is exactly what independent reporters using the internet (AKA bloggers) are so well-suited to do.

I think the emergence of the the blogoshphere has made the journalism community in the United States more powerful and influential than ever before.

I do think that newspapers themselves need to get a lot more creative about their core product (dead tree news). Although many newspapers maintain informative and innovative websites, the dead tree product they leave on your door step is largely unchanged from what it was fifty years ago. Why should such a thoroughly non-innovative product get a subsidy from the taxpayer? I think some bold newspaper publisher ought to switch to a glossy tabloid form (think of a very thick NY Times Magazine) that comes out twice a week with in-depth reportage and lots of great photography. In other words, play to print's strength -- as a sort of luxury good just perfect for relaxing with -- instead of trying to compete with the intenet for regular, hard news. If the computer industry had followed the same track as newspapers, we'd be payinng $300,000 for ultra-slow home PCs the size of refrigerators.

Finally, the fact that a newspaper isn't profitable shouldn't and doesn't mean it can't compete. We don't need government subsidies. And we don't need tax code changes. We just need concerned citizens to run newspapers along the lines of a charitable trust or a non-profit -- in similar fashion to the excellent St. Petersburg Times (I might actually be persuaded to support low-interest government loans to concerned citizens who want to form groups to buy dying newspapers, with the proviso that they either run them on break-even/non-profit basis, or face confiscatory tax rates on any profits they do make).

But any way, the central point I'm trying to make in this rambling comment is that the St Pete Times's model -- a for profit company whose shares are controlled by a public-spirited entity willing to eschew profits -- is the best arrangement to salvage flagging newspaper publishers.

Posted by: Jasper99 | July 2, 2009 3:35 PM | Report abuse

Wapo has been BUYING access to government officials with slanted coverage for years. It seems only natural that they'd want to do some selling of their own.

Posted by: akmakm | July 2, 2009 3:47 PM | Report abuse

Quite frankly, if you'd work for government media, I have no idea why you wouldn't attend the "salon."

Posted by: whoisjohngaltcom | July 2, 2009 3:49 PM | Report abuse

I don't know whether you should be insulted or complimented Ezra. Maybe they hired you for your credibility and integrity so they could give the dirty work to the other healthcare reporters and maintain that they have a diverse perspective. For example, I would bet my last dollar that Ms. Ceci Connolly was invited.

Until the others tell us on the record that they were not invited or going to participate, it looks like the only one we can trust on healthcare at the Washington Post is Ezra Klein, who told us he was not invited and would not have participated. Am I right?

Posted by: MadAsHell3 | July 2, 2009 4:24 PM | Report abuse

Meanwhile, it's not as if NPR or the BBC seem particularly concerned about criticizing their respective governments (nor, for that matter, do professors at public universities seem particularly cowed).

NPR might be a poor example for you to use. Have you checked out the NPR ombudsman's column lately where she argues that Bush era torture should not be called torture because the president said it wasn't?

http://www.npr.org/ombudsman/2009/06/torture_round_two.html

Posted by: pmorlan1 | July 2, 2009 4:29 PM | Report abuse

Two words: "loss leader"

I don't know what happened, but news depts of corporations used to be recognized as such, but now they must contribute as profit centers. That seems stupid to me. Even MS understands the concept, loses money on the Xbox for Pete's sake! It seems to have happened when we somehow went from paying attention to Annual reports, to Quarterly ones. I think this happened when I was slaving away at The Firm, but I emerged from lawyer hell to find the world turning upside down!

Posted by: ajw_93 | July 2, 2009 4:45 PM | Report abuse

really Ezra? You would have refused an invitation from Katherine Weymouth to come to her house for dinner? Because its highly unlikely that you would be told directly how your services are being pimped out. Rather, it would have gone something like Brauchli saying

"Hi Ezra! Katherine Weymouth has been reading your stuff on health care reform, and she's very impressed. She wants to know if you'd be available for dinner on the 21st at her home in Georgetown. She's having one of her 'salons' where she invites movers and shakers on a particular issue to dinner, and she likes to have Post reporters there on an off-the-record basis to cut through the rhetoric, and ask the tough question....

you'd really pass that up? Because that's how the invitation would come, not "hey Ezra, Weymouth is selling access to you for $25K, so show up at her house on the 21st because that's how your salary gets paid!"

Posted by: PaulLukasiak | July 2, 2009 4:56 PM | Report abuse

LOL Paul.

Right now, Ezra's smacking himself in the head, going, "My God! I've already been to four of those things. Holy crap!!!"

Posted by: whoisjohngaltcom | July 2, 2009 5:40 PM | Report abuse

The main thing is transparency.

In the print edition -- in the op-ed section in particular -- it seems at times that some of the writers aren't entirely forthcoming about the kinds of financial conflicts of interests that may be at work in their piece.

I know this was an issue for George Will in the 1980s -- and there are times I wonder if some of his op-ed ideas might have been generated by a PR lobbyist and a $5,000 handshake.

If the op-ed columns on global warming for George Will had a "sponsored by Exxon, etc" then I think readers might be more forgiving. At least he's being forth-right.

Related: The Post shouldn't let employees free-lance; it shouldn't let employees collect speaking fees, for example (at least nothing more than travel expenses).

Maybe that's too harsh, and the old hands are simply spoiled by privilege, but I think readers are willing to pay for a high quality product at the end of the day. They're likely to be less enthusiastic in paying the same fee for a badly compromised product.

As far as the industry as a whole goes, I don't think federal subsidies of the print industry are the way to go. Charging a proper fee for content may be the answer. Managing expenses is part of the equation too -- the Washington Post has a ton of resource waste in its print op-ed division. Is it really necessary to have Gerson, Krauthammer, Kristol, Will, Hiatt, Diehl, and other hacks dragging down the papers bottom line? Wouldn't ONE of those conservative hacks be sufficient? Those cuts alone would probably save the paper as much revenue as the "salons" would have generated.

Posted by: JPRS | July 2, 2009 5:40 PM | Report abuse

No. Hell no.

I'm a card-carrying liberal, which means that I am willing to spend tax dollars on a lot of things that I think government CAN do better than private enterprises. However, giving a thin dime to the NeoCon Post, or the Gray Lady is just a bridge too far.

Frankly, my tax money is better spent on $2000 toilet seats for a bomber than on subsidizing the Washington Post, Charles Krauthammer, and William "Wrong About Everything" Kristol.

Let them die. If they can't stand for themselves, or find a business model that works, like any other private enterprise, let newspapers die.

They don't drive the news any more. Hell, newspapers don't even do a good job at what is supposed to be their focus, which is local news.

To ask this question is much like asking whether the Federal government should subsidize buggy whip manufacturers circa 1905. Dumb idea.

Posted by: Desert_Rat | July 2, 2009 6:48 PM | Report abuse

Politico reports that, just as I suspected, Ceci Connolly was in the thick of this mess. So now we know what we only suspected before about Ceci Connolly.

Posted by: MadAsHell3 | July 2, 2009 7:34 PM | Report abuse

It's time for the healthcare reporters for the Washington Post to disclose their outside sources of income derived from the healthcare industry. I have my suspicions that Ceci Connolly has taken and is taking significant amounts of outside income from the healthcare industry and its lobbyists. The Post doesn't care about these ethical issues as they proved when David Broder was caught taking money from healthcare interests.

Posted by: MadAsHell3 | July 2, 2009 7:46 PM | Report abuse

I think that there is a lot of room in the market for a national or even local newspaper that is willing to do real investigative reporting without bowing to the false notion of bias per Goldberg. News has never not been biased, or slanted, but never has there been such ideological monotony between papers and never before has there been such a willingness to settle for crap reportage. A newspaper that was willing to lay out the news intelligently and inform its readers would be worth whatever money it cost .

Posted by: sparkplug1 | July 3, 2009 3:28 AM | Report abuse

Ezra, you raise many important points -- journalism as a public good, the ill-effects of market pressures on newsgathering, etc. -- that we make in a recent report. Noting that this market failure in sustaining journalism is a problem for public policy, we follow our critique with five proposals:

New ownership structures, such as low-profit limited liability company (L3C) models; new tax incentives and bankruptcy laws that encourage local, diverse, nonprofit, low-profit, and employee ownership; a journalism jobs program that provides training and retraining for novice and veteran journalists in multimedia and investigative reporting;
an R&D fund for journalistic innovation that invests in experimentation and identifies and nurtures new models;
and a new public media system that transforms public broadcasting into a world-class noncommercial news operation that utilizes new technology and focuses on community service.

For the full report, please see “Saving the News: Toward a National Journalism Strategy” (http://www.freepress.net/files/saving_the_news.pdf)

Posted by: VictorPickard | July 3, 2009 10:22 AM | Report abuse

Ezra-
Call your local Public Television station and ask them about what happens when they take government money. The Corporation for Public Broadcasting, which was supposed to be the "heat shield" between the politicians and the broadcasters was turned into an advocate for right-wing partisanship. As the President of my local PBS station put it, "When you take government money, you've got Jesse Helms on your board of directors."

Posted by: hbreit | July 3, 2009 12:35 PM | Report abuse

Ezra,

what hbreit said, ture dat

Posted by: bmschumacher | July 3, 2009 2:35 PM | Report abuse

Stating the obvious...Ezra have you ever heard of "Pravda"?

Posted by: evelyn28 | July 4, 2009 12:16 AM | Report abuse

Ezra:

As a decade-plus community newspapers editor-reporter who just saw his current paper close the door with one day's notice, let me ask you a question of a different sort, or a couple.

Should community newspapers get this kind of support, too, or just national 7-days? Other people who have mentioned this before have refused to comment on that.

To only support national 7-days would be like public Congressional campaign financing that deliberately excluded third parties, is the best immediate analogy to come to my mind.

I twittered you on this too.

Posted by: SocraticGadfly | July 4, 2009 1:33 AM | Report abuse

Ezra, I like you and most of what you write, but this is a TERRIBLE idea.

TERRIBLE.

Posted by: firenze_italia | July 4, 2009 7:58 AM | Report abuse

National Public Newspaper,eh? If it achieves NPR's audience #'s, will that do?

We'd be better off getting out of the way of the restructuring of the news business that continues to accelerate. There is demand for news. Gathering and distributing it is farther less expensive than ever before. Someone will figure out a business model. It's like pulling a bad tooth. Slow is not the way to go.

Posted by: lfstevens | July 4, 2009 7:22 PM | Report abuse

If NPR and (most of PBS) is a model, then subsidized newspapers is a horrible idea. Now, if these media were to have a trust fund established to prevent the constant threat of de-funding...

Posted by: alwaysspinningintothefuture | July 5, 2009 11:16 PM | Report abuse

Ezra,

Really, no offence - I respect your work - but, are you stupid? Do you really think that a media already slavishly devoted to big government should become big-government subsidized? What would be the point? Might as well just fire up the Ministry of Truth and have done with it.

Posted by: markedwardnoonan1964 | July 7, 2009 12:28 AM | Report abuse

A simple rule in life: He who pays for something controls it. The payer gains despotic leverage over the payee. The relationship becomes master-servant since the latter is beholden to the former for its survival.

This is already true with Obama's seizing the automakers, will be true with his attempt to take over the health care industry, and would be true if ever the government funded the press. Allowing that to happen would not only rank as one of the stupidest decisions in the history of the US, but it would also mark a drastic curtailment of liberty.

Moreover, if the press is losing money, it's because the product has become inferior or unappealing. Unfortunately, the lack of rigor in Mr. Klein's logic amply illustrates this fact. Why should the taxpayers subsidize vapidity?

People like Mr. Klein seem to think the world would end without his sinecure. The implicit arrogance is astounding, as if well-educated reporters for the Washington Post have a moral right to take money from waitresses, truck drivers, and plumbers. If those waitresses, truck drivers, and plumbers wanted to buy the Post's product, they would. Increasingly, they do not, and that worries such as Mr. Klein.

Finally, the American people have rejected Bailout Nation, as well they should. If a commercial entity can't make it, let them shutter their doors and let the market redeploy the physical, financial, and human capital to more productive uses. This formula produced the greatest economy that ever existed. The American people are demanding we return to that formula, and they will punish politicians who do not heed their demand.

Posted by: SARileyMan | July 7, 2009 4:15 AM | Report abuse

Of course NPR and the BBC feel free to be "oppositional" - they're effectively insulated from the consequences by subsidies. Is this really a good thing? Both the Beeb and NPR have evolved into cliques of right ( that is left ) thinking monocultures with an obnoxious sense of entitlement. What's so great about entrusting the news to that kind unaccountable institution?

At least the Washington Post has a bottom line to keep it partially in touch with reality. Subsidized news is not an idea worth importing.

How typical of the Post to fawn over bad ideas from Europe.

Posted by: binkless | July 7, 2009 7:07 AM | Report abuse

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