Wednesday, May 20, 2009

Could BBC-style ‘news tax’ save U.S. press?

Amid growing economic distress at newspapers and magazines, a number of folks have suggested imposing a BBC-style tax on American households to rescue the struggling print media.

Could the idea work? Potentially. Would it help? Possibly. Could it really happen? You be the judge.

Although the idea of a news tax raises a host of troubling questions, it has one powerful argument going for it: It worked great for the BBC.

The British Broadcasting Co. has been supported since 1922 by a tax imposed first on radios, then on radios and televisions, and now on televisions only.

The annual fee, which started at 10 shillings per radio receiver, today is £142.50 (US$227.43) for a color TV and £48 (US$76.61) for a black-and-white set. The fee applies to those who view TV on computers and blind people get a half-off discount.

Assuming the tax is collected on all of the 26.3 million TVs in the UK, the levy generates $3.7 billion a year to help fund eight national television channels, five national radio networks and an assortment of local broadcast and Internet services in England, Scotland, Wales and Northern Ireland.

The tax evidently is one reason the BBC continues to cover Iraq on a full-time basis, while the once-proud American Broadcasting Co. is outsourcing a good deal of its coverage of the conflict to – you guessed it – the BBC.

The BBC tax dates back to the earliest days of broadcasting, when the government decided it was important to ensure that radio service and quality programming were widely available throughout the British Isles. When TV was invented, the tax simply was carried over to it. Today, it supports a number of top-notch websites, too.

In the United States, by contrast, the print and broadcast media grew up as privately capitalized businesses, prospering handsomely for decades until the Internet-enabled media rocked their world.

The notable exceptions to private media ownership in U.S. are National Public Radio and the Public Broadcasting System, which each derive about a fifth of their funding from federal sources; about a fifth of their funding from state and local government; about a fifth of their funding from educational institutions, and the rest of their funding from foundations, corporate donors and listeners and viewers like you.

In the absence of a tradition of government support for the media in the United States – not to mention the constitutional proscription against government interference with the press – a move to impose a fee to fund newspapers would be, to say the least, a sharp break with precedent.

For the sake of argument, however, let’s think about how a news tax would work.

The most popular proposal, which has been discussed but not advocated by such industry leaders as Tom Rosenstiel, the director of the Center for Excellence in Journalism, would "embed" a fee to pay content producers in the bill of everyone who subscribes to Internet access through a telephone company, cable-television service or other provider.

Assuming 75% of the 118.3 million U.S. households subscribe to Internet service and the news tax were $10 per month, the measure would raise the respectable sum of about $10.6 billion per year.

If the tax were allocated strictly to newspapers by daily circulation, then 350,000-circulation papers like the Boston Globe or San Francisco Chronicle would get annual subsidies of $85 million apiece. That would be enough to cover the $1 million-per-week in operating losses that their owners say each paper is suffering and make it possible to reverse some of the recent draconian staff cuts at each publication.

A 10,000-circulation paper would be entitled to a windfall of $2.4 million, enough to cover the pay and benefits for nearly 50 employees for a year.

If the ball got rolling for a news tax, however, wouldn’t magazine and web publishers want a share of it, too?

If the tax had to be divided among the nation’s 1,400 daily newspapers, 26,400 magazines and 75 million active blogs, then the estimated annual subsidy would tumble to less than $50,000 for the Globe or Chronicle, $1,400 for a 10,000-circulation paper and a few bucks for a blog with a handful of page views.

Apart from the apparently negligible economic benefit a news tax would deliver if it were applied broadly to all print and web publishers, a levy intended to assist strictly newspapers would face a number of daunting barriers of its own:

:: Only a third of Americans cared enough about newspapers to read one in the prior day, according to a survey released in August by the Pew Center for the People and the Press. Why would the other two-thirds be willing to pay the tax?

:: The vast bulk of the American population has come to believe that news, information and entertainment are supposed to be free. What would motivate them to be willing to pay the tax?

:: Voters don’t like new taxes and politicians don’t like doing things that voters don’t like. Are there enough brave political leaders to take this on?

You be the judge.

25 Comments:

Anonymous Anonymous said...

As expected, the last desperate throw of the dying media.

So nobody wants to read your biased and uninformed content? Just force everyone to pay for it.

But what if we still refuse to read it?

1:59 AM  
Blogger Steve said...

I live in the UK, and this tax for the BBC is unfair. It's unfair because suppose if I have cable, subscribing to a number of premium sports channels (which I would), irrespective of this - I'm FORCED by law to subsidize the BBC, even if I don't watch it!

I am absolutely against the BBC's and I would commercialize the BBC tomorrow. I'd also get rid of the Royal Family too, but that's an aside :-) ... there is too much armchair socialism in the UK, and we get away with it because we're so used to it.

And it's not about taxes - I am regularly in the US and while the two countries are different, I wouldn't say one was significantly better or worse to live in than the other. Apart from the weather. Seattle excluded.

There is already a way to contribute to newspapers' profitability: it's called subscriptions. This is the correct way to go.

If enough people don't subscribe, and there are losses, then why artificially prop this up with higher taxes and/or state intervention?

The UK and the US have both bailed out numerous banks, which - while unpalatable - is more of a no-win choice... collapse of the financial system (apparently) is not good. So we were stuck there.

Detroit? Er, no. Sorry. Sad as it is, but businesses need to be able to stand up on their own, or move on.

I think the best thing for the newspaper industry (which I do hope will live long and prosper) is to figure out the value in its own content, stop giving it away for free online - and of course, focus on producing great quality content. Getting rid of time-honored, experiences, diligent professionals is not the way to achieve this aim. Managerial level upon level, 'management consultants' looking at workflow, and treating the internet as a mystical manna and panacea also don't achieve this aim.

I think the way to go is micro-payments. Put shortly, if there is an easy way (like Amazon's one-click) whereby I can choose to read some premium content, and pay by the piece (e.g. 20c)... plus don't need to get off my fat ass and pull out a credit card, I'll pay. Doesn't sound much, but it's 20c more than you'd get giving it away for free, and also 20c more than you'd get if I get 'click here to subscribe - only $99 for the year'.

So, a common provider of micro-payments forces me to put my money where my mouth is. I think this is the correct model...

And in a way, iTunes figured this out: why be forced to drop $15 on a new Beatles compilation CD, when all you wanted was that one unreleased track... you can get it for 99c or whatever. And again, 99c or me not buying the CD at all???

So, in short, tax isn't the way. Payment is. America, and Britain if it could wake up a bit, are wonderful. Government is good, and should be there to provide free universal healthcare and quality education. But subsidizing businesses it should not.

2:26 AM  
Blogger garsky said...

Extending the analogy, this means that papers accepting 'BBC tax' money would have to be free. Nobody's going to want to pay twice for a subscription; it's hard enough to get them to pay once.

7:31 AM  
Anonymous Anonymous said...

You've skipped over the obvious difference between the BBC (and for that matter, NPR and PBS), namely that these are publicly controlled institutions, albeit with appointed boards that provide reasonable insulation from the political process.

You, on the other hand, seem to be proposing that the Sulzburgers, Hearsts, Grahams etc. receive public funds for the propagation of their views. Or would the President get to appoint the publisher and managing editor of any media that receives such money?

1:36 PM  
Anonymous Anonymous said...

To Anonymous 1:59 am:

Quit whining and start your own media outlet if you hate it so much.

As for the OP, there's so many prohibitions that this run afoul of that there's no point debating this even as an academic exercise. And you know damn well that the politicians would be trying to exert control over any news media that accepted this tax revenue.

7:22 PM  
Anonymous T Heller said...

First reaction: it's a fair source of funds in that it recognizes ISPs currently capture the majority of the value of newspaper content made available for free on web sites.

Second reaction: it's sheer folly to use such funding to prop up a failing -or failed- business model. The money should go toward modernization of a new paradigm.

There's got to be the prospect of delivering a better bang for the buck, not just keeping an enterprise on life-support.

7:50 PM  
Blogger rplothow said...

Bad idea. Terrible idea. Bad, terrible, unworkable, stillborn, idea. I wrote about this is in a recent column, arguing that the BBC model won't, can't and shouldn't work in our country. Frankly, it's a bad idea in the U.K., but they're on their own.

Roger Plothow
Editor and Publisher
Post Register
Idaho Falls, Idaho

8:32 PM  
Blogger rplothow said...

I wrote about this very thing in my newspaper last week. There are many reasons why it wouldn't work in the U.S., but the larger issue is that it shouldn't. Newspapers have enjoyed the great benefit of capitalism and need to buck up and learn to find new business models that will allow us to continue our important work.

Roger Plothow
Editor and Publisher
Post Register
Idaho Falls, ID

8:35 PM  
Blogger Helge Ogrim said...

Why should a tax on web content go to companies that provide only a small part of the content used there? Unlike British radio, internet users consume blogs, Wikipedia, Youtube, weather, games, porn, email etc. Should this subsidize NYT?

10:41 PM  
Blogger Greg said...

I understand you are just a messenger, but the message you carry is truly ridiculous.

The problem is: people nearly stopped reading local newspapers and THEN advertisers stopped supporting paper publications that hardly anyone reads. Throwing tax money on the problem will not change anything.

The solution has to be in finding a way to gain back the readership, THEN the money will return either in the form of paid advertising, subscription or maybe something else, but the key is to make people read again.

12:38 AM  
Anonymous R Berkeley said...

The situation here in the UK has been made murkier by the BBC being leant on by central government to make some of their regional resources available to other news organisations.

http://www.marketingmagazine.co.uk/news/901155/BBC-share-resources-local-media/

I am in line with the UK's majority view when I say that I do suport the BBC 'tax' and feel it gives terrific value for money. It ensures a flow of quality content that would otherwise not exist. However, when the 'Beeb' strays into areas already occupied by thriving private businesses it needs to be slapped back quickly.

1:50 AM  
Blogger J. Garland Pollard IV said...

We do some of this already through NPR and PBS and Voice of America. While public television and radio aren't funded like a government entity on the complete dole, they do get government grants from state and federal sources and match that with foundation money and grants, which is in effect subsidized with special tax laws. They have also been shown to be terribly innovative with programming.

Perhaps local PBS and NPR stations can rise to the need for more local coverage on the web and reap the reward in donations. In some cities (my former hometown of Richmond), the city would pay the PBS station to air the council meetings and have a commentator sum it up at the end. There was no bias; it was seen as an extension of the PR function of government.

The US government also sponsors VOA and other services. Perhaps there are ways that programming can be expanded in moderate ways without some awful new BBC tax.

5:10 AM  
Anonymous Laid Off Too said...

I agree with Anonymous. A tax gives money to a private company which wouldn't need it if run properly. Or a tax gives it to a government-owned company, and I already give the government money.

I find it ironic the newspaper industry missed covering their own demise for the past 20 years. Like the Detroit 3, their world didn't change with the rest of the world.

5:10 AM  
Blogger Radio Ann said...

A couple of points about a BBC tax.

1. Be careful what you wish for. When Tony Blair told the BBC "thou shalt not air live the hearings" investigating the strange death of Dr. David Kelly, the weapons expert who committed suicide while Blair was under intense criticism for supporting the American led invasion of Iraq, they backed down...as they always do. Now, I could also make the argument that commercial stations back down as well in the interests of advertisers - we have a long tradition of this in the U.S. - and maybe it's just an issue we'll always have with our media, whether the interests are government or commercial.

2. Parliament is getting rid of the license fee to support the BBC. In an era of increasing audience fragmentation, the license fee doesn't make much sense anymore. The monopoly is gone, and even Brits don't want to pay taxes, bless their social welfare hearts. The BBC has 8 years until their next charter to come up with a different funding stream. Bottoms up, mates!

Again, that doesn't mean it couldn't work in the U.S. Preferably, I would like to see a tax, on say, Google, that goes directly into a fund for public media and for that matter public libraries to create a mechanism to support participatory journalism and increase media literacy.

And as for the chum who doesn't like paying for the BBC, or anyone else who gripes about paying taxes, you might feel differently when nobody reports on the toxic dumping going on in your town, or commercial media ignores minority perspectives, whether right or left of center, because it doesn't suit their political agenda. The press, and the media is a public good - like public safety, or healthcare. If requiring the haves to put in a little dough to make sure the have nots have equitable access to reliable, accurate information, than call me a socialist. I never heard of a benevolent corporation.

5:37 AM  
Anonymous Anonymous said...

Even better, just let the UK pay the tax, and people living in the US can get their news from the BBC.

5:42 AM  
Blogger Crisatunity said...

"Saving the US press" is not a political issue. Politicians that take on solving it aren't brave, they are the same sorry shell game con artists that meddle in saving American sports institutions.

7:00 AM  
Blogger Lex said...

Even with the license tax, it seems the BBC doesn't have enough money.

I read that the BBC, before the the financial crash, explored selling advertising for its websites to pay for growing deficits.

If you give the government money...it often disappears... into the vast void of bureaucracy and incompetence.


Lex Wadelski
Austin, Texas

9:22 AM  
Anonymous Anonymous said...

You should note that the tax does not cover all of the BBC's news gathering activities, and some portions of the BBC operation like the World Service are funded by the Foreign Office budget. This, alone, should raise questions about the nature of this government-subsidized operation. Yes, I think it generally does a good job. But we also need to recognize a bias in stories like that going on in Zimbabwe, currently the point of BBC ire. This caused considerable misunderstanding during the 1955 Suez Crisis, when the BBC when on an anti-Nasser binge. There are many pointed BBC stories that seem to me to be founded in making foreign policy points.
The concept of a news tax is, to me, abhorent. Would this tax subsidize the news that is produced by the National Enquirer and other supermarket tabloids under this plan, and if not, why not? Playboy magazine? Hustler? A magazine promoting cigar smoking? As a reporter, I would relish covering the political committee that made these spending decisions, especially if was a committee composed of elected officials.

My opinion is that since 1960, newspapers have benefited from an advertising spending splurge. Now the ad tide has ebbed and the billions are being spent elsewhere. Newspapers just need to adjust themselves to the way things were before the 1960's.

4:41 AM  
Blogger Steve said...

So much has been said about the changes affecting many of the big-city papers. I haven't heard much about one particular point so obvious to so many outside of the MSM: repetition, especially affecting political reporting.

With the apparent death of journalistic independence over the past decades, with all J-schools going to one particular political ideology, thus nearly all "journalists" (are there any left, really?) siding up on the left edge of the political divide, we have a flood of repetition in the big-city media afecting many areas of news, not just political news.

Of course people are jumping ship! If Denver news consumers get the same treatment of politics from the Big 3 boadcast nets as well as the radio media, why even bother picking up the Rocky Mtn News to see the same words? Ditto Minneapolis, ditto Philadephia, ditto Boston....

When newspapers actually had independent points of view, they prospered; but, how many sources of Newspeak does a consumer need?

7:12 PM  
OpenID fgraver said...

You must also remember that the BBC-tax (and we have one here in Norway for the publicly-owned NRK, based on the BBC) does not just fund news. The intent is to have a public broadcaster that can air a number of different types of programmes that would not necessarily commercially viable on a private station. News, while an important part, is still only a part of the mandate.

Newspapers need to stop thinking of themselves as selling a commodity (the news), and instead find out how they can sell a service (a place to find the news). The water industry has made a fortune selling something free (water) because they offer tremendous convenience that many are willing to pay for. News agencies that find a way to offer a more convenient way to get your news will be able to make money off it.

5:34 AM  
Anonymous Anonymous said...

I'm so glad I found your blog (off a link from Slate). I will be a regular reader!

Thanks

11:25 AM  
Anonymous Anonymous said...

You need also to note the perverse impact the TV tax has in England. My relatives there are still watching black and white TV because they save money that way, and technology is about to make the tax a moot issue. Perhaps you notice Hulu and other computerized delveries of TV via the Internet. The days of broadcast TV are clearly numbered as people realize they can arrange their own watching schedules with the Internet. So is the British TV tax like the French salt tax and a relic that a revolution is sweeping away? I think so. Might have worked 50 years ago, but won't work today. Probably a good thing for my relatives, who will be introduced to the world of TV in high-def color.

7:00 PM  
Anonymous Anonymous said...

No, no, no. A thousand times no. And I'm a journalist.

12:12 PM  
Anonymous Anonymous said...

@rplothow, "[the UK is] on their own [with a tv licence system]".

Umm, no. Do some research. The vast majority of the world uses TV licencing. The USA is one notable exception, along with Canada and a few countries.

Some countries have abandoned the system, others have conversely introduced it recently.

8:33 AM  
Blogger PK said...

A press funded by the Government has a hard time remaining a free press.

When you pay the bill, you get to decide the stories reported. Anybody wanna trust a politician with that?

If print media can't survive, then let it fail on its own. The pet rock industry is in total tatters but there's no tax on gravel driveways to salvage it.

11:21 AM  

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