Newspaper Bailouts: Just Say No

A year ago, I would have assumed that it was unnecessary to even address the possibility, but in the wake of the bank and auto bailouts, and the continued, precipitous decline of the newspaper industry, we’re starting to see semi-serious proposals for a government bailout of the news industry. Over at the Technology Liberation Front, Adam Thierer has a good roundup of the key arguments against bailing out the newspapers.

Probably the most important point is the one made by Slate‘s Jack Schafer:

The government’s attempt to prop up newspapers with rewrites of the tax code or Sarkozy-esque direct subsidies of government advertising and free subscriptions for young people interferes with the already-in-progress transition from print to digital news delivery that’s been accelerating for the past 15 years—or longer. Propping up troubled papers has a cost. It weakens the enterprises that are rising from below to compete with them to deliver advertising and, yes, deliver news. I can think of no better way to hinder the rise of such Web sensations as Politico and Talking Points Memo than rewriting the rules to benefit newspapers.

It’s not clear what will happen to the newspapers, but the worst possible outcome would be for the government to create a news business dominated by undead newspapers. Newspapers that are perpetually in the red but propped up by government subsidies would lack the institutional independence to provide a real check on elected officials. But even more important, by allowing them to continue producing news at a loss, indefinitely, they’ll stifle the creation of web-native alternatives and make readers dependent on these feeble institutions. If the newspapers are going to fail (and I suspect most of them will) they should be allowed to fail swiftly and decisively, so that their audiences will be available for new, more innovative news outlets. Zombie car companies and zombie banks are bad enough.

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One Response to Newspaper Bailouts: Just Say No

  1. Rhayader says:

    Yeah this would be a disaster.

    I’ll bring up David Simon again, both because I’m obsessed with The Wire and he’s been pretty outspoken on this. He’s proposed granting non-profit status to newspapers and relaxing anti-trust laws in the industry. A couple quotes:

    “But a nonprofit model intrigues, especially if that model allows for locally based ownership and control of news organizations. Anything the government can do in the way of creating nonprofit status for newspapers should be seriously pursued.”

    “Lastly, I would urge Congress to consider relaxing certain antitrust prohibitions, so that the Washington Post, the New York Times and various other newspapers can openly discuss protecting copyright from aggregators and plan an industry-wide transition to a paid online subscriber base.”

    The second one strikes me as a pipe dream; I think the content horse is out of the barn, and paywalls will only work for highly specialized materials (like what the Wall Street Journal has done). Also, I’m not sure that creating non-profit status does much to circumvent the problems Tim pointed out with the direct bailout scenario. Is preferential tax and regulatory status much different from a cash payout?

    Ultimately, like most things, I think the best approach is to leave it the hell alone and let the players decide the game.

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