How Would We Craft a Subsidy?

I want to react to Paul Starr’s observations about subsidy, which I largely agree with.

To put his observations in economic terms, we have been in the unusual and happy situation, in the 20th century, of having an essential positive externality — an informed public, supported by an aggressive and talented press corps — subsidized both by advertisers and by the readers who paid full price for the paper to read about the Lakers or Megan Fox, while ignoring articles on the City Council or the Honduran coup. These subsidies allowed publishers to fund serious reporting for readers who do care, even though that reporting operated at a loss.

The “Come for the crosswords, stay for the war crimes!” theory of newspaper reading doesn’t describe the real world. Citizens who regularly read and react to detailed political news are a small but critical minority. Publishers know this; newspapers are divided into sections for a reason, and that reason isn’t to maximize the chance that a basketball fan will stumble across dispatches from Tegucigalpa.

Because the newspapers are being unbundled, they are suffering, but I believe Professor Starr is right to focus on the threat to subsidy rather than revenue. Because most of the staff of a newspaper isn’t engaged in production of civic value, the profitability of newspapers isn’t a matter of public concern, but the subsidy of people creating that value is.

The question of public subsidy raised by Starr creates the especially tricky question of incentives with taxpayer dollars. I am an avid New York Times reader, and love the work of both Gretchen Morgenson, a financial reporter, and Eric Asimov, a restaurant reviewer. I am also a politics junkie, and was glued to Nate Silver’s 538.com, which tracked electoral votes in the 2008 presidential election. Subsidizing newspapers would help Asimov but not Silver, a perverse outcome if the goal is civic value. The ideal would instead be a subsidy that aids Morgenson and Silver but not Asimov, not because his work isn’t terrific, but because the behavior of the nations’ banks and the outcome of its elections are critical public issues, but the quality of that new restaurant in the East Village isn’t.

With the caveat that politics is the skillful wielding of blunt instruments, such subsidies would almost have to be applied to the income tax of individual citizens. I have a hard time imagining how such a thing would work, though my imagination about tax matters has never been of the finest.

My best guess is instead that we will have to double down on new forms, both of journalism and of subsidy. (And let me cop to Mamonides Ladder’s complaint, quite correct, that I oversimplified the landscape of subsidy in my original post.) These new forms could involve anything from making it easier for virtual corporations to fund journalism to creating a new class of non-profits that would endow journalistic outfits (possibly with new language allowing non-profit political endorsements), as well as all the other forms of subsidy that will come from amateur participation.

Much as I like the idea of a single, content-neutral set of subsidies that reward civic value, as postal subsidies did, and as much as I understand the value created by commercial subsidy, as the metro dailies’ advertisers and readers did, I don’t think either of those models can be saved at the scale we need, and more importantly, I don’t think they can be replaced by other subsidies that work the same way.

I think, as so often with the move from analog to digital, we’re seeing to see a radical fracturing of what was a previously coherent activity, and the only response likely to help us discover workable solutions will be an equivalent fracturing of many forms of subsidy.

Also from this issue

Lead Essay

  • Not an Upgrade — an Upheaval by Clay Shirky

    In his lead essay, Clay Shirky argues that the old models of journalism are broken primarily because in today’s online environment, self-created publics can parse the news however they like. The biggest failure of journalism in the online age is the failure to reproduce the front page — the news that everyone saw together and first. Today, individuals who want specialized or even personalized news can get it instantly. Readership has become impossible to control.

    In this massive upheaval, one thing that may be at risk is the provision of “serious” journalism — news stories about the city council, or about events on the other side of the globe. These stories aren’t being subsidized anymore, as they had been in the past, by getting bundled in with coupons and stories about sports. To provide serious journalism, new forms of patronage may be necessary, and Shirky’s essay concludes with a brief look at some models that may work. Yet no upheaval of this magnitude is really predictable, and the future will probably surprise us all.

Response Essays

  • Some Patterns in the Chaos by Philip Meyer

    In his response essay, Philip Meyer argues that while newspapers may be in financial trouble, journalism is on the move. In particular, citizen journalism, done by individuals who may have other careers or life paths outside of full-time journalism, is a key trend for the future. Certification for these journalists — whether through reputation metrics or through a formal certification process — will become increasingly important. Evidence-based journalism, specialty niche journalism, and journalism done through philanthropic foundations are some of the other key trends that are accompanying the decline of the generalist newspapers that dominated the twentieth century. Evidence-based journalism is more open to ordinary citizens, who may not have the contacts of traditional newspaper reporters. Niche journalism had a hard time finding an outlet in the old days. And, although the prospect may be unsettling, philanthropy is increasingly an important source of funding for these projects.

  • The Public May Need to Subsidize Itself by Paul Starr

    Paul Starr agrees with much of Clay Shirky’s lead essay, but he is not optimistic about the power of the public to self-organize. He argues that law, politics, and the unequal fortunes of people in society will all influence the process, and that this means that if we want responsible public-service journalism, we will likely have to subsidize it in a viewpoint- and platform-neutral manner, perhaps with tax exemptions.

  • Abandon Old Strategies to Survive in a New Era by Steve Yelvington

    Steve Yelvington argues that much of the hype about the death of the newspaper business is simply the product of journalistic myopia, in two different forms: First, the news business as a whole made a series of bad business decisions that left it ill-prepared for the information age. And second, the effects of these decisions are all too apparent to reporters, who see them up close in their professional lives. Yet let’s be skeptical of the claim that the newspaper is dying, he says: We are in the middle of a very serious recession, and many other industries are also suffering. No one, however, suggests that we will stop banking, say, or driving cars. Tax breaks, subsidies, bailouts, and laws forbidding hyperlinks to copyrighted content are not only unnecessary — they are harmful, because they will prevent the news industry from developing the new strategies it desperately needs.

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