Sign up for The Media Today, CJR’s daily newsletter.
A year after publishing our 2021 report “Saving Journalism: A Vision for the Post-Covid World,” our researchers went back to see what happened to some of the promising measures we documented. What follows is an excerpt from our most recent findings.
Ripple Effects from Australia’s News Media Bargaining Code
Perhaps the biggest news of 2021 was the February implementation of Australia’s News Media Bargaining Code, which had global repercussions. The code was passed by Australia’s Parliament on February 25, 2021, after lobbying and threats from Google and Facebook. Google claimed the law would “break the way Google works.” In the week before the legislation passed, Facebook did in fact black out users’ accessing news content through the platform in Australia.
It’s not clear how much money has been given to Australian media outlets as a result of the Code. Indeed, the Code has been criticized for its lack of transparency, as the arrangements between the outlets and Google and Facebook are kept secret. One interviewee told us that the total payouts in 2021 were around $AU150–200 million ($110–$150 million in US dollars), with Facebook paying a bit more than Google and giving some outlets around $AU800,000 (about $US600,000). One analyst estimates that The Guardian got between $AU3–5 million (approx. $US3 million). News Corp (Murdoch-owned) and Nine (which merged with Fairfax Media in 2018) are thought to be getting tens of millions of dollars. Google is apparently giving smaller outlets around $AU100,000 to $400,000 each ($US75,000 to $300,000)—a tiny amount, given the annual revenues of both Google and Facebook.
Despite these inequalities, the redirection of resources from Google and Facebook toward the media sector resulting from the News Media Bargaining Code is an important step forward—at least for bigger traditional outlets. As Richard Denniss, chief economist of the Australia Institute, said, “There is nothing egalitarian about the Code at all. Google and Facebook were forced to negotiate and bigger outlets are getting a lot more money than the smaller ones, and we will probably never know whether the ratio of cash paid to clicks is constant across the mastheads. But if smaller publishers are not happy with the offer they can hold out and an independent arbitrator can set the price for them. It’s not fair, but it’s shoveling a lot of money from people who have an enormous amount of money to a sector that doesn’t have any.”
In Australia, however, groups that were left out of the Code or that feel they were not bargained with in good faith are continuing to pressure Facebook. The Conversation launched a petition against Facebook, noting that while Google agreed to negotiate, Facebook refused.
Global tensions between large and small outlets
In other countries besides Australia, we’ve seen smaller journalism organizations oppose programs favoring large ones. In Germany, the Krautreporter successfully protested after the German government announced in 2020 that it would provide €220 million in its budget for the year in order to support “digital transformation.” Cofounder Sebastian Esser argued that this was unfair to digital natives, and after Krautreporter threatened a lawsuit, the government dropped the plan (and at this writing has yet to replace it). “We killed it. But I don’t mind that, and we didn’t get complaints from other publishers about it, actually. This approach was messed up from the start, so better to start from scratch, or not at all,” Esser said in an email.
Can policy fixes from the Global North work in the Global South?
While there is debate among news publishers in the US, Canada, and the Global North about which policy options will benefit whom, there is a feeling in many parts of the Global South that many of the proposed policies would not be suitable for them. Many of the outlets are too small to pay taxes and have tiny staffs, so a tax credit for hiring new reporters would not help them. Others worry about government advertising, feeling that it may constrain what they can report on and lead to too much government influence. They say that accepting such advertisements may erode brand credibility and that if they accept government advertising, they may be asked to kick back some of that funding to the officials who allocated it.
Indonesia announced a journalism stimulus package in July 2020, which included tax credits and direct subsidies. The core policies were abolition of the value-added tax for newsprint, suspension of electricity charges for the media industry, a decrease of 50 percent on corporate tax, and exemption of income tax for employees earning up to 200 million rupiah. In addition, there was a subsidy for news outlets that came in the form of direct payments, on the condition that outlets publish a certain number of stories each month advising Indonesians on how to handle covid-19—such as stories related to social distancing, hand washing, and mask wearing. The policies were controversial—some credited them with saving the journalism industry during the pandemic, but others saw it as an example of direct government intervention in what content was produced.
Economists taking a pragmatic view
Economists we interviewed take a pragmatic view of the many policy options being proposed or implemented to help journalism. They agree that a tax on tech, which would be used to support quality journalism, is the ideal. Even better would be government funding journalism out of general revenues and imposing a tax on tech as a general matter of tax policy.
But economists we spoke to recognize that the idea is difficult to achieve in the current environment. For this reason, many support other policies such as tax breaks for news outlets and tax credits for new subscribers, as well as the Australian News Media Bargaining Code. None of these are ideal solutions, but if they cause no harm then that is good enough: Economists consider them “second best measures.” The media provide an important public good, they argue, and in the absence of public support there will be under-provision—an inadequate supply. Many economists believe it’s important to correct that problem, at least partially, even if the approach is imperfect.
There isn’t hard economic data telling us whether many of the policies being proposed and implemented around the world will work—there is simply not enough clarity as to what will. But this is true of interventions besides those using the tax system. In the US, as in many other countries, tax credits have encouraged people to save for their retirement, but it’s not known exactly why. It’s not clear whether the tax credit is an incentive in and of itself or whether the existence of IRA accounts in the US serves as a powerful reminder to people that they should save for their retirement—and provides incentives for banks to “advertise” savings.
Economists generally believe that every policy option involves trade-offs, so it makes sense to choose whichever option is politically viable, most cost-effective, and lacking in unintended adverse side effects—or causing the least harm. “When a government wants to support a particular industry there is a long menu of choices,” explained Richard Denniss. “One option is tax credits targeted towards the specific thing you want the company to do more of. For example, in the case of journalism you can provide tax credits that are linked to the wages an outlet spends on journalists. It’s probably not going to do any harm, so you are just arguing over how much good you want it to do or whether you want to use other levers to support the media.”
Dean Baker, founder of the Washington, DC–based Center for Economic and Policy Research, summed up this practical way of thinking in an email: “I would generally be a fan of the tax credit system rather than vouchers for new subscriptions but my general view on this issue (and pretty much any issue) is to go with what is moving. If the credit idea is getting political favor, I couldn’t see opposing it even if I thought the voucher system was preferable. It is such a huge improvement on the status quo and would make such an enormous difference to journalism if implemented, that it would be a shame not to do everything possible to get it through.”
Whatever regulation governments implement, economists note that incentives can be built into its design. For example, an outlet that gets government funding could be given the funding on the condition that it not lay off reporters or that it hire more reporters. “One provision in the Local Journalism Sustainability [Act] in the US that I would love to see is a ban on paywalls for any material produced by a newspaper getting money. We want people to be able to benefit from the news they pay for with their tax dollars. The papers should be smart enough to do this themselves—make their material free to get more viewers and more credits—but it would probably be a good thing to put in law to ensure and also for politicians to say when justifying a subsidy,” says Dean Baker.
Tax credits—an idea spreading around the world
Tax credits for media outlets are being proposed and implemented in a number of countries as they are a relatively simple way of getting funding to large and medium-size outlets.
This is different from a tax on tech that would be given directly to funds that support journalism. Traditionally, tax authorities do not like such earmarked taxes. They would rather see funding go into government coffers so that the government can allocate revenue where needed through ordinary budget processes. According to Rod Sims, then-chair of the Australian Competition & Consumer Commission, “if you want to fund journalism, proper fiscal policy says that you design an efficient tax system, you raise the money in the most efficient way, and then you allocate it in the best way and, in my view, you’d allocate some of it to journalism. What you don’t want is a system where you say, ‘What’s my need, where will I find someone to go and tax?’ You’ll just have a mess of a fiscal policy and a mess of a tax system.”
However, after the covid-19 pandemic began, governments around the world expanded or implemented new tax credits in order to support journalism. France and Canada expanded existing tax credits while Indonesia and Tunisia started new ones. These credits can take many forms: credits for outlets that hire new journalists, credits for advertisers advertising in outlets, and tax credits for new subscribers to outlets. All include definitions of which outlets are eligible and often include other criteria. Tax credits for local news were included in the proposed Local Journalism Sustainability Act in the US. In November 2021, one portion of the bill—a tax credit for local news organizations designed to undergird a portion of a journalist’s salary—passed the US House as part of the Build Back Better Act. Clearly, if media outlets are not profitable then exempting them from profit taxes doesn’t help much but it’s hoped that other kinds of tax relief will.
US interest in municipal advertising
Elizabeth Hansen Shapiro, from the National Trust for Local News, believes that there are a number of policy measures, as well as investments, that can help local news in the US. “Municipal advertising should be a policy priority at state and local level. It’s a powerful tool,” said Hansen. “A payroll tax credit would be transformational. It would fundamentally change the economics of reporting and economic strength. That is the most expensive part of the newsroom.”
In Colombia, Senator Richard Aguilar and journalist Werner Zitzmann pushed for a bill to be introduced with novel ideas for supporting local journalism. The bill proposes eliminating the tax on advertising for media outlets between 2021 and 2025, exempting all media outlets from the income tax for twenty years, and offering several economic incentives on subscriptions and payroll. However, the bill’s future is uncertain, as the senator who proposed it was recently jailed for corruption.
No shortage of good ideas
The good news is there are lots of good ideas about how governments can support journalism and strengthen democracies. While the US is in gridlock, others have moved ahead. The hard part will be summoning the political will to act and working out what policies are the most likely to be effective.
The taxonomy of interventions
As we did in our 2021 Saving Journalism report, we examine a number of initiatives from around the world aimed at helping journalism. We’re again using a taxonomy suggested by Nishant Lalwani, executive director of Luminate, a foundation that spent about $20 million in 2021 to support journalism globally, who notes that many current efforts fall into four (somewhat overlapping) categories: more funding; new business models; a tax on the tech platforms; and public subsidies.
This article is adapted from “Saving Journalism 2,” commissioned by the Konrad Adenauer Foundation.
Schiffrin’s coauthors on the report are: Hannah Clifford (SIPA), and Theodora Dame Adjin-Tettey (School of Journalism and Media Studies, Rhodes University), Matthew Reysio Cruz (Columbia Journalism School), and Ryan Lee (SIPA).
The Journalism Crisis Project aims to train our focus on the present crisis and to foster a conversation about what comes next. We hope you’ll join us. (Click to subscribe!)
Has America ever needed a media defender more than now? Help us by joining CJR today.
