Supporting the past, ignoring the future

December 22, 2011

By Rasmus Kleis Nielsen
The opinions expressed are his own.

Western media industries are going through a rapid and often painful transformation today with the rise of the Internet and mobile platforms, the erosion of the largest free-to-air broadcast audiences, and the decline of paid print newspaper circulation.

Despite all these changes, the important and sometimes neglected ways in which governments provide support for the media have remained largely unchanged for decades.

There is a real need to reform our 20th century support arrangements to make sure they effectively serve our needs in the 21st century. Public sector support for the media should not be industrial policy, propping up specific ailing incumbents, but democratic policy, aimed at ensuring that timely, accessible news from a diversity of sources is available to the entire population.

Most media companies prefer not to talk about the support they receive from their government, but all developed democracies intervene in media markets in direct and indirect ways to serve a range of public interest goals.

The most important intervention in much of Western Europe is licence fee funding for public service broadcasting, based on what is basically a ring-fenced tax on households that own television or radio receivers. The United States also provides funding for public broadcasting, but on a much more limited scale and through direct federal and state appropriations.

Governments also support private media—most visibly through direct public subsidies, such as those made available to newspapers in France and Italy, but also in less visible ways through a complex combination of tax relief for printed publications, favorable postal rates, and exemptions from various forms of labor and anti-trust regulation. Such forms of indirect support can run into hundreds of millions of dollars a year per country. In the case of the United States, indirect support is worth more than a billion dollars a year, according to estimates provided by the University of Southern California.

In per capita terms, the figures for indirect support are higher in most of Western Europe, more than nine dollars per capita in Germany, 13 in Italy, and almost 18 in Britain, as shown by research done at the Reuters Institute for the Study of Journalism at the University of Oxford. This kind of support matters, and industry incumbents know it. The European Newspaper Publishers’ Association in their 2011 Warsaw Resolution said value-added tax (VAT) reductions for newspapers are “essential” for the health of the industry.

Both direct funding for public service broadcasting and indirect support for private media, like newspapers, have helped ensure that the media provides people with accessible news from different perspectives and sources. Despite concerns often expressed about the freedom of the press when it comes to government support of the media, indices of press freedom maintained by independent NGOs like Freedom House and Reporters without Borders suggest that public sector support does not need to undermine the autonomy and independence of journalists and editors. Scandinavian countries have some of the most extensive systems of public support in the world and also consistently top both the Global Press Freedom Rankings and the Press Freedom Index.

But, even if these 20th century arrangements have historically been effective, it is less clear that they will remain so in the 21st century. The media landscape is rapidly changing yet its forms of support have remained unchanged for decades. The bulk of the hundreds of millions of dollars provided by governments goes to industry incumbents coming out of legacy media platforms like broadcast and print.

Free-to-air television is still the single most important source of news for most people, and paid print newspaper companies still underwrite more original news reporting than anyone else, but their importance is diminishing and their traditional business models are under pressure. Meanwhile, innovative efforts in new media by existing companies and new entrants often receive little or no support.

As people’s media use switches toward new platforms and providers, the effectiveness of the inherited forms of government support will decline. Take, for example, a sales tax relief for publications in Britain that “consist of several large sheets folded rather than bound together, and contain information about current events of local, national or international interest.” This hardly defines what a news organization is today.

As newspaper circulation and revenues from print sales and advertising decline, the value of subsidies structured around these increasingly outdated definitions will diminish. Worse, they do nothing to help address the more fundamental challenge of structural adjustment facing much of the industry.

Public and private incumbents are busy adapting to a new environment, and new competitors are emerging everywhere. But many of these exciting new initiatives face competition from providers benefiting from public sector support that depend on their legacy platforms. Such support does not help the media industry. But well-designed, up-to-date new forms of intervention—such as a recent Dutch initiative that supports journalistic work, irrespective of platforms—helps to effectively support the news.

Today, we have an opportunity to reform public sector support for the media to serve our democracies by focusing on enabling news across all platforms, whether by incumbents or new entrants, whether on dead trees, over the air, or via cables.

This is a moment for reform where we can build upon the accomplishments and strengths of legacy media—public and private—and the energy and innovation of the newcomers. We are in the midst of a time to help new and old news organizations go where no news organizations have gone before.

Rasmus Kleis Nielsen is the lead author of a recent Reuters Institute Report on public support for the media supported by a grant from the Open Society Foundations.

Photos: Activists from Reporters Without Borders (RSF) stand next to doves on symbolic newspapers piles during a demonstration in support of jailed Chinese Nobel peace laureate Liu Xiaobo near the Pompidou center in Paris November 4, 2010. REUTERS/Benoit Tessier

One comment

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“New” media? The only news sites I read online – and I read a lot of it – are the online versions of print publications: newspapers, or, in the case of Reuters, a company which supplies newspapers. I read the above article without knowing exactly what the writer is advocating, as the article seemed an exercise in beating-around-the-bush; but if the article is aimed at subsidizing people who stumble off sidewalks reading twitter and obtaining their culture through torrents, I’d rather the taxpayer was not further molested.

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