Federal Trade Commission Chairman Jon Leibowitz said earlier this month that the agency will explore whether the federal government should step in to help the news industry, which is struggling to survive at a time in which the combined effect of the Internet and the recession has caused ad revenues to plummet.
“We should be able to take action if necessary to preserve the news that is vital to democracy,” Chairman Leibowitz said in a speech on the first day of a two-day FTC workshop on the future of journalism. He said the commission will study whether and how the government should change the manner in which the industry is regulated. He floated some ideas, like exempting news-gathering organizations from antitrust laws, granting them special tax treatment, amending copyright laws, and extending government subsidies to commercial news organizations.
Another agency, the Federal Communications Commission, is currently revisiting a long-standing rule that prevents a company from owning newspapers and TV stations in a single market.
But Chairman Leibowitz cautioned that changes in the news business must be much better understood before any policy changes are made. As for their part, media executives at the hearing said that some relaxation of antitrust and tax rules might be helpful, but also expressed concern about excessive government involvement in the news business.
News Corp. Chairman and Chief Executive Rupert Murdoch said at the workshop that media companies need to figure out how to convince readers to pay for high-quality journalism. “Good journalism is an expensive commodity,” he said. Murdoch owns The Wall Street Journal, the online version of which is subscription-based. Murdoch also criticized Internet sites that reuse or repost news articles published by others without paying for them. “To be impolite, it’s theft,” he said.
Arianna Huffington, editor in chief of the Web site Huffington Post, spoke after Murdoch. She pointed out that sites such as hers that collect and link to news content from other providers drive a great deal of online traffic to The Wall Street Journal. “It’s time for traditional media companies to stop whining,” she said.
A Google executive backed Huffington, saying that Google and similar online news aggregators benefit news organizations by sending users to their sites. “The reality is that the vast majority of publishers want to be discovered,” Josh Cohen, senior business product manager for Google News, said at the FTC event. Cohen said it was technologically very simple for a publisher to instruct Google’s Web crawler not to index its news site. The implication was that publishers choose not to do so because they understand the value of having their articles show up on Google News.
Congress is also looking at ways to help the ailing news industry. This spring, Sen. Benjamin Cardin (D-Md.) proposed a law that would allow newspapers to operate as tax-exempt institutions. Congress has held several hearings on the financial challenges facing the industry.
Why it matters: The news industry’s traditional business model – based largely on revenues generated by ads placed in printed papers – is clearly broken. More and more readers are getting their news from the Internet, or from electronic reading devices like Amazon’s Kindle. Although the government may be able to help the industry, such help would not fix the fundamental problems with the old advertising-based model, and may result in unintended consequences and unwanted governmental oversight of a fiercely independent industry.