No, an internet tax won’t save journalism — or newspapers

As the traditional media business continues to flounder, a number of people seem to think that Guardian investigative editor David Leigh has come up with a smart new idea for saving journalism and newspapers in particular — namely, a tax on internet service providers that would be used to finance the leading periodicals in Britain. The only problem with this plan is that it is neither smart nor particularly new: as others have noted, the same idea has been floated in the past as a way of saving the music industry, and thankfully never became reality. While Leigh’s proposal seems appealing at first, it suffers from a host of flaws — including the fact that it would likely fail to accomplish what its supporters want it to.

The impetus for this idea (which would levy a fee of two British pounds (about $3.20 US) on every internet account to create a government investment fund), is abundantly obvious: print-advertising revenue, which most general-interest papers rely on for the bulk of their income, has fallen off a rather large cliff over the past several years, and the rate of decline seems to be accelerating rather than slowing. Paywalls may be picking up some of the slack for a few providers, but they are not enough to fill the gap completely — and so companies are cutting back, and in the case of U.S. papers even shutting down print.

Journalism and newspapers are no longer synonymous

Editors like Leigh — and columnists like Roy Greenslade of the Guardian, who wholeheartedly supports the idea of an internet tax to subsidize print papers — are understandably concerned about the effect that this unprecedented industry decline is likely to have on journalism, which they argue serves a crucial public purpose and therefore can’t be left to the whims of the marketplace. Others in the U.S., including New York Times media writer David Carr, have raised similar concerns about the effect on cities such as New Orleans when their newspaper shrinks in size or stops printing, and can (theoretically at least) no longer hold politicians and other evil-doers to account in the way they always have. As Leigh puts it:

“When the day comes that the newspapers are forced to stop printing altogether, it will be a disaster for democracy. The lean pickings from web advertising on a free newspaper site will only pay for a fraction of the high-quality investigative journalism that commercial newspapers generate.”

There are a whole series of problems with the internet-tax idea, many of which journalist Allan Donald has summarized in a smart and funny post (which, as Chris Dixon points out, imitates a popular geek response to early spam-fighting ideas). Among his points are that such a plan “tries to support a fundamentally broken business model” and “users of the web will not put up with it.” As Paul Carr notes at Pando Daily, the idea of compensating or financing newspapers based on their readership and market share could also worsen some of the existing problems with digital media, since all it would do is encourage papers to boost their traffic by whatever means possible.

But one of the biggest flaws with the tax idea, as Charlie Beckett at the LSE points out, is that it is based on the principle that journalism — of the kind that is deserving of government funding — is synonymous with newspapers. Even if that was the case in the distant past, it clearly isn’t any more: such a plan would leave out a growing number of alternative providers, from non-profit entities like the Bureau of Investigative Journalism to smaller web-only media outlets (some would argue that the Guardian is also a non-profit, but not by design). And these kinds of alternative services and startups, many of whom are trying to reinvent journalism for a digital age, are arguably more deserving of funding than the large newspapers who already have giant market share.

Taxing internet users would do little to “save” journalism

The reality is that the internet-tax plan would do very little to help subsidize journalism that is in the public interest. Instead, it would be used to subsidize a failing business model, one that continues to be based primarily around a dying medium called print. How would that benefit society as a whole? I think Carr is right when he says the industry needs to be more creative in finding a range of small ideas and solutions to their problems, not depending on a massive publicly-funded bailout.

Some of the proponents of the internet-tax idea argue that it makes sense for Britain to take such measures, since a similar structure — namely, a government-imposed TV tax — is used to subsidize the BBC. But whether you believe that a tax on the purchase of a specific consumer product is the appropriate way to do such a thing (which I would argue it is not), creating a single government media outlet for public-service purposes is a very different thing from setting up a fund that would be used to prop up an entire industry.

American newspaper owners like Advance Publications — which has shut down a print paper in Michigan and cut back on printing in a number of other cities — have been criticized for their failure to negotiate the transition from print to digital well, and there is no question that their handling of the move and their digital replacements leaves a lot to be desired. But at least they, and other struggling newspaper chains such as the Journal Register Co. (which recently filed for bankruptcy for the second time) are trying to find a way towards a new model, not asking for governments to subsidize the existing one.

Saving — or rather, enhancing and expanding — journalism is a noble and worthwhile goal, and finding innovative solutions for doing so is a commendable idea. But taxing internet users to prop up a largely print-based newspaper industry is not the same thing. Not even close.

Post and thumbnail images courtesy of Shutterstock/iQoncept and Flickr user Zarko Drincic