How to Save the News Media

What if the government offered tax-free status to media start-ups?

A discarded newspaper on the wet ground
Brendan Smialowski / AFP / Getty

A nightmare. A wasteland. A place of confusion and half-truth. Ask Americans these days for their impressions of the news media and they are likely to produce such grim descriptions.

These sentiments boil and fester as political and regulatory communities, whether motivated to tackle information monopolies or address data-privacy concerns, seem poised to get serious about new laws that could fundamentally alter the media ecosystem. But much of this energy is focused on the big tech companies, when the crisis, as the public perceives it, is deeper.

Policy makers could do more, much more, to help the collapsing news industry, which is pulling down America’s civic culture with it.

At the moment, the overwhelming problem is not a deluge of fake news (with a need to suppress it), but an undersupply of quality news, particularly at the local, state, and regional levels. The lack of such news has become an issue even for social-media platforms, which serve up other available stories instead—including whatever crazy, amusing, or outrageous pieces of content start trending online. But no business solution is in sight; most local news outlets cannot seem to make a profit.

The federal government could help address this market failure through the tax code. As the legal scholar Cass Sunstein has pointed out, the government has long held the power to subsidize speech, a tradition begun when America’s 18th-century leaders gave postal subsidies to newspapers and magazines to ensure the diffusion of knowledge throughout the sprawling young republic.

What if the government offered tax-free status to media start-ups and smaller existing news outlets that could demonstrate a commitment to public service?

For sure, the issue of defining the public interest has bedeviled the Federal Communications Commission and the TV broadcasting world for decades. But the vast majority of regulatory decisions would be straightforward, and in a crisis like ours, worries about edge cases should not stop progress. Policy makers could keep the rules simple and let independent regulators make the decisions, subject to legal review. They could also impose a market-capitalization limit, so no current conglomerates would qualify.

About a decade ago, a number of leading media thinkers were toying with ideas such as creating low-profit companies for these purposes, or more modest tax-credit proposals. More resources are now flowing toward nonprofit news models. That’s good. But coming up with the tens of billions in annual revenue needed to serve and inform a vast country of 330 million people is tough. So why not open the floodgates for commercial innovation and see what happens?

Another way to change the market for news would be to protect news consumers from the costs imposed by internet-service providers through a 21st-century version of the postal subsidy. Specifically, regulators could devise a rule exempting the news from data caps, which might become stricter as telecommunications companies consolidate power. Under “news neutrality,” everyone would have a right to access news sources without charge, and at the fastest possible speed. (At the moment, this change would have more of an effect on video news than on text.)

Of course, the first hurdle would be to define what “news” is. Regulators could take a fairly expansive view of the word, including any and all information gathered on socially significant issues. News has always been a mix of hard and soft stories, so the granting of this benefit might be based on a holistic evaluation of what an outlet does—whether it serves a public interest in some general sense.

Finally, the government could help on the advertising front by allowing news companies to band together to negotiate revenue sharing with the big tech companies. (The Federal Trade Commission would likely have to approve such collective action.) Ultimately, perhaps, the likes of Google and Facebook could pay news companies a “carriage fee,” as cable companies do broadcasters, for the privilege of disseminating their content.

None of the many possible policy schemes to rectify the collapse of the news business will bring back the days of old. We are not going back to a time of three TV networks and a moneymaking newspaper in every city. Yet finding new ways to help anchor our digital public sphere through higher-quality, sustainable news institutions is vital.

Problems in the news business grow deeper each year as policy makers do nothing. The ideas outlined above could of course lead to negative unintended consequences. But the social consequences of the status quo—in which news sources crater as the government offers no additional support—are likely worse.