By Dan Kennedy • The press, politics, technology, culture and other passions

Government ideas to help ease the local news crisis may be fizzling out

Photo (cc) 2007 by weirdisnothing

Less than a year ago, it looked like the federal government might be ready to pass legislation aimed at addressing the local news crisis. The ideas in play were far from perfect, but they might have provided some needed assistance, at least for the short term. Now those proposals appear to be all but dead.

Rick Edmonds, who analyzes the news business for Poynter, wrote recently that the Local Journalism Sustainability Act, or LJSA, seems likely to fall victim to Washington’s dysfunctional political environment.

The LJSA would create three tax credits for a period of five years. One would allow news consumers to write off the cost of subscriptions on their taxes. Another would be aimed at businesses that advertise in local news outlets, and a third would subsidize publishers who hire or retain journalists.

Late last year, though, the credit for publishers was broken off and added to the Build Back Better bill, which died because of intransigence on the part of all 50 Republicans plus Democratic Sen. Joe Manchin. As Edmonds observes, the LJSA could be revived and considered as a discrete piece of legislation. But, he writes, “separate breakout legislation would need to go through committees and get 60 votes. A subsidy for journalism is probably not so popular as to command those 10 added votes.”

Meanwhile, another Democratic senator, Amy Klobuchar, is pushing a bill that would allow the news business to bargain with Facebook and Google to share some of their ad revenues. That bill, dubbed the Journalism Competition and Preservation Act, or JCPA, is modeled after a law adopted in Australia. But the JCPA may also be dead on arrival, Edmonds reports, as Republican Sen. Mike Lee has trashed it by saying that “the last thing we should do is to accept a cartel — or create one — colluding against a business partner.”

Yet a third bill sponsored by Democratic Rep. Mark DeSaulnier may prove less controversial. The DeSaulnier legislation would make it easier for a for-profit news organization to convert to nonprofit status, something that is currently not covered by the IRS code. But given that the IRS has shown quite a bit of willingness to approve such conversions in recent years, the effect of that particular proposal may be minimal. (Disclosure: I had a hand in drafting the DeSaulnier legislation.)

As I said, these proposals are problematic. The LJSA would reward corporate chain owners along with independent operators, thus subsidizing a model that has failed to provide communities with news and information they need. In Australia, the revenue-sharing scheme with Google and Facebook has mainly served to further enrich Rupert Murdoch.

There is no substitute for innovation and passion at the local level. Still, given the dire straits in which local news finds itself, a helping hand from the government would be welcome. Sadly, it doesn’t look like it’s going to happen.

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  1. As someone who started the non-profit Ipswich Local News newspaper 2.5 years ago, I see nothing in any of those proposals that would be of any assistance to me.
    I am also uncomfortable with the government messing in the newspaper business.
    As for Facebook and Google, they get a lot of flack for aggregating content. However, that is all they do. At the end of the day, they still link back to websites and potentially drive up traffic.
    My real problem is with the “news app” companies that lift articles entirely and put them on their sites. That is outright theft in my book and our work is being used to make someone else money.

    • I completely agree with this. Newspapers were not done in by Google and Facebook -and while news apps are thieves to be sure, they’re not responsible for the demise of newspapers either. In this discussion we need to be very clear on the distinction between local news – and local journalism. We’re drowning in local news. It’s local journalism that’s missing, and you have to wonder what the market need is for that…

      • Dan Kennedy

        Peter, I read this great Cory Doctorow piece right after reading your comment.

        Of course Google and Facebook are destroying newspapers, although not through the old cliché of “they’re stealing our content.” Here’s more on the antitrust cases being brought against Google and Facebook by state governments and newspaper publishers:

        • Dan, not wishing to prolong but, three quick points from a journalist turned advertising manager turned media company president:
          1. Newspapers do not somehow “own” advertising as something to be stolen from them. Google and Facebook simply offer advertisers a better, that is, more efficient, marketing alternative
          2. Newspapers began losing market share on a per capita basis with the advent of local television in the 1950s. Their solution was not product overhaul. Rather, it was to raise rates and lift ad page count to preserve revenue. They priced themselves right out of the market
          3. Walmart wiped out the local retailer in towns throughout the country. Out the door went 45% of newspaper ad revenues. Then a slew of digital classified competitors – autotrader (which I helped found) careerpath, monster (now LinkedIn and Indeed) etc – demolished newspaper classified advertising. Out the door went another 45% of ad revenues – and 60% of a newspaper’s profit

          None of this had anything to do with Big Tech.

  2. Steve Ross

    Just to underline the complexity, “franchise” broadband carriers like Comcast and Spectrum are required by federal law to carry local TV stations.

    The fees paid by these carriers have increased 20-fold since 2004, when I started covering the industry and now total about $12 billion a year (about $10 for every cable subscriber). None of that money went directly upstream to networks like NBC and CBS in 2004… the money stayed local and helped subsidize the stations that broadcast local news.

    Today, most of the money goes to the networks, either as programming fees or because most local stations can now be owned by large chains.

    Moral: Any new pile of money made available directly to local providers will be gulped early and often by those who have the best lawyers.

    Subsidies to news consumers should be in the form.of credits, not tax deductions.

    In today’s Washington and in today’s statehouse that is indeed highly unlikely.

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