American government: It's always subsidized commercial media

By Geoffrey Cowan and David Westphal

Geoffrey Cowan is university professor at the University of Southern California and dean emeritus of the Annenberg School for Communication and Journalism. David Westphal is a senior fellow at USC’s Center on Communication Leadership and Policy and former Washington bureau chief for McClatchy Newspapers.

A mythology about the relationship between American government and the news business is again making the rounds, and it needs a corrective jolt. The myth is that the commercial press in this country stands wholly independent of governmental sustenance. Here’s the jolt: There’s never been a time in U.S. history when government dollars weren’t propping up the news business. This year, federal, state and local governments will spend well over $1 billion to support commercial news publishers through tax breaks, postal subsidies and the printing of public notices. And the amount used to be much higher.

This topic is back in the news because of the rapid economic decline of newspapers, news magazines and many broadcast outlets. Amid deepening concern about the impact on our democracy, some are calling on the government to get involved. Leonard Downie and Michael Schudson were among the latest, urging limited government aid to support the cause of news and information. The Federal Trade Commission is among the federal agencies wading in, scheduling discussions Dec. 1-2 to gauge whether government intervention is needed.

The truth is that American government and the news business have always been joined at the hip, and not just through the government’s copyright protections, restrictions on anti-competitive practices and regulation of the public airwaves. It’s also through the infusion of tax dollars.

The Postal Service’s subsidy of mailing costs for newspapers and magazines, which dates back to colonial America and the Postal Act of 1792, is often raised as Exhibit A. Less well known is just how large this subsidy was – and how much it has shrunk. As recently as the late 1960s, the government was forgiving roughly three-fourths of print publications’ periodical mailing expenses, at a cost of about $400 million annually (or, adjusted for inflation, about $2 billion today). Much of that disappeared with the Postal Reorganization Act of 1970 and in subsequent cutbacks. But the Post Office still discounts the postage cost of periodicals by about $270 million a year.

Postal subsidies, though, are just the start of the story. Federal and state governments forego about $890 million a year on income and sales tax breaks to the newspaper industry, most of it at the state level. The actual figure is probably much higher because many states don’t report tax expenditure details.

Another major form of government support comes through public-notice requirements, which also have their roots in colonial America. These laws require cities, counties and school districts, along with state and federal agencies, to buy advertising space in newspapers to disclose a range of government actions – such as plans for a new school. Take a look at the Wall Street Journal, for example, and you’ll usually find a page or more of federally paid and mandated ads – in impossibly small print — announcing property seizures. Those are public notices, and nationwide they bring in hundreds of millions of dollars in revenue.

But all three of these categories are shrinking. For example, legislation has been introduced in 40 states to move public notices to the Web, and the Department of Justice has already announced it will shift property-forfeiture notices from newspapers to its own Web site. The impact would be another blow to newspapers, especially small ones: In 2000, the National Newspaper Association estimated that public-notice billings accounted for 5-10 percent of newspaper revenue.

Postal subsidies, tax breaks and public-notice requirements only begin to describe the ways governments at every level have supported the American news industry. Municipalities provide newspapers with enormous sales and marketing benefits by allowing vendor boxes on public sidewalks at little or no cost to the newspaper companies. Drug advertising regulations by the Food and Drug Administration have been a boon to magazine publishers because they require TV ads to be accompanied by more specific disclosure, and magazines are one of the approved outlets. Commercial broadcasting has also benefited mightily, via the free use of government-licensed airwaves.

After backing the news industry for more than 200 years, the government should assess how it can be most helpful now, when the future of news and information is so uncertain. As it debates possible forms of support, the government should consider these principles:

First and foremost, do no harm. A cycle of powerful innovation is under way. To the extent possible, government should avoid retarding the emergence of new models of newsgathering.

Second, the government should help promote innovation, as it did when the Department of Defense funded the research that created the Internet or when NASA funded the creation of satellites that made cable television and direct TV possible.

Third, for commercial media, government-supported mechanisms that are content neutral — such as copyright protections, postal subsidies and taxes — are preferable to those that call upon the government to fund specific news outlets, publications or programs.

However policymakers proceed, they should do so based on facts rather than myth. The government has always supported the commercial news business. It does so today; and unless the government takes affirmative action, the level of support is almost certain to decline at this important time in the history of journalism.

Lessons from the revolution, for the revolution

My travels this summer have brought me to Washington, D.C. and Williamsburg, Va., where I’ve shown my California-dwelling kids some of the scenes of their nation’s birth. But while they’ve been seeing the sights from their U.S. history classes for the first time, I’ve also enjoyed revisiting some of the scenes of the American Revolution, for the perspective they’ve given me on the business and information revolution that’s now roiling the journalism industry.

My kids are big fans of the “National Treasure” films, so, like thousands of other visitors, we had to stop at the National Archives in Washington. While my kids rushed to see the Declaration of Independence (once we slogged through a 90-minute wait), I slid over toward the more legally profound Constitution, then spent the bulk of my time with the Bill of Rights.

As a journalist, I find it thrilling to look upon the original First Amendment (actually, “Article the third” on the document). Straining to see those famous words, now faded almost to obscurity on the page, I was reminded that their power draws not from their presence on that piece of paper, but from the affect that they had upon a new nation, and have to continued to have since.

Words fade from paper. Websites fall offline. Books are sometimes lost to the ages. But those works’ influence endures in the people that they affected – people who copy and reference and change their lives as result of the words that they read or heard.

That was the first lesson I took from my recent trip: That the power of journalism lies not in its presence on a printed page or on a website, but in the influence that it has upon the audience who reads it. We protect journalism not by restricting access to it, but by extending its influence by spreading its reach.

After visiting D.C., we drove down to Colonial Williamsburg, where we spent a day walking around the recreation of Virginia’s 18th-century capital city. Dozens of craftspeople make up the bulk of the exhibits there, and, predictably I suppose, I chose to spend the most time at the print shop.

Colonial Williamsburg printing press. Image from Robert's

A solitary young lady inked and, literally, pressed the day’s paper in a small shop, no more the size that three cubicles in a modern newsroom. There were no typesetters on duty that morning, though the young lady said that no more than two or three people would ever be working in the shop at a time, back in the day.

Watching the colonial press in action, it reminded me far more of what my wife and I do at home to put out a couple of websites, than what corporate news publishers such as Fox or Gannett do today to run their business empires. (And, by the way, those folks back in the day in colonial print shops made money and plenty of folks publishing in small online shops today are making money, as well. So let’s lay that counter-argument to rest, shall we?)

In the 18th century, the power of the corporation was the power of the crown. Corporations in colonial America were charted and sustained by the King of England. Frankly, given the power that modern corporations extend, through their lobbyists, over the writing and enforcement of U.S. law, not all that much as changed today.

Some modern journalism industry executives are fond of claiming that the journalism industry is the only one in the U.S. to enjoy constitutional protection, through the First Amendment. How wrong they are. The First Amendment’s freedom of the press did not endow corporations the right to make a profit, or protect their market share. Nor did it select a class of businesses to keep watch over others, something that they’ve too often failed to do, anyway.

The First Amendment instead endowed the people – individuals like those who worked the press in Williamsburg – the right to publish, and by doing so, to challenge their government and institutions, even corporations.

The words printed on that fading document in the National Archives retain their power only so long as individuals exercise the rights those words describe. As certain news publishers attempt to use the power of government to change the rules – to restrict access to information and the ability to publish and distribute it – others of us ought to remember the lessons of Washington and Williamsburg, and to raise our voices – in print, online and on air – to protect our existing freedom of publishing for individuals who wish to exercise it.

How early online newspaper production tools led the industry down the wrong path

Wisdom is the ability to see your life and career not simply as a line going forward from wherever point you are, but as an arc that extends from the past into the future. That’s why I believe it is important to teach online journalism students about the history and development of the Internet and for online news professionals to remember the early days of their craft. (It’s also why I find books like Malcolm Gladwell’s “Outliers” so interesting.)

I’ve written about how legal precedents shaped the thinking of early online news managers. Today, I’d like to suggest that early online publishing technology affected industry thinking in profound, and, ultimately, tragic, ways as well.

For those of you who weren’t working on a newspaper website around 1996, let me take you on a trip into the pensieve (or, down memory lane, for those of you overdosed on Harry Potter references this week). I started on the Rocky Mountain News website in November 1996, and was the only person at the paper updating and maintaining the news side of the website. Every morning, I came in around 5 am, selected a couple dozen stories from the newspaper, then called them up on the paper’s ATEX terminals. One by one, I sent a copy of each story to a queue we’d created which interfaced with the Pantheon Bridge program on a Windows NT box in the paper’s computer room.

Pantheon was a set of programs used by many newspapers at the time to port copy from the papers’ publishing systems into flat HTML files. One by one, I’d call up each story in Pantheon, to make sure that it had come over and then to assign the story to the appropriate section in which it would appear on the website.

Pantheon built index pages for each section, in addition to create an HTML page for each article. To do those things, it had to read the head, deck, byline, publishing date and story copy into fields in an Access (!) database, from which it would push each article into page templates. (Heaven forbid that anyone on the copy desk had decided to use a different way to mark up a head or byline, because that would break the parsing process.)

I pulled whatever photos I needed from the paper’s photo server (on a Mac) and Photoshopped them to the specs I needed. After that, I fired up Notepad to hand-code the paper’s front page.

Finally, I would use two FTP programs to manually transfer each JPG image and story and index file to the Rocky’s webservers, then at Scripps headquarters in Cincinnati (Fetch for the images from the Mac, and WS_FTP for the HTML files from the Wintel box).

When I moved to the Los Angeles Times website in January 2000, I was delighted to find that the Times staff (which numbered in the dozens) had written a series of scripts to move every article and some images from the paper’s print publishing systems onto the Web. But human staff needed to check the feed every morning, to see that it had come through uncorrupted. Several mornings, it hadn’t, and tech staff needed to debug and restart the feed.

Still, Times online editors hard-coded most top stories in HTML, manually editing images in Photoshop and building index pages by hand.

By today’s standards, the work was ugly and mundane. But it had to be done. Online readers wanted to see the newspaper online. They wanted the freedom to read the paper on their computers at work, so that they could hit the road from home a few minutes earlier each morning.

On the advertising side, automated scripts at both papers helped bring classified ads online. And at the Rocky, inside sales reps “upsold” classified advertisers to put their ads online. At the Rocky and at many papers, that incremental revenue from upsold classified ads paid for the online production staff, in both editorial and advertising.

Why does this matter now? Shouldn’t those of us who remain at newspaper websites just be thankful that we don’t have to go through that hassle to get our sites online everyday?

Let’s remember that arc, though, and how what happened then has shaped what is happening in the industry now.

I believe that the hoops we had to jump through to get newspaper stories online influenced newspaper managers’ perceptions about the difficulty of online publishing. Sure, many of us had personal websites and knew how it easy it was to slap together a page in HTML (or by using an early page editor). But senior newspaper managers, the people plotting the business future of the industry, saw online publishing only through the prism of getting their content from their proprietary print systems through programs like Pantheon and onto the Web. That led many of them to see online publishing as something difficult, creating a high barrier of entry for potential competitors.

If newspapers were worried, it was about big-money rivals such as Microsoft’s Sidewalk. Individually published websites and blogs, when they started to appear, weren’t n anyone’s radar as competition. Managers saw online publishing as demanding complicated, expensive, technical solutions.

So online staff were put to that task, not to noodling around with online-only content, independently conceived and produced. Today, we can look back and see the opportunity missed. What if the Bay Area newspapers had developed a free online classified service, and attempted to upsell some of those free advertisers into a paid print ad – the opposite model of what so many newspapers pursued? If they had, perhaps there wouldn’t have been a Craigslist, and the future of the news industry could have developed along a radically different arc.

What if more managers had paid attention to the ease with which so many of us were cranking out our personal websites and charged us, on company time, to develop tools to allow all newspaper readers to do the same? Can you image what could have happened had newspapers developed and controlled the first blogging tools?

What if newspaper ad sales teams sold ads into those bloggers’ webpages, before Google got into that game with AdSense? What would the industry’s market share look like today?

But, of course, none of those things happened. Because, I suggest, 1990s newspaper managers looked at us, toiling with the likes of Pantheon and hacked-together Perl scripts, and concluded that online publishing was complex, frustrating and difficult. So by the time that online jockeys who didn’t have to struggle getting newspaper copy online had developed tools like Craigslist, Blogger and AdWords, the competition they unleashed overwhelmed the industry before newspaper managers could change their thinking.