Sir Timothy John Berners-Lee, little known to those who surf the net rather than scrutinize its origins, is the inventor of the World Wide Web, the match the newspaper industry used to set itself on fire. This analogy is, of course, ridiculous, not because of the result it depicts but because it ascribes intent, which gives newspapers too much credit. The industry could only burn itself alive by accident.
From the moment three decades ago, when our old boy Sir Tim connected the Web to the internet, the clock has ticked on printed newspapers. The industry needed leaders to navigate the sea change the internet and World Wide Web brought. Instead of captains, the industry had at its helm mostly deputies in the mold of Barney Fife, only someone forgot to take away the gun and bullet.
Feet bleeding from self-inflicted wounds, newspapers paddled blindly toward the waterfall while tech giants sucked away their lifeblood and handed the industry an anvil. And here we are.
This backdrop is important in consideration of the latest flailing about, known formally as the “Payroll Credit for Compensation of Local Journalists.” This idea is found somewhere in the legislative layers of the $3.5 trillion budget Democrats are pushing in Congress.
Under the bill, newspapers would receive a five-year tax credit of up to $25,000 per journalist in the first year and up to $15,000 in the subsequent four years. The Wall Street Journal huffed at this in a recent editorial, asking “why journalists deserve a subsidy more than, say, nurses or teachers.”
Of course, the Journal is positioned well to wonder such things. The paper is owned by News Corp., which earlier this year cut a deal with Google and Facebook, assuring those companies can’t gnaw into the Journal’s digital margins to the same extent they do others’.
But there are critical questions.
First, the legislation requires that beneficiaries of the credit serve a regional or local community and employ at least one journalist there. The Journal wants to know: “Will the Washington press corps be lining up for credits? Where does that leave nonprofits like ProPublica that are financed by wealthy left-wing donors?”
Second, what about conflict? Can newspapers be counted upon to hold accountable the same government from which they are fed subsidies? Independence is part of the foundation of a free press.
It is anathema in many circles in our business to question this legislation, touted by one of the industry’s leading organizations, but the Journal’s objections are credible, particularly the last.
There is another concern. Will it work? Partially subsidizing an industry won’t save it. Newspaper revenues have fallen by more than two-thirds over the past 15 years. Advertising revenues over that span have plunged by more than 81%.
Tax credits, whether they run out in five years or extend into perpetuity, cannot circumvent the certain end those trends mean. If advertising revenues continue their current rate of decline, they will hit zero in less than five years. That will leave the industry to subsist on circulation revenues, which are inching back toward their 2003 peak of $11.2 billion.
Tech’s two major players make $200 billion annually, most of it from digital advertising and much of it from the work of journalists for whom the newspaper industry pays. While newspapers continue to draw unique visitors online, meaning they are succeeding in attracting a digital audience, they are virtually locked out of digital revenue. This puts the lie to the idea the industry is not sufficiently invested in the digital game. The industry is heavily invested and getting next to nothing in return.
The thousands of newspaper organizations still standing, with thousands of others already dead and gone, soon will be left to survive on 5.5% of the revenues two companies make alone.
Government dole isn’t what newspapers need but a fair chance to profit from their digital work so they can remain truly independent and afford to replenish their badly depleted ranks. The proposed payroll credit equates to handing a man feathers and expecting him to fly.
Proponents will argue the aim is to provide aid, not a panacea. But this is relief like giving a soldier a cigarette as he bleeds out on the battlefield.
It’s another example of what long has ailed this industry. Too many people at the top of it can neither see past their noses nor find their hind parts with both hands.
Under the leadership of our managing partner, Doug Reynolds, still a news business neophyte but also a deep, big-picture thinker, our company is taking on, via an antitrust claim, those who are suffocating the industry. Breaking big tech’s unfairly gained digital revenues stranglehold is the difference between the industry surviving or dying. Sir Tim provided the match that sparked the flames big tech fanned. Our claim is the water to douse them.