Wednesday, March 25, 2009

Senator Proposes Newspapers Re-Structure, Become Non-Profits

Apparently, U.S. Senator Benjamin Cardin(D-Maryland) has proposed something called the "Newspaper Revitalization Act"....

According to a post on the Editor's Weblog, under the Newspaper Revitalization Act, newspapers would be organizations eligible for 501(c)(3) status, the same status public radio and television have now, and could adopt the Low Profit Limited Liability Company business model (L3C).

"We are losing our newspaper industry," Cardin said in a statement. "The economy has caused an immediate problem, but the business model for newspapers, based on circulation and advertising revenue, is broken, and that is a real tragedy for communities across the nation and for our democracy.

The new legislation would make advertising and subscription revenue tax exempt and contributions to newspapers tax deductible. Cardin says the bill is to help local newspapers, not big conglomerates...and does not apply to radio or other media (this means *you* New Media interlopers!) what sort of "local newspaper" would fit Cardin's definition? Since most newspapers are owned by corporations of some sort, what are the qualificaitons for a a newspaper corporation to be considered a "big conglomerate"? There are some obvious ones, like Tribune, McClatchy, NYTCo. and Gannett. But what about Advance? What about some of the other regionals? And what if your local newspaper--your only local newspaper--is controlled by a conglomerate? Or are we talking small local papers with very limited ownership--like the Journal Register Co., which closed several papers in Connecticut because buyers could not be sought for them.

Over at the Boston Globe, readers had some rather irate comments to the bill. Says one commenter:"Newspapers aren't failing because of incompentence. Would you say that horse-drawn carriage manufacuturers were incompetent because they couldn't compete with Ford automobiles? Newspapers are failing because they have to adjust to completely new business model, customer base, and production.

According to an AP report John Sturn, President and chief executive officer of the Newspaper Association of America voiced support for the bill, saying it "recognizes changes in the law might be necessary to provide a boost to newspapers trying to weather this difficult economic period."

Yes, newspapers *may* be vital for democracy--but what about the massive incompetence that allowed them to run up huge debit? Perhaps before a bill is passed, what needs to be looked at is exactly why smaller newspapers are failing. Is it because of huge amounts of debit--like at some of the conglomo-papers? or is it some form of financial mis-management, or an inability to monetize web offerings, or some other reason?

Nobody wants to see newspapers close, that's for sure, but is a piece of legislation necessary to help another ailing business? And what sorts of give-backs will be asked from newspaper employees (the way that they were asked from GM employees)? What about newspaper profit margins? Perhaps before doling out money, legislators should look at what's going on with profit margins, with debit, and other aspects of the business model before being so certain that government intervention is needed to keep them in business.

Although, Cardin's proposal makes a bit more sense than Nancy Pelosi's proposed legislation which would allow for relaxing of anti-trust laws, and thus favor the large conglomerates.

Still, to rely on government intervention at this point is perhaps a bit premature. Yes, small regional dailies are closing, and some larger papers (like the Seattle Post-Intelligencer and the Rocky Mountain News) have moved completely online. But what would throwing government money at newspapers do for them, if there have been no substantial changes in the business model and just a lot of wishful thinking that we'll simply go back to our pre-internet days of relying on the presses?

And then there's the idea of state-owned newspapers....can you say Pravda??

'Nuff said.

(hat tip to Techmeme!)

Update 3/26/09 For some time, I had an inkling that there was something fundamentally wrong with the way the journalism establishment has been whining and moaning about how the death of newspapers will be the sure death of democracy. David Eaves excellent post posits the notion that it's Free Speech that's protected by the Constitution, not newspapers or journalism. Eaves goes on to speak about how newspapers themselves are not democratic (very good point)and that the "Diversity of content and access to it, made possible by the internet, has strengthened our civic engagement." Bravo, Mr. Eaves! Bravo!

No comments: