Tuesday, December 8, 2009

FTC Considers Subsidies to Help Failing Newspapers

According to an article in the Wall Street Journal, the Federal Trade Commision is deciding wether or not to assist failing newspapers, after many major dailies have gone bankrupt or are close to it. With free information and news available through the internet, many papers are struggling with old business models and new ways of making revenue.

There are a few issues with this. One argument the media executives have, especially those from newspapers, is that internet sites can search their site for free and return the article to the user, or print articles on other sites. I take the side of the execs on this, but only a little. Lets look at it this way. Anything that is printed by Townsville's newspaper's staff in that newspaper is property of Townsville's newspaper, and no one else. If Cityville's newspaper wants to borrow, or re-print an article, then they pay Townsville's newspaper for the article. And so on. The problem some execs - OK, Rupert Murdoch - have is that Google, for instance, can search a news site, and reprint a blurb, or an entire article, with out the user ever visiting the actual newspaper site. The other side of the coin is that newspapers need to either update their business model, create new revenue streams (The FTC is considering letting media companies own TV stations and newspapers in the same market), or just fail and go out of business.

Another issue with the government sponsored subsidies of media organizations is the (further) blurring of the line of the separation of government and media. Earlier this year, Democratic Senator Benjamin Cardin of Maryland introduced a bill that would let newspapers operate as non-profits. So, if that were to come to fruition, then newspapers would be indebted to government for practically being propped up. If government intervention is the sole reason newspapers would be able to stay afloat, how could they be government watchdogs and actually do investigative journalism? Media organizations that received government assistance would practically become state run news agencies.

A third issue is the further bailing out of failing companies. I guess, by now, the model for failed government intervention is GM. They get billions of dollars, and have nothing to show for it in nine months except (continually) falling profits and hundreds of dealerships boarded up. As hard as it would be, the government would be better served by letting business find new ways to do business or go out of business. The same business models that worked 50-100 years ago don't always work now.
Related Posts Plugin for WordPress, Blogger...