Though Western media systems are going through a rapid and often painful transformation today with the rise of the internet and mobile platforms, the decline of paid print newspaper circulation, and the erosion of the largest free-to-air broadcast audiences, the ways in which governments provide direct and indirect support for the media have remained largely unchanged for decades.
The bulk of the often quite considerable direct and indirect subsidies provided continue to go to industry incumbents coming out of broadcast and print, while innovative efforts and new entrants primarily based on new media receive little or no support. In central ways, public support for the media remains stuck in the twentieth century, and some parts of these support systems are in need of real reform to be brought into the twenty-first we live in.
That is the thrust of a report called ‘Public Support for the Media’ that I’ve written with help from Geert Linnebank, former Editor-in-Chief of Reuters. In it, we review the various forms of subsidy in place in Finland, France, Germany, Italy, the United Kingdom, and the United States.
In all these countries, the main forms of support relevant today have been put in place in the 1970s and in many cases long before. None of these countries have carried out major reforms of their subsidy systems to take into account the changes the media industry has undergone over the last twenty years. The bulk of the public support provided continues to go—
- First, especially in Europe, directly to public service broadcasters with varying commitments to the online and mobile services people increasingly desire, and
- Secondly, in all the countries covered including the United States, indirectly through various forms of tax relief to paid printed newspapers that remain of central importance in terms of generating original general interest news content on a regular basis, but are suffering from declining readership and stagnant revenues.
It is well-known that most European countries remain committed to public service broadcasting, but it is less well known that private sector print publishers in most countries benefit from very substantial forms of indirect support. The British press, for example, benefits from VAT relief worth an estimated £594 million (€748 million) every year.
The large table below (click to enlarge) provides an overview over the main forms of support in place in the six countries, and their estimated total value. As is clear, the sums involved are considerable, even if they pale by comparison to how much revenue some parts of the industry has lost in recent years (US newspapers have seen their total revenue decline by more than $20 billion since 2000).
A lot of money thus goes to supporting broadcast and print media in various ways, media that continue to be important for how people keep informed about public affairs, but also media that are increasingly being supplemented by online and mobile media of various sorts. Despite the well known and rapid spread of internet access and increasingly smart mobile phones, today, of all the six countries covered in the report, only France offers any meaningful support aimed directly at online media—and that to the tune of about €20 million a year after reforms in 2009, less than 0.5% of all the support provided. (The ‘Other support’ available in Italy goes to private sector broadcasting.)
Our aim with the report has been to collect in one place information on various forms of public sector intervention meant to encourage and foster vibrant and diverse media systems. Rather than discuss each kind of policy—broadcast, press, online, etc—separately and on its own terms, we have wanted to provide a more general overview over forms of intervention in increasingly convergent media markets and help shed some light on an otherwise all too opaque policy area attracting increased interest as some commercial media companies continue to struggle and newsrooms in many countries are cut. In several countries, detailed reports on the national support systems have been published in recent years (see for example this one from the US, this one from France, or this one from Finland), but we are not aware of any comparative overviews bringing together different forms of media support the way we have done.
This kind of cross-country comparison can help identify overlaps—like the absence of change and the bias in favor of legacy media common to all the countries considered here—but also map out differences. Different developed democracies support the media to different degrees and in different ways—of the countries we looked at, Finland, Germany, and the United Kingdom offer the most support in per capita terms, based on robust public service funding and VAT relief for historically strong newspaper industries. France and Italy has more extensive support systems in place, but their total value is actually lower in per capita terms partially because of their lower license fees, partially because tax relief is worth less for their much smaller press. The US is the clear outlier amongst developed democraces, with minimal public support, mainly for public service broadcasting (through federal and state appropriations) and for print publishers (through various forms of tax relief).
The figure below breaks down the absolute sums in terms of support per capita to make them more directly comparable than absolute figures (listing 5.5m population Finland and 300+m population US side-by-side may invite misunderstandings).
As is clear, there are important variations in how these six different countries support the media. But in all of them, direct and indirect subsidies runs to billions of Euros per year and overwhelmingly go to legacy media organizations coming out of broadcasting and print, while new media initiatives—whether pursued by these or by new entrants and entrepreneurs—get basically no support.
As our media systems change and people’s media use switches towards new media platforms, the effectiveness of the inherited forms of intervention will decline. Especially indirect support for the press—support still considered “essential” by industry associations—is and has been far more significant than most people realise. But support systems built around legacy platforms of relatively diminishing importance will lose their effectiveness as current trends in the advertising business and in people’s media habit continues. As newspaper circulation and revenues from print sales and advertising thus decline, the value of the indirect subsidies meant to help the industry thrive will diminish—and they do nothing to help it address the more fundamental challenge of structural adjustment that it faces.
Those who favour a renewed commitment to public support for the media will therefore have to rethink the role of public policy, of public service media organizations, and reconsider how governments can support those private sector media companies that provide public goods like the kinds of accessible accountability journalism and diverse public debate that democracies benefit from. Media scholars have long called for such reform, and yet little has been done to bring our twentieth century media policies into the twenty-first century. The basis for indirect support for the press in the United Kingdom, for example, continues to be the definition of a newspaper as publications that “consist of several large sheets folded rather than bound together, and contain information about current events of local, national or international interest.”
Whether one wants public support for the media or not is a political question (and one all developed democracies have answered in the affirmative in the twentieth century), but as people’s media habits and the economics of the industry change, effective intervention probably ought to be built around the “information” part of the sentence quoted above rather than the “several large sheets” part (just as “public service broadcasters” have in many countries sought to redefine themselves as “public service media organizations” to emphasize their cross-platform ambitions).
It will not be easy to develop new forms of public support for the media. New policies intervening in a sensitive area crucial for the functioning of our democracies will have to command wide political support, navigate industry and professional concerns, and at the same time try to meet the multiple ideals of being platform neutral (not biased in favour of any one distribution system), of being viewpoint neutral (not affording politicians or others too many opportunities to meddle), of being targeted enough to make a difference (one can’t support everything), of being governable and transparent (so that recipients can be held accountable in the public interest), of not distorting competition unnecessarily, and of being able to pass muster under various anti state-aid provisions in for example the European Union.
Developing new policies in this area is not a question of simply shouting “out with the old, in with the new” and switching support wholesale to new media—most news, for examples, is still accessed via linear broadcast and print newspapers, even though other platforms are of growing importance. Reform is a more difficult issue of deciding what it is one wants to support—what kind of public interests public support should serve, what kinds of public goods one wants delivered—and developing forms of direct and indirect support that effectively encourage that without too many malign side effects.
Developing such policies will be hard, difficult work, and call for renewed intellectual and political leadership—but it is also much needed work. Reform is necessary if we want to move beyond supporting our media past while ignoring the future.
Note: We decided to look at these six countries because they represent distinct approaches to media policy and have different media market structures. (For more on this, see for example the chapters on each (bar Italy) in the book I edited with David Levy last year). I should add that our review is not completely comprehensive in that we leave out public notice laws, regulatory relief in competition and labour law, and many other potentially important but smaller forms of support for certain media, and that it is not absolutely up to data as the last year on which the necessary information was available on all six countries was 2008. We have focused on support for the main kinds of content-producing media companies with at least a partial interest in news journalism, and thus left out both telecommunications and support for, for example, movie production and various kinds of art and culture.
Cross-posted on rasmuskleisnielsen.net