What would state subsidies for public interest journalism look like?

If Fairfax’s annual report last week delivered a temporary reprieve for the midweek print editions of its flagship titles, it did little to alter the narrative of long-term decline in the profitability of news journalism. 
 
 Annual revenue for Fairfax’s news business, Australian Metro Media, fell 5% to $574 million while profit on that revenue fell 45% to $39 million. Fairfax’s regional and local newspapers suffered a 10% decline in profit. Total cost reductions of $400 million dollars over the last four years have included painful cuts to core editorial staff. 
 
 It is further evidence that the commercial prospects for public interest journalism are shaky indeed and gives credence to Eric Beecher’s recent warning on Media Watch that “we’re going to wake up in a year or two years time and find that half to two-thirds of the important journalism that kept power accountable won’t exist.”
 
 Beecher’s argument that we need to consider subsidising news publishers to ensure the viability of the journalism critical to a flourishing democracy seems as urgent as ever. “I’m talking about something like government funding in a way that the courts are funded, so they are 100 per cent independent of government, but they are funded by government,” Beecher explained. 
 
 How would a system of government subsidies for news sites work?

A good starting point is Sweden which has subsidised its press for almost half a century. Sweden seems to pass the threshold test of whether, in practice, media outlets can remain politically independent while being (partially) financially dependent on the state. It typically ranks in the top 10 in Reporters Without Borders’ Press Freedom Index (8th in 2016), quite a few places higher than Australia. Tellingly, the system of subsidies has survived as power has oscillated between left and right over the decades, indicating a working consensus that the Press Subsidies Council, now incorporated into the Swedish Broadcasting Authority, operates independently and impartially enough. 
 
 Sweden introduced the production subsidy, as it’s called, in 1970 after two decades in which a net 60 newspapers had gone out of business. Its introduction halted the decline in competition and led for a time to a moderate increase in the number of daily newspapers. 
 
 More recently, the Swedish newspaper industry has not been immune to the devastating effects of online competition for advertising revenue that have beset publishers globally. But the media diversity enjoyed by this country of less than 10 million people remains what should be a source of envy for Australians. 
 
 Sweden has 78 daily newspapers (including papers that are published at least four times a week). That’s double the number in Australia, a country with more than twice the population. Critically, there are 15 geographical markets in Sweden where at least two newspapers compete, again in stark contrast to Australia where not even all our capital cities sustain duopolies. 
 
 To qualify for the production subsidy, which is funded by a tax on advertising, newspapers need to be published at least once a week and meet a minimum circulation requirement (but have less than 30% market share). The paper also needs to comprise of at least 51% original editorial content (and the size of the subsidy is scaled up the more space is devoted to editorial). The subsidy constitutes only 2–3% of total industry revenue but typically amounts to between 15 and 20% of revenue for the weaker competitors that are the subsidy’s main beneficiary. 
 
 Sweden is by no means alone in providing its press some form of financial support. Many European countries, for instance, provide full or partial exemptions to newspapers on their value added taxes. But the extent to which it targets support to maintain diversity — and does so using an explicit criteria, the application of which requires relatively minimal discretion — is noteworthy. 
 
 While state sponsorship can easily seem inimical to free and fearless journalism, the idea is perhaps best likened to public funding of political parties. The objectivity of the funding criteria — in which the allocated amount is simply multiplied by votes received — allows little room for favouritism or the perception of it. 
 
 Of course, the case for public funding rests on the premise that there isn’t an independent commercial future for public interest journalism. It’s clear the era in which the overwhelming majority of revenue comes from advertising is over. Only time will tell whether business models in which news publishers rely on majority reader revenue will become sustainable. If they don’t, Sweden will be a good place to turn for answers as to how we fund the kind of journalism that makes democracy work.