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You Want to Save Democracy? We Must Save Newspapers. Here’s How.

People of goodwill, regardless of their political worldview, agree that democracy depends in some significant measure on the general public’s access to information. While the late Justice Louis Brandeis is often credited with the adage that sunlight is the best disinfectant, in reality Brandeis was expounding on a thought expressed by James Bryce in a book published in 1888, The American Commonwealth. The scholar Alasdair S. Roberts, the director of the School of Public Policy at the University of Massachusetts Amherst excerpted the relevant paragraph from Bryce’s book on his blog in 2015, and it is worth reading in full:

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Excerpt from The American Commonwealth by James Bryce

Indeed, as Bryce wrote nearly 150 years ago, public servants are far likelier to avoid the temptation to misuse power for personal gain — the “noxious germs” of self-interest is how Bryce identified it above— if they risked exposure. And simply no one does that better than local newspapers.

And yet, as Adam Gabbatt writes in The Guardian, “[l]ocal journalism is on its knees,” especially in the United States. Quoting from the book Ghosting the News by The Washington Post’s Margaret Sullivan, Gabbatt reports that “[s]ome of the most trusted sources of news — local sources, particularly local newspapers — are slipping away, never to return.”

Gabbatt continues:

“The news industry, where profits tend to vary between slim and non-existent, has particularly suffered over the past four months. Scores of newspapers have laid off staff or closed entirely, according to Poynter, and in April Penny Abernathy, the Knight chair in journalism and digital media economics at the University of North Carolina, told the Guardian she expected “hundreds, not dozens” of newspapers and news websites to close.”(1)

The response by Congress and state legislatures to this calamity thus far has been anemic. Imagine how congress would react if other pillars of our modern way of life were existentially threatened as newspapers are — think electricity or garbage removal, for example. Could you imagine those political bodies standing idly by if local utilities were collapsing or garbage was piling up?

And yet, with 1,300 U.S. communities having already “completely lost [local] news coverage,” the proverbial garbage James Bryce warned against is already beginning to pile — the garbage of graft, inefficiency and corruption. As Sullivan says, ““Studies have shown [that] . . . municipal borrowing costs go up when local news declines. Why? Because the watchdog isn’t there — and so, local government becomes less efficient and more prone to corruption or at least wasteful spending,”

It’s vital for political bodies with the power to draft and pass legislation to provide newspapers with a sustainable lifeline, as doing so is no less critical to preserving our way of life as electricity and garbage removal. My goal in this article is to propose some viable new options.

It is well established that most advertising migrated to the internet, particularly “thanks” to Facebook and Google. A 2018 article in The Guardian offered this sobering data point: “In the nine years since Google bought the mobile ad company AdMob, annual ad revenue at Google and Facebook has soared, to more than $95bn and almost $40bn, respectively. During this period, ad revenue at newspapers fell around $50bn in 2005 to under $20bn today.”

Short of government subsidies for newspapers — which are undesirable in and of themselves as they may create at least the perception that newspapers are beholden to the politicians who control budgets — the best way legislators can support journalism is to create tax incentives promoting local advertising and readership.

To that end, I am proposing that local newspapers are classified as being on-par with charitable entities for tax purposes only. The rationale for this policy proposal is to level-set journalism as a vital public good on par with charity.

A 2017 article in the online blog The Conversation provides an expansive summary of the rationale for making charitable donations tax-deductible. I’ve taken the liberty of making bold arguments that, in my view, apply equally to local journalism:

The main argument for tax-deductibility of donations is that it is a form of government assistance or subsidy for what are considered publicly beneficial causes. If the tax concessions were not available, society may not benefit from high levels of assistance for worthy causes.

Another strong argument is that it is a form of subsidy or payment for the delivery of goods and services that are of public benefit, such as medical services provided by not-for-profit hospitals. The hospital saves the government from paying for similar activities.

A third argument is that indirect support mechanisms, such as tax-deductibility of donations, facilitates choice. So, taxpayers can direct a certain proportion of their tax to causes they choose, rather than the government determining how it should be spent . . .

Tax deductibility of donations can also be used to support private donations to politically sensitive causes that many consider provide a public benefit.

I believe that local newspapers check the boxes for the bolded statements above, no less than most charities. To that end, I propose the following:

  • Advertisers should be allowed to deduct up to 100% of the cost of advertising placed directly with any local newspaper
  • Readers should be allowed to deduct 100% of the cost of a local newspaper, whether purchased at retail or through a home subscription, up to $1,000 per year, provided they are residents of the state served by the newspaper
  • To promote the return of classified ads to newspapers, federal, local and state governments would be required to place all job openings in the local newspaper that geographically corresponds with the job opening.
  • I believe that it would be appropriate (though regrettable in some ways) for newspapers who choose to receive non-profit tax treatment to avoid making endorsements in general elections. Newspapers should be entitled to endorse candidates in primaries.

In addition:

  • Legislation should make Google responsible to either shut down loopholes in its Incognito function that allows users to bypass newspapers’ paywalls, or pay residuals to local newspapers for any story accessed by an Incognito user that originated from a Google Chrome search.
  • While organizations like Facebook have recently come around to accepting their responsibility to pay for journalism, the amount they pay is “a drop in the bucket,” according to Laura Bassett, cofounder of the Save Journalism Project — a nonprofit organization advocating for journalists in the digital era. Facebook and its peers should be required to pay a more meaningful share of revenue to newspaper publishers for their content, based upon a transparent calculation set by congress.

We have reached — and in many ways, surpassed — a crisis point, where failure to act could lead to a catastrophic and irreversible damage to our democracy, at the worst possible time. Thousands of American newspapers have shuttered and others are tethering on the edge. In addition to the damage to our democracy, tens of thousands of jobs have been lost, and tens of thousands more are at stake. The time to act is now. While there may be other options, it is my view that only bold legislative action has a chance to materially change the trajectory of local newspapers in a sustainable manner. I am calling on members of congress to act now, and on candidate Biden to incorporate saving local journalism into his agenda.

Let’s not live to regret standing pat while the embers of this vital industry are dimming before our very eyes. Let’s come together, and act now.

Written by

Tal J Zlotnitsky is the President & CEO of iControl Data Solutions, a Bethesda, Md.-based SaaS provider of DSD workflow automation & consolidation solutions

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