In Defence of Liberty

Driven by data; ridden with liberty.

News of Future Past

Newspapers, by their very nature, are reporting yesterday’s news. In the age of 24 hour news programming, and the restless revolutions of social media, newspaper sales are waning. David Leigh, a journalist for The Guardian, believes he has stumbled upon “a perfectly easy way to rescue newspapers”. In his piece, A £2-a-month levy on broadband could save our newspapers, Mr Leigh recommends placing a £24 annual tax on household broadband internet bills, and distributing the raised funds amongst newspaper companies, according to their online readership.

Mr Leigh’s proposal would tax a newer technology, the internet and the dissemination of news online; in order to connect the older technology, newspapers, to the intravenous therapy of state subventions. The problem of how to provide a product that, since everyone can obtain it for free, few are willing to pay for, has already been solved. In the economic sense, radio is a public good: it is both non-excludable and non-rivalrous. Individuals cannot be excluded from tuning into a radio signal, and one person listening to a radio channel does not stop another person listening to the same channel. This presents a problem, as individuals may “free ride” on the production of a public good. To solve this issue, radio channels pay for their rents, broadcasting costs and the host’s labour through advertising, which is coupled together with the radio programmes.

Advertisement can raise a significant amount of funds, but Mr Leigh fears that this will “only pay for a fraction of the high-quality journalism that commercial newspapers generate”. Another solution to sustain unpopular newspaper titles works along the same lines as advertisements tethered to radio broadcasts: adjoining an unpopular publication to a more popular publication. Both News International and the Guardian Media Group already do this, with The Times and The Guardian feeding parasitically off the revenues of The Sun and Auto Trader respectively.

This tax would be highly regressive, taking £24 a year away from each and every household that has a broadband connection. It would be a 13% increase on a household’s £15 monthly broadband bill. Some of these families may not even use the internet for checking news other than the BBC news website, which they presumably already pay for through the license fee. Mr Leigh is arguing that people should be taxed for the luxury of subsisting newspapers and journalists that are utterly opposed to their views.

Mr Leigh’s system would distribute the taxed funds, over £500m, as determined by the online readership of each newspaper. However, clicking on an online article is not the same as agreeing with what it says, or wishing to have the newspaper receive money. The mere act of reading an online article is not equivalent to donating in favour of the journalism, or lack thereof, it took to write it. The existence of a large golden pot, available to news providers, will introduce an incentive for activities such as link-baiting, as well as open sensationalism that journalists of The Guardian often claim to object to.

Like most rent-seekers, Mr Leigh is able to claim that his vested interest actually represents the national and public interests. He darkly proclaims that: “Yet when the day comes that newspapers are forced to stop printing altogether, it will be a disaster for democracy.” News media began to emerge following the widened use of the printing press, with numerous publications arising in Britain in the 17th Century, including pamphlets and ballads. On newspapers, American Founding Father Thomas Jefferson once said:

Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to choose the latter.

The end of newspapers, if that ever happens, is not the same as the end of news. In Jefferson’s time, the only means for the mass distribution of news and information was by newspapers. Now, we can view entire books and the day’s news in a simple press of a button.

David Leigh’s system seeks to crystallize a certain moment in time, the ascendancy of newsprint, and endure against the eroding tide of internet technology. The democratic function of newspapers, the wide dissemination of news and information, can now be outperformed by news websites. It would be providing state subvention to a declining medium; it would also establish a new regressive taxation on households, and gives powerful incentives for newspapers to inflate their online readership.

Related viewing:

A £2-a-month levy on broadband could save our newspapers by David Leigh (The Guardian)

Why David Leigh’s broadband tax plan is bonkers by Dominic Ponsford (New Statesman)

The Guardian’s Poll Tax Moment by Guido Fawkes (Order-Order)

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This entry was posted on September 30, 2012 by in National Politics and tagged , , , , .
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