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Now We're Bailing out the Media?!


Posted by Kelly William Cobb on Thursday, June 3rd, 2010, 7:09 PM PERMALINK


“Thanks for all that unabashed liberal support, Mainstream Media!  Now, here’s a ton of other people’s money.”  Or at least that’s what the Federal Trade Commission’s recently released proposal on the “reinvention of journalism” may as well read.  The FTC’s draft report would toss journalists as much as $35 billion per year, citing the inability for the industry to monetize itself in the wake of advertising and subscriber revenue loss.  So, since you didn’t want to subscribe to newspapers, the government wants to make sure you continue to pay the industry in the following ways:

  • Tax on Consumer Electronics: Aptly dubbed the iPad tax, a 5% tax (presumably on top of your current sales tax rate) would raise $4 billion.
  • Internet Service Provider/Cell Phone Tax: A tax of 3% would raise $6 billion a year – while causing prices to rise and consumers to drop service at the same time.
  • Advertising Taxes: A 2% tax on ads would presumably net between $5 and $6 billion per year, as well an additional $2 billion from changing how businesses could expense it.  Oddly, the report also says that 80% of newspaper revenue comes from ads.  Taxing and discouraging the largest revenue source for papers to help monetize and save the industry is sure to have the complete opposite effect.
  • Tax on Broadcast Spectrum: At a rate of 7%, a tax on the spectrum that carries radio and television would raise between $3 and $6 billion.
  • Spectrum Auction Tax: Tax commercial communication spectrum and toss the money into a “public-media fund.”

And what will all this revenue get the American people?  From the report:

  • Establish a “Journalism” division of AmeriCorps
  • Increase Funding for Corporation for Public Broadcasting
  • Establish a National Fund for Local News
  • Provide a tax credit to news organizations for every journalist they employ
  • Establish Citizenship News Vouchers (you get to choose what non-profit media outlet gets $200 of your tax money, but you don’t get to keep it yourself)
  • Grants to universities to conduct investigative journalism

This is a blatant boondoggle for public media.  Additionally, what the government calls “reinvention” would cement in place old business models and prevent the industry from reinventing itself.  Traditional media is trying to find new ways to monetize and create innovative new business models, yet the FTC’s proposal would remove all incentive for this progress to continue.  The report is so backwards looking that it only mentions the word “blog” once, and only in the context of advertising.

The government has a disgusting habit of turning a fire hose of taxpayer money at every single industry that is undergoing a rough, but necessary transition.  And while no taxpayer bailout is ever warranted, the last industry that should be ever be propped up by the government is the media.  It opens the door for severe First Amendment violations, extreme political bias (journalists will remember who cuts their check), and it shatters the notion of an independent media necessary in a free country.  In short, it leads us ever closer to an American Pravda.

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