In colonial America, a small network of local newspapers proved crucial in the lead-up to the Revolutionary War. They facilitated the exchange of information between the colonies, fostering a collective sense of identity among politically distinct entities.Footnote 1 They also spread news of British injustices, creating a shared set of grievances that ultimately coalesced into more united opposition to foreign rule.Footnote 2 This circulation of news throughout the colonies “made the American Revolution possible.”Footnote 3
Yet these crucial information exchanges did not occur on their own. Rather, they were the product of deliberate government intervention. In 1754, Benjamin Franklin served as the postmaster general in the colonies under the British Crown.Footnote 4 He decided to exempt newspaper-to-newspaper exchanges from postage and delivery fees. Under this policy, printers could send their editions to one another through the mail at no cost.Footnote 5 Congress later codified this rule with the enactment of the Postal Act of 1792. The statute also permitted newspapers to send issues to their subscribers at a lower rate.Footnote 6 Collectively, these interventions facilitated the free exchange of ideas and created a vibrant public sphere for intellectual discussion and debate.Footnote 7 The number of newspapers proliferated.Footnote 8
Since then, the government has intervened in countless ways to support the press. It has offered various forms of financial support, such as tax subsidies and grants.Footnote 9 It has also recognized new property-like interests, such as “hot news,” in order to allow media organizations to seek a return on their investments in newsgathering.Footnote 10 It has invested substantial resources in critical information infrastructure, such as telegraph and radio cables, satellites, broadband internet cable, and more.Footnote 11 And it has engaged in myriad forms of regulation that have facilitated growth in media, such as creating rules to manage and allocate broadcast spectrum.Footnote 12
Yet this effort takes on new urgency today. The American press is in a period of decline. Since 2005, the nation has lost roughly a third of its newspapers and nearly two-thirds of its newspaper journalists.Footnote 13 Local newspapers have been especially hard hit, leaving large swaths of America without any local news coverage at all.Footnote 14 Members of the press have described it as an “extinction-level event.”Footnote 15
This has prompted a wave of new efforts to save the local press. Many of these have been undertaken voluntarily by the media. Press institutions have tried innovating to attract back advertisers and subscribers. These efforts have included increased investments in video and data-driven journalism,Footnote 16 new financial structures like journalism cooperatives or direct public offerings to subscribers,Footnote 17 and an expansion of nonprofit, digital-only outlets.Footnote 18 They have also included the sale of struggling media institutions to wealthy individuals.Footnote 19 But these private-sector and internal reforms have had only limited success and have not yet stemmed the decline of the local press.Footnote 20
In response, scholars, policymakers, and journalists have called for the government to take more aggressive steps to bolster the press, especially the local press. Many interventions have been proposed or adopted in recent years. They include intellectual property rights, tax credits, subsidies, prizes, and grants.Footnote 21 These reforms have also been proposed by a wide range of government actors, including international organizations; foreign countries; and federal, state, and local legislators.Footnote 22
Yet there has been little effort to develop an overarching framework to compare and evaluate these many different policy interventions.Footnote 23 This chapter begins this work. It argues that the local news crisis should be understood as a kind of innovation failure, one that calls for solutions drawn from areas of the law that have long grappled with similar problems. In markets like pharmaceuticals and technology, policymakers often employ “innovation policy pluralism,” or combinations of intellectual property protections and other government tools, such as prizes and grants.Footnote 24 Such combinations harness both free-market forces and government regulation to foster socially valuable services in productive and efficient ways.Footnote 25
Drawing on the work of scholars who have examined various combinations of innovation policy levers in other contexts, we map these existing and proposed press interventions onto this innovation policy rubric. Specifically, we rely on an innovation policy framework developed by scholars Daniel Hemel and Lisa Larrimore Ouellette. We adopt this framework to plot various press policy proposals across two indices: whether the interventions are government-sponsored or market-driven; and whether the innovation reward is allocated ex ante or ex post.Footnote 26
Consider an example. The Postal Act of 1792Footnote 27 represents a government intervention designed to bolster innovation and, specifically, press innovation.Footnote 28 Congress set the price of the subsidy and determined who would shoulder the costs – in this case, private letter-senders who paid higher postage fees.Footnote 29 Further, the incentive was imposed ex ante: The government offered the subsidy in advance to any qualifying newspaper, regardless of their business model, focus, or level of success.Footnote 30 We argue that each press policy intervention can be plotted along these two dimensions. Further, we suggest that categorizing the various press policy interventions in this way permits a comparison among the different policy levers and an analysis of how these levers can be combined and layered to meet different innovation goals.Footnote 31
After mapping out these various proposed press policy interventions, we conclude by suggesting that intellectual property and other market-driven mechanisms alone are insufficient to ensure continued local news creation in today’s media landscape. Yet a pure government-funding model is also inadequate. Instead, intellectual property solutions should be combined with other government incentives like grants, subsidies, tax benefits, and prizes.Footnote 32 In future work, we intend to evaluate the benefits and drawbacks of combining them in different ways at various levels of the local news supply chain by drawing on interventions in other industries, such as pharmaceuticals, that have also suffered from innovation failures.Footnote 33 This chapter lays the descriptive groundwork that will allow us to advance these normative claims.
It does so in three sections. Section 25.1 describes the innovation policy framework. It then argues that this rubric can be a useful lens for evaluating press policy proposals. Section 25.2 applies this framework to various existing or proposed press policy interventions. It outlines five categories of regulatory interventions when it comes to the press: market-set, ex post rewards; market-set, ex ante rewards; government-set, ex post rewards; government-set, ex ante rewards; and hybrid approaches. It then concludes by briefly examining the implications of the press policy pluralism framework. It outlines our plans for future research by offering early lessons learned by mapping press policy innovations onto the policy pluralism rubric.
25.1 Innovation Policy Levers
“Innovation” is a nebulous concept. Among policymakers and in popular discourse, it usually refers to the fostering of technological or scientific breakthroughs. But, as scholars of intellectual property contend, innovation can and should be a broad umbrella, referring to the production of all “knowledge goods.” It encompasses anything that contains ideas and/or information, including but not limited to, “[b]ooks, blueprints, films, and pharmaceutical formulas.”Footnote 34
By adopting this approach, we treat journalism as a form of innovation.Footnote 35 As discussed further below, the market failures that have plagued the news industry correspond closely to the market failures known to occur in other innovation-focused industries, such as technology, pharmaceuticals, and entertainment.Footnote 36
Indeed, innovation in general is often understood to require some kind of legal or regulatory intervention to occur effectively. The law involves itself in innovation not simply because many innovations are socially desirable but because the production of knowledge goods commonly poses economic difficulties. Knowledge goods generally suffer from a classic public goods problem: They can be used simultaneously by many without leading to scarcity (nonrivalrousness) and their use cannot inherently be limited to some and not others (nonexcludability).Footnote 37
In more concrete terms, a song or a pharmaceutical formula or a piece of investigative reporting can be copied and shared indefinitely without any inherent way for the creator to police such sharing. This runs in contrast to tangible goods – from apples to airplanes – that can only be used by one person at a time (rivalrousness) and, by virtue of the good’s physical nature, can be protected from use by nonowners (excludability). Many contend that, because of the problems of nonrivalrousness and nonexcludability, innovators will lack an incentive to produce socially valuable knowledge goods unless they are guaranteed some possibility of financial reward for investing the time and money that innovation generally requires.Footnote 38
Most notably, patent and copyright law provide this financial reward by granting innovators a limited right to exclude access to their innovations and, therefore, charge a market-based price. Without this property right, the theory goes, innovators would lack the incentive to produce valuable knowledge goods. But property-based interests are not the only way this innovation incentive can occur. The government can also directly reward innovators through grants, prizes, or tax credits.
Legal scholars, in particular Lisa Larrimore Ouellette and Daniel Hemel, have categorized the variety of ways that a government can facilitate “innovation policy.”Footnote 39 Specifically, they note the distinctions between when the innovation reward is set temporally (ex post vs. ex ante) and who actually sets the reward amount (market vs. government).Footnote 40 A brief discussion of the four categories follows.
Market-Set, Ex Post Rewards. This category includes any intervention that grants an innovator the right to exclude and thus charge a market price. Patent, copyright, and other forms of intellectual property are all examples of such policy levers. Patent law, for example, grants inventors twenty years of exclusivity for nonobvious, useful innovations.Footnote 41 Thanks to this exclusivity, the patent owner can earn a financial reward through licensing the invention or through producing the invention itself.Footnote 42
The compensation structure of intellectual property is ex post because the innovator will only be able to demand compensation if they successfully produce a knowledge good that the public actually finds valuable. Simply attempting to write a novel or invent a new pharmaceutical is not sufficient; the innovator must actually produce something of value. The reward is market-set because the precise compensation will be dictated by market demand. The government itself is neutral as to the specific innovation and the kind of compensation it warrants.Footnote 43
Market-Set, Ex Ante Rewards. This category includes tax preferences and other interventions that lower the costs of doing business for innovators. For example, the tax code explicitly allows researchers to deduct certain expenses related to research and development.Footnote 44 Through these preferences, innovators are incentivized to spend more money more quickly on research than would otherwise be financially feasible.
Tax preferences are ex ante because they are provided neutrally to anyone engaged in a specific form of innovation before the results of the innovative activity are known. But the reward is still dictated by the market because the benefits of a tax preference are meaningless if innovation does not ultimately yield a marketable product. The preference may enable a quicker route to that possibility, but it does not guarantee it.Footnote 45
Government-Set, Ex Post Rewards. This category includes government prizes that promise compensation if a specific innovation goal is achieved. For example, if the government is concerned about a specific disease, it may set a prize for the successful development of a vaccine for that disease.Footnote 46
A prize operates ex post because only successful achievement of the prize’s criteria will yield a reward. But, unlike a patent, the reward is government-set; compensation can be received regardless of whether the innovation has market value.
Government-Set, Ex Ante Rewards. This category includes direct spending by the government on innovation. Such direct spending can be done through grants or through direct government ownership of entities engaging in research. Examples of the former include funding provided to private researchers by the National Institute of Health, and examples of the latter include direct government-funded research at the Department of Energy’s National Laboratories.Footnote 47
Through such direct funding, research and development can occur without regard to market-driven returns on investment. But, in contrast to prizes, the reward is not conditioned on a specific successful outcome. Thus, the reward is government-set because the government makes the compensation decision, but it is ex ante because the reward is given before the government knows whether the innovative activity has actually proven fruitful.
***
These categories provide a helpful heuristic for making sense of various innovation policy proposals in any industry focused on the production of knowledge goods, including, as the next section argues, the press. It is important to note, however, that the categories are more ideal types that can encompass a variety of policy arrangements. As Hemel and Ouellette note, many actual interventions operate on a spectrum between government-set and market-set rewards and even between ex ante and ex post reward settings.Footnote 48 Moreover, specific policy interventions can entail intricate combinations of different innovation strategies. For example, government-funded researchers may be permitted to also seek a patent – a mixing of patent and grant strategies. Or the government might license a pharmaceutical patent at a market-set price and then distribute the corresponding medicine for free – a matching of a market-set reward with government-driven allocation. In addition to discussing how the four primary innovation policy categories already operate in the press landscape, some of these combinations are also discussed in the next section.
25.2 Innovation Policy and the Press
For much of the nation’s history, the press has been governed largely by market forces.Footnote 49 Technological innovations throughout the 1800s caused publishing costs to fall, making newspapers more widely available to the masses.Footnote 50 By the end of the 1800s, media magnates like William Randolph Hearst and Joseph Pulitzer had established media empires through the sale of salacious and scandal-ridden “yellow journalism” papers.Footnote 51 The industry continued to grow from there. Newspaper advertising revenue grew from roughly $3.7 billion in 1960, to $14.8 billion in 1980, to $48.7 billion in 2000.Footnote 52
Yet around the turn of the millennium, the press’s long-standing financial model began to break down. The invention of the internet brought a series of cascading financial, technological, and cultural changes that disrupted the media’s financial viability. Job and real estate listings had long subsidized news reporting.Footnote 53 But the internet allowed for the disaggregation of classified advertisements from journalism products.Footnote 54 Further, critical advertising revenue migrated online to other platforms.Footnote 55 Many newspapers and magazines also offered their publications for free online. Readers became accustomed to accessing news without paying for the content, and it became difficult to later reshape consumer expectations again.Footnote 56
Local news outlets were hardest hit by these developments, especially local newspapers. Since 2005, 2,900 newspapers have closed.Footnote 57 Many that remain are now “ghost newspapers,” with little or no staff and limited original reporting.Footnote 58 More than half of American counties now have no local newspaper or only a single paper,Footnote 59 and most of the existing local newspapers today are published only weekly.Footnote 60 The rise of digital-only outlets has not come close to making up for this loss.
Against this backdrop, governments have begun to experiment with new and expanded forms of financial support for the press. The press has always functioned with some measure of intervention and assistance from the government in the United States, although the government’s support has traditionally been limited.Footnote 61 Given the depth and severity of the current local news crisis, however, many government actors, both domestically and abroad, have begun experimenting with new forms of press assistance. Many advocates have also proposed innovative new forms of support that have not yet been implemented. This section surveys these efforts, categorizing them according to the innovation policy pluralism framework developed by intellectual property and innovation law scholars.
25.2.1 Market-Set, Ex Post Rewards
A ubiquitous form of innovation policy consists of the various legal regimes that enable the press to successfully monetize content in the marketplace. These policy tools enable media companies to enforce a right to exclude, thereby preventing freeriding by rivals or by users.Footnote 62 Thanks to these protections, media companies can assert control over the ways in which the public can access new content, which in turn allows these companies to utilize a variety of monetization strategies: for example, direct charging for content via subscriptions or hard-copy purchases, licensing of content, or seeking payment from advertisers.Footnote 63
We include in this category conventional forms of intellectual property, especially copyright, as well as media-specific regimes, such as “hot news misappropriation” or special licensing obligations for platforms. We also include the variety of laws that enable media companies to prevent circumvention of various technical protections, such as paywalls. This section discusses each of these regimes below.
25.2.1.1 Copyright
In the United States, copyright protects any original work – including textual works, audio works, or audiovisual works – from the moment of fixation.Footnote 64 News articles, television news, podcasts, or radio news broadcasts are all protected by copyright.Footnote 65 Newspapers, magazines, and websites are also protectable as a collective work or compilation.Footnote 66 Thanks to copyright protection, media companies can seek damages or injunctive relief for any unauthorized copying, distribution, or transmission of these materials.Footnote 67
Copyright in news, however, is more limited than copyright in areas such as music, art, or literature. Copyright law does not extend to ideas or facts about the world. The Supreme Court has explicitly stated that “all facts – scientific, historical, biographical, and news of the day … may not be copyrighted and are part of the public domain available to every person.”Footnote 68 In practice, then, copyright in news materials is limited to the specific ways these unprotectable facts are expressed. The wholesale copying of an entire, or a large portion of, a news article would be considered infringing, but the borrowing of facts for inclusion in a new work of journalism – even if such facts were previously unreported – would not be considered infringing. For a finding of infringement, an entire article need not be copied verbatim, but the copy must be highly similar, including, for example, utilizing “the same structure and organization, … the same chronological and substantive grouping of facts … [and some] identical phraseology and word choice.”Footnote 69
Protection for news material is further limited by some other areas of copyright. The simple copying of short phrases or headlines is generally not actionable.Footnote 70 The fair use doctrine can also prevent news organizations from asserting copyright in certain contexts. While fair use will generally not excuse a rival news organization’s copying of protected material,Footnote 71 the doctrine allows members of the public to copy materials for many educational uses.Footnote 72
Copyright, then, is primarily useful to media organizations for preventing the unauthorized dissemination of news articles and the like (in contrast to the reuse of factual materials from those articles in other reporting).Footnote 73 Actually asserting copyright, however, can carry some challenges. Registration of a work at the Copyright Office is a precondition to filing suit, and this process can prove onerous for news organizations that are constantly producing new content.Footnote 74 Broad unauthorized dissemination online by members of the public is also generally difficult and expensive to police.Footnote 75 Around a decade ago, some media organizations attempted to deal with these costs by assigning their rights to sue for infringement to a for-profit “copyright enforcement” entity called Rightshaven. But after a series of failed litigations against various bloggers and news aggregators, Rightshaven ultimately closed its operations.Footnote 76
25.2.1.2 Hot News Misappropriation
The unprotectability of facts under copyright law has, historically, raised concerns for newspapers that their investments in gathering news would go unrewarded, since rivals could immediately co-opt and rewrite any breaking news stories. In reaction to this problem, the federal courts developed a special form of unfair competition tort: hot news misappropriation. As the Supreme Court elucidated in 1918, newspapers maintain a “quasi-property” interest in their time-sensitive, factual news reporting that they can assert against competitors.Footnote 77
The later abolition of federal common law, however, relegated the cause of action to the common law of just a handful of states.Footnote 78 And the passage of the 1976 Copyright Act raised questions about whether the cause of action was preempted. In its 1997 decision in NBA v. Motorola, the Second Circuit held that preemption concerns limit the doctrine’s applicability to a very narrow set of scenarios.Footnote 79 Since then, courts that have considered hot news misappropriation claims have generally not permitted them to go forward.Footnote 80
Some courts and commentators have speculated that hot news misappropriation can survive if recharacterized as a kind of unfair competition or unjust enrichment claim, rather than an intellectual property interest.Footnote 81 Indeed, news organizations continue to assert such protection for their works. For example, in the litigation over OpenAI’s use of The New York Times’ materials, the parties are currently debating the applicability of a common law hot news misappropriation claim.Footnote 82
25.2.1.3 Press Publishers’ Rights Against Platforms
The rise of online platforms and news aggregators has posed significant challenges for media organizations. In particular, platforms’ role as both a gateway and (algorithmic) curator of consumers’ access to news has led to significant decreases in news media revenue.Footnote 83 Rather than accessing news directly on a media organization’s website, most consumers now encounter news articles via platforms, while accompanied by the highly precise targeted advertisements that these platforms enable through data accumulation and sophisticated algorithms. This has meant that news organizations’ advertising revenue has decreased significantly, as advertisers have instead flocked to platforms.Footnote 84 Notably, from 2014 to 2018, Google and Facebook advertising revenue increased by 150 percent while newspapers experienced a 35-percent advertising revenue decline.Footnote 85 Moreover, platform-based news access has also eroded consumers’ familiarity with distinct media brand identities, as consumers now access content through algorithmically driven curation that is mostly independent of specific media brands.Footnote 86
Platforms’ role in reducing media revenue has led to several interventions ostensibly designed to restore the status quo by requiring platforms to compensate news organizations for reproducing their content. Some of these interventions can be categorized as intellectual property-like ex post, market-based rewards. In particular, Article 15 of the 2019 European Union Copyright Directive provides that EU member states must grant press publishers an exclusive right to prevent platforms (including news aggregators, social media companies, and search engines) from reproducing excerpts of press publications without permission.Footnote 87
This press publishers’ right is independent of the copyright in the news story.Footnote 88 Thus, for example, a national law implementing Article 15 would require Facebook to obtain permission from a publisher before providing a headline and short snippet of a news story (even though such permission would not always be required under copyright law). Notably, the Copyright Directive explicitly justifies the creation of this new press publishers’ right using the language of innovation incentives. It explains that the “organisational and financial contribution of publishers in producing press publications needs to be recognised and further encouraged to ensure the sustainability of the publishing industry.” The Copyright Directive aims to do so by providing “harmonised legal protection for press publications in respect of online uses by information society service providers.”Footnote 89
While the Article 15 press publisher right does not cover simply linking to press material (without the inclusion of any excerpt), some countries have implemented their own press publisher rights that also include linking. For example, Australia and Canada require payment for such uses. And in order to address perceived imbalances in bargaining positions,Footnote 90 Australian and Canadian laws require platforms to negotiate royalties with news organizations before the platforms can make their news content available. They also enable the government to step in to set rates if negotiations do not succeed.Footnote 91
The United States has not enacted a press publishers’ right, but California has proposed legislation modeled after some of the examples described above. Like the Canadian and Australian approaches, the proposed California Journalism Prevention Act would require that platforms engage in a negotiation, with the possibility of arbitration, to determine an amount the platforms must pay for a license to make available news content.Footnote 92
Scholars have criticized press publishers’ rights on a variety of grounds. The lack of government-mandated negotiation and rate-setting in the EU Directive raises concerns that large platforms will take advantage of their market power to demand the use of content for a low or no fee.Footnote 93 Approaches with mandatory arbitration or rate-setting attempt to resolve this competition problem but still raise concerns that platforms will deprioritize news content, or even pull it altogether, to lower or avoid royalty payments. For example, the Canadian government is still in negotiations with Facebook, which has threatened to pull all news content from its platform in Canada.Footnote 94
The California proposal has also received more specific criticism. Some media stakeholders have raised concerns that the royalty payouts would predominantly benefit large media organizations (or, even more troublingly, clickbait-focused entities), at the expense of small, local media outlets.Footnote 95 Finally, some commentators believe the California proposal could not survive a court challenge on First Amendment and/or copyright preemption grounds.Footnote 96
Notwithstanding these criticisms, the direct payments from platforms to media organizations have begun to prove helpful to at least some in the news industry. In particular, in 2023, 33 percent of media leaders described payments from platforms as an “important revenue stream.”Footnote 97
25.2.1.4 Paywall Anti-circumvention
Many media organizations now use online paywalls, requiring a reader to create an online account and (usually) pay a fee in order to access content. Paywalls provide a source of direct revenue to media companies, while also attempting to ensure that users access content predominantly on the media company’s website, which can bolster advertising revenue.Footnote 98
Paywalls, however, are easily circumvented by specialized software, URL manipulation, or password sharing.Footnote 99 Several areas of law may provide protections for media companies that seek to prevent circumvention. Access to paywalled media content is usually accompanied by terms of service that may create contract remedies for misuse of the paywall or its underlying content.Footnote 100 Additionally, the Digital Millennium Copyright Act’s (DMCA) prohibition against circumventing technical measures that control access to copyrighted worksFootnote 101 may be implicated by efforts to bypass a paywall.Footnote 102 Such a theory remains untested, and the courts’ differing interpretations of the DMCA may pose barriers.Footnote 103 That being said, at least one recent case attempted such a strategy: The owners of the Wall Street Journal brought a series of breach-of-contract and DMCA anti-circumvention claims against the owner of a commercial password sharing service.Footnote 104 The case, however, settled before any judgment on the merits.Footnote 105
25.2.2 Market-Set, Ex Ante Rewards
A variety of ex ante, market-based rewards are also used to support the press. Most take the form of tax benefits. Through these tax initiatives, the government harnesses information held by the private sector. Government actors establish “general ground rules for the reward system without making tailored, technology-specific judgments.”Footnote 106 The government offers up financial incentives but leaves private actors free to decide how to respond.Footnote 107
There is a long history in the United States of using federal, state, and local tax incentives to support the press. A common example is the use of sales tax exemptions for news publishers. As far back as the nation’s founding, states have excluded newspapers and other news products from general sales and use taxes.Footnote 108 This technique is still employed today as a form of government support for news institutions.Footnote 109 Federal, state, and local governments have also long provided tax breaks for items critical to the news manufacturing processes. They have exempted ink, newsprint, and newspaper machinery and related equipment from sales taxes.Footnote 110 They have also excluded broadcasting and other telecommunications equipment from sales taxes.Footnote 111
Such benefits are less valuable today because news organizations print fewer hard copies or offer digital-only products. But new tax incentives could be fashioned to better address publishers’ needs in the digital age. For example, President Joe Biden’s 2020 Build Back Better Act proposed tax credits for the salaries of new journalism hires. The bill, if enacted, would have provided $25,000 for the salary of local journalists in their first year of employment and a $15,000 tax credit for the following four years.Footnote 112 Similarly, Washington state recently enacted a law that reduces newspaper publishers’ tax rate under the state’s business and occupation tax,Footnote 113 a move estimated to save the states’ publishers around $1 million per year.Footnote 114
Other tax-based proposals have focused on better utilizing existing tax advantages. For example, nonprofit press institutions already receive general tax breaks available to all nonprofit journalism entities.Footnote 115 Some scholars have argued that the government should make it easier for for-profit news organizations to convert into nonprofit ones in order to obtain the benefits of these existing tax-based incentives.Footnote 116 The downside is that nonprofit institutions are restricted from engaging in certain political activities, such as endorsing candidates.Footnote 117 But these costs might be outweighed by the financial advantages of securing nonprofit status. Similarly, scholars have suggested moving all for-profit journalism institutions into a lower tax bracket.Footnote 118
Scholars and policymakers have proposed modifying existing tax laws to incentivize the donation of legacy news institutions as well – for example, by eliminating capital gains when newspapers are sold or by providing enhanced federal tax deductions when newspapers are donated.Footnote 119 They also have focused on redistributive efforts among media institutions. For instance, they have proposed taxing wealthier news institutions that benefit from government information infrastructure like broadcast technology to subsidize other, less-profitable forms of journalism.Footnote 120
Some of these proposals may not pass constitutional muster. At times, governments have imposed selective taxes on press institutions to silence political critics. The Supreme Court has struck down these efforts on First Amendment grounds.Footnote 121 In doing so, it has emphasized that the government should not use its powers of taxation to single out specific press institutions or the press as a whole for either beneficial or adverse treatment.Footnote 122 Yet the Court has permitted tax burdens that fall more heavily on some news industries than others. For example, it has upheld a tax on the receipts of the sales of services for cable television but not for newspaper and magazine subscriptions.Footnote 123
As a result, generally applicable taxes will most likely not pose a constitutional problem. But those that burden the press specifically, favor certain press outlets over others, or discriminate against particular viewpoints may be found unconstitutional. It is unclear how these precedents would apply against some of the proposals described above, such as tax treatments that favor local press institutions over national or regional outlets. That said, tax incentives that do comply with First Amendment requirements offer a clear policy benefit. Such rewards incentivize news creation while still tethering its allocation to market forces.
25.2.3 Government-Set, Ex Post Rewards
Governments at all levels have also established rewards for which the government both sets the price and determines ex post how it is allocated. These innovation incentives mostly operate independent of market forces.Footnote 124 In the context of the press, these usually take the form of journalism prizes.
Governments have long used prizes to incentivize innovation, especially in areas like engineering, science, and medicine.Footnote 125 Among the best-known examples, the British government offered a prize in 1714 to whoever solved the long-standing problem of calculating longitude while at sea.Footnote 126 Press-based government prizes are distinct from those awarded in other contexts, in part because it is more difficult to create objective metrics against which to measure success and in part because there is a greater risk of viewpoint-based decision making by the government.Footnote 127
Yet prizes already operate as a powerful incentive for the press. Awards like the Pulitzer Prize are among the nation’s most prestigious and coveted domestic honors.Footnote 128 The financial benefits from these rewards are often modest compared to other forms of both government- and market-based interventions. The Pulitzer Prize, for example, provides award winners with $15,000.Footnote 129 But the nonmonetary benefits – including recognition, prestige, and potential future employment opportunities – are often highly valued.
Most journalism prizes are awarded by private nonprofit groups, such as the Pulitzer Prize BoardFootnote 130 or the American Society of Magazine Editors, which awards the National Magazine Awards.Footnote 131 Yet some journalism prizes can be categorized as government or quasi-government initiatives. These are prizes awarded with government funds or administered through public universities. Among the best-known examples is the Peabody Award, which recognizes excellence in television, broadcast media, and radio journalism.Footnote 132 The University of Georgia and the National Association of Broadcasters jointly fund and administer this award.Footnote 133 Another example is the Livingston Award, which recognizes outstanding journalism by reporters under the age of 35.Footnote 134 The University of Michigan administers and partially funds this prize.Footnote 135
There are many such examples. The University of Florida administers the Collier Prize for State Government Accountability, for example, which awards $25,000 for excellence in press reporting about state governance.Footnote 136 The University of Wisconsin administers the Anthony Shadid Award for Journalism Ethics, which recognizes ethical decisions made during the newsgathering process.Footnote 137 UCLA administers the Loeb Awards, which recognizes excellence in business and financial journalism.Footnote 138 And so on.Footnote 139
In addition to prizes that public universities administer, government agencies also directly dispense a handful of awards. For instance, the U.S. Agency for Global Media, which oversees government-funded and directed media outlets like Voice of America and Radio Free Europe,Footnote 140 offers annual prizes to government journalists employed by affiliated press institutions.Footnote 141 A handful of government actors or agencies at the state or local levels also directly award journalism prizes. For instance, the Texas Governor’s Committee on People with Disabilities issues an annual award recognizing excellence in reporting about individuals with disabilities.Footnote 142
25.2.4 Government-Set, Ex Ante Rewards
Finally, the government provides ex ante awards to the press, or monetary incentives that the government dispenses before a news product has been created. Examples include various types of grants and subsidies for media institutions. They also include direct funding to government-controlled media entities, such as the military publication Stars and Stripes or overseas government radio and broadcast stations like Voice of America.
25.2.4.1 Grants and Subsidies
The government has long supported the press in the form of both direct and indirect grants and subsidies. Historical examples include financial assistance with the purchase of newspaper manufacturing equipment,Footnote 143 shipping costs,Footnote 144 and more.Footnote 145
Ex ante government rewards today come in different forms. Some are one-time or time-limited grants. They can look like prizes, but they operate as grants because the government dispenses them before press products are created. Examples include government-funded journalism fellowships like the Fulbright Program. Fulbright Germany, for instance, offers funding for early-career American journalists to conduct research and serve as interns in German media outlets.Footnote 146 Fulbright Japan offers a fellowship for early-career journalists to engage in a months-long reporting project in Japan.Footnote 147 And the Fulbright-National Geographic Award Program offers one-time grants for research and storytelling about conservation efforts in partnership with the National Geographic magazine.Footnote 148
Some states have also begun experimenting with government-funded fellowships to compensate for the loss of local news reporting. In 2022, for instance, the California legislature allotted $25 million in state funding to a new state-sponsored reporting fellowship.Footnote 149 The program awards up to 40 two-year fellowship positions per year at news organizations throughout the state, with an emphasis on serving underrepresented communities.Footnote 150 Similar programs have been funded in New Mexico and Washington state,Footnote 151 and legislatures in other states are considering additional proposals.Footnote 152
A related set of ex ante rewards provide annual or repeated financial grants to the press. Perhaps most significant is Congress’s annual budgetary allotment to the Corporation for Public Broadcasting, which oversees public-funded media institutions like NPR and PBS.Footnote 153 Each year, Congress allots funding to the independent governing board. The board then disperses these funds to public radio and television stations across the nation.Footnote 154 These funds are significant. Congress provides over $500 million per year to public media.Footnote 155 Yet they still represent only a small part of public radio and broadcasting stations’ spending. Congressional allocations comprise only around 7 percent of the average public radio’s budget and 13 percent of the average public television station’s budget today.Footnote 156
Some states have followed the federal government’s lead by enacting similar public media governance institutions. In 2018, for example, New Jersey created the New Jersey Civic Information Consortium.Footnote 157 This structure is similar to the federal model in that the state legislature awards a grant to the consortium, which then allocates the funds to different state and local media institutions.Footnote 158 But the funds have been dispensed differently and have been used to support a wider range of media outlets, including journalism translation services and training programs.Footnote 159
The government awards many other, smaller grants annually to media institutions. For example, the Bay Journal is a small publication that covers environmental issues in the Chesapeake Bay.Footnote 160 The Clean Water Act of 1972 requires that the government make information about its progress on the bay cleanup available to the public.Footnote 161 Since the 1980s, the Environmental Protection Agency (EPA) has fulfilled this obligation by awarding funding each year to the Bay Journal through a competitive grant.Footnote 162
Scholars and advocates have also proposed new types of grant-funding institutions to support the press. One scholar has argued for the creation of a “National Endowment for Journalism,” similar to the National Endowment for the Arts.Footnote 163 This program could be modeled after the federal government’s arts program, accepting applications and dispensing funds on a project-by-project basis. Others have proposed an international journalism consortium, which would dispense journalism funds globally, allowing democratic nations to support journalism efforts in repressive or autocratic nations.Footnote 164 Still others have proposed the creation of a local news bank that would offer low-interest loans, no-interest loans, or loans-to-grant support for new or struggling local press institutions.Footnote 165
A further set of ex ante government interventions come in the form of press subsidies used to defray press institutions’ costs. Examples include the post office subsidies to newspapers. These began in colonial times, but they continue into the present. The value of these subsidies, however, has declined over time. Until the late 1960s, publishers received up to a 75-percent subsidy on mailed news products.Footnote 166 Today, the postal subsidy is around 11 percent.Footnote 167 The importance of this ex ante reward has decreased with the transition to digital publication. But the total amount of the postal subsidy was significant. At the program’s height in 1967, the government was providing the equivalent of roughly $3.5 billion in today’s dollars in postal subsidies to the press.Footnote 168
Another form of government subsidy for the press comes in the form of reduced licensing fees for private media institutions that broadcast over government-owned radio and broadcast frequencies.Footnote 169 Historically, the government has charged these commercial media institutions only nominal amounts, allowing private media institutions to construct their business on top of the public’s airwaves.Footnote 170 In exchange, the government has imposed public-interest obligations on these private institutions. For example, the government has required licensees to air both sides of an issue and cover topics of public importance.Footnote 171 The government has also offered cable companies public rights of way for the laying of cable infrastructure as long as they open up free access channels for public, government, and educational access television.Footnote 172 Individuals and community groups can then use these stations to air programming at little or no cost.Footnote 173
25.2.4.2 Government Press
Government-run media outlets can also be characterized as an extreme form of ex ante government reward.Footnote 174 While government actors mostly or entirely fund and administer these institutions, they still play an important role in the democratic information ecosystem, reporting from regions and telling stories that commercial outlets are no longer able to cover. They also have some mechanisms in place to safeguard journalistic independence and protect against editorial interference.
One well-known example is Stars and Stripes, a military newspaper that the Union Army began during the Civil War.Footnote 175 Today, the Defense Media Activity, a subset of the Department of Defense, administers the paper.Footnote 176 Roughly half of its funding comes from the Pentagon.Footnote 177 Under federal regulations, military interference in the editorial process is prohibited,Footnote 178 and the newsgathering and publishing process must proceed “in accordance with journalistic standards governing US daily commercial newspapers of the highest quality.”Footnote 179
Another example is the set of government-run radio and television stations that broadcast overseas. These include the federal entities of Voice of America and the Office of Cuba Broadcasting.Footnote 180 They also include Radio Free Europe, Radio Free Asia, and the Middle East Broadcasting Networks, which operate as independent nonprofits but receive substantial funding from federal government grants.Footnote 181 Collectively, these radio and television stations broadcast in more than forty languages in countries around the globe.Footnote 182
There are also some safeguards in place to protect against government interference with the editorial process. For example, by federal statute, the secretary of state must “respect the professional independence and integrity” of the stations.Footnote 183 Yet these institutions are not wholly independent. For instance, Voice of America must produce content that is “consistent with the broad foreign policy objectives of the United States.”Footnote 184 Government-controlled journalism comes with risk, moreover, such as the threat that government actors will retaliate against press institutions for unfavorable coverage through funding cuts and other mechanisms.Footnote 185
Even so, these outlets play an important role in the broader press ecosystem. Dozens of news outlets have closed their foreign bureaus since 2003, and the ones that still exist now employ fewer reporters.Footnote 186 Government press institutions cannot replace truly independent media. But in certain places overseas, such as many US military bases abroad, government journalists are the only American correspondents left reporting from the area.Footnote 187
Together, government grants and subsidies at all levels offer substantial financial assistance to the press. Yet the amount of ex ante support the United States provides today is much lower than it has been in the past.Footnote 188 The United States also lags behind other Western democracies in the amount of press support that it provides.Footnote 189 While the United States spends around $1.40 per capita to fund public media, for example, the United Kingdom spends around $80 per capita, and Denmark spends more than $100 per capita.Footnote 190 The US government could still do more, especially when it comes to local media outlets.
25.2.5 Hybrid Approaches
Several existing or proposed media-related innovation policy levers incorporate aspects of the different interventions described above. Unlike grants and prizes, these interventions do not entail direct government funding of media organizations, but they also do not entail pure free market-driven rewards. Rather, the government intervenes at various stages of the press-to-consumer supply chain to promote purchasing, leading to compensation to media organizations without having to rely solely on consumer willingness or ability to pay.
One example of such an intervention is the practice of public libraries and educational institutions purchasing newspaper and magazine subscriptions.Footnote 191 These government institutions pay the media company’s market price but then provide the public with access to these materials for free. This intervention is akin to what Hemel and Ouellette call a “matching” approach to innovation policy, in which an ex post market-based innovation reward is coupled with a government-controlled form of allocation.Footnote 192 Such combinations can be particularly valuable when the government wishes to rely on predominantly market-based innovation incentives but the public benefits of cheap or free dissemination are also high.Footnote 193 This is certainly true of the press, where the positive effects of citizen access to media are notably high.Footnote 194
Another example of the government intervening in the media-to-consumer supply chain is through tax credits or subsidies to consumers. For example, a 2020 draft bill in Congress proposed giving each taxpayer a $250 credit for subscriptions to local newspapers.Footnote 195 The credit would have covered 80 percent of subscription costs in the first year and 50 percent of subscription costs in each of the next four years.Footnote 196 Similarly, the Massachusetts legislature has also proposed providing taxpayers with a credit of up to $250 to purchase subscriptions to “local community newspapers.”Footnote 197 Some foreign countries have already enacted such provisions. France, for instance, provides a tax deduction of up to 50 euros to anyone who purchases a new magazine or newspaper subscription.Footnote 198 Similarly, one United States nonprofit has suggested giving citizens vouchers to purchase news products.Footnote 199 All of these proposals would lower the costs of news for consumers, allowing them to purchase media products at the market price even if their willingness or ability to pay is otherwise low.
The government has also intervened in the media advertising market by creating tax exemptions for the sale of advertising services.Footnote 200 The goal of these initiatives is to return advertising dollars back to the press, especially to local press institutions. States have long exempted news advertising from general sales tax obligations.Footnote 201 But others have experimented with more novel approaches in recent years. In 2021, for instance, Wisconsin created an income and franchise tax credit for any business that purchased advertising in a local media outlet.Footnote 202 The credit can be used for 50 percent of the advertising expenditure up to a maximum of $5,000.Footnote 203 Likewise, in 2023, Maryland enacted a law permitting small- and medium-sized businesses to claim a tax credit for advertising through a news media organization based in the state.Footnote 204 Similar bills have been proposed in other states and in Congress, although they have yet to pass.Footnote 205 As with consumer tax benefits, these interventions preserve media companies’ market-based revenue structure – in this case, advertising – but encourage greater purchasing than might otherwise occur.Footnote 206
25.3 Conclusion: Towards a Press Policy Framework
A range of innovation policy levers are already at play in the press ecosystem. From copyright and other intellectual property protections, to tax credits, to grants, to prizes, the government has frequently intervened to encourage the creation of media products. As the last section explained, categorizing these interventions as ex post or ex ante and as government-based or market-based showcases that they fall within the innovation policy pluralism framework that has been used in other industries where innovation is prioritized.
We hope this categorization is valuable in and of itself, but we also believe that innovation policy pluralism provides a necessary path to tackling some of the biggest problems facing the press today. A full discussion of these issues – including analogizing to interventions in other industries that frequently suffer from innovation failures – will be the subject of future research. But we conclude here by briefly offering some preliminary observations.
First, and perhaps most obviously, the press must be understood as a form of innovation that can benefit from numerous, and overlapping, policy interventions. The choice here should not be between market-based remuneration and full government control of the media. Rather, a range of more subtle interventions can be used in combination to solve the specific problems facing the media. For example, just as financially lucrative pharmaceuticals – like weight loss drugs – can generally be incentivized solely using market-based interventions, like patents,Footnote 207 so too large, national media organizations may be able to survive primarily by using market-based interventions, like copyright or press publishers’ rights.Footnote 208 But just as other pharmaceuticals, such as “orphan drugs” for rare diseases, often require direct government funding,Footnote 209 so too media in smaller, less established markets may require more direct grants in order to successfully operate.Footnote 210
Second, paying attention to both the timing and institutional nature of a press policy intervention may help with weighing the pros and cons of an intervention, including First Amendment implications. While many are naturally skeptical of government control of the press,Footnote 211 not all government intervention is the same. The government, for example, can intervene using broadly applicable tax credits for media organizations. If structured properly, such an approach can provide a necessary financial boost, while still trusting the market to ultimately allocate rewards to media products based on public demand.Footnote 212 This might help ensure the government does not engage in content- or viewpoint-based discrimination in choosing how to allocate funding, while still recognizing that the press cannot survive if forced to shoulder all of the harsh realities of a market-focused business model.
Third, the question of innovation incentives can and should be decoupled from the question of allocation. Scholars and policymakers have criticized intellectual property and other forms of market-based pricing for failing to account for distributive justice and other values.Footnote 213 Considering the role of the press in fostering democratic engagement, this concern certainly also applies to media products.Footnote 214 But the government can step in in subtle ways to enable broader distribution of press products, even if incentives are market focused. Just as the government may purchase a vaccine patent at the market price and then distribute the vaccine for free, the government can (and has, in the case of public libraries and education institutions) purchase press products at market-based prices and then allocated those products for free.Footnote 215 Such an approach may be particularly valuable since it frees the press’s decision making from government supervision but still enables broad access to media products.Footnote 216
Fourth, and finally, new interventions may be necessary to successfully solve the many financial problems facing the press, especially in an age of platform-based intermediation and increasing public distrust of the media in general. The numerous interventions in other innovation-intensive industries like pharmaceuticals, music, or technology – such as compulsory licensing, various grant and tax credit programs, and new or adapted intellectual property rights – could be mined to discover promising solutions to the crises facing the press. These examples demonstrate that innovation in general is rarely a one-size-fits-all policy problem, and solving the problems facing the media will be no exception.
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