Sun - 21.01.2018

David Leigh's levy proposals raise questions about newspaper subsidies

David Leigh's levy proposals raise questions about newspaper subsidies

Two weeks ago when the SFN blog examined the National Readership Survey (NRS)’s report on print and online news consumption, we suggested that encouraging digital figures for quality titles could be of great interest to advertisers. Looking at the same figures, The Guardian’s Investigations Executive Editor, David Leigh, had an altogether more radical idea: a £2 pound levy on broadband services.

Thanks to the BBC’s free-to-access, taxpayer-funded news website, British news consumers will always have access to reliable, up-to-date news reports. This, Leigh argues, means that the paywall model will “never really work in the UK context.” 

The noted investigative journalist reasons, in an article posted to MediaGuardian, that the simplest and most effective means of solving the financial dilemma faced by British news publishers is a “small levy on UK broadband providers [that] could be distributed to news providers in proportion to their UK online readership.” Brits are not particularly inclined to pay for online news, Leigh continues, but almost 20 million UK households are, and will continue to be, willing to pay for essential broadband subscriptions.

A levy of £2 per month added on to standard broadband contracts (which usually begin at a basic rate of £15 a month), would raise around £500 million per year and would see the Guardian Media Group, the Telegraph Group and Associated Newspapers receive £100 million p.a., and Independent titles would benefit to the tune of £40 million. The Sun, the nation’s most popular newspaper, would stand to gain £50 million a year, but Leigh’s proposals would restrict the amount of money that would be available to the News International sites that place online content behind a paywall. Leigh also insists that restrictions would apply to exclude content aggregators from benefitting from the scheme.

Eager to avoid a situation in which a state-subsidised press would be open to government interference, Leigh’s levy would be regulated in the same manner as the BBC licence fee: collected by an independent body and “operationally ring fenced against ‘state intervention.’ ”

Hailed as “the magic bullet we’ve been seeking” by Roy Greenslade, who is a professor at City University and also writes for The Guardian, the plans for a broadband levy are an alternative to the kind of direct government subsidies that maintain newspapers in Norway, Italy and Sweden.

That said, it is nonetheless unclear as to whether other large newspaper groups in Britain are as in need of subsidies as Guardian Media Group titles, whose financial woes are well documented. Last week the Daily Mail’s website reported more than 100 million unique users in August, making it the world’s most visited English-language website, and Britain’s most popular news site. Under Leigh’s proposals, MailOnline’s majority share of the UK’s online news audience would entitle it to the largest portion of money raised by the "broadband tax" – despite its being the most profitable of all news websites. Meanwhile the Telegraph titles achieved pre-tax profits of £54.5 million.

Greenslade touches upon some of the obstacles that Leigh’s idea faces, including the participation of ISPs. There is little to recommend the proposals to the Internet service providers who would be at the forefront of the "tax-raising" process. An extra two pounds added to a monthly bill may appear to be a small amount, but for bills of £15 it represents just over a 13 percent increase in the amount each household would pay - a bitter pill that would stick in the throats of many customers, and which would be tough for companies to market.

Comparisons with the BBC's licence fee also pose problems for Leigh's subsidy plans. The licence fee issue is fraught with political wrangling, and sees the BBC obliged to negotiate financial terms with ministers on what is frequently a yearly basis. Likening the broadband subsidy to the Corporation’s payment system inevitably calls to mind the current freezing of the licence fee and the resulting loss of 2,000 positions within the organisation. How would newspapers charged with holding politicians to account cope in a similar situation?

Another consideration would be the willingness of broadband users to subsidise newspaper titles that they choose not to read. When choosing which national title to follow, readers often opt for the publication that best reflects their political or social views. Convincing a reader of The Daily Telegraph that they ought to be supporting The Guardian, or a Guardian subscriber that they should be contributing to the financial health of the Daily Mail could be a hard sell.

The argument that news gathering organisations are a public service and vital to a healthy democracy is advanced by both Leigh and Greenslade, and is nigh on impossible to contest. However, there is some confusion in Leigh’s argument as to whether the subsidy would be used to protect the print industry or to aid news-publishing companies in general. Although he asserts that “when the day comes that the newspapers are forced to stop printing altogether, it will be a disaster for democracy,” can we really say that the end of print would be the end of the news’s essential role? The NRS figures were striking because they proved that news titles continue to have a healthy readership online, despite a drop in print circulation. Readers are not disappearing, and there is continuing demand for quality news reporting. That reporting does of course have to be paid for, but using a subsidy to bolster a failing section of the newspaper industry would seem to be counter-intuitive.

Leigh’s levy will provide food for thought in an industry ready to debate all suggestions relating to its future sustainability, but in its present incarnation his proposal of a blanket scheme designed to raise money through a service not directly linked to news companies themselves would seem to raise more problems than it solves. 

Sources: The Guardian (1) (2), PaidContent, SFN blog, Editors Weblog

Image: Flickr user aubergene, under creative commons licence


Amy Hadfield


2012-09-24 16:01

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