Friday, June 11, 2010

Sin Taxes, and Journalism Taxes

I don't much like sin taxes.

Whenever someone in government or the rabble of innocent vicitms gets excited about a new tax on cigarettes or alcohol, or proposes the legalization and subsequent taxation of marijuana, I scoff.

Tax something they use, these supporters. Diapers. Soft drinks. and marijuana, after legalization and taxation and then tax it and tax it and tax it and you'll see them plead for it to be criminalized again so the price will go down.

Or electronic devices.

That's among the many proposals the Federal Trade Commission is "exploring" as they ponder how to save traditional news outlets. Yeah. Tax electronic devices, or ISPs, and turn that money over to the people who make the news. That'll get those bums getting their news for free to pay for it all.


Yes, this is old news, though it's making rounds in the blogs right now. This report popped up last year. I don't see that it's got any legs, or even pseudopods. Because there are no real new ideas here.

I don't argue that people should pay for the news. The years I spent in the news business I certainly would not have spent for free. But the problem of news -- or content -- not making money isn't isolated to traditional news outlets, such as the FTC says:
Existing newspapers are struggling to find a sustainable business model for the future. Severe cuts in expenditures, especially staff cuts, permitted most newspapers to break even or better during 2009. Advertising revenues are likely to improve in 2010 as some businesses recover from the recession and increase their advertising expenditures again. But the trend toward online, rather than print, advertising is very likely to continue over time, forcing newspapers to look for other sources of revenue.
 I'm a volunteer worker for a purely online content outlet, and we're not exactly swimming in cash, either. Last year, in fact, we made just over $100, going nowhere near in paying the bills. We didn't even have enough money to have a petty cash fund from which we could withdraw to take Dana Barret on a date or buy some Chinese food.

The FTC realizes this:
Although dozens of newly created online news sites have found sufficient funds to keep going through the early years of their existence, virtually no sites have yet found a sustainable business model that would allow them to survive without some form of funding from non-profit sources.
 So, from whence to squeeze the blood from this news-sucking turnip?

The FTC proposes:
  • A $5 to $7 per account fee on internet service providers. Fees collected would be distributed by a new bureaucracy to copyright holders who applied for it and could prove they were losing revenue to online news aggregators and such, or through algorithms based on what kind of online content is being viewed. This will, of course, effectively be passed on to consumers, since no ISP is going to absorb that cost.
  • News organizations establish pay walls uniformly. That, of course, is they key, because applying them haphazardly only drives most Internet news consumers to the free outlets.
  • New vouchers, funding, Small Business Administration and university incentive funding for non-profit news outlets. That one fascinates me. They're basically saying, well, we can use existing or augmented mechanisms to provide funds for non-profits, but not for for-profit entities.
  • Allowing news produced for Radio Free America, et cetera, to be aired domestically. Ah, yes, government-funded agitprop rather than the private entity agitprop. How is that saving the industry? I guess maybe more journalists could be hired by the government? (I know, I know. I'm a hypocrite: I work for a government subcontractor. Cleaning up a government-owned nuclear waste site. Oh, no hypocrisy here. Move along.)
Paying for it all. That's where the ISP fees come in, plus the five percent tax on consumer electronics. Couldn't traditional media just increase subscription rates? Oh, right. Noboby would pay them. But we'll pay them indirectly because we're taxed on stuff we want, to pay for stuff that we don't necessarily want. I don't mind gas taxes to pay for roads; that makes sense. It's when they shift gas taxes to pay for, say, flood control, that I wonder.

Yeah, I know it's tough. There are no easy answers, and it's certainly easier to sit here as an armchair blogger critic than to think up ways to solve these problems. Citizen journalism I mostly laugh at, because it couldn't be any less partisan or incompetent than what most citizens accuse traditional journalism of being.

What do I think is likely to succeed? Well, first of all, all the news organizations out there have got to have the guts to install paywalls. All of them. Anyone not participating needs to be slapped down by their pay-walled fellows. Yeah, there'll be revolution from those who are sooooo used to getting their news for free. But once they see a united front, they'll cave, because they'll figure out that the news they want is valuable enough to be paid for. But if the paywall application isn't uniform, they'll flock to the chinks in the wall just as certainly as East Germans fled to Hungary in order to evade the border to flee into West Germany. There'll be a lot of griping, lots and lots of it. Then, I'm sure, many of us will pay up. Right now, locally, only one paper has a paywall, while one other has one for "premium" content. Everything else is free. Guess which one doesn't get much traffic from me?

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