New Strategies for Supporting Public and Noncommercial Media

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April 30, 2010, Dean Baker's Statement at the Federal Communications Commission’s Future of Media Workshop

Workshop on "Public and Other Non-Commercial Media in the Digital Era"

I appreciate the opportunity to discuss this proposal for using individual vouchers as a mechanism for supporting non-commercial media. I will briefly describe the proposal and then outline what I consider the three main issues in its design: the size, the scope, and the treatment of copyright under this program. I should point out that this concept has been developed in conjunction with Randy Baker, my brother.

The basic idea for the voucher is to give each taxpayer a fixed amount (e.g. $100 a year) that can be used to support the media venture or individual of the person’s choice. This is in effect a refundable tax credit. The mechanism can be designed as a payment from the government by designating a code for a registered recipient on a tax return, or it can be a payment by the individual which is credited against taxes, subject to the same verification process as is currently used for contributions to 501(c)(3) organizations.

The 501(c)(3) treatment would be a good way to conceptualize this plan. Individuals and/or organizations would have to register as authorized recipients of these funds in the same way that eligible organizations must register at present in order to receive tax deductible contributions. The registration process would involve simply stating what the individual or organization does. The Internal Revenue Service or other agency designated to monitor the program would only record the activity, not make any effort to evaluate its merits. The claim could be subsequently investigated in the event of concern over fraud in the same way that charity receiving tax-deductible contributions can be investigated if suspicion of fraud arises.

It would be desirable to have some minimum level of support before an individual or organization is eligible to receive funding through the voucher system. This would eliminate the opportunity for petty fraud with friends or relatives sending or passing vouchers back or forth. A modest floor of $10,000 should be sufficient to accomplish this purpose. The point would be to keep a low floor so that people would have the opportunity to support small operations or even an individual’s own efforts, while at the same time setting a number high enough that it would require considerable collaboration to reach it through fraud.

This system can allow as much money as is needed to support media through a process that only has the government as an intermediary. It leaves the choice as to which media outlets, reporters, or creative workers are supported entirely to individuals. The government plays no more control over who will get funded than it does over the recipients of tax-deductible contributions.

The first key question is the size of the credit. This is closely connected with the second issue, the scope of coverage. The immediate concern of the FCC is of course replacing the funding for traditional media outlets like newspapers and television stations, with the main concern supporting the news gathering operations at these outlets. This can be done with a relatively small tax credit.

If 200 million people took advantage of a $100 per person tax credit, this would provide $20 billion a year through this system. If compensation and overhead costs average $100,000 for each person in a news gathering operation, then this sum would be sufficient for 200,000 reporters, editors, or other newsroom staff. This would be almost an order of magnitude higher than would be needed to fully replace the news staff of every newspaper, magazine, television, and radio station in the country.

This suggests either reducing the size of the credit or increasing its scope. A credit as low as $10 per person per year would be sufficient to employ 20,000 news staff, if it were widely used. This would go very far toward providing enough money to support a very substantial amount of news gathering and reporting. However, a credit this small is likely to be ignored by a large number of individuals, who might view it as too inconsequential to bother with. The stakes could be raised either by allowing people the option to have a larger tax credit but only at longer intervals, for example a $50 credit that people would have the opportunity to use once every five years, or broadening the scope to cover a wider range of activities.

For example, the scope could cover creative and artistic work more generally, including support for producing movies, music, books and other creative endeavors. This range of activities could justify an annual tax credit in the $100-200 range. The amount of creative work generated through a credit of this size could match what is currently being produced through existing financing mechanisms. This funding would be sufficient to support the production of a vast amount of movies, recorded and live music, writing in books and other forums, as well as print and broadcast/web reporting.

This broader scope would have many practical advantages. First, and perhaps most importantly, it lessens the problem of having a government agency define the bounds of news reporting. While there are many areas that may unambiguously fit the definition, newspapers, magazines, and news shows often branch out into areas that are quite far from traditional hard news. They may feature stories on issues such as gardening, cooking, personal health, movies and entertainment, and other areas. If the credit were designated to be only for news gathering operations, then presumably there would be some limit to how much of these less traditional news areas could be included in order for a news outlet to qualify for the credit. Monitoring these limits, wherever they are set, could be a difficult and costly process. And, more importantly it raises the concern of political factors affecting the decision.

If the credit were applied to a broad range of creative work, including reporting, then this pushes out this concern. There will always be boundary issues (this comes up at present with non-profits), but these boundaries should be far removed from anything that could remotely fit the bill of news reporting, thereby ensuring that the government will not be using political criteria to affect which news organizations get funding through a tax credit.

Allowing a broad range of creative work to qualify for the credit does have the potentially undesirable effect of putting reporting in direct competition with movie and music production and other forms of creative work. This could lead to a situation in which individuals do not allocate an adequate portion of their voucher to news reporting, leaving the country with under-funded newsgathering operations. This is a potential risk, but this risk is ultimately unavoidable.

If the public does not believe that the newsgathering is worth the cost, there is no way in a democracy that they can be forced to pay for it. In a well-funded voucher system, newsgathering operations will have the opportunity to make their appeals as to why individuals should allocate some or all of their vouchers to them. If few people find these appeals compelling then the news organizations will have to find ways to convince the public that they deserve more support.

As a practical matter, if a voucher system is seen as supporting a wide range of creative and artistic work that is deemed valuable, then there is likely to be far more political support for it than if it is confined to a relatively narrow area that has little appeal to large segments of the population. For these reasons, a voucher that applies to creative work more generally, and not just newsgathering, is likely to present a more workable route to follow.

The third basic question is the treatment of copyright under this system. There are three compelling reasons for putting the work funded under this system into the public domain. First, by placing the material in the public domain it will reach the largest possible audience. It is important that the public sees a clear return on whatever money is spent through this voucher system. If, after using their voucher, they still have to pay to obtain the material produced through this system, the public is likely to question its value. By contrast, if there is a vast amount of material that can be instantly downloaded off the web at no cost, then the benefits from the system will be very clear.

The second reason to prefer that material be placed in the public domain is avoid the legal issues that have arisen around the use of content in the current system. Content producers have had serious disputes with aggregators over the unauthorized use of their material. If the material is free for all to use, then there is no basis for these disputes. A copyright-free system allows the public to take full advantage of the flexibilities of the Internet rather than requiring obsessive efforts to find news mechanisms to close content off from public access.

A public domain system is also simple to enforce. Any individual or organization who is registered to receive funds through this system would be ineligible to receive copyright protection for the period in which they were registered. This means that if they sought to evade the rules and copyright their work in spite of this prohibition, then their copyright would simply be unenforceable. In this sense the restriction is completely self-enforcing. The would-be violator has obtained a meaningless copyright.

Finally, there is a fairness issue at stake. Copyright protection is a mechanism through which the government compensates people for creative work. It agrees to enforce a monopoly for that person or corporation on the sale of their work. The voucher system is an alternative mechanism for compensating people. It seems reasonable to argue that the public should have one mechanism or the other for compensating creative work, but it is difficult to present a rationale for the public using both mechanisms for supporting the same work. If the work has already been funded through the voucher system, there seems little reason that the public should have to pay the producer a second time because of the government-granted copyright.