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Bailout won't help newspapers; an antitrust exemption could

Posted: Thursday, February 05, 2009

In this winter of our discontent, it probably was inevitable that talk of some sort of government bailout for newspapers would begin to find an audience. These days, after all, newspaper companies seem to vie with automakers for the dubious distinction of being the American economy's most pitiable basket cases.

But a direct governmental bailout - whether at the state or federal level - is a wretched idea. The last thing we need is a government-funded National Public Newspaper.

That's not to say there isn't something the federal government could do to help newspapers - and there's a precedent on which to draw. Washington ought to extend to the newspaper industry the same sort of antitrust exemption that Major League Baseball has enjoyed since 1922.

In an online exchange with his paper's readers this week, New York Times Executive Editor Bill Keller pointed out that "there is a diminishing supply of quality journalism, and a growing demand. By quality journalism, I mean the kind that involves experienced reporters going places, bearing witness, digging into records, developing sources, checking and double-checking, backed by editors who try to enforce high standards. I mean journalism that, however imperfect, labors hard to be trustworthy, to supply you with the information you need to be an engaged citizen. The supply of this kind of journalism is declining because it is hard, expensive, sometimes dangerous work."

Keller said the best evidence of the soaring demand is that Web sites that do "dependable" reporting are winning readers; he noted that The New York Times' Web site gets nearly 20 million unique monthly visitors.

"The law of supply and demand," he said, "suggests that the market will find a way to make the demand pay for the supply."

Entrepreneur and journalist Steve Brill agrees, and this week told the American Journalism Review that "newspapers have basically destroyed themselves by giving it away for free." He called the unwillingness of most to charge for visiting their Web sites "totally insane."

Two major newspapers - the Wall Street Journal and the Financial Times - charge readers tiered fees to view their online journalism. The rest of the industry has decided there's more money to be made in charging advertisers for the larger audiences that free content attracts than in selling online subscriptions.

That's wrong, in my view, but it's hard to argue with as long as some major newspapers are giving their online journalism away; until they stop, nobody can risk charging for theirs.

That's where the antitrust exemption would come in: It would allow all U.S. newspaper companies - and others in the English-speaking world, as well as popular broadcast-based sites such as CNN.com - to sit down and negotiate an agreement on how to scale prices and, then, to begin imposing them simultaneously.

That, in turn, would set the stage for tackling the other leg of this problem - how to extract reasonable fees from aggregators such as Google and Yahoo, which use their search engines to link to news that newspapers and broadcasters pay to gather. As veteran journalist and book publisher Peter Osnos said this week, newspapers and magazines "have to start demanding payment for use of their material or they will disappear." No one delivers more of that content online than Google does, Osnos noted, through its advertising-supported search functions. That revenue goes to Google, not to the companies that gathered the news.

"The notion that 'information wants to be free' is absurd, when the delivery mechanism is making a fortune and the creators are getting what amounts to zilch," Osnos said.

Why are we so sure that Web content has to be free? We have, in our own recent history, a striking example of a free information medium that moved easily into the pay category: Thirty years ago, if you wanted to watch television, you went to the store, bought a TV set, came home, plugged it in and that was it. You didn't have to pay for the content. Now, however, most of the country pays fees for cable or satellite hookups. It's true, of course, that those transmission systems also added value to the viewing experience - uncut, commercial-free movies, live local sports, 24-hour news. Newspapers need to think harder about how they too can add value.

The fact remains, though, that Keller, Brill and Osnos are right.

Washington found a way to manicure the law on behalf of our national pastime; now it needs to do the same for our democracy's lifeblood.

• Tim Rutten is a Times columnist and can be contacted at timothy.rutten@latimes.com.



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