Monday Note

(Includes correction with the right 3rd graph)

Two important questions in our times of large public debt and lagging economies: Is it effective to inject public money in support of the ailing media industry? And, in order to ensure the best readers’ bang for the taxpayer’s buck, are some models better than others?

Last week, I chatted with Rasmus Kleis Nielsen, a Research Fellow at the Reuters Institute for the Study of Journalism at the University of Oxford, and a communication professor in Denmark. With Geert Linnebank, a former editor-in-chief at Reuters, Rasmus wrote a compelling report on the subject: Public Support for the Media, A Six-Country Overview of Direct and Indirect Subsidies (PDF here). Together, they review public support systems for Finland, France, Germany, Italy, United Kingdom and the United States. A large part of the report looks at the funding of public radio and television channels, which varies widely from one country to another. In this column, I’ll limit myself to public sector funding for the print media.

When it comes to supporting its print press, Finland is a big spender. It invests 22 times more public funds per capita than the United States, nine times more than Germany, five times more than the United Kingdom, four times more than Italy, and three times more than France, see below:

Supporting the press sector is a big deal in Finland, then. In theory. Because, in Finland, like in all Scandinavian countries, newspapers enjoy a huge reach: 79% of the population. This might tempt you into thinking there is a direct relationship between subsidies and penetration. Actually, there is none: According to the report, Germany, which spends 11% of what Finland does, has a newspaper reach of 72%.

Using readership stats provided by the World Association of Newspapers, the picture looks like this:

Combining the two sets of numbers leads to a compelling result: While spending much more than any other country, the Finns get a much better performance. According to the Reuters Institute report, they perform 13 times better than Italy and France, the clear losers of the subsidies systems, as shown here:

We can draw three conclusions from these data sets.

1 / There are no Keynesian mechanisms in evidence when it comes to correlating public spending with print media penetration. The US spends only 16% more per capita than Italy, but have 94% more readers per thousand people. As for Germans, they spend 40% of what the Italians do, but have almost three times more readers. Practically, it means there is no hope to reverse the declining trend by beefing up subsidies.

2 / The Finnish performances is more a matter of editorial product than of public policy. I happen to know quite a bit about the kind of journalism practiced in Nordic countries. It is a fiercely independent, aggressive (in the best sense) kind or reporting. A couple of years ago, I was a jury member for the Schibsted Journalism Award (see my June 2009 column about it). I saw editors making choices, strategizing their coverage, assigning substantial resources to it, and striving to beat their competition. In addition, they provide very efficient public service journalism, lifting the veil on administrative shortfalls and occasional abuses by officials.

From a pure industrial perspective, Scandinavian media companies have once and for all decided competition had to stop right after the newsroom doorstep. For a long time, printing and distribution have been mutualized. Newspapers and magazines have not been spared by erosion, but they are in a much better shape than in most countries.

3 / Contrary to the cliché, internet growth doesn’t cause a decrease in print press penetration. Finland (again) and the UK have both strong readerships and a high number of online users (respectively 57% and 37%).

The Rasmus Nielsen report explains in great detail the complexity and diversity of public funding for media. In passing, it kills long lasting prejudices such as European media being massively state-funded, or an American public sector unsupportive of the media industry.

And there is no one-size-fits-all model.

Still, some ideas emerge — as long as you think media ought to be somewhat subsidized. Which I do, for several reasons:

• Quality information plays a critical role in democracy.
• Good reporting remains quite expensive to produce. Remaining able to preserve non-commercial formats (such as NPR or the BBC) leaves no choice but public support.
• The industry — especially the print press — is in the midst of a radical and costly transformation, and many organizations don’t have enough capital to undertake it.
• We are facing an historical wave of mediocrity in the information business with wealthy aggregators eager to repackage anything that fits their obsession with eyeballs. (I’m appalled to hear Le Monde is about to strike a deal with the Huffington Post.)

Having said that, for public support to work, critical conditions must be met:
1 / Tight management. Sounds obvious, but too often public money means outrageous waste (as often seen in public broadcasting).
2 / No open-bar. Meaning: no open-ended funding. If money is supposed to help a precise restructuring, it must be tied to measurable results.
3 / Sanitization. Subsidies should rather be indirect than direct. For instance, a tax break as opposed to a grant for a specific company falling below a certain level of advertising (as is the case in France).
4 / No life-support funding. Only support for transformation.

— frederic.filloux@mondaynote.com

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