Amid so much talk of federal bailouts for the banking and auto industries, what would a national bailout plan for journalism look like? If you were given $700 billion to save journalism, how would you use it? How would you fix the system?

The End of Commercial Media

Several months ago I watched Roger Alton, the new editor of the Britain daily, The Independent, get absolutely skewered by Stephen Sackur on the BBC evening talk show, Hard Talk. Their 30 minute discussion boiled down to 15 minutes of Sackur asking how The Independent planned to stop losing money and 15 minutes of Alton stuttering and stammering. The unavoidable conclusion, once again? Big media, whether in the US or UK, has no idea how to stop losing money.

Despite Roger Alton’s cozy relationship with Tony Blair and complete lack of journalistic skepticism in the run-up to the Iraq War, I found myself actually feeling sorry for the guy. His job, as editor of a major print daily with a terrible website, is that of kamikaze pilot. But why the stuttering and the constant reaching for an empty glass of water? Why not direct Sackur’s questions right back at the him? After all, the BBC is also in the same money-losing industry, right?

There is a good reason why Alton didn’t question the BBC’s business model. Most of the British Broadcasting Corporation’s revenue doesn’t depend on advertising or classified ads like The Independent, but rather, selling television sets. The 1949 Wireless Telegraphy Act established an annual license – that is, a “TV tax” – on all households with television sets. The current annual cost for a color television in the UK is around $300. Households with only black and white televisions pay roughly $100. (The license fee is per household, not per television. If you are over 75 you don’t have to pay and if you are blind, as logic would dictate, you get 50% off.)

Britain’s total annual revenue from television licensing is roughly $3 billion, which funds BBC’s wide ranging domestic coverage on radio, television, and the internet. BBC’s World Service is funded by a grant from the Foreign Office.

Television licenses are not unique to Britain. According to the Museum of Broadcast Communications, two-thirds of European countries and half of the countries in Asia and Africa use television licenses to fund public programming.

The United States, of course, also has public programming, in the form of the Public Broadcasting Service, which hosts this blog, and National Public Radio. But whereas most British households pay $300 per year for their color television, annual funding for public television in the United States is about $2 per capita, roughly the same cost as a medium cup of coffee. In fact, the United States never adopted television or radio licenses because, unlike most countries, privately owned commercial radio stations, historically, were able to make easy profits through advertising. The majority of non-commercial radio stations in the first half of the of the 20th century were owned by local or state governments and charitable organizations. In fact, a federal body to regulate and coordinate public broadcasting, the Corporation for Public Broadcasting (CPB), did not emerge until 1967.

In comparison to Britain’s annual revenue from television licenses of $3 billion, the annual budget of the CPB for 2005 was $390 million, which is scheduled to be halved next year. Whereas nearly all of the money from Britain’s TV tax is funneled to a single media organization, the BBC, the Corporation for Public Broadcasting distributes about 90% of its budget to public broadcasters across the country, including both local and national organizations. This is part of its genius. Rather than putting all its chips in the same place, the CPB encourages a competitive marketplace of public broadcasters who are able to focus on local content. Ideally, CPB funding is awarded to those broadcasters who produce the best and most innovative journalism.

The Corporation for Public Broadcasting, however, is saddled with two major flaws in the context of the current US media ecology. First, it is severely underfunded. The second flaw has to do with how the CPB decides who is eligible for funding. Most of these requirements make sense. For example, it is a good thing that eligible applicants must hold open meetings, open financial records, and a community advisory board. But it makes far less sense, today, for the federal government to fund a “corporation” for public broadcasting when we’ve steadily been moving beyond broadcast for the last decade. We need a federal body in charge of supporting the nation’s journalism, communication, and information needs. That is, in charge of supporting quality online content and mash-ups.

Imagining an America without Science

Nuclear energy, mapping the human genome, developing the internet, finding solutions to global warming: the United States has been at the forefront of all of these discoveries thanks in large part to the support of the National Science Foundation (NSF). Today the NSF, a federally funded organization of 1,700 employees, has an annual budget of around $6 billion and funds approximately 20 percent of all federally supported basic research at American universities. Despite squabbles over issues like stem cell research, the NSF enjoys strong bi-partisan support from both Democrats and Republicans who have, in the words of Wikipedia, “generally embraced the notion that government-funded basic research is essential for the nation’s economic health and global competitiveness.”

That stands in stark contrast, however, to general sentiment pre-World War II, when academic research in science and engineering was not considered a responsibility of the government. It was in 1945 when Vannevar Bush, then head of the government’s wartime Office of Scientific Research and Development, issued a report to President Truman titled “Science – The Endless Frontier,” which made the case for federal funding of scientific research by arguing that the nation would reap rich dividends in the form of better health care, a more vigorous economy, and a stronger national defense. The report proposed creating the “National Research Foundation” to administer this effort.

Five years later, after much debate, negotiation, and imperfect compromise, President Truman signs Public Law 507, creating the National Science Foundation on May 10.

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National Science Board Members, July 1951. Credit: NSF Collection

Vannevar Bush and President Truman had the foresight to recognize the importance that research and technology would play in the transition from the industrial era to the knowledge economy. Today we need an equally prescient voice – or, more likely, a collection of voices – to convince the incoming Obama administration to create a National Journalism Foundation to fund this country’s failing journalism industry and, in Obama’s own words, to “preserve the multiplicity of voices on the internet.”

The National Journalism Foundation would essentially serve as a re-invented Corporation for Public Broadcasting. Annual funding should increase from $200 million to $3 billion. (One percent of the total cost of the Iraq War; four percent of the federal bank bailout.) Similar to the NSF, the National Journalism Foundation would regularly award grants to individuals, organizations, and institutions that propose projects which serve to better inform the American public about their communities, government, nation, and the rest of the world. PBS and NPR would, of course, continue to receive funding, but other organizations and projects like EveryBlock and FiveThirtyEight.com, which provide important information to the public but don’t attract advertising revenue, would also be considered for funding.

A Reason to Hope

The nature of our media itself is changing so rapidly that the most important thing that we can probably do is to preserve the diversity that is emerging through the internet. The internet is not yet the major source of news for most people, but it is increasingly becoming the major source of news … There is still a multiplicity of voices on the internet and so the question is how do we preserve that as bigger companies want to start getting into that space.

Barack Obama, speaking during his presidential campaign

There is good news: Barack Obama is clearly on the side of internet enthusiasts and advocates of net neutrality. The bad news is that today, more than any other time in the last 50 years, the federal government is going to have a difficult time selling new federal agencies to the American public.

Taxing Internet Service Providers’ Profits: The Least Worst Solution

In order to fund the National Journalism Foundation (NJF) and stave off the inevitable decline of quality journalism in the United States, the Obama administration will need to come up with a new source of revenue to finance it. Given this country’s history of anti-tax hysteria, that is no easy feat. But thanks to Obama’s political capital and the prolonged crisis in the field of journalism, the incoming administration could follow the lead of French president Nicolas Sarkozy and push through a tax on internet service providers to fund the creation of a National Journalism Foundation.

The biggest obstacle to doing so is the 1998 Internet Tax Freedom Act, which last year was extended until 2014, and bans any state or federal tax on internet access and online commerce. Supporters of the ban point out that taxes levied against internet service providers (ISP’s) are handed down to consumers, which makes the world’s greatest source of information, the internet, unattainable for more people, especially the poor.

One possible solution would be to tax only the profits made by telecommunications giants as they install internet connections in more homes and businesses across the country. Earlier this year Comcast, for example, reported a 54 percent jump in fourth-quarter 2007 profits, including $1.7 billion of revenue gain from new high-speed internet customers alone. AT&T, benefiting from its exclusive contract as wireless provider for Apple’s iPhone, racked up huge profits as wireless data sales increased more than 57 percent in the first quarter of this year compared to the first quarter of 2007.

While the profits of telecommunications companies soar, the quality of online journalism is increasingly at-risk. Nearly all blogs which sustain themselves with advertising revenue are heavily focused on technology and celebrity news. Major news websites that have been lauded for online innovation and high-quality content, like the New York Times, continue to report declining revenue as advertisers pull out.

A Hard Sell, But an Important One

Last month the New York Sun announced that a three-week search for new financial backers had failed and that it would shut down immediately. The paper is hardly alone. These days Jim Romanesko’s daily column hosted by Poynter Online reads more like an obituary page than a source of media insider news. At least once a week a paper folds or tries to put a bright spin on announcing non-profit status and a “streamlined newsroom”.

Despite a rise in media-related philanthropy, foundations alone aren’t able to replace the billions of dollars in lost advertising and millions of dollars in reduced federal funding that threaten the journalism industry today. New tools, cheaper computers, and wider internet access offer a deep reservoir of potential for a more informed citizenry and more meaningful civic participation. Just as President Truman recognized the importance of creating a National Science Foundation to ensure America’s leadership in scientific innovation and engineering in the second half of the 20th century, President-Elect Obama could create a National Journalism Foundation to bring about a more informed and more participative American public than has ever existed before.