Subsidies for newspapers?

No, I'm not talking about Indian papers, many of which survive on government ads. The failure of several newspapers in the US and elsewhere in the present crisis has prompted a debate on whether newspapers need to switch to a different business model from the present one that relies overwhelmingly on ads, says an FT report.

In the alternative model, newspapers would be subsidised either by private endowments or by the state. If you regard them as a form of public service, like educational institutions, then such an argument could be made. According to estimates, the New York Times would require an endowment of $5 bn to cover its newsroom costs. The total endowment required for all US papers would be $114 bn.In France, the government is stepping in to support papers by doubling government expenditure on ads- no doubt, a unique form of fiscal stimulus.

Government subsidies for the press are always an uncomfortable matter. As for private endowments, that could create an uneven playing field between papers supported by endowments and those that operate commercially. Besides, as the FT report notes, papers supported by endowments are not insulated from commercial papers- the Christian Science Monitor has closed its print edition.

Another option is charging for the online editions. But other than a few papers such as the Wall Street Journal and the Financial Times, not many papers have met with success in charging for their online versions. Part of the solution, as the FT notes, must be attacking the cost structures. Newspapers are still not disciplined enough in terms of weighing expenditures on coverage of news stories- Rupert Murdoch must be an exception in the game.