FTC's 'Journalism Reinvention Ideas: The Good, the Bad and the Ugly: Examining the Federal Trade Commission's Talking Points on Possible Federal Aid for Newspapers

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THE FEDERAL TRADE COMMISSION (FTC) IS AT PAINS TO EMPHASIZE that the ideas contained in its "staff discussion draft of potential policy recommendations to support the reinvention of journalism" are just talking points--not steps the government is about to implement. That's a good thing, because the proposals packed in its 47 pages range from the brilliant to the boneheaded. With discussions continuing on the FTC draft, here's E&P's take on some of the ideas, from a newspaper industry perspective.

BUSINESS MODELS

Worthwhile: Extending so-called L3C corporations to newspapers and other general news organizations. The draft makes the best case for changing IRS standards for tax exemption to recognize that journalism is a public benefit and allow media companies to incorporate as low-profit limited liability companies that can operate as for-profit businesses while also accepting funding or investments from non-profits. Similarly, other proposals would let newspapers operate as "Flexible Purpose" or "Benefit" corporations.

Worth thinking about: In the welter of ill-conceived ideas that would give newspapers antitrust exemptions for various purposes are two more sensible proposals: allowing news organizations to "agree jointly to erect pay walls" and allowing them to "agree jointly on a mechanism to require news aggregators and others to pay for the use of online content."

What were they thinking?: Apparently some publishers are urging the FTC to recommend extending and strengthening the Newspaper Preservation Act. The joint operating agreements (JOAs) permitted under the law have a miserable record of "preserving" newspapers. Two cases in point from 2009: The Rocky Mountain News and the Seattle Post-Intelligencer.

PROTECTING ONLINE CONTENT

Worthwhile: There's no more fraught issue in cyberspace than trying to reconcile the public interest in a free and open Web with a newspaper's natural economic interest in preventing its expensively produced reports from simply being swiped in nanoseconds by any number of Websites or aggregators news in a cut-and-paste world. Yet this complex problem may have a simple answer: Amend federal copyright law to again permit news organizations to sue "free riders" who grab their content under the old "hot news" doctrine still recognized by some states. Though this draft isn't supposed to take sides, it makes a strong ease for this idea advanced most prominently by the brothers David and Daniel Marburger.

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Worth thinking about: In this part of the draft there's little that comes close to the copyright solution. There are proposals for federal legislation defining hot news or allowing states to set their own hot news standards that might reach a fair balance, but, like the amended Copyright Act itself, technology could soon bring out unintended consequences. …