< The Swedish Model


Friday, January 16, 2009

BOB GARFIELD: This is On the Media. I'm Bob Garfield. President Obama may or may not have a better relationship with reporters than George Bush, but one thing’s for sure – he won't have to deal with as many of them. The U.S. newspaper industry is in a tailspin. Onerous debt, declining subscription bases, Internet competition, the shrinkage in display advertising and near oblivion of the classifieds have sucked the profitability out of what until recently was one of the highest-margin businesses on earth. The result has been a rash of closings, cutbacks, buyouts, layoffs and general decimation with who knows what implications for our media future and democracy itself. All around the world, people are searching for answers large-scale and small to keep newspapering stable and relevant, several of which measures we'll look at now. We'll begin with a concept that’s just all the rage these days – a bailout. In 1971, facing widespread losses at its many local newspapers, Sweden stepped in with government subsidies, an option being considered today elsewhere in Europe. But what about here? Is The New York Times any less critical to our society than, say, General Motors? Robert Picard, a professor of media economics and director of the Media Management and Transformation Centre at Jonkoping University in Sweden points out that the Swedish government stepped in explicitly to preserve public discourse.

ROBERT PICARD: Well, Sweden, as most Nordic countries, is a Parliamentary democracy, and when you’re having eight to a dozen parties they all want to have a voice and they all want to be heard. And so, even in small towns in Sweden you would have four to six newspapers that were carrying not only news but the opinions of the parties and the discourse that was taking place in the political debates of the time. And the idea that those could be lost were considered very frightening to Swedish society because they wanted to continue the kind of debate that is necessary for a Parliamentary democracy to survive.

BOB GARFIELD: And how did the government go about keeping them afloat?

ROBERT PICARD: Well, it established a system so that every time a newspaper ad was taken, a tax was placed on it, and this created a fund. Then from this fund it created a subsidy commission, an agency that was designed to go ahead and distribute the funds that were there to those papers that were not financially successful.

BOB GARFIELD: Now, one of the obvious risks of this kind of arrangement is that the papers, now that they're, you know, subject to government largesse, would suddenly start going easy on the government. Did that take place?

ROBERT PICARD: There is actually a lot of evidence that reporting actually improved after this occurred, and you had much more tax on issues of the environment, much more tax on the issues of financing. And, in fact, the Social Democratic Party, which was in power when this system was developed, was ultimately pushed out of power by centrist coalitions. So they managed to use those subsidies for the purpose of keeping this political discourse going on that they were intended for.

BOB GARFIELD: Now, in this country, at least at first blush, it would be unthinkable that the government somehow start funding private newspapers, for a whole host of reasons. But actually the Corporation for Public Broadcasting and National Public Radio benefit rather directly from some government subsidy. There are tax breaks and various exemptions to antitrust laws that newspapers have enjoyed. Do you think it’s even possible within the framework of this society that papers could be kept afloat based on direct government subsidy?

ROBERT PICARD: The biggest problem here, of course, is you’re going to have resistance from many in the media companies because, as you've rightly pointed out, there is a great distrust of government here in the United States that is particularly strong and is one of the reasons why we are American and not British. But you have a political reality on top of that, and that is that we have a lot of money that needs to be spent for a lot of services. We have a lot of services of government that are going to be cut over the next few years because of the financial situation of the federal government. And so then we have to ask, why would taxpayers want to keep using tax funds to try to keep alive a product that three-quarters of them don't read anyhow? [LAUGHS]

BOB GARFIELD: And some percent of whom despise it at the core of their beings because they represent the enemy.

ROBERT PICARD: [LAUGHS] Absolutely, absolutely.

BOB GARFIELD: And then there’s the larger question of whether these bailouts even work. Let's go back to Sweden. I'm just curious, lo these 37 or 8 years later, whether you think that the life support that was given Swedish papers was ultimately successful.

ROBERT PICARD: It was successful for a short to medium period of time, but if you look over a period of 20 to 30 years, it’s not successful. We've gone from a situation where there were four to six papers even in relatively small towns to a situation where there’s one or two today, so you've had a huge loss of papers despite the subsidies. So clearly they do not address the underlying economic problems of the newspaper industry.

BOB GARFIELD: And yet in France they're looking at a very similar system. You actually have been called in to deal with the plight of Le Monde. Tell me what’s going on there.

ROBERT PICARD: The Parisian papers are, in fact, in very difficult financial situations, papers like Le Monde, Liberation, Le Figaro and others. President Sarkozy there has established a commission to try to understand the plight that they're in and to fashion policies that would perhaps help them survive or find a better way to adjust to the current environment. The question becomes how would they structure it and what would its intent be? Now, the French press is particularly bad online, I have to tell you. They have not picked up in the way that the British press has, the way the German press has. And I think that it’s probably likely that the French government will provide some subsidies to help them move more and more online and to develop skills and personnel for doing that.

BOB GARFIELD: That said, are there any lessons that we can learn from Europe or any mechanisms that Europe has employed to help us in our predicament with American papers?

ROBERT PICARD: If you compare the situation of European papers as a whole to American papers as a whole, they're suffering from the same kind of general economic problems that we are, but their equity structures, their ownership structures, their debt structures are much better than most of the American newspaper companies. And, as a result of that, it has created a cushion for them so they still have a few years to go before they're going to be at the situation we're at today.

BOB GARFIELD: Robert, thank you so much for joining us.

ROBERT PICARD: It’s been a pleasure to be here with you.

BOB GARFIELD: Robert Picard is a professor of media economics at Jonkoping University in Sweden and editor of The Journal of Media Business Studies.