AIP Column: No Non-Profit Status for Newspapers

My latest AIP column is up and today I address Senator Ben Cardin’s bill that would endow newspapers with non-profit status as a means to help out the struggling industry. Cardin’s bill was introduced back in March and didn’t gain any traction until President Obama ignited debate when he told editors from Toledo and Pittsburgh newspapers that he’d be happy to look at bills that would help the newspaper industry.

Cardin’s bill is a bad idea for a number of reasons, the most important of which is the free market has spoken. More and more Americans are getting their news from sources other than newspapers and for good reason. A portion:

Technology is gradually relegating traditional newspapers to the same fate as the proverbial buggy whip. With 24 hour cable news and around-the-clock news websites and blogs, breaking news and events are delivered to consumers’ Blackberrys, iPhones, cell phones, and laptops within minutes after their occurrence. Take as an example Michael Jackson’s death. The website TMZ broke the story before any news organizations and within minutes the news was broadcast all over Twitter, Facebook, over various websites and blogs and through email. By the time newspapers got their stories printed and delivered to its newsstands (let alone to consumers’ doorsteps) the following day, news websites had already published pages and pages of background on Michael Jackson’s life, YouTube videos of his best music videos, and reaction from friends and relatives. Newspapers simply cannot compete with the instant reporting of news.

This technological shift benefits consumers because it gives them a larger market from which to obtain their news. Americans in smaller towns are benefiting in particular because they are no longer dependent on local papers for information. Instead, the internet puts consumers in large cities and small towns on an equal footing when it comes to getting information. They can access international, national, and local news from a variety of online and television sources, and more of them are doing so every day.

Nonetheless, some are fighting this inevitable technological evolution. Maryland Senator Ben Cardin introduced legislation that would allow smaller newspapers to restructure their operations so they can operate as 501(c)(3) non-profit corporations, giving them tax-exempt status. The bill has been around since March of this year but did not receive any real attention outside the newspaper industry until President Obama said just a few days ago in an interview with the editors and publishers of the Toledo Blade and the Pittsburgh Post-Gazette that he would be “happy to look at” any bill in Congress that could offer assistance to the struggling newspaper industry.

President Obama’s support of a bailout of sorts for newspapers is one that will not sit well with taxpayers who are already on the hook for trillions of dollars in automobile company bailouts, Wall Street bailouts, Fannie Mae and Freddie Mac bailouts, an unpopular attempted government takeover of health care, possible cap and trade spending, and other government subsidies and entitlements. Cardin’s bill is meant to artificially prop up an industry that does not serve its customers well enough to keep them coming back.

When you’re finished reading, feel free to leave a comment here or at the column. While you’re at AIP be sure to stop by and check out the other columnists and bloggers who write there. TJ Brown also discusses the controversy surrounding the possibility of bailing out newspapers and doesn’t think it will happen. I agree with him. Michael Lewis examines Obama’s message to Americans and the world at the UN and G-20. Ed Morrissey writes that the president taxes our patience when he tries to argue that an individual mandate requiring every American to purchase health insurance isn’t a tax.

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