The Federal Trade Commission has issued a draft discussion called "Potential Policy Recommendations to Support the Reinvention of Journalism." The draft proposals include possible government subsidies for journalists, taxes on news aggregators, mobile phones and Internet users, more copyright protection, increased postal subsidies and public notices, and changes in tax laws to encourage nonprofit news organizations.

"Newspapers have not yet found a new, sustainable business model, and there is reason for concern that such a business model may not emerge," the report says. "Therefore it is not too soon to start considering policies that might encourage innovations to help support journalism into the future."

The FTC held a roundtable discussion of the 47-page document earlier this week. The report notes that "journalism always has been subsidized to a large extent by...the federal government, political parties, or advertising." With the decline in print advertising revenues, the FTC says it may be time to look at other sources of revenue, including government subsidies.

"Journalism is moving through a significant transition in which business models are crumbling, innovative new forms of journalism are emerging, and consumer news habits are changing rapidly," the report says. "...Through this document, we (the FTC) seek to prompt discussion of whether to recommend policy changes to support the ongoing ‘reinvention' of journalism..."

The report analyzes the current state of journalism, with heavy emphasis on the newspaper business, including major declines in advertising that led to news room staff cuts. "...Coverage of state houses and state perspectives on news from Washington, D.C., has declined, as has coverage of local government issues, foreign affairs, and specialty beats such as science and the arts.

"Existing newspapers," the report says, "are struggling to find a sustainable business model for the future. Severe cuts in expenditures, especially staff cuts, permitted most newspapers to break even or better during 2009. Advertising revenues are likely to improve in 2010 as some businesses recover from the recession and increase their advertising expenditures again. But the trend toward online, rather than print, advertising is very likely to continue, forcing newspapers to look for other sources of revenue."

The report says that while newspapers are developing "new ways to generate revenue ... no one can be sure than any one of these strategies, even in combination, will generate sufficient revenues over the long run to maintain existing newspapers at their current - smaller - sizes."

The FTC report added that while online-only news sites are appearing "virtually no sites have yet found a sustainable business model that would allow them to survive without some form of funding from non-profit sources."

One possible alternative calls for creation of a journalism division of AmeriCorps, the federal program that places young people with non-profit companies to do public service work. "According to proponents, this proposal would help ensure that young people who love journalism will stay in the field," the report says.

Another possible program would be one that would provide grants to universities to conduct investigative journalism. The report quoted a proponent of this plan as saying: "If the nation's 200,000 journalism and mass communications students spent 10 percent of their time doing actual journalism, that would more than make up for all the traditional media jobs that have been lost in the past 10 years."

The FTC proposals include establishing a "National Fund for Local News." Funding would come from taxes on telecom usurers, TV and radio broadcast licensees, and Internet service providers. The FCC currently uses such funding to underwrite telecom services for rural areas.

The report suggests possible restraints or license fees charged on news aggregators and search engines. "Because free riding is usually easy in these circumstances, it is often difficult to ensure that producers of public goods are appropriately compensated," the report says. The report suggests possible federal or state laws to enhanced intellectual property rights "to support claims against news aggregators."

Another option called for stronger laws to limit "fair use" of copyrighted content by aggregators and search engines. The report notes concerns that such laws might impede the public's ability to access news.

The report also suggests reviewing copyright laws to possibly restrict fair use of content produced by the news media (and others). Also, the report suggests possible enhancements of copyright protection of "hot news" to protect companies from "parasitic free riders."

One possible tax option listed in the report was a possible license fee — $5 to $7 — paid by every Internet service provider on each account if provides. A new department in the U.S. Copyright Office would be established to monitor and make payouts to news media. Another taxing option would be one imposed on the commercial broadcast spectrum.

Still another proposal called for more antitrust exemptions for newspapers so they might work in concert — for example, to set up paywalls for news content. The report speculated that paywalls might not work if newspapers couldn't impose pay walls in concert, industrywide — action that would be barred by current antitrust laws.

The report suggests possible "indirect or direct government subsidies." The FTC staff said public funding for the Corporation for Public Broadcasting has resulted in the creation of distinguished journalism, calling PBS "the most trusted and unbiased institution among nationally known news organizations."

Other possible options included allowing the Small Business Administration to insure loans to fund new nonprofit journalism organizations, and allowing use of content produced by Voice of America and Radio Free Europe to be used by domestic news organizations without charge.

Subsidies could come in the form of increased public and legal notices, accelerated depreciation schedules and higher subsidies for delivery of newspapers by the U.S. Postal Service.

Still another option called for Citizenship News vouchers which would allow "every American taxpayer to allocate some amount of government funds to the non-profit media organization of their (sic) choice.