Handbook on the Economics of the Media

Handbook on the Economics of the Media

Edited by Robert G. Picard and Steve S. Wildman

This Handbook explores the economic features of the media and its infrastructure to provide readers with a sophisticated understanding of the critical issues and their influence on companies, audiences and regulators. The contributors explore and explain the impact of underlying factors such as multi-sided platforms, advertising and industry structure. They assess the unique economic factors affecting print, broadcast and broadband-based media, and highlight how the economics of the media can influence policy making. Each original chapter introduces the reader to a specific topic, reviews the literature on the development of knowledge in the field, explores critiques of the approach, and provides an understanding of applying this knowledge and the implications.

Chapter 16: Effects of taxes and subsidies on media services

Hans Jarle Kind and Jarle Møen

Subjects: economics and finance, cultural economics, industrial economics, innovation and technology, technology and ict

Extract

Controversies over the role of the press are almost as old as the press itself (Sánchez-Tabernero, 2006). Controversies over taxes also have a long history, and for the media industry it dates back to protests against the British stamp duty that was introduced on newspapers in the early 1700s. The Examiner, started in 1808, consistently labeled the duty a “tax on knowledge”, and this slogan is still used by the media industry today. Some publishers refused to pay the stamp duty, claiming that the tax restricted circulation of journals to people of high income. Incidentally, there is some evidence that the tax was used at least partly to obstruct the radical press, and thus to reduce newspaper circulation (Simkin, 2012). Modern press policies typically have the opposite objectives. A major aim is to increase circulation and educate the people. After World War II, a large number of countries started to subsidize domestic newspapers. In particular, press subsidies have been used to halt newspaper mortality since the 1960s and 1970s (see for example Picard, 2006). According to Krumsvik (2011, p._69), government support to media is perceived as a prerequisite for a free press in social democratic countries, while it is perceived as an obstacle for a free press in more market oriented countries. The background for Krumsvik’s claim is an early study by Picard (1985) and more recent studies such as Hallin and Mancini (2004). The latter analysed public policies towards the media sector in 18 countries in Western Europe and North America.

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