News and the market

What is the state of news provision in the Netherlands and what is the government’s role from an economic perspective? This report concludes that news production which cannot be adequately generated by the market should be eligible for government funding. The news in question concerns journalistic productions that create value by keeping people informed of developments in government and society but are unable to generate sufficient monetary returns. A lack of information on these societal benefits prevented the researchers from ascertaining the level of financial support that would actually be required. This study concludes however, that the preferential treatment currently enjoyed by TV and radio via the public broadcasting service is undesirable.

The rise of the internet has made it increasingly difficult for newspapers to finance news from advertisements. Accordingly, the business model for journalistic news productions (interpretative reports and investigative journalism) is under pressure. It is assumed that these productions may be important for the workings of democracy and government and beneficial to society at large. The market may not be generating enough journalistic news productions. In that case, the government should step in by making resources available that do not distinguish between TV, print, radio and internet. The current financial support for the public broadcasting service and the press is not in line with the policy objectives for news and does not reflect the multiformity of the media landscape. In the current system the consumption decisions of users and the production decisions of news producers are at risk of distortion. This, in turn, would have an adverse knock-on effect on innovation and undermine the ability of news producers, now and in the future, to meet the changing consumer needs.

This report proposes that financial support be provided for producers of journalistic news that generates societal benefits that exceed private monetary returns. Given the trend towards convergence, it is unlikely that the market will be able to create sufficient output in investigative journalism and interpretative reports. This market failure will impact primarily on productions with a relatively small audience (such as reports about smaller regions).