Report Proposes ‘Google Tax’ To Subsidize Local Media In UK

The massive Pew State of the News Media report, which Matt wrote about briefly, alludes to findings (previously published) that only 19 percent of online news consumers would pay for content. That number is actually larger than some figures coming out of consumer surveys. According to the Pew Internet and American Life Project’s survey findings:

  • Most people graze the Web for news rather than rely on primary sources. Only about a third (35%) can even identify a favorite news website. And of those that do, only 19% said they would continue to visit if that site put up a pay wall.
  • The prospects for growth in conventional display advertising also look difficult. The vast majority of Internet users, 79%, say they never or rarely had clicked on an online advertisement. They don’t mind them. They simply ignore them.

If most people won’t pay for content and advertising is only marginally effective (we can debate this) where does the revenue come from to support online journalism? In the UK one source might be a tax or levy on Google.

A commission in the UK called “The Commission of Inquiry into the Future of Civil Society” has suggested a tax on Google (and presumably others in Google’s position) as one way to support local news media. According to a report in the Guardian newspaper:

In a rapidly changing market, more than 100 local and regional newspaper titles vanished last year – a trend amplified, says the commission, by advertising revenues and audiences shifting to online platforms. “The advent of free newspapers, the emergence of 24-hour television news and the popularisation of online and mobile platforms have all contributed to a far more volatile and unstable environment for news organisations.”
The report argues for levies to promote new media and encourage a diversity of news sources. Recycling money in this way, say the authors, is not new for Britain. Google could generate £100m a year for cash-starved media if it was taxed for the content it distributes.

The report itself, entitled Making Good Society, is somewhat less sensational than the Guardian article that focuses on the “Google Tax.” Here’s the relevant excerpt from the document:

Levies are used in 30 European countries and are popular with the general public. The Institute for Public Policy Research (IPPR) has conducted a thorough study for BECTU, the media and entertainment union, and the National Union of Journalists into the potential of industry levies as a means of funding public service broadcasting and found that a ‘one per cent levy on pay TV operators such as Sky and Virgin Media could bring in around £70m a year. A similar fee imposed on the country’s five mobile operators could generate £208m a year. Making Google meet its full tax liability in Britain would boost the pot by a further £100m.’

The same IPPR report argues that ‘such sums could save many local newspapers and web sites from closing down, could stop the destruction of local and regional news on ITV and could help new media start-ups to plug these gaping holes in public service provision – all without the taxpayer having to stump up any more cash and without having to raid the licence fee.’ In the past, the Eady Levy, a tax on box office receipts in the UK, supported the growth of the British film industry and provided funding for the National Film and Television School, which trained a number of directors and actors. Levies could now involve direct charges on broadcasters, cinemas, video labels or new media levies on internet service providers and mobile phone operators.

While these ideas are merely suggestions in a report expect them to get serious consideration. Part of the reason, beyond alarm about disappearing newspapers in Britain and questions about how to support media diversity, is the fact that Google doesn’t pay taxes in the UK. Its European headquarters are in Dublin, Ireland. There’s some indignation in the UK over that fact, which could fuel support for the levy concept described above.

Related Topics: Channel: Industry | Google: Critics | Google: General | Google: Outside US

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About The Author: is a Contributing Editor at Search Engine Land. He writes a personal blog Screenwerk, about SoLoMo issues and connecting the dots between online and offline. He also posts at Internet2Go, which is focused on the mobile Internet. Follow him @gsterling.

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