Will tax incentives fuel a new wave of subscribers?

By Dr. Merja Myllylahti

Auckland University of Technology (AUT)

Auckland, New Zealand


Is 2019 going to see a new wave of subscriptions, donations, and memberships? Have the authorities found a magic bullet to sustain journalism and the business of journalism?

In his report Journalism, Media, and Technology Trends and Predictions 2019, Nic Newman predicts “donation models could be supercharged this year by government initiatives to allow media companies to benefit from tax incentives when receiving charitable donations.”

In several countries, a tax credit for printed newspapers could ease the financial strain they are under.
In several countries, a tax credit for printed newspapers could ease the financial strain they are under.

In Canada, Australia, and the United Kingdom, governmental bodies and inquiries seem to agree that taxation is a crucial way to support the sustainability of media.

In 2018, Canada’s government launched a hefty package, worth C$595 million, to support digital media in the country. In its budget proposal, the government suggested non-refundable tax credits for digital news readers. These would allow them to claim 15% of the cost of their digital news subscription. The package also included a proposal to give non-profit journalistic institutions a charitable status so they could issue donation receipts to their readers.

Last December, the Australian Competition and Consumer Commission also proposed making personal digital news subscriptions tax deductible “to encourage production and consumption of news and journalism.”

In February, the Cairncross Review commented on the sustainability of the United Kingdom’s media, echoing proposals introduced in Canada and Australia. The review says the UK government should introduce “new tax reliefs aimed at encouraging payment for online news content.” It also recommends zero-value added tax to digital newspapers and magazines.

There is no guarantee any of these proposals will materialise or even work. There are plenty of questions arising from the proposals: Who would be eligible for tax credits? All households or just some? Or, as a reader, could you claim multiple tax credits if you have subscribed to multiple digital newspapers?

I also wonder if tax credits would give some news publishers a competitive edge against others. In the end, some digital subscription packages are more expensive and, therefore, the potential discount is also more substantial.

Whatever happens with taxes and tax credits, memberships and donations seem to be gaining ground. Last August, BuzzFeed made it easier for people to donate, and in December it launched a new membership programme. Quartz also launched memberships (US$14.99 per month) giving readers access to content, events, and conference calls with the outlet’s journalists.

More recently, the hyperlocal news site Patch introduced a membership programme. And, of course, the Dutch De Correspondent launched a membership giving readers an opportunity to pay as much as they think the site and its content deserves to be paid.

All this is positive, but perhaps a warning from American journalist Jeff Jarvis is appropriate. Jarvis warns about memberships and donations, saying “just as with subscriptions, there is a finite pool of generosity. Charity won’t save us.” He also noted “there is not enough philanthropy from the rich — or charity from the rest of us — to pay for what is needed.”

Hard to argue with that one.

About Dr. Merja Myllylahti

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