Record Labels Put Out Report Insisting That Record Labels Do, In Fact, Invest In Musicians

UK Commission Suggests Taxing Google To Prop Up Newspapers

from the tax-the-successes-to-prop-up-the-failures? dept

Mon, Mar 15th 2010 7:15am — Mike Masnick

Earlier this year, we noted that France was considering a plan to tax Google to pay record labels. It looks like the UK has come up with a similarly bad plan for the newspaper industry, with a commission suggesting a tax on Google and other news aggregators, to help prop up newspapers. There doesn't seem to be much greater rationale, other than that old news publications are struggling and Google seems to be doing great, so why not tax them? The argument, of course, makes little sense. It's basically saying let's put a tax on the successful and give that money to the companies squandering it. Talk about a way to give the exact wrong message to companies, while making the economy that much more inefficient.

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Filed Under: journalism, newspapers, success, tax
Companies: google

26 Comments

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Ima Fish (profile), 15 Mar 2010 @ 7:33am

If only we could have taxed the automotive industry to give to the buggy whip industry, we'd still have a thriving and utterly useless buggy whip industry.

Of course someone will argue that news is important and we can't let the news industry die. Sure, news is important, which is why it will not die. Even if the current news industry dies, as people demand news, a new and more efficient industry will take its place.
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Dark Helmet (profile), 15 Mar 2010 @ 7:57am

Sigh...
"Sure, news is important, which is why it will not die."

Why can't more people understand this extremely simple point? There are very few things that are served better by organized intrusion: environmental concerns, human rights issues, some limited oversights. But really, that's about it.

For a great many "issues", the best course of action in terms of intrusion is to simply not do anything at all. Let things sort themselves out. There's nothing intrinsically WRONG with a nation without newspapers. If that happened, it likely meant that they shouldn't exist any longer. Yet "news" as we mean it will continue, because there is a hunger for it....
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NAMELESS.ONE, 15 Mar 2010 @ 8:06am

and then
google has to up rates for british advertisers...ya that will work
i say do it and google DO increased rates at exact amount that they tax ya....
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Jimr (profile), 15 Mar 2010 @ 8:14am

Need to tax the legislators
They just need a tax on the legislators to help fund a Stupid cause. Just because there is just not enough stupid people making laws.
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Ryan, 15 Mar 2010 @ 8:23am

What's the Difference?
There doesn't seem to be much greater rationale, other than that old news publications are struggling and Google seems to be doing great, so why not tax them? The argument, of course, makes little sense. It's basically saying let's put a tax on the successful and give that money to the companies squandering it. Talk about a way to give the exact wrong message to companies, while making the economy that much more inefficient.

Doesn't this describe nearly every tax anymore? It just looks like they've abandoned any hint of subtlety here, replacing the more general "rob rich people to pay poor people" with specifically "rob Peter to pay Paul". Pretty shameless...
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Anonymous Coward, 15 Mar 2010 @ 8:28am

What is a shame is that the print industry has already. Massive layoffs mean that the articles now come from other media outlets and can often be read the night before.
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Anonymous Coward, 15 Mar 2010 @ 8:29am

Having always viewed search engines such as Google as "web crawlers" (so-to-speak), I am curious why it seems to be associated with "aggregators"?
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Anonymous Coward, 15 Mar 2010 @ 8:53am

There is nothing stopping Google from de-listing newspapers and/or charging them for their indexing service. Once this happens, Google will quickly recover the tax they pay and guess what, the very industry they wanted to protect, is now paying google for indexing!
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ethorad (profile), 15 Mar 2010 @ 8:56am

Re: What's the Difference?
More like rob rich people to pay government bodies to work out how they would have paid poor people if only there was any money left after their expenses.
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DaveL (profile), 15 Mar 2010 @ 9:03am

Reagan was right
Government's view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.
-- Ronald Reagan

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crade (profile), 15 Mar 2010 @ 9:04am

Re: What's the Difference?
Nothing wrong with taxing google (fairly along with any other corporation), but there is no responsibility there. The claim of responsibility is dishonest. If they really want to increase the amount google pays just because they are doing well, they should just increase the amount that companies who are doing well must pay.
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Newbelius, 15 Mar 2010 @ 9:05am

Re:
Yes, news is important, but newspapers are not necessarily so. The buggy whip industry died because the new-fangled horseless carriage didn't need to be whipped. The buggy whip became superfluous. The transportation industries flourished never the less.

The same will be true of the news media industry. Although one medium may decline and eventually die off, relevancy of news never will. We will always need to be informed of relevant news, we will just get it from different places.

Interestingly, my local community news paper, delivered freely twice per week, recently added a third edition per week with a slightly different, more commercial market. While big, national papers are losing ground, smaller ones aimed at specific communities still are thriving.

I find that their focus on news within my community is more immediately relevant than the news provided by the national. Plus, they are chock full of flyers for local retailers and I find it hard to resist looking to see if there is a sale on produce.

It's all about relevancy. If a product is no longer relevant, it should change or cease to exist. Governments should not tax those that provide what the market desires in order to prop up those that do not. Let the big newspapers die if they cannot remain relevant.
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Ryan, 15 Mar 2010 @ 9:38am

Re: Re: What's the Difference?
Not sure I understand your "claim of responsibility" reference. If you mean that Google is obviously not responsible for newspapers' struggles, then how is it any better/more "honest" to tax all well-performing companies? And regardless of responsibility or whether they tax just Google or all successful companies, the harms I quoted remain: you disincentivize success and massively distort the economy, thus making it much less efficient.
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Richard (profile), 15 Mar 2010 @ 9:39am

Re: Sigh...
Why can't more people understand this extremely simple point? There are very few things that are served better by organized intrusion: environmental concerns, human rights issues, some limited oversights. But really, that's about it.
Plus the biggy - keeping the playing field level. This means preventing successful organisations from abusing their market power.

Unfortunately in recent years governments have shown a disturbing tendency to do the opposite (and this proposal is an example)
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Rikuo (profile), 15 Mar 2010 @ 9:49am

This is not how the market works
I thought a business had to innovate, advertise, promote their product/service. Now basically they can say "I'm a newspaper, give me Google money", and do f**k all. This will only encourage the newspapers to deliberately run their businesses into the ground. After all, if the government says that if their business is failing, they'll give them money from a more successfull business, where's the incentive into doing a proper job?
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Anonymous Coward, 15 Mar 2010 @ 9:53am

You know what would be great? If the news papers got what they wanted and Google and the like stopped giving them free traffic. Once it's gone perhaps they will understand that they were biting one of the hands that feeds them. And when they ask nicely for Google to come back, Google can charge them for the privilege.
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Rikuo (profile), 15 Mar 2010 @ 9:54am

Hey Honey
"Hey Honey, guess what!"
"What is it dear?"
"I just got promoted at the newspaper. I'm in charge of Business De-Enterprise!"
"What's that?
"Basically, in the olden days, you had to work hard to make sure people bought your newspaper. You know, well-written articles, catchy headlines, advertising. Well, the government has just done something great. If a newspaper is strapped for cash, why they'll tax some completely unrelated company, for no reason that makes sense, and give us that money!"
"That's mad!"
"Yeah well, its great for me! I just have to make sure that we don't do a good job anymore! Let's see, I could edit things wrong, put in articles no-one wants to read. And once business drops off, well, off to the government I go!"
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Ryan, 15 Mar 2010 @ 10:00am

Re: Re: Sigh...
Perhaps I misunderstand your post's intentions, but this example seems to me a very good instance of the government's misguided attempts to "keep the playing field level". The field doesn't need to be kept level - consumers naturally will choose the goods and services that provide the most value, and in the absence of government intervention incumbents will be defeated via innovation and improved products or production methods. Google and other "aggregators" clearly offers a great service to news consumers - one that didn't exist until very long ago - and to which existing media must adapt or go extinct.

When the government attempts to "level the playing field" as they do here or in most antitrust examples, they hurt consumers by increasing the cost associated with the best products and discouraging improvements past a certain point. It also serves as a harmful alternative to competition for many incumbents in that they can instead either be propped up or hurt their rivals via government protectionism - in turn incentivizing resources spent lobbying instead of improving or innovating.

Rewarding pro-consumer policies is quite obviously much, much better provided by the public than by government.
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crade (profile), 15 Mar 2010 @ 11:30am

Re: Re: Re: What's the Difference?
I think it is "better" when governments are honest and not trying to deceive the voters. If they raised taxes on successful companies, and people dissagree with that they can get all pissy and vote them out. Here it seems they are trying to trick uninformed voters into thinking google is responsible and deserves to pay for the newspapers failures. Not that it a better decision to tax google more just because they are successful and to subsidize the newspapers from public money just because they are not successful, but that this is already what they are doing here while trying to deceive their voters about it.
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NAMELESS.ONE, 15 Mar 2010 @ 1:55pm

as i said
just charge anyone from britain more money to advertise.
THAT will do the world good and then those businesses relying on some ads can whine to the legislators.....
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SteveD (profile), 15 Mar 2010 @ 5:01pm

The moral argument and Google Tax
The thing that makes me fall slightly in favour of a Google Tax right now is the tax-dodging tricks Google (and other major tech companies) use to avoid paying corporation tax in many EU countries; they just transfer all their ad revenue to Ireland and pay the much lower rates there.

So France has a corporate tax rate of 33.3%, and Ireland is 12.5%, so Google is saving quite a bit of money. Contrast that against the fact that Google is having a heavy impact on national ad markets, and you have to wonder if there's anything wrong with France wanting 1-2% back.
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Anonymous Coward, 15 Mar 2010 @ 6:25pm

I'm tired of governments serving the interests of the highest campaign contributors instead of the public interest and the interests of those who actually innovate.

Governments like to take money from the successful who innovate and give it to failures who refuse to adapt.
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Anonymous Coward, 15 Mar 2010 @ 6:30pm

Re: Re: Sigh...
"Plus the biggy - keeping the playing field level. This means preventing successful organisations from abusing their market power."

You sound like a communist.

In a free market the playing field IS level. The problem is that the incumbents can not compete in a level playing field because they are failures. So instead of innovating they lobby the government to give them an unearned unlevel playing field whereby they can make money by being failures.
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Hephaestus (profile), 16 Mar 2010 @ 6:53am

Re:
"You know what would be great? If the news papers got what they wanted and Google and the like stopped giving them free traffic. Once it's gone perhaps they will understand that they were biting one of the hands that feeds them."

I was thinking something similar. All google would have to do is stop aggregating news from the UK. no aggregation and no taxes.
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