Cairncross backs PPA call to axe the reading tax

Louisa Cavell

Today, the highly anticipated Cairncross Review, examining the long-term sustainability of the press and high-quality journalism in a changing market, has been published.

The review, which was commissioned by the Government, under DCMS, and conducted by Dame Frances Cairncross, looks at the future of the press in a rapidly changing digital media environment. 

The PPA submission to the call for evidence suggested three main areas for consideration, all of which have been included in the reports recommendations. 

Our main proposal, that the zero-rate of VAT afforded to print titles be extended to digital publications forms a key recommendation by Dame Frances.

The review observes the challenges to traditional sources of revenue for publishers, such as advertising and circulation. It also sets out the importance of  high-quality journalism to a democratic society. 
Looking to the dominance of Google and Facebook in digital advertising, the report examines the fairness in the operation of the digital market for publishers and sets out ways to have more accountability for key players, including backing our call for a CMA investigation into the workings of the online advertising market to ensure fair competition.

The report notes changing consumer habits and the “unbundled” experience of absorbing news online has implications for the visibility of public-interest news, as well as trust in news (the rise of so called “fake news”).  

Dame Frances calls for public intervention to protect investigative journalism and democracy reporting, which she identifies as the areas of journalism most under threat. 

Another conclusion is that policy-makers should seek to ensure that the unbalanced relationship between publishers and online platforms does not threaten the viability of publishers’ businesses. It concedes that the government has a role in helping publishes adapt to the online world, by encouraging the development and distribution of new technologies and business models, as well as the introduction of new codes of conduct, to redress the unbalanced relationship between publishers and online platforms. 

The report also proposes a new fund which will be focused on innovations aimed at improving the supply of public-interest news, as well as a plan to improve media literacy.

Owen Meredith, Managing Director of PPA, commented:

“PPA welcomes the publication of this report and the detailed study undertaken by Dame Frances. 

“We are delighted that the report recognised our submission and the concerns of magazine publishers, having adopted our key proposals. 

“It is especially welcome that Dame Frances has backed our call to axe the reading tax on digital publications. The government should now move to adopt this as soon as practical, now the legal barriers have been removed thanks to our lobbying efforts in Brussels, on behalf of the industry.”

In all, the report makes a total of nine recommendations:
1: New codes of conduct to rebalance the relationship between online platforms and publishers: Those online platforms upon which publishers increasingly depend for traffic should be required to set out codes of conduct to govern their commercial arrangements with news publishers, with oversight from a regulator.
2. Investigate the workings of the online advertising market to ensure fair competition: The Competition and Markets Authority should use its information-gathering powers to conduct a market study of the online advertising industry.
3. News Quality Obligation: The efforts of online platforms to improve their users’ news experience under regulatory supervision. Platforms have already developed initiatives to help users identify reliability, and the trustworthiness of sources. They must continue, and expand these efforts but do so with appropriate oversight. 
4. Media Literacy: The government should develop a media literacy strategy, working with Ofcom, the online platforms, news publishers and broadcasters, voluntary organisations and academics, to identify gaps in provision and opportunities for more collaborative working.
5. The BBC’s market impact: Ofcom should assess whether BBC News Online is striking the right balance between aiming for the widest reach for its own content on the one hand and driving traffic from its online site to commercial publishers (particularly local ones) on the other. The BBC should do more to share its technical and digital expertise for the benefit of local publishers.
6. Innovation funding: the government should launch a new fund focused on innovations aimed at improving the supply of public-interest news, to be run by an independent body.
7. Tax Relief: The government should introduce new tax reliefs aimed at encouraging (i) payments for online news content and (ii) the provision of local and investigative journalism. 
8. Direct funding for local public-interest news: The Local Democracy Reporting Service should be expanded, and responsibility for its management passed to, or shared with, the proposed Institute for Public Interest News.
9. Establish an Institute for Public Interest News: A dedicated body could amplify efforts to ensure the future sustainability of public-interest news, working in partnership with news publishers and the online platforms as well as bodies such as Nesta, Ofcom, the BBC and academic institutions.
To read the full report click here.

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