In Norway, a Slow Road Toward Subsidies for Digital Media


imageThe tale of subsidies for digital media in Norway is a story about a long and winding road. The kind of road along which everybody understands that something needs to be done, but nobody can agree which way to go. Maybe Norwegian media will see a new system of public support from 2014. On the other hand: That is what government and media pundits said about 2013, too.

Nation of Newspaper Readers

Norway loves its newspapers. The Norwegians are among the world’s most avid newspaper readers. All over the sparsely populated country, you will find small, local newspapers, with a high penetration in their own, tiny markets.

Hadia Tajik, the Norwegian Minister of Culture, attributes it mostly to the public support system.

“For many years, the press support has been a targeted and efficient instrument to promote media diversity in Norway,” she says.

“Compared to other countries, we have an impressive amount of local newspapers: 228 papers, and 195 municipalities with their own newspaper. We see that the number is rising,” Tajik adds.

In a country with 5 million inhabitants, where most municipalities have fewer than 5,000 residents, that is a lot.

“The support has been accurate when it comes to its target, to reach newspapers with a difficult economical situation, particularly small local newspapers and papers with a larger, local competitor. If the press support was to disappear, this would lead to a large number of Norwegian newspaper also disappearing,” Tajik says.

Readers go online
Most political parties and nearly all editors and press organisations agree with Tajik and the government that there should be some kind of media subsidies.
So the question is: Who should get public money?

The media landscape is hardly the same as back in 1969, when press support was introduced. Newspapers have severed ties to political parties. A number of small newspapers, both in cities and in rural municipalities, have ceased publication, often to be replaced by free, weekly newspapers, which do not qualify for subsidies. More readers prefer specialised magazines and newspapers, which do not qualify for subsidies either.

And, of course, increasing numbers of readers get their news updates online, terminating their relationship to a newspaper that might have been hitting their family’s breakfast table for generations.

Subsidies and Restructuring

The process for changing press support of Norway has been one of dribs and drabs: A 145-page committee report in 2010. Then, a long wait. Next, a 2012 proposal from the Ministry of Culture to make media subsidies platform-neutral. Followed by a 2013 budget with no changes. Now, a new ministry proposal to support even the newspapers relying on single copy sales rather than subscription.

“The government wishes to continue its target to give considerable support to media diversity. At the same time, the government sees that newspapers are experiencing a fundamental technology change, where both readers and advertisers move to electronic platforms,” Tajik, the minister, says.

Thus the government wishes to make the support platform-neutral, to make sure subsidies will not prevent necessary changes and restructuring.

Not everybody agrees on that.

“It is neither necessary nor desirable to speed up a development that mainly moves from paper to digital presentation. We still know little about to what extent digital media is able to replace and take over the tasks that newspapers have had so far,” writes Rune Hetland, secretary general of LLA, the association of local newspapers.

Tax Exemption – For Whom?

When debating subsidies, many tend to more or less forget the major part of the press support.

While the newspapers receive direct subsidies of NOK 308 million (around 41 million euro) in 2013, the indirect support – exemption from sales tax – amounts to five to six times that figure.
Several new tax models have been proposed. In the existing system, newspapers have no sales tax burden. Digital news organisations must pay the full 25 percent sales tax.

One proposal involves a change to an 8 percent sales tax for everyone. Another proposes a model where papers still avoid paying sales tax, while digital media see the rate lowered to 8 percent.

Trygve Hansen, CEO of The Norwegian Specialized Press Association, believes both the current and the proposed models hinder free competition. His organisation filed a complaint with the EFTA Surveillance Authority back in 2007.

Daily newspapers have been and are still going through rounds of job cuts. That impacts quality and means the specialised publications will, more than ever, have to provide competence in areas where the dailies no longer can afford dedicated journalists, Hansen argues.

The answer as to what will happen should be given in the 2014 budget.

Then again, Norway will see a general election this September, and all polls point toward a new government. That might lead to the decision being postponed for yet another year.

Tags: tax, subsidies, public finance, press support, norwegian media, newspaper,