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The people who the media aims to serve are also the ones who could save the industry

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Styli Charalambous is the CEO and co-founder of Daily Maverick, having joined the effort a few months before launch in 2009. Over the years, he has studied media models and news innovation efforts. He has also helped launch various projects and products within the Daily Maverick orbit.

In a previous column addressing funding issues facing the media industry, I looked at how we might structure media companies and create investment incentives through structured tax breaks.

First published in the Daily Maverick 168 weekly newspaper.

I looked at how arguments have been made to create a new hybrid class of company and how Section 12J-like tax incentives could entice investors seeking social impact returns. But there is another source of funding that remains the best a media people can get: revenue.

Fixing the media means shoring up all the weak points of the ecosystem and getting various stakeholders involved in the cause.

Big business is often a big winner of the work of independent and investigative journalism, cheering from the sidelines but conspicuously light on financial support when things get “too political”, which in South Africa is all the bloody time.

All the while, these large corporates are happy to spend with big foreign companies such as Google and Facebook, where the revenue leaves South Africa untaxed, and, between these two behemoths, struggle to account for 50 jobs in South Africa. We also have a failing Enterprise Development programme, where these same corporates apply billions in corporate social investment (CSI) spend to small businesses that, according to a 2013 New York University/Impact Amplifier study, “did not have a successful impact on socio-economic transformation”.

What if we could add Press Council accredited media to the list of qualifying enterprises for CSI purposes and incentivise corporates to support media through advertising spend? This would help create a macroeconomic benefit to the country (assuming a less corrupt and compromised government), subsidised advertising spend for corporates as well as a healthier and more diverse media ecosystem. Whether it be under Enterprise Development or any other programme, there are ways to make it more attractive for big corporations to support media houses.

Media ecosystem with stakeholders
Media ecosystem with stakeholders. F.Scott-Berning

As someone who has had to sell media, I can attest to the pain of trying to convince younger media buyers that supporting independent media is an investment in their future. Unfortunately, there are no key performance indicators like “Getting rid of corrupt politicians and businessmen” for media buyers, just the lowest cost per acquisition and impression.

The only way we can align interests is to move through the regulatory system in which forced CSI spend doesn’t do too well on a return-on-investment basis anyway.

To make the public support of media more palatable, let’s make all contributions – whether it be through a paywall, contribution or membership (again to Press Council members in good standing) – tax deductible for readers. In this way, we lessen the burden of cost on readers and make it more appealing to a greater portion of the public.

Another body in the ecosystem is members of the public – the people we as media aim to serve. They are major beneficiaries of the work we do, but we are only seeing the beginning of a move to reader revenue as a business model, especially in South Africa.

These models come in all guises, some having opted for hard paywalls (The Financial Times), metered paywalls (The New York Times), a freemium model (News24), donations/contributions (The Guardian), as well as membership (Daily Maverick).

The one they all have in common is you, the reader, dipping into your wallet.

Although reader revenue models have had a positive impact on levels of journalism, they do raise the spectre of accessibility, especially in a country like South Africa where so many have so little. We are left in a situation where only seven million taxpayers out of 30 million adults are the addressable market, and then only a fraction of those are inclined to pay for or support news media.

To make the public support of media more palatable, let’s make all contributions – whether it be through a paywall, contribution or membership (again to Press Council members in good standing) – tax-deductible for readers. In this way, we lessen the burden of cost on readers and make it more appealing to a greater portion of the public. We could also look at making such contributions zero-rate for VAT purposes, increasing the impact of such contributions by another 15%.

As with all of the tax-incentive suggestions in this series, we are looking at measures that will ultimately have a hugely positive return for the industry through entity and job creation, while at the same time playing the watchdog role at national and community level. In South Africa, President Ramaphosa estimated corruption to have cost the country close to a trillion Rand in the last decade – before the opportunity cost of the exodus of talent and significant erosion of the tax base is included. It’s against that cost that we should measure the investment of tax breaks for independent media support.

These tax subsidies would show appreciable returns in a short space of time. Or we could just fund it all by tagging an extra 10% premium to South African Airways or the SABC’s next government bailout. DM168

This story first appeared in our weekly Daily Maverick 168 newspaper which is available for free to Pick n Pay Smart Shoppers at these Pick n Pay stores.

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  • The problem with tax incentives under our current government is that they could pick and choose which media Brands they wanted to support. Because of the type of news coverage the Maverick shares, I doubt that they would be chosen.

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