Since 2005, nearly 2,900 U.S. newspapers have closed as ad dollars moved online and subscriptions slumped.
Washington state lawmakers grew so concerned about the trend that in 2009, they enacted a law providing newspapers a significant financial discount on their business and occupation, or B&O, taxes.
News outlets continued vanishing and surviving newsrooms shrank.
So earlier this year, state lawmakers went a step further and eliminated the B&O tax for newspaper publishers and expanded the deal to include a handful of digital-only news sites. The new rules take effect on Jan. 1, 2024.
“There are lots of really solid online-only outlets across the state that have a record of changing policy and revealing wrongdoing.”
– Caley Cook, UW Department of Communication
But while the deal helps traditional print newspapers and their websites — collectively saving them roughly $800,000 per year in state taxes — it leaves out most local, digital-only news sources. That includes this publication, GeekWire, and other for-profit outlets focused on cities and communities, such as Axios Seattle, the West Seattle Blog and Capitol Hill Seattle Blog.
“The delineation in this legislation between print and online-only outlets is really odd, but it’s not surprising,” said Caley Cook, a teaching professor in the University of Washington’s Department of Communication.
While the legislation’s goal of strengthening newspapers is positive, she said, “it’s also representative of this outdated thinking that metropolitan daily newspapers and their local cousins are the only ones that know how to do this work.”
“That’s simply not true,” Cook said. “There are lots of really solid online-only outlets across the state that have a record of changing policy and revealing wrongdoing.”
Last week, the Seattle City Council passed a measure to align its definition of news publishers with the state’s language, though the exemption does not cover the city’s B&O taxes.
A recent study on local media by Northwestern University found 18 digital news sites in Washington — nine for profit, and nine nonprofit.
The West Seattle Blog has posted online news since 2007. Its co-publishers are a married couple, Patrick Sand and Tracy Record. The blog is their primary source of income and a local institution. People approach them at the grocery store, Sand said, to talk about issues they want to see covered.
“The roles that we play in our community are every bit as valid as what appears on a printed page,” Sand said. In addition to the policy’s tax benefits, he wants sites like his recognized for their contributions.
Justin Carder, publisher of the Capitol Hill Seattle Blog, launched his digital-only news source in 2006. Recent coverage includes news on the city council’s funding gap, a power outage, and plans for a local business to reopen despite challenges of gentrification and gun violence.
Carder tweeted his disappointment in being omitted from the B&O tax exemption. “Wish I was a Blethen,” he wrote, referencing the family that has owned the Seattle Times since 1896.
There are also multiple nonprofit digital-only outlets in Western Washington including three sites produced by My Neighborhood News Network that target Edmonds, Lynnwood and Montlake Terrace; Salish Current, which serves communities near the Canadian border; and statewide sites such as Crosscut, Investigate West and Washington State Standard.
State Attorney General Bob Ferguson requested that state lawmakers pursue the tax bill. The measure’s original language, which was cut in revisions, praised digital news. “The legislature finds that community-focused online digital publishers provide a vital service to geographically remote and ethnically diverse communities by producing timely, community-focused information in an accessible format,” it read.
Seattle City Councilmember Teresa Mosqueda sponsored the city’s version of the bill.
“Anything else that we can do to support the diversity and the voices of small publications to ensure local news outlets have the resources, we should all be vested in that,” Mosqueda said. “This is a public good, and I think that it should be more publicly funded.”
Yet the final legislation turned its back on digital-only outlets — with a curious exception.
Senate Bill 5199 provides the tax exemption to print news as well as online-only news if they were still publishing a print product by Jan. 1, 2008 and were subject at that time to B&O taxes under the printing and publishing tax classification.
The definition appears to cover at least three Seattle digital news outlets: the Seattle Post-Intelligencer, The Seattle Weekly and The Stranger. All were formerly robust print papers, but are now shadows of their former selves.
- After publishing for 146 years, the Hearst-owned Seattle P-I stopped printing in 2009. The outlet, which once employed multiple GeekWire journalists, appears to have no local reporters.
- The Seattle Weekly, which went digital in 2019, lists one reporter. In recent weeks its news section led with the headline: “Kirkland officer accused of creepy behavior with bikini baristas.”
- The Stranger stopped printing regularly in 2020 and reduced its staff. It covers music, arts, culture and local politics and issues.
Sen. Mark Mullet, a Democrat representing Issaquah, sponsored the state legislation and confessed to having a soft-spot for the Seattle P-I — which was one of the papers he read growing up.
Mullet and other lawmakers opted to keep the online news tax exemption narrow to avoid opening “Pandora’s box,” he said. “It was kind of a place we didn’t want to go.”
Policies trying to bolster local journalism need to distinguish between online sites that provide trustworthy, original content from those masquerading as news. But experts say it’s doable and being done in other regions.
“Everyone knows — or knew — their local newspaper,” said Benjamin Shors, chair of Journalism and Media Production at Washington State University’s Edward R. Murrow College of Communication.
“That can be trickier when trying to define digital newsrooms,” Shors said, “although I think policymakers are beginning to draw clear guidelines regarding who should qualify.”
The city has the option of applying a local B&O tax break to newspapers and a broader definition of online-only news, but Mosqueda said the council would need to consider the impact on tax revenue. Radio and TV news are not included in the state’s exemption.
Mullet expressed a willingness to look at expanding the online news tax benefits, but said the legislature might need to study the issue first.
“It’s always a possibility for discussion,” he said. “I would never rule it out.”
Editor’s note: This story has been corrected to note that the city of Seattle does not provide a B&O tax exemption for newspaper publishers and certain digital-only news sites. Seattle’s recently passed measure updated the definitions of these businesses to align with the state’s new definitions.
