Bargains in the Information Marketplace: The Use of Government Subsidies to Regulate New Media

76 Pages Posted: 18 Feb 2003


It used to be that free speech interests were deemed not particularly relevant or not especially powerful in many areas of communications regulation. Phone companies, for example, were not considered speakers at all. Broadcasters, although speakers, did not have the same First Amendment status as newspaper journalists. The emergence of new communications technologies and the convergence of existing media over the past decade have dramatically increased the salience of First Amendment concerns in communications regulation. As a result, the government is finding it increasingly difficult to achieve traditional regulatory policy objectives - such as promoting competition and diversity in the electronic media - in the face of more stringent First Amendment review.

In response to these developments, the government will likely devise new regulatory approaches that steer clear of First Amendment restrictions. This article examines one possible approach: the government's use of speech benefits rather than regulations to promote desired activities in the media marketplace. Specifically, in the 1999 Satellite Home Viewer Improvement Act (SHVIA), Congress fashioned a copyright benefit - a compulsory copyright license that allows DBS operators to retransmit local broadcast stations without charge - in order to induce certain behavior - the carriage of local broadcast stations that a DBS operator might not otherwise provide.

Part I of this article begins with a discussion of why the government might choose to "regulate" new media in the long shadow of the First Amendment by attaching conditions to the speech it promotes, rather than by risking classic First Amendment scrutiny of ordinary regulation. Part II reviews the recent subsidized speech cases, identifying a common preoccupation with the question of whether or not government speech subsidies have coerced, rather than simply encouraged, a speaker to communicate in a certain fashion. Against this doctrinal background, Part III discusses the history and structure of SHVIA and why governmentally bestowed copyright benefits may operate as speech subsidies. It concludes that, from the standpoint of the benefited speaker, the government's manipulation of the copyright law just as clearly constitutes a "subsidy" as an outright grant of funds or a tax exemption. Thus, the award of a compulsory copyright license to a satellite carrier ought to be treated like a speech benefit to which strings (i.e. carriage of local broadcast signals) have been attached. Part IV returns to the subsidized speech doctrine and suggests two modifications to allow courts to better assess the communicative impact of laws like SHVIA that are designed to achieve the traditional communications regulatory goal of more diverse speech. First, a coercion theory should take into account the process of compromise between industry and government, as well as among competing industries vying for marketplace advantage, that produced the speech exchange reflected in the law. Second, evaluation of the First Amendment impact of the speech exchange should include a frank consideration of whether or not the exchange is likely to add diversity to the information market.

Keywords: Satellite Home Viewer Improvement Act, First Amendment, subsidized speech, communications regulation, broadcast regulation, must carry, unconstitutional conditions

JEL Classification: K1, K2, K3

Suggested Citation

Goodman, Ellen P., Bargains in the Information Marketplace: The Use of Government Subsidies to Regulate New Media. Available at SSRN: or

Ellen P. Goodman (Contact Author)

Rutgers Law ( email )

217 N. 5th Street
Camden, NJ 08102
United States
856-225-6393 (Phone)
856-225-6516 (Fax)

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
PlumX Metrics