I wonder, Stan, from your description of the problem whether the parallels to public education aren't informative here. Consider your statement:
The current business structure of the news doesn’t take externalities into account. There are indeed substantial costs involved when people are not as well informed. But from a public policy perspective, how do you estimate, let along capture, those costs?
There is a belief that I am better off as a citizen if you are educated as opposed to uneducated. The rationale is that an educated person can make better choices and better contribute to democratic self-government. We describe education this way as something that happens largely in the pre-adult phase. Doesn't it strike you as odd that we spend all that money on education so that people will have the capacity to be good citizens and then the choices they make about what programming they will favor in adulthood suggest that they have almost no interest in using that capacity?
If we believe this notion of positive externalities about education, then we should probably believe it about information production. In moving to the new arrangement, in which information production is less of a for-profit business and more of a not-for-profit business, I think we will face the same issues as we do in public funding of education. Specifically, public funding has resulted in government production of education and hostility toward and financial disincentives for private alternatives. The same outcome for information production would not be desirable.