Legislating Prices for Legal Ads

What do you do when something costs too much?  You don’t buy it.  Or if you’re the state, you simply mandate a new lower price.

The State House of Representatives recently voted on H.B. 1876 to force newspaper media to charge lower advertising rates for legal advertising (i.e. legal notices that the state and local governments place, and are often require to place).  They were generous enough to only lower prices by 25% from the commercial rates. 

However legislating prices is the wrong policy.  Not only is it arbitrary and difficult to enforce, it only compels newspapers to raise prices on other advertisers.  Instead the state should consider the other option – not buy it. 

Currently the law requires public notices to be put into newspaper media, however newspaper readership has long been on the decline: today only 13% of Americans buy a daily newspaper.  Lawmakers should consider legislation which places legal notices online and/or other forms of media, such as “shoppers” and community papers.

Such measures would be cost-effective.  A 2006 Penn State Study reports that state entities could save 70 million over 3 years by switching to online public notices.  The primary beneficiaries would be school districts and municipalities, especially during this time of recessionary restraint.

Lawmakers should look to competition and online transparency to resolve expensive legal advertising rates, rather than extending and tinkering outdated policies.