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.
Negative Externalities
David Friedman often points out that more education can improve peoples' abilities to seek rents, too. So, it isn't clear what the net effect even is for public policy issues.
That aside, journalism is a lousy way to learn anything. Aside from David Warsh, how many journalists even understand the basics of economics?
Proust's take on newspapers
I wanted just to glance at Le Figaro, to proceed to that abominable and voluptuous act known as reading the paper, thanks to which all the miseries and catastrophes of the world during the past twenty four hours -- battles that have cost the lives of fifty thousand men, crimes, strikes, bankruptcies, fires, poisonings, suicides, divorces, the shattering emotions of statesmen and actors alike -- are transmuted for our own particular use, though we are not ourselves involved, into a daily feast that seems to make a peculiarly exciting and stimulating accompaniment to the swallowing of a few mouthfuls of coffee brought in response to our summons. No sooner have we broken the fragile band that wraps Le Figaro and alone separates us from all the miseries of the world, and hastily glanced at the first sensational paragraphs of which the wretchedness of so many human beings "forms an element," those sensational paragraphs the contents of which we shall later retail to those who have not yet read their papers, than we feel a delightful sense of being once again in contact with that life with which, when we awoke, it seemed so useless to renew acquaintance.
Marcel Proust, "Filial Sentiments of a Parricide"
Snopes
Is there something that can be said about factcheck.org and snopes in this vein?
Clearly there is a market for these research/news services, Specifically business ventures that serve as low content, low commentary interpreters and collators of publically available knowledge.
Media 2.0 has easy access to public data (through polls and web data dumps, etc), easy access to verification (through reputation based sites that do that), and easy commentary (through blogs).
Everything is there, it's just not all in one place anymore. This is especially lovely when bloggers can be expected to link to source materials rather than just dumping their interpretation out there.
My .02c