A flourishing, diverse media is essential to a functioning democracy. We have neither. An already broken model faces an existential crisis. Back in 1948, the media mogul Lord Beaverbrook told a royal commission on the press that he ran the Daily Express “purely for the purpose of making propaganda and with no other object ... I look at it as a purely propagandist project.” Today, most of the British press remains the plaything of media moguls who profit from a broken status quo.

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Ideas such as public ownership are popular with the public: a poll by one rightwing thinktank found that 83% back nationalisation of the water industry, as do more than three-quarters with regard to electricity, gas and the railways. The vast majority of people back higher taxes on the rich. Yet these are fringe ideas within most of the mainstream media, which marginalises those who support them.

Then there’s the daily whipping up of hatred and bigotry against benefit claimants, Muslims, refugees, migrants and trans people – helping to legitimise and fuel the prejudice and discrimination experienced by minorities. Both the Times – supposedly a reputable paper of record – and the Sun have been forced to correct false or misleading stories about Muslims: but by then the damage is done. Political reporting is too often trivialised, treated as a soap opera based in Westminster, rather than placed in a broader social or economic context. Financial dependence on collapsing advertising revenues inevitably ties newspapers to corporate interests: in one egregious example, the conservative commentator Peter Oborne resigned from the Telegraph after he claimed it refused to cover a scandal involving HSBC for fear of compromising its advertising revenue.

The media is also desperately unrepresentative of those it exists to serve, partly because of the decline of local newspapers, which offered a way in for aspiring non-privileged journalists; and partly because of the prevalence of unpaid internships and expensive postgraduate journalism degrees, two routes into the profession which are financially prohibitive options for most.

One government study suggested that, after doctors, journalists had the most privileged backgrounds across a broad range of professions. Minorities are drastically under-represented, and in one study in a randomly selected time frame in 2017, just a quarter of front page stories were written by women.

Advertising has migrated to internet giants such as Facebook, plunging the old media into economic crisis. In Britain, 228 local newspapers closed between 2005 and 2018, while the number of regional journalists is believed to have halved. That’s been accompanied by an explosion in the PR industry: from £9.62bn in 2013 to £14bn three years later. Too often, PR propaganda is written up as news, or what investigative journalist Nick Davies once called “churnalism”.

Facebook Twitter Pinterest ‘Ideas such as the public ownership of the railways, gas, water and electricity are very popular with the public – these are fringe ideas within most of the mainstream media.’ Photograph: Murdo Macleod/The Guardian

There are, of course, brilliant journalists in the media, including those courageously exposing injustices: take our own Amelia Gentleman and the Windrush scandal. It is the system at fault, not individuals. There are other ownership models, of course: the Guardian isn’t owned by a mogul, and its now million-strong supporter scheme is a source of revenue independent of advertisers. But the wider media system is broken.

How can we overcome this crisis to build a dynamic media ecosystem that informs and educates, holds the powerful to account, challenges myths, and creates an active, informed citizenry? This week, the government-appointed Cairncross review offered its suggestions, warning that a collapsing media threatened the “long-term sustainability of democracy”. It suggested that the drain of advertising to the likes of Facebook should be subject to a public investigation, while public interest news outlets should receive direct funding, and public interest journalism should benefit from tax reliefs.

But these suggestions are not ambitious enough. One possible solution is public subsidy for the whole media industry, whether or not it is for profit. There is state support for the media in both Norway and Sweden, and that doesn’t compromise the freedom of the press: they both top the Reporters Without Borders’ World Press Freedom Index. Yet that would rightly be widely opposed here. Why should failing for-profit news organisations be propped up by the state? And who would decide how the money is allocated?

Here’s another idea. The veteran US media reformer Robert McChesney has proposed that such a subsidy could be democratised. Every citizen would be given an allowance of $200 a year to donate to a single publication, or spread across multiple publications. It’s an idea that’s been further developed by British media activist Leo Watkins. The allowance could be funded by an annual tax on the advertising industry. To be eligible for funding, an outlet would need to be a not-for-profit cooperative – ensuring good terms and conditions for journalists – and would be forbidden from taking money from other sources, guaranteeing editorial independence. Media outlets would have to compete for support from citizens, incentivising them to listen to currently unrepresented voices. Such outlets could range from general news organisations at national or local level, to outlets catering for minorities, to sports or leisure pursuits. A thriving, diverse, genuinely independent media universe could be constructed from the bottom-up.

Sure, it’s a radical idea. But with the media in a death spiral – and with Britain’s print press the least trusted in Europe – a wide-ranging debate about where to go next is long overdue. Our democracy faces an existential crisis: but with imagination, it can be rebuilt.

• Owen Jones is a Guardian columnist