Even before we get to that point, let's take them to task for (A) conflating "journalism" with the print press:
Unless Congress embarks on far-reaching change in public policy to maintain the viability of journalism as it evolves online, we will soon find ourselves with the remnants of a broken industry incapable of providing the knowledge necessary to manage life in a complex world. Journalism does not need a bailout, but it does need a sort of "recovery act" to bring the legal landscape in line with today's publishing technologies.
(B) disingenuously associating "safe-harbor" provisions with the failure of traditional newspapers:
...The law of the Internet was written for the technology companies seeking to protect their growth in a once-fledgling medium, not for the journalism outlets that are now handicapped trying to survive there. Regulatory reform is needed because the playing field has become so uneven.
The Internet innovators that have thrived online enabled their own success as early as 1996 by securing immunity from defamation and other liability caused by user postings on their sites. ...It is unrealistic to demand new business models from the press without giving it the legal tools to succeed.
and (C) trying to frame voluntary, simple access controls as a burdensome "opt-out" regime:
But Google's products (and profit) would look a lot different if, for example, the law said it had to obtain copyright permissions in order to copy and index websites. Search engines have instead required copyright holders to "opt out" of their digital dragnets, and so far their market power has allowed them to get away with it.
Here's the reality of the situation. If a newspaper (or a web site!) does not want Google to index its pages, it can do so in a simple fashion. Google's search engine will respect their request.
Suppose book publishers demanded that libraries negotiate agreements with them before creating card catalogs. Or before reviewers summarized a book. Would we put up with special pleading in that case? Do the authors of a bibliography require permission of the publishers of articles they cite? If you provide content free to all visitors, there are good policy reasons to prohibit you from retroactively trying to claim that there are some uses of that content you didn't intend to take place.
My primary use of Google is not news. It's technical information. (But sometimes the line is blurry.) How do I benefit if Google needs permission from each and every content provider on the Internet before indexing its pages? If this is a good policy position, why restrict it to "news"?
So their first recommendation is absolute bullshit.
(1) "Publishers should not have to choose between protecting their copyrights and shunning the search-engine databases that map the Internet. Journalism therefore needs a bright line imposed by statute: that the taking of entire Web pages by search engines, which is what powers their search functions, is not fair use but infringement." Why shouldn't publishers have to choose? If they don't want Google using their content, they don't have to let it. Try negotiating a better deal, you don't need extra law to back you up.
Let's proceed to the ones that are merely horrifically bad policy:
(2) "Federalize the "hot news" doctrine." AKA copyright facts. Just because you worked hard to establish a fact doesn't mean other people should be prevented from knowing and reporting that fact. You know what? In the Internet age, people are pretty good at linking to the original source. Much better than your average AP reporter is at citing his sources.
(4) "Use tax policy to promote the press... Congress could provide incentives for placing ads with content creators (not with Craigslist) and allowances for immediate writeoffs (rather than capitalization) for all expenses related to news production." A typical excuse for a failed industry--- "the tax code is unfair to us" or "we need subsidies to survive."
Those Craigslist dollars are not coming back. Many ads are free. Also, online job search is so much vastly superior to newspaper job search that even 100% free will not bring them back. Newspapers simply cannot expect to pull in classified revenue any more.
(5) "Grant an antitrust exemption. As noted in the Kerry hearing, publishers need collective pricing policies for their websites to finally break out of the expectation of free content that is afflicting the industry." Bad public policy, worse economic reasoning. Merely because news creators could collaborate does not imply that they would. We had newspapers and magazines that tried paywalls--- guess what? Free distribution won. Again, if it's good policy for newspapers, why not other areas? Air carriers complain constantly about competition keeping their prices too low to survive.
The only one I can sort of agree with is (3) "Eliminate ownership restrictions. Media insolvency is a greater threat today than media concentration. Congress should abolish caps on ownership of broadcast stations and bars on newspaper and television ownership in the same market." But the problems of newspapers isn't that they can't coordinate with TV news. Nor have mega-mergers of failing industries proven a key to turnarounds.
Assignment for the Bruces: Go read "The Innovator's Dilemma", plus some basic econ texts, and report back. Also try to think hard about what "free press" and "free speech" really mean.