New York CNN Business  — 

There is a “market failure” in the local news business, a new report suggests, because “even though Americans tend to view local news as a community asset, most are not personally helping to keep it viable.”

The report by the Knight Foundation and Gallup comes with both encouraging and discouraging signs about the state of local news.

“Americans take pride in their local newspapers,” the researchers said after surveying thousands of people on the web.

A whopping 86 percent of respondents said that everyone should have access to local news, regardless of whether they pay for it.

But producing the news is expensive – and “just one in five Americans have supported local news in the past year by subscribing to, donating to or purchasing a membership to a local news organization,” the researchers found.

Print newspapers across the country have been shrinking and shutting down due to changes in consumer behavior, shifts in advertiser spending, and other factors. Digital upstarts are filling some, but not all, of the gaps.

And that’s causing growing concern about the information needs of communities.

“It’s time to ask searching questions of ourselves as a society about how much we value local news, and what we’re prepared to do to ensure its future,” Sam Gill, vice president for communities and impact and special adviser to the president at the Knight Foundation, said in a statement about the new report.

Ideas include new digital subscription models, fund-raising campaigns, and government subsidies.

The report found that “Americans mostly oppose local news organizations receiving government funding — with six in 10 opposed to federal (66%) or local (60%) government subsidies.”

Some of the findings are related to distrust of the media, which is especially pronounced among Republicans. Knight and Gallup found that Democrats are much more open to government subsidies for news than Republicans and independents.

The survey also affirmed other recent research that showed a lack of public awareness of the cash crunch many local news outlets are experiencing.

“One of the challenges facing local news is that Americans still believe local news is doing well financially,” the report stated.

The researchers conducted experiments with different groups of respondents.

“When people are told about the financial situation facing local newspapers or the ways in which local journalism supports a healthy democracy, they were significantly more likely to donate to a nonprofit organization that supports local journalism (54%) than were those who did not get such information (40%),” they wrote.

The conclusion: “Raising awareness about the financial health of the local news industry” could have practical benefits.