Sean Speer: A disrupted legacy media model isn’t a market failure, it’s a market correction

Policymakers should, generally speaking, let the creative destruction of the market play itself out
Copies of Postmedia-owned newspapers the Vancouver Sun and The Province are displayed at a store in Burnaby, B.C., on Tuesday January 19, 2016. Darryl Dyck/The Canadian Press.

On Thursday, December 7, The Hub’s editor-at-large, Sean Speer, appeared before the House of Commons Standing Committee on Canadian Heritage on the state of the news media, the role of online technology platforms, and the future of news. His opening statement is presented here, with a lightly edited transcript published below. 

I want to thank the committee members for inviting me to participate today. 

I present to you in my capacity as editor-at-large at The Hub, an online Canadian news organization that I co-founded nearly three years ago. We publish a combination of opinion commentary, standard news reporting, and a series of podcasts. We’re philanthropically supported.  

Our audience size, content mix, and level of engagement are significantly growing. We view ourselves as an increasingly valuable part of the country’s news media ecosystem and a major contributor to its public policy discourse. 

As an organization, The Hub has generally opposed government intervention in support of the news media industry. I’d like to use my time here to set out how we’ve come to think about what’s occurring within the industry and how policymakers should respond. 

Journalism is clearly going through a process of transformation. Traditional business models have been disrupted by new technologies and the rise of online platforms like Google and Meta. 

This process of “creative destruction” has created a lot of destruction. It’s led to business rationalizations, layoffs, and even outright closures. 

But there’s also a creative dynamic of which The Hub is a part. New and emerging players are experimenting with different business models, content forms, and relationships with their audiences in order to figure out how to create sustainable businesses that are supported by the market broadly defined.

Most of these entities will fail. Some will succeed. Some will cover specific subject matters. Others will target geographical areas or particular points-of-views. Some will operate as for-profit businesses. Others will take the form of non-profits or even charitably-funded organizations. 

The process that I describe is complicated and uncertain. But it isn’t a market failure that necessitates large-scale government intervention. It’s a market correction that policymakers should, generally speaking, let play itself out.

It’s the same dynamic market process that has transformed other parts of the economy over time and ultimately contributed to the country’s progress and prosperity. 

Now, one might argue that news media is different. That it’s not the same as other sectors. It plays a more crucial role in our civic and democratic life and therefore should be treated differently. 

There’s something to that argument. We, at The Hub, believe passionately in the importance of reliable news and information in our democratic society. But we shouldn’t let our good intentions interfere with the process of market-led change. Doing so would effectively signal that the legacy business model is the only one capable of meeting our democratic needs. It’s ahistorical and fails to reckon with the exciting innovation occurring within the industry. 

That said, there may be certain areas where public policy can play a role to better enable the transformation that’s occurring in the market rather than a shaping role that tries to presume which direction the market should head. 

One example is to increase the Charitable Donations Tax Credit for Registered Journalism Organizations to the same level as the tax credit available for donations to political parties. It would be a logical step to recognize that both institutions—the media and political parties—have key roles to play in the functioning of our democracy. 

Another would be to make the subscription tax credit for Qualified Canadian Journalism Organizations refundable and increase its generosity to higher levels. 

The virtue of both of these suggestions is that they would follow the choices of Canadian consumers. They would be subjected, in that sense, to a market test rather than the diktats of government itself. 

As my time comes to an end, if I may sum up my comments: 

  1. It’s premature to conclude that we’ve reached a market failure that necessitates major government intervention. Doing so would take the onus off of the industry to figure out how to create sustainable journalism and impede innovation being led by independent outlets like The Hub. 
  1. The extent to which the government opts to intervene, public policy should be neutral and subordinated to consumer signals. I’ve put forward a couple of options but there are no doubt others. 

Let me conclude with this point: The Hub is currently running a series that we’re really excited about called The Future of News where we’re bringing different voices and perspectives—including some you’ve heard at the committee—to our pages to talk about how to move forward, and specifically how to create the conditions for a sustainable journalism sector.

I can tell you that after nearly three years at The Hub, we’re optimistic that entrepreneurs and markets are capable of creating sustainable journalism and would encourage policymakers to minimize their interference in that process. 

That approach would be in the best interest of journalism and I would argue in the best interest of our democracy. 

Thank you.

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