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Michael Geist: Government salvages C-18 with Google deal—but it’s hardly an example of good policy

Commentary

This week, the government announced that it reached agreement with Google on a deal that will ensure that news links are not blocked on the search engine and that the company pays $100 million to support the news sector in Canada. To be clear, this is good news for all given that the alternative was bad for news outlets, the government, Canadians, and Google. Indeed, over the past few months in discussions with representatives of media outlets, the consistent refrain I heard was that there had to be a deal. The harm from Facebook and Instagram blocking news links was taking a significant toll with lost revenues, lost traffic, and lost deals, meaning that something had to be salvaged from Bill C-18.

It turns out the way to salvage the Bill was essentially to start over by tossing aside most of the core elements in it in favour of a single payment by Google negotiated by the government on behalf of the news sector. What is left is a $100 million payment into what amounts to a fund to be managed by the news sector itself. Google has agreed to pay $100 million to a single collective (there will be a battle over which collective will represent the news sector) and the collective tasked with allocating the money based in large measure on forthcoming regulations.

The broadcast sector will remain the big winner. (Initial speculation that the CBC might be excluded from the agreement was quashed yesterday by Canadian Heritage Minister Pascale Saint Onge during her parliamentary committee appearance.) Allocating the majority of the money to broadcasters presumably helps explain why the government announced a $129 million bailout that expands the available money in the labour journalism tax credit, for which only print and digital publications (known as Qualified Canadian Journalism Organizations) are eligible.

While this is a far better outcome than the blocked links, this is hardly an example of good government policy. First, the loss of Meta from the system not only dropped the estimated benefits of Bill C-18 by $50 million, but the lost links and deals mean that there are actual losses that run into the tens of millions of dollars. Indeed, it was only a few months ago that the government said it estimated Google’s contribution alone at $170 million. There was some sense that the extra $70 million was designed to offset the Meta losses, but that was something Google unsurprisingly was unwilling to cover.

Second, the Google deal is largely what was available over a year ago. The government told the Heritage Committee its estimates were $150 million in revenue, divided two-thirds to Google and one-third to Meta. Google later indicated it was comfortable with the government’s estimates, but preferred a single-payer fund model that provided cost certainty. That is ultimately precisely what Google obtained, suggesting that months of uncertainty, reduced investment, and risks to Canadian news outlets could have been avoided.

Third, the reality is that Bill C-18 is now barely at break-even. Google’s $100 million is not all new money. The company was already paying millions in deals for its Google Showcase program with many Canadian news outlets. Those deals will now be cancelled with the single payment replacing the other contributions. There is obviously some new money—particularly for broadcasters—but it isn’t the full $100 million, and it must be offset by the losses sustained by the exit of Meta.

Fourth, the government was ultimately able to strike the deal largely by changing the law, albeit through yet-to-be-released regulations. After claiming for months that it would not get involved in negotiations and specifying in considerable detail what any deals between platforms and media companies needed to look like, the government dropped all of that and simply negotiated the best deal it could get on behalf of Canadian news outlets. The risks to the independence of the press are significant, though the fact that the law no longer functions as advertised might well open the door to trying to negotiate something with Meta that brings news links back to Canada.

I’ve been asked several times in recent days if the Canadian approach will be a model for other countries. While I suspect that many may be tempted by the prospect of new money for media, the Canadian experience will more likely be a cautionary tale of how government and industry ignored the obvious risks of its legislative approach and were ultimately left desperate for a deal to salvage something for a sector that is enormously important to a free and open democracy.

This column originally appeared on michaelgeist.ca.

Rudyard Griffiths: The News, brought to you by Big Tech and big government

Commentary

The last two weeks have seen a financial bonanza of epic proportions showered on newsroom operators across Canada.

The mana from heaven began with the Fall Economic Statement. Buried in its voluminous analysis of the country’s growing debts and deficits were a few lines of text that increased, by more than a hundred million dollars, the government’s already multi-hundred-million-dollar scheme to directly fund journalists. With a stroke of her pen, the finance minister topped up the per journalist wage subsidy to $29,000 for every “ink-stained wretch” making a cool $85,000 a year.

Then, not a week later, Google and the government announced their joint climbdown over the Online News Act that would have forced the world’s largest online platform into a binding arbitration process to “compensate” news providers for their content. In turn for being able to arrange its funding through a single association representing all eligible news organizations in Canada, Google has agreed to contribute $100 million annually to the production costs of news content. A back-of-the-envelope calculation suggests that if this subsidy is distributed based on the current headcount of newsrooms, news organizations could receive in theory a further $12,500 in direct subsidy per journalist from Google.

So where does this flurry of new subsidies leave the Canadian news industry?

On the positive side, it means Google isn’t going to purge its platform of news content. This would have been a horrible outcome both for Google users looking for more, not less, accurate news and information and for news outlets who could well have seen the traffic on their website drop by as much as half. In such a scenario the advertising revenues that news providers generate on a cost-per-click basis would have plunged precipitously setting off a doom loop for the industry and no doubt more calls for more direct government support.

More worrying, these announcements likely push the newsrooms of print and digital news providers (think The Globe and Mail or Toronto Star) to the point where fifty percent of the staff costs of their news operations are funded by direct and indirect government supports.

This represents a full doubling of the pre-FES status quo, an amount that arguably warrants a sustained public debate about the threat that these large subsidies represent to the independence of news organizations. It simply will not be credible to readers and viewers for editors of mainstream news outlets to puff their chests and assert that journalistic standards insulate them from the results of their owners’ conspicuous rent-seeking.

The source of the subsidies matter. These monies are coming from arguably two of the most powerful groups in society today: Big Tech and big government. For news outlets to argue that we ought to take them at their word that they will hold these behemoths to account when half or more of the salaries of the very reporters they assign to cover the federal government and Google will be paid for by the very same is a jaw-droppingly audacious contention. 

It is important to acknowledge the public opinion backdrop against which these extraordinary industry supports are being extended. As Richard Stursberg wrote yesterday for The Hub’s Future of News series, our collective trust in the media is in free fall. Only 39 percent of English Canadians trust most news most of the time, down from 58 percent only five short years ago.

Without public trust, it is not clear what news will in fact become. Arguably in an era where “The News” isn’t invested with some kind of shared belief that it is more often than not factual, unbiased, and in the public interest, it simply becomes information, open to endless contestation, debate, and deconstruction. This demonstrably isn’t what a deliberative democracy like ours needs to thrive. 

In the last two weeks, thanks to significantly increased direct and arranged government supports, we have taken another large step towards an information dystopia. We have done little to anything to address the implications of declining public trust in the news. Other ways to support journalism have been largely ignored. The news industry seems mostly disinterested in these issues and ever more focused on government subsidies.

The Hub is committed to continuing to debate what is happening to journalism in Canada and put forward alternative solutions and ideas. This is a hugely challenging public policy issue. Real thought and attention focused on this problem is urgently needed. Richard Stursberg provided a novel idea yesterday (i.e. news outlets should break up with social media), and Peter Menzies last week provided a series of constructive suggestions as to how to rethink government support with the idea of weaning the press off direct subsidies.

We will keep reform-minded ideas coming via our Future of News series, and hopefully a certain government in waiting is paying attention, because this policy challenge isn’t going away and issues that are at the heart of our democracy are in play.