Derek Fildebrandt: The best thing Ottawa can do to help the media? Stop trying to help us

The news media in Canada is in crisis. Policy responses to date are failing to solve for the information that citizens need to make informed decisions about important issues and debates. The Future of News series brings together leading practitioners, scholars, and thinkers to imagine new business models, policy responses, and journalistic content that can support a dynamic future for news in Canada.

“The nine most terrifying words in the English language are: I’m from the government, and I’m here to help.” These words were spoken by Ronald Reagan to emphasize that the road to hell is often paved with good intentions. So much the worse when it is the government paving the roads. 

The Canadian legacy media cartel has been lobbying and begging the federal government for “help” for a decade now. Their first big rent-seeking win was the creation by the Liberal government of the media bailout, an expensive suite of programs that are mostly administered through the federal tax system. 

Dangerously, it created for the first time in Canadian history what amounts to a federal licencing system for journalism. Anyone who wanted in on the free money had to meet federal standards to be declared a “Qualified Canadian Journalism Organization.”

At the insistence of the organization that represents the legacy media cartel, News Media Canada sold its independence to the federal government in exchange for some cash. 

But it was obviously not enough. In fact, companies tethering their financial health to government largesse resulted in what corporatism almost always results in: dependence on the state. This dependence led the cartel to seek new and potentially larger sources of unearned income: a shakedown of Big Tech. 

Google and Facebook succeeded Craigslist and others in replacing the media’s monopoly over advertising with their own. Google in particular has been accused of using openly anti-competitive practices to monopolize the online advertising market. But News Media Canada didn’t ask Ottawa to do anything to restore competitiveness to online advertising; they asked it to forcibly give it a slice of the monopoly’s cake. They didn’t ask for anti-trust legislation but instead argued that Google and Facebook were “stealing” their content by…making their links available for readers to click on. 

This ass-backward thinking gave birth to the grossly flawed logic that would underpin Bill C-18, the Online News Act. 

The cartel and the feds would simply present the two big tech giants with a bill, and they would pay it. Such has always been the power of modern nation-states. What choice would they have? 

But like the legacy media, the federal government is still living in a bygone era where the state has almost unlimited power to coerce its will upon all. Unlike an American auto branch plant, Google and Facebook maintain no real physical assets within Canada for the government to coerce. 

Importantly, the cartel and the government both failed to recognize that Google and Facebook held all the cards. They may have eaten the media’s advertising lunch, but the transfer of value was not from the media to Big Tech (“stealing the content”), but from Big Tech to the media (making our content available to readers or customers”). 

As I put it in my pleading before the Senate on Bill C-18, Facebook and Google are the 21st century’s paperboys; delivering our content to readers. And no paperboy would pay the newspaper for the privilege of delivering the paper. 

Facebook made crystal clear while the bill was before Parliament that they would comply with it by blocking the news in Canada. No news, no payments. Google made similar threats in softer, more diplomatic language. 

But the feds damned the torpedoes and went ahead anyway, believing Google and Facebook would have no choice but to pony up. 

They were shocked when Facebook did exactly what it said it would do. Analytics show that it suffered no drop in traffic whatsoever. But the media sure took a hit with massive drops in traffic, with no silver lining. In particular, new entrepreneurial media start-ups took by far the biggest hit, relying as we did on Facebook to reach new audiences. 

Google held off on a quick move to block the news but made clear that it would do so unless Ottawa effectively re-wrote the legislation before the December deadline. 

And so this entire year, the prospect of losing a majority of our web traffic hung over the heads of the independent media like the sword of Damocles. The Western Standard, where I am the publisher, was forced to shelve major investment plans for expansion for an entire year, for fear that we would lose the two largest sources of our traffic and the most effective ways to build new audiences. 

Far from supporting journalism, the federal government forced us to not create new journalism positions. 

Late in the game, Ottawa came to the painful recognition that it had lost an all-too-predictable bad gamble. If Google followed the path of Facebook, the media would outright collapse. They had no choice but to make a deal, and Google held all the cards. 

It effectively surrendered to Google, getting a mere $100 million per year from them that is being put toward a media fund. After accounting for Google ending its existing agreements with the media, this is only about half what the cartel was promised. To Google, this was merely the cost of business, like paying a corrupt customs official at the Port of Shanghai. 

To make up for the disappointing loot, Ottawa doubled the generosity of the media bailout. 

Predictably, corporate rent-seekers like TorStar were wholly unsatisfied with all the new money, but they will inevitably die anyway. They are still dinosaurs in the online age. 

All of this has compounded the federal government’s misguided mission to prop up the dying (or dead) legacy media. By doubling the media bailout, they continue to make the innovative new media companies less competitive relative to the legacy media incumbents. 

By playing chicken and losing badly with Facebook, they have cut off a major source of traffic and audience growth disproportionally used by new media. 

All of this has had the effect of delaying the inevitable market forces that are shaping a new, financially viable media industry, making that industry more reliant on the state. 

And while the Liberals may be ideologically comfortable with regular businesses being reliant on the state, they continually fail to see the extreme danger to the freedom of the press by having said press reliant on the state. Any disagreement with the Liberals on this point is met with howls of “Trumpism. Disinformation. Conspiracy theories. Convoy.”  

No matter what the federal government does, it seems to make the media less independent and less financially sustainable. 

To those less charitably disposed toward the Liberals, a less independent media is seen as probably a feature of these policies, not a bug. 

But the Liberals very likely are genuine in their desire to see a more financially sustainable media industry. But even here, their efforts to “help” have been an unmitigated disaster of biblical proportions. 

Pierre Poilievre has pledged to defund the CBC if he comes to power, a move that would be positive from both press freedom and industry competitiveness perspectives. But even more urgently, he needs to scrap the entire regime of the Online News Act and media bailouts. 

The legacy media cartel would surely howl that it will die if he does so. But for the new trees to grow, die they must. 

The Future of News series is supported by The Hub’s foundation donors and Meta.