C-18: What we learned from the Australian News Media Bargaining Code

December 5, 2022

The Australian Finance Minister’s overdue anniversary review of the groundbreaking News Media Bargaining Code (NMBC) gives Canadians some welcome pointers on how to think about, improve or critique our Bill C-18, the “FaceGoogle” Online News Act.

The Report does two things well, the first being an evaluation of how well the Australian legislation was implemented. The other is that Finance Minister (‘Treasurer’ in Oz lingo) Jim Chalmers unapologetically backs the Code as an anti-oligopoly law and downplays using the Code as a tool for reshaping news journalism. Both points ought to be helpful to Heritage MPs who are mid-way through amending C-18.

The Treasurer neatly sums up the goal of the NMBC, also that of C-18:

The Code aims to address bargaining power imbalances to ensure that news businesses receive fair remuneration from digital platforms for the value generated from their content.

In broad terms, the Code therefore aims to ensure that digital platforms remunerate news businesses where they generate more value from news content than the business creating this content obtains from its distribution via the platform.

The practical lessons learnt by the Australians are limited by the ‘non-designation’ route chosen by Facebook, Google and 34 news businesses in favour of reaching voluntary agreements, reportedly valued at $190M. This meant the Australians had no opportunity to test the Code’s formal bargaining and arbitration scheme.

The Australian government’s decision to confer its blessing on the voluntary agreements, and so grant ‘non-designation’ status to Facebook (for three-year agreements) and Google (for five-year agreements), courted controversy because Facebook stiffed two reputable news organizations, the Special Broadcasting System (similar to our OMNI TV) and the investigative news site The Conversation. Additionally, radio stations were shut out although that hasn’t attracted much attention.

We don’t know what happened exactly. The two news outlets professed bewilderment. Google and Facebook said some Australian news businesses had unrealistic expectations. The Treasurer’s narrative suggests that after four months of bargaining Facebook ran out of money it was willing to spend on settlements and the two outlets fell victim to circumstances. 

At least as far as Facebook was concerned, by the summer of 2021 the Treasurer was on the spot to decide whether, as Menlo Park surely hoped, it had done enough to meet the statutory test of non-designation by making ‘a significant contribution’ to Australian news journalism. The Treasurer at the time, Liberal Josh Frydenberg, said it had.

Despite the public outcry supporting the excluded news outlets and calling for the revocation of Facebook’s exemption from formal designation, nothing in this Report suggests the new Treasurer, Labour’s Chalmers, thinks any differently than his predecessor.

The very idea of Facebook or Google doing ‘just enough’ to avoid designation is what keeps CEOs of Canadian independent news businesses awake at night. The authors of C-18 have done a decent job of addressing that concern by writing in detailed criteria for the Canadian “exemption test” as well as putting the decision in the hands of the CRTC rather than federal cabinet. I am thinking especially of the legal text in section 11(1)(a)(vi) requiring deals with a diverse range of news outlets:

(vi)…. they involve a range of news outlets that reflect the diversity of the Canadian news marketplace, including diversity with respect to language, racialized groups, Indigenous communities, local news and business models;

Another implementation lesson from Australia impacts the Canadian debate over the scope of ‘eligible news business,’ in particular the line between legitimate news outlets and citizen-journalists or opinion sites run by political partisans.

In Australia, the Competition Commissioner turned away twelve of the 46 applicants for official status as news organizations (regrettably the Report only lists those who were approved). The Treasurer acknowledges in his Report that some applications were ‘opportunistic.’ 

On that point, an interesting feature of the Australian Code that Bill C-18 has not replicated is the NMBC’s requirement that an eligible news business brings in at least $150,000 (AUS) in annual revenue. That’s based on the plausible theory that no one can run a legitimate news business on anything less. 

In Canada the drafters of C-18 chose instead to draw the line based on a number of arm’s length employed journalists (two) although that was watered down last week by Heritage MPs to include proprietor-journalists and employed family members. 

The Treasurer’s Report also emphasized, anecdotally, that several news organizations went on a hiring binge adding more journalists with the settlement monies. 

He dismissed any criticism that news organizations might spend those funds on paying down corporate debt on the grounds that less debt will increase the sustainability of those news organizations in the long run. It’s an interesting policy argument although its chances of mollifying Canadian critics of the debt-encumbered Postmedia receiving C-18 funds are zero. On the Kelvin scale.

The other major theme of the Report might be too policy-focused for some, but it perfectly anticipates the partisan politics over C-18 on Parliament Hill.

The Treasurer is impatient with criticism that the NMBC has not done more for small independent media outlets. 

In his own words:

While some stakeholders raised concerns about the Code’s impact on competition and media diversity, the objective of the Code is to address bargaining power imbalances so as to ensure news businesses receive fair remuneration from digital platforms for the value their content generates. It is not designed to redistribute resources across the news sector or to guarantee that all news businesses receive funding. Other policy and funding tools are available to achieve these objectives.

Another way of putting it is that the NMBC exists to correct a market imperfection in news monetization caused by FaceGoogle’s oligopoly power over advertising and distribution to the mass audience in Search and Social Media. 

As a competition remedy, the NMBC checks abuses of market power between platforms and news organizations, it does not subsidize news businesses, no matter how deserving. Any subsidies lay elsewhere in the realm of media policy. Chalmers’ Report includes a long list of government subsidies available to public broadcasters and small publications. 

If this sounds anything like the Canadian government’s rationale for C-18, it’s no coincidence. But unlike the Australian NMBC which was supported by the major political parties, Canadian Conservatives do not support the Bill C-18. They seem to have found their wedge by championing one-journalist news outlets whose C-18 pot of gold they say is about to be pillaged by the CBC, Bell Media and Rogers (but not Postmedia, strangely enough).

Like the Australian Treasurer, our Heritage Minister Pablo Rodriguez hastens to point out his own list of federal subsidies keeping small Canadian publishers afloat that will continue to be available no matter which side of the eligibility line they fall under C-18.

But that’s not to say that C-18 is agnostic about which news organizations pry loose compensation from the Platforms. As noted above, the bill’s ‘exemption’ criteria requires Facebook and Google to make deals with a diverse range of news outlets.

Yet all of this parsing of C-18’s eligibility rules may be policy navel gazing. 

C-18 favours a pragmatic approach to compensation, perhaps too much for some, by incentivizing Facebook and Google to decide which news organizations will find themselves in the ‘significant portion’ of outlets that get deals, and how rich those deals are, subject to the CRTC’s authority to approve the exemption. 

The platforms will in turn wash their hands of unpleasant decisions by encouraging small outlets to join one of the bargaining coalitions authorized for news organizations under the Bill. The platforms will then negotiate a lump sum with each coalition and leave it to news organizations to divide the spoils among themselves. 

If any news outlet gets the short end of the stick, and we can expect some will at least think they did, expect a CRTC hearing to sort it out.

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