February 20, 2023
Senators sitting on the upper chamber’s Transportation and Communications Committee gave us a sneak preview of their opinions on the Online News Bill C-18 at Second Reading on February 7th and 9th.
The sponsor of C-18 in the Senate is Peter Harder of the Progressive Senate group. His lengthy resumé includes stints as chief of staff to Joe Clark as Leader of the Opposition and the Liberal Government Representative in the Senate.
The other dramatis personae of the debate include familiar faces from the Senate’s hearings on Bill C-11: Conservative point-person Leo Housakos, former CTV News host Pamela Wallin, and the two Independent Senators (both former journalists) who co-authored a key C-11 amendment, Paula Simons and Julie Miville-Dechêne.
As described in several MediaPolicy.ca posts, the policy idea behind Bill C-18 is that government should intervene in the highly concentrated marketplace of online news distribution and force Google and Facebook to pay license fees to news publishers and broadcasters.
Once the Committee begins deliberations on C-18 in late March, expect the Conservatives to offer tightly scripted messaging carried over from the Commons Heritage Committee: that neither the CBC nor fat cats Bell CTV and Rogers should be compensated by the Big Tech platforms for their news product (but Québecor’s TVA and Postmedia should).
And if the C-11 debate is a guide, get ready for combat by metaphors: Senator Housakos has already suggested that compelling Google and Facebook to make compulsory license payments to news publishers is like Uber drivers demanding a cut of a restaurant bill for connecting diners with restaurant owners. (If you are confused by that metaphor, so am I).
Miville-Dechêne’s Second Reading speech expressed restrained enthusiasm in support of the Bill, her first choice would have been requiring Google and Facebook to finance a single source News Fund (ditto, MediaPolicy.ca).
Simons on the other hand ran the skull and cross bones up the mast, offering almost every policy objection to C-18 available, beginning with Facebook’s claim that it doesn’t benefit financially from hosting news content (Simons also opposes the federal government’s QCJO subsidies to journalist wages).
The best argument she marshals against C-18 is the possibility of Google or Facebook acquiring undue influence over newsrooms once licensing payments begin to flow (or more precisely ‘flow more,’ as there are already some voluntary licensing agreements in place).
As a rule Simons (and several of the other Senators) bring a refreshing plain-speaking to policy debate. But their credibility as former journalists comes with a special responsibility to support the Bill or else offer a reasonable alternative.
One such alternative is the elimination of any government intervention to save news journalism. In that scenario, government denies all subsidies or regulatory supports, forcing news outlets to ‘adapt or die,’ and hold your breath for whatever kind of news journalism arises from the ashes of creative destruction.
If Senators have the sang froid for that gamble, we will need their plain-speech on the market-based business model they envision.
And what could that look like? No one contests that the advertising model of funding news journalism has been permanently reduced to a supplementary revenue stream. So what then?
Going all-in on subscriber-pay is the most desirable option of course. But after a decade of experience in the unregulated US market, only niche journalism (akin to magazines catering to a narrow demographic of loyal customers) or continentally-scaled newsrooms of three to six million subscribers (the New York Times, Washington Post or Wall Street Journal) have established themselves as sustainable businesses that are independent of the largesse of billionaires. It’s not a solution for the mass market of regional and local audiences who won’t pay for news.
Another model is relying upon the patronage of media barons and philanthropists.
That can work reasonably well, the Thomson-owned Globe and Mail (200,000 paid subscribers) being a case in point.
It also can work reasonably badly where the media baron is a political actor or a political action committee.
Needless to say, civic-minded billionaires willing to lose money are in limited supply and are not a business model.
Even grants from well-intentioned philanthropists (with expectations) are complicated, more of a supplement than a business model for core news coverage.
Without a compelling market solution, Senator Simons appears to advocate for refundable federal tax credits for subscribers and businesses that advertise in Canadian publications.
It’s an attractive policy prescription. The Liberals introduced a modest subscription subsidy in 2019, worth a $75 refund on $500 of subscription expenditures. Thanks to Revenue Canada’s unhelpful disclosure practices, we still have no data on the program and we have no behavioural evidence as to whether it generates new subscriptions.
As for federal subsidies to advertising buys, our Income Tax legislation already permits full write-offs of those expenses (for print or broadcast but not online news).
The further tax measure mooted by the Senator (she attributes it to Vivek Krishnamurthy of the University of Ottawa) is for government to give money to private businesses so they can patronize the media of their choice.
You see how hard this is.
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