The Standing Committee on Canadian Heritage wrapped up its lengthy hearing on the media and local news last week with appearances from Facebook, Google, and the Globe and Mail (I appeared before the committee last month and my opening comments and review of the discussion that followed can be found here). The high profile witnesses sparked another round of debate over the ongoing troubles in the newspaper industry with intensifying criticism of the CBC’s emphasis on digital news services, including a new opinion section and its acceptance of digital advertising, which are both viewed as direct competition for the struggling private sector alternatives.
For example, Globe and Mail publisher Phillip Crawley told the committee that the CBC is the Globe’s largest competitor in the digital ad space. He expressed concern over the inclusion of opinion, which is viewed as further encroaching on newspapers’ turf, and pointed to the BBC’s approach, which faces government-backed restrictions on accepting digital advertising on its domestic websites. The CBC criticism has emerged as a common theme for several years with many media organizations and commentators arguing that CBC should not be in the business of competing with newspapers.
The CBC responded on Monday with a letter to the committee titled “limiting access to the digital public space is not in the public interest.” The CBC argued that given the struggles of smaller papers, its online presence is more important than ever. Further, it tried to downplay the significance of its digital advertising revenue, arguing that it amounts to $25 million annually, a very small share of the total digital advertising expenditures in Canada.
It is helpful to separate two issues: the CBC competing in digital news as opposed to it competing for digital advertising dollars. While some have characterized the CBC’s role in providing digital news as an unfair, publicly-subsidized competitor to private news services that increasingly rely on paywalls and subscriptions to generate revenue, the industry’s reliance on paywalls is precisely why the CBC should be offering a free, taxpayer-backed digital alternative. An informed electorate demands that all Canadians have access to reliable news and expert opinion without regard for their ability to pay for it. In a digital world filled with paywalls and concerns about fake news, the importance of a publicly-funded, freely available, trusted media institution is greater than ever and the CBC (now backed by hundreds of millions of extra tax dollars) is ideally suited to meet that need.
While the CBC should be responding to its audience with a strong digital news service, it does not follow that it should also compete for digital advertising dollars. As noted in the CBC letter, its total digital advertising revenues are relatively small (and they are even smaller – roughly $6 million – for the online news service) so the foregone earnings will not have a material impact on the CBC. However, there is a market effect of having the CBC compete for ad dollars that affects news organizations of all sizes. This includes large players like the Globe as well as smaller, independent media for whom a loss of thousands in advertising can be significant. An ad-free online service would better justify the public investment in the public broadcaster, make for an enhanced user experience, and remove the concern that the CBC is harming private sector alternatives by competing for advertising dollars.
The government just gave the CBC a $150 million taxpayer boost – six times its annual digital ad revenue – with the promise of much more to come. It would be entirely appropriate for Minister Melanie Joly and the Standing Committee on Canadian Heritage to attach a condition to the funding that encourages a robust digital presence for the public broadcaster but mandates that the news portion of the site remain ad-free.