News Media Canada (NMC), the lobby group representing the major newspaper publishers in Canada, released a new report yesterday calling for the creation of a government digital media regulatory agency that would have the power to establish mandated payments for linking to news articles, establish what content is prioritized on social media sites, require companies to disclose algorithmic changes, hand over moderation control of content on news stories to the publishers, and potentially issue fines in the hundreds of millions of dollars. Canadian Heritage Minister Steven Guilbeault has made “get money from web giants” his top legislative priority and has expressed support for mandated licensing for links.
The report, which inaccurately describes the ill-advised Australian approach to licensing links to news articles, is notable for many of the things it does not say. For example, one could easily read the 41 page report and not realize that companies such as Google and Facebook do not publish full versions of news articles without a licence. Indeed, rather than “taking” content, links to news articles are posted by their users, which then send interested readers back to the original source. In fact, the media companies themselves are typically responsible for posting their own articles and granting a licence for their use.
Moreover, the report includes excerpts from an opinion that concludes the sector qualifies under the USMCA’s cultural industries exemption. While that has never been in dispute, it neglects to mention that the same agreement would give the U.S. the right to levy tariffs in response to such a system. The NMC concludes that the measures would raise over $600 million annually, but the U.S. would be entitled to levy retaliatory measures of “equivalent commercial effect” in response to Canadian policies that would violate the trade agreement if not for cultural exemption. That cultural poison pill can be levied anywhere, meaning that the U.S. could target the dairy or steel industries, who would ultimately pay the price for the mandated levies.
Yet the most problematic aspects of the report isn’t what it doesn’t say, but what it does. For one thing, it incorrectly characterizes the Australian approach by suggesting that it includes expanded intellectual property rights. The NMC report states:
Our recommendation is to follow the lessons learned and path outlined in Australia to restore competitive balance in market conditions, which includes:
Expanding the intellectual property rights publishers have over their content (and user data) and requiring platforms license such content before using it
But the Australian approach is not tied to intellectual property rights. Rather, it is grounded in competition law, not intellectual property law. By conflating the Australian and French approaches (France has pursued a press publishers’ right), the NMC does not even appear to fully understand the policies it is recommending.
Moreover, the NMC calls for a massive regulatory system that would hand the government dramatic new powers over the news and digital media sectors in Canada. The principle of firmly rejecting government regulation of the news sector is summarily dismissed for the sake of a payout from companies that already drive considerable traffic to Canadian news organizations. The proposal – which is remarkably endorsed by the CBC – includes the following:
- Establish a new federal government regulatory agency with responsibility for overseeing Internet platforms
- Require platforms to pay licensing fees for linking to content. Failure to pay could result in fines of millions of dollars (the NMC points to ten percent of Canadian revenues)
- Require platforms to prioritize original news content. In other words, a government agency would dictate which news stories get priority on Internet platforms
- Require Internet companies to provide notice for any changes to algorithms affecting publishers
- Hand over moderation of user comments to publishers
When combined with Guilbeault’s other plans for the Internet, which include granting the CRTC additional powers to regulate Internet streaming services, the vision is to establish a heavily regulated Internet space in order to get money from Internet companies. There is surely a need for regulatory reforms when it comes to the Internet and I wrote recently about digital taxation and the effective application of competition laws. But the NMC reforms are not about tax or marketplace fairness. Rather, they are the product of intense domestic lobbying by Canadian sectors long accustomed to regulatory protection. Should the government agree, the outcome is likely to be increased costs for consumers alongside less access to news as social media sites respond by blocking the sharing of news articles, thereby harming both media organizations and the broader public.