The Logic is a Toronto-based news startup that focuses on the innovation economy. Launched in 2018, it has attracted some great reporters with a subscription-based business model that starts at $299 per year. I’ve been a subscriber for several years, dating back to when it began providing extensive coverage of the Waterfront Toronto – Sidewalk smart city project and I was serving as chair of the Waterfront Toronto Digital Strategy Advisory Board. The site, which tends to produce one or two new articles per day, uses a hard paywall as nearly all articles – other than an occasional Letter from the Editor – can only be accessed by paying subscribers.
In addition to subscription revenue, The Logic licenses some content to Postmedia (which happens to be one of the lead lobbyists for the bill and a strategic investor in The Logic) and has also qualified as a Qualified Canadian Journalism Organization (its inclusion is cited as evidence that a broad approach is taken when assessing applicants), meaning that it benefits from the Journalism Labour Tax Credit, which covers 25 percent of its qualifying labour expenditures. It also qualifies for Digital Subscription Tax Credit, which creates an incentive for subscribers, who get a tax credit with their subscription. Taken together, the public has likely provided The Logic with hundreds of thousands of dollars in support through government programs, though access is limited to those willing to pay a subscription fee similar to that found at many daily newspapers.
David Skok, The Logic’s founder and CEO, has emerged as a go-to voice in favour of supporting Bill C-18, which mandates payments from Internet platforms. He regularly appears on panels (here and here) and this weekend published a Letter to the Editor, which he titled Rebutting Critics of the Online News Act. Since I was one of the critics cited, I thought I would respond. Skok says that this isn’t a solution he initially favoured, but now feels compelled to support to remain competitive. The piece raises several issues – for example, he dismisses concerns about press independence even as he implicitly acknowledges the issue by noting his own “potential journalistic conflict of interest” – but much of his argument seems premised on gaining greater transparency in the deals between Internet platforms and media companies. He says Internet companies already pay for news and that a level playing field requires transparency.
Yet the lack of transparency in the deals – which is a concern – is neither solved by Bill C-18 nor sought after by many Canadian media organizations. I’m not sure what bill Skok has been reading, but Bill C-18 doesn’t require public disclosure of the terms of the agreements and effectively encourages private deals subject to CRTC approval. At best, the CRTC would be required to disclose who qualifies and participates in the process and require an independent auditor to release an annual report on the impact of the agreements, including their total commercial value. Simply put, if transparency of the actual agreements is Skok’s goal, he should be criticizing the bill.
But beyond the limits of the bill, the reality is that many Canadian media organizations don’t actually want to disclose this information. Watch this debate on the Future of News, where former Torstar CEO John Boynton is asked about transparency and he hedges by noting that these are agreements between commercial entities. In other words, many in the industry would prefer to keep the information confidential too. Indeed, for all of Skok’s professed desire for transparency, he has provided no details on his efforts to strike deals with the Internet platforms, which he said last year were “unproductive” even as companies of all sizes were finding common ground.
Skok also takes aim at claims that the bill does not feature a link tax (he also oddly assures that the bill will only affect Facebook and Google, which is questionable advice when the industry is abuzz about how everything from Twitter to LinkedIn to Apple could be caught). Skok seems to base his argument on the notion that individual links are not compensated and that the money isn’t strictly a “tax” because it doesn’t go into the public purse. However, the bill’s scope is even broader than individual links to articles, since it covers facilitating access to news. This might not result in a per-link charge, but the payments must be based on something and links are a well established metric that have been brought within scope of compensation by the bill with Canadian Heritage Minister Pablo Rodriguez saying they have value worthy of compensation.
With all due respect, it seems to me the question left unanswered in Skok’s piece is why The Logic in its current business model should be entitled to any payment at all from the Internet platforms. There is no reproduction of any articles and even links do not lead to an accessible news article. Given that there is no reproduction and no access to articles without a subscription, what is the value in need of compensation? At best, The Logic might argue that the content of its articles are indexed by search engines. Yet that indexing takes place at its request and if compensation is required simply for indexing content, then every website can make the same argument that it too is entitled to some form of payment and the very foundation of the Internet is placed at risk.