The government released its draft Bill C-18 regulations on Friday ahead of the Labour Day weekend, but ironically those regulations do very little to ensure that new funding will be allocated toward employing journalists. While the regulations establish what amounts to a minimum 4% link tax on Google and Meta if they link to news content, they set no minimum requirements to spend the resulting revenues on journalists or news content. In fact, the government specifically dictates to the CRTC that the legislative requirement that an “appropriate portion of the compensation will be used for the production of local, regional and national news content” will involve no minimum amount and the agreements need only reference that “some” of the compensation will be used for that purpose. As a result, in the best case scenario for the government in which the Internet platforms pay for links by reaching commercial agreements with news outlets, the big beneficiaries such as Bell, Rogers, the CBC, and Postmedia would be free to spend the vast majority of the money generated by those deals on executive salaries, debt repayment, or any other purpose.
As readers of this blog will know, I think that this best case scenario is very unlikely. The new draft regulations further increase the likelihood that at least Meta will continue to comply with the law by blocking news links in Canada. The company will therefore fall outside the definition of a digital news intermediary by no longer facilitating access to news and will not be required to enter into any new agreements. Moreover, recently cancelled deals will not be revived and the value of free referral traffic will be lost. The result will be lost revenues for many outlets, particularly smaller and digital publications.
Further, the draft regulations may have increased the likelihood that Google will follow suit given the Canadian government’s approach of requiring the company to pay 4% of the Canadian portion of its global search revenues for linking to news content. After insisting that Bill C-18 was grounded in compensating news outlets for the value of their news content, the Canadian model has now completely disconnected applicable payments from the actual costs or value of news creation and delivery. It is simply a shakedown with a percentage of revenue that was never discussed during the Bill C-18 legislative process and was picked out of thin air. Moreover, the 4% will no doubt be used by other countries as a global minimum for similar payments. Even if Google was willing to meet the government’s minimum demand of $172M annually on Canadian news links, the bigger question for the company will be whether it is content to hand over 4% of its search revenues in countries worldwide to subsidize the media sector.
That assessment may mean that Google follows the Meta approach and that Bill C-18 generates no new revenues since it does not apply to any digital news intermediaries. But even if Google is persuaded to pay up, the government’s regulations do not require that much of that money be spent on journalists or news content. The low bar in the regulations that an undefined “some” compensation be spent on the production of local, regional and national news content is likely to mean that the vast majority of the money goes elsewhere. Further, the CRTC has been given no flexibility on the issue, as the government says that merely including the word “some” in the agreements means that the Commission “must interpret the agreements as providing that an ‘appropriate portion of the compensation will be used for the production of local, regional and national news content’.” The government could have pursued a fund model that would have guaranteed that most of the money from Internet platforms would be spent on journalism. Instead, Canadian Heritage Minister Pascale St-Onge has introduced draft regulations that virtually guarantee that it won’t.
Related posts:
Backdown or Bailout?: What Comes Next for the Government’s Epic Bill C-18 Miscalculation
A Massive Own-Goal for the Government: Google to Stop News Links in Canada Due to Bill C-18
Caving on Bill C-18: Government Outlines Planned Regulations that Signal Willingness to Cast Aside Core Principles of the Online News Act
What Urgency?: CRTC Says It Will Take Years For Bill C-18 Media Bargaining to Begin
Why is any of this surprising? C-18 always was a shakedown. Now it’s just more obviously one, at a point where nobody can do anything about it.
Moreover, of course there is no minimum spend on actual journalism and journalists. This entire shakedown was engineered by the big media distribution companies as a way to get some free money to do anything and everything except produce more/better journalism.
Postmedia as just one example, has a huge debt burden that it needs Google and Facebook to pay down. You don’t really think they are going to take the Google and Facebook shakedown money and do anything even remotely journalistic with it do you?
I am sure some of will even wind up in the LPC coffers as their kickback for providing the framework for this shakedown.
I don’t know about party coffers, but since it is likely to be considered to be income then a portion of it would end up in government coffers in the form of corporate and individual income tax. Corporate and union funding of a federal political party is supposed to be illegal in Canada. And if I understand it correctly, they can’t give money to an individual wiithin the company to make the contribution on their behalf (think Dean Del Maestro 2008 campaign and cheques from Deltro Electric).
“Corporate and union funding of a federal political party is supposed to be illegal in Canada.”
So is letting foreign governments and entities pay money for access to (and influence over) the LPC government.
But all of these activities are easily enabled and actively encouraged with the special help of the “Trudeau Foundation”! Your 125 million CAD$ at work!
It’s not a “4% link tax.” Calling it that makes it sound pretty reasonable, as if it’s a 4% tax on links based on some kind of fictional accounting value for each link served up to visitors. No, it’s a ~4% tax on all their revenue in Canada, regardless of how much of that revenue has anything to do with links to Canadian news. I don’t understand how anyone involved sees that as other than completely insane.
Remember that Rebel News was denied certification as a “qualified Canadian journalism organization” because they were viewed as producing less than 1% original news content. To me this would indicate that a similar cutoff value here could be in the works.
If that is the case, then less than $2M of the demanded Google “compensation” would actually be an “appropriate portion of the compensation”. This would pay the wages (but not any of the “employment taxes” such as benefits, employer EI and CPP contributions, provincial health insurance premiums, etc) for about 71 journalists IF the salary was at the “low-income threshold for a single-adult household” of $25,252 per year. Since that number is unlikely to happen (I don’t know what the union rates of pay are) the actual number would be somewhat less.
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In dissecting the implications of the Government’s Bill C-18 Draft Regulations, it becomes evident that the proposed measures fall short in ensuring a substantial increase in spending on journalists or news content. While the intention behind the bill is noble, the drafted regulations lack the specificity needed to channel funds effectively into the journalism sector. It’s crucial for policymakers to address the core issues and establish clear guidelines for allocation. Perhaps incorporating more stringent criteria for eligible recipients and fostering partnerships with reputable news outlets could strengthen the impact of this legislation. Moreover, considering the financial challenges faced by media organizations, exploring alternative funding avenues, such as a transparent and accessible loan application process, might provide a sustainable solution to support the industry in the long run.