By june b. bugg
In April 2022 the government of Canada introduced the Online News Act (or Bill C-18) in response to a perceived existential crisis in the Canadian news media industry. It isn’t a surprise to anyone that revenue and readership in the news industry has been declining since the rise of the internet; the way we consume media is fundamentally different than it was before the World Wide Web. This structural change in how media is distributed has made it necessary for industries to adapt or collapse; the television and film industries have largely transitioned to subscription streaming models, on demand podcasts have replaced radio talk shows and outside of niche markets, physical music media (with the exception of vinyl records) is all but dead. The news industry however has had some trouble transitioning their revenue models to keep up with the times. News articles and broadcasts are now largely distributed over the web, far fewer people are buying newspapers and few people are willing to pay the subscription fees that many news businesses charge to access their digital content. Traditional news businesses did not rely much on newspaper sales or subscriptions as their main source of revenue, however, that came mostly from selling ads, some corporate ads, but money mostly came from selling classifieds.[1] Classified ads do not take up much page space or ink so are very cheap to sell, and since newspapers up until the internet had a quasi monopoly over this sort of advertising they could charge enough to keep growing in spite of the relatively little revenue they got from actual sales. However the internet provided a whole new platform for people to advertise: ads for businesses are mostly sold through middlemen like Google and Meta rather than directly through a paper’s advertising department, meaning this stream of revenue has to be shared with the middleman, and websites like Kijiji and Craigslist which allow users to post classifieds for free have decimated the newspapers monopoly over that sort of advertising.
News media in the internet age may not be able to survive competition in the “open” market of capitalism, but the value of the news and a free press is not in how much revenue it can generate but its actual utility to society. With the introduction of C-18 it would appear that the government agrees that the news industry is worth protecting, however the bill does little to address many of the problems eroding the utility and freedom of the press, instead focusing on the falling revenue of the industry, and the market relationship between news outlets and tech giants that operate online platforms where news content gets posted.
Before we get into what the Online News Act actually does, let’s define some of the language used in the Bill, and some that I have been using up to this point. I will quote the definitions from the Bill directly:
“digital news intermediary means an online communications platform, including a search engine or social media service, that is subject to the legislative authority of Parliament and that makes news content produced by news outlets available to persons in Canada. It does not include an online communications platform that is a messaging service the primary purpose of which is to allow persons to communicate with each other privately...
news business means an individual or entity that operates a news outlet...
news content means content — in any format, including an audio or audiovisual format — that reports on, investigates or explains current issues or events of public interest…
news outlet means an undertaking or any distinct part of an undertaking, such as a section of a newspaper, the primary purpose of which is to produce news content...
operator means an individual or entity that, through any means, operates a digital news intermediary.”[2]
Mainly Bill C-18 tries to “establish a framework through which digital news intermediary operators and news businesses may enter into agreements respecting news content that is made available by digital news intermediaries”. What this means is that platform operators like Meta must try to establish agreements to pay news businesses to host links to their content on platforms like Facebook or Instagram. It would also allow news businesses to bargain with these operators collectively. “The underlying assumption behind the proposed legislation is that fundamental unfairness exists in the relationships between news publishers and internet platforms…” writes Ariel Katz, associate professor at the University of Toronto Faculty of Law, “The logic runs as follows: By providing links to newspapers’ stories, Google and Facebook freeride on that content to attract readers to their platforms (and away from newspapers).”[3]
The Logic behind this assumption does not however hold up very well under scrutiny. Meta tracks user activity quite closely and regularly releases lists of websites and domains linked the most from Facebook; In their Q1 2024 report it is stated that, in the US where no laws regulating relationships between news outlets and platform operators exists, “News domains in the list accounted for about 0.2% of all Feed content views” however no such report exists for Instagram.[4] All around, negotiating with possibly hundreds of Canadian news outlets or collective groups of them, to compensate them for content that makes up only a small portion of Meta’s user activity is all around a bad deal for the tech giant, so Meta’s response was to promptly block all news content in Canada on Facebook and Instagram. It’s impossible to see this outcome as a win for the Canadian news industry.
Google’s case is a bit more complex however as its relationship to news media in general is quite different to that of Meta’s. Google doesn’t just own platforms where users can post links to news articles, Google actively aggregates and indexes news content both in Google Search when relevant keywords are entered and through Google News. Having to exclude Canadian news content from search results would undermine the integrity and utility of Google Search as a search engine, and essentially spell the end of Google News in Canada. As such Google has chosen to come to the bargaining table, though not in the capacity outlined by the Bill. Google is not negotiating with individual or collective groups of News Outlets for the rights to host or link to their content, but rather Google struck a deal with the government where they would pay $100m to Canadian news outlets in exchange for exemption from Bill C-18. The money transfer to outlets will be handled by a non-profit called the Canadian Journalism Collective that was created to ensure the equitable distribution of the Google funds through an application process.[5] Although this outcome can be seen to benefit Canada’s news industry it’s still not ideal.
Google and Meta seem to also be the only operators implicated in the Online News Act. Platforms like Reddit and X also host a lot of news content and links to content from Canadian news outlets. Although these platforms meet the definition “digital news intermediary” outlined by the bill, they do not meet the criteria for having an imbalance of bargaining power with Canadian news outlets, however in the paper referenced earlier Katz argues that “it is far from clear that these statutory criteria would not apply to them in practice because these criteria are broad and quite vague”. The criteria for determining this imbalance outlined in the bill are as follows: “This Act applies in respect of a digital news intermediary if, having regard to the following factors, there is a significant bargaining power imbalance between its operator and news businesses:
- (a) the size of the intermediary or the operator;
- (b) whether the market for the intermediary gives the operator a strategic advantage over news businesses; and
- (c) whether the intermediary occupies a prominent market position.”
If Google and Meta were intended to be the sole targets then it’s possible the definitions were left vague in order to target these specific companies without the risk of scaring other smaller intermediaries from dropping Canadian news content altogether like Meta did. In any case the lack of clear definitions when it comes to the operators implicated will make enforcement and interpretation by courts and judges difficult.
As stated earlier the Online News Act would also allow news businesses to enter into the bargaining process with intermediary operators collectively. This has some pretty serious implications that may undermine parts of the Copyright Act as well as the Competition Act.
The Copyright Act contains some provision for the collective administration of copyrighted work, but this is not to increase the bargaining or market power of such collectives, quite the opposite. The purpose of outlining this sort of collective administration is to reduce administrative cost and burden that may weigh more heavily on individual entities, as well as regulate how collective societies administer copyrighted works; According to Katz “regulating the fees that collective societies may charge was deemed necessary in order to curb the exercise of excess market power by collective societies”. The Copyright Board overlooks this regulation and decides on fees based on “what would have been agreed upon between a willing buyer and a willing seller acting in a competitive market with all relevant information, at arm’s length and free of external constraints” and “the public interest”.[6] This regulation is directly contradicted by C-18’s stated purpose, which is to enhance the market power of news businesses by permitting them to bargain collectively and through the state imposed constraint that intermediaries must enter some sort of agreement with news outlets. Katz elaborates: “This goal is based on a premise that the competitive conditions disfavor news publishers and that even when intermediaries make news content available with the publishers’ consent, the existence of a ‘significant bargaining power imbalance’ forces the publishers effectively to forgo remuneration.”
Collective bargaining by individual workers and employees of an organization is, of course, permitted under Canadian law, however this is necessitated by the relationship between the capitalist and the worker, and the mode in which the former extracts value from the latter and the imbalance of political and economic power between these classes. This relationship is not analogous to that which exists between news outlets (which includes some of the largest Canadian corporations) and operators like Meta and Google, though the implication seems to be that the authors of the bill think it is. News outlets may be struggling but their value is not being “extracted” by Meta and Google in the way a capitalist extracts value from those they employ, even implying such a comparison is absurd.
Bill C-18’s allowance for this sort of collective bargaining also runs into some issues with the competition act. Exemptions from parts of the competition act in service of reducing the supposed imbalance of bargaining power between news outlets and intermediaries were no doubt intentional, however these exemptions may extend beyond that scope and allow these bargaining groups to operate like cartels or trusts. Katz Writes:
“Suppose that in an agreement that
two national newspapers negotiate with Google, they propose to allocate the ads that
Google serves on their respective websites on a territorial basis (e.g., that ads from local
advertisers based in Eastern Canada would be served primarily on the website of
Newspaper A while Newspaper B would be served primarily with ads of advertisers
from Western Canada. Such an agreement could be lucrative for the newspapers (who
could charge a higher price to the advertisers who now face fewer ad outlets) and for
Google (who could earn a higher commission from the higher advertising fees). An
agreement where Newspaper A undertakes to limit its coverage of local news to stories
from Eastern Canada while Newspaper B covers local stories from the West could have
a similar effect of increasing the market power of the newspapers relative to local
advertisers (and can also contribute to the newspapers’ bottom line by allowing them
to reduce the costs required for covering local news—to the detriment of readers). Or
consider an agreement where Google offers the newspapers a higher payment in
exchange for allowing it to veto the publication of stories that it considers harmful to
its interests. While such anticompetitive agreements may contribute to the newspapers’
profitability, making them lawful has nothing to do with the mischief that Bill C-18 is
supposed to remedy. Yet, such agreements, which otherwise would be illegal under
subsections 1(b) and 1(c), would become legal under Bill C-18.”
To put it all together the current effects of the Online News Act have been that Facebook and Instagram users in Canada can no longer access news content, the Canadian Radio-television and Telecommunications Commission (CRTC) is reviewing Google’s bid for exemption in exchange for a $100m injection into Canada’s news industry, and with its vague definitions and sweeping allowances for collective bargaining, Bill C-18 may have other unforeseen consequences on a free and diverse press in Canada.
So how do we fund news media in the internet age? Maybe a better question is “how do we structurally maintain a free and diverse press?” because granting news businesses exemption from competition laws may allow them to increase revenue through practices that would be illegal for any other type of business, but referring to Katz’s hypothetical above, an increase in the profitability of the news sector does not necessarily lead to a healthier press. The ongoing deregulation of markets since the 1980’s is part of the problem: Google and Meta may not have an “imbalance of bargaining power” if they were more accountable for their unethical business practices, and if they were taxed more fairly we could simply allocate some of those public funds to subsidize struggling news businesses (though the state subsidizing the press does come with some of its own problems). A decrease in revenue is not the sole reason news readership is falling and the industry is shrinking. The rapid concentration of media ownership in Canada since the 1990’s making it harder and harder for smaller and independent outlets to compete and raising the barrier of entry for emerging outlets, and shrinking attention spans[7] leading to a dwindling interest in traditional longer form news media are also both huge factors that are entirely unaddressed by the bill. By reducing the erosion of the free press down to a failure to generate revenue the Online News Act fails to even account for why the press is worth saving in the first place.
NOTES
[1] Seamans, R., & Zhu, F. (2014). Responses to entry in Multi-Sided Markets: The impact of Craigslist on local newspapers. Management Science, 60(2), 476–493. https://doi.org/10.1287/mnsc.2013.1785
[2] Online News Act, S.C. 2023 c.23
[3] Katz, A. (2023). Sedating Democracy’s Watchdogs: Critical reflections on Canada’s proposed Online News Act. Columbia Journal of Law and the Arts, 46
[4] Widely Viewed Content Report: What People See on Facebook. (2024). In Meta. Meta. https://transparency.meta.com/data/widely-viewed-content-report/
[5] Djuric, M. (2024, June 7). Google signs deal with organization to distribute $100M to Canadian news companies. CBC. https://www.cbc.ca/news/politics/google-canadian-news-companies-1.7228190
[6] Copyright Act, R.S.C 1985, s4.
[7] Lorenz-Spreen, P., Mønsted, B. M., Hövel, P., & Lehmann, S. (2019). Accelerating dynamics of collective attention. Nature Communications, 10(1). https://doi.org/10.1038/s41467-019-09311-w