National Post


Steep declines in ad revenues threaten an ever-shrinking Canadian media

- Jesse Snyder

OTTAWA • An alliance of major publishers has united to urge the federal government to effectivel­y force tech giants like Google and Facebook to pay for news content, saying Canadian publishers’ survival is threatened by the firms’ domination of the digital advertisin­g market.

News Media Canada says the publishers — such media companies as the Toronto Star, Glacier Media and Postmedia Network Canada, which owns the National Post – are locked in a permanent state of crisis and fast action is needed.

In a landmark report released Thursday, the alliance lays out a suite of recommenda­tions that would effectivel­y force U. S. tech firms to pay for the news content shared on their platforms. The recommenda­tions include regulatory changes and the introducti­on of an online media monitoring agency, among other things.

The move comes at a time when both publishers and government are pushing back at the dominance of Facebook and Google. On Tuesday, the U.S. Department of Justice, joined by 11 state attorneys general, launched a sweep ing antitrust lawsuit against Google.

France, Spain and Australia have all made moves to regulate the industry. News Media Canada is recommendi­ng the Australian model, which once enacted would allow news publishers to bargain collective­ly against Facebook and Google when negotiatin­g licences to display or reproduce news content.

Andrew Macleod, chief executive of Postmedia Network Canada, said Ottawa has “dramatical­ly” shifted its posture toward major tech firms in recent months, which he and other publishers welcome. Macleod said the move fits into a broader trend in which political parties of all stripes have begun to push back against the dominance of major American tech firms.

“I think it’s a sea change around the world,” he said.

Canadian publishers have for years sought compensati­on for news content shared on major search engines and social media sites. The U. S. firms have strongly opposed attempts in Australia and France to introduce similar policies. The result has been a dramatic showdown between policy- makers and internatio­nal tech firms, intensifie­d by public anxieties over the growing sway of digital behemoths like Google, Apple, Facebook and Twitter.

In its report, called The Sustainabi­lity of Media in Canada, News Media Canada says a regime similar to the Australian one was its “strongest recommenda­tion.”

Heritage Minister Steven Guilbeault has voiced his support for regulatory changes that would rein in major tech firms, saying he would resist their “bullying attitudes.” In a September interview with the National Post, he warned that Facebook’s “business model is going to face some serious challenges” if the company continues to threaten to pull its services in response to regulatory decrees.

Daniel Bernhard, executive director of Friends of Canadian Broadcasti­ng, a public broadcasti­ng advocacy group, said the report on Thursday points to a growing consensus among Canadian media companies to address the matter.

“Publishers are sounding the alarm about a serious problem,” Bernhard said. “Right now, publishers have a choice between giving their content away to direct competitor­s for free, or disappear from the internet. That’s basically the choice. And that’s not much of a choice at all.”

Bernhard is optimistic that regulatory changes could begin to challenge the dominance of major tech firms but warns that it will be a long, slow climb to untangle the imbalances in the digital marketplac­e.

“It’s been built up over 15 years of government neglect.”

“It’s been built up over 15 years of government neglect.”

Jim Balsillie, the philanthro­pist and one-time Blackberry co- CEO who founded the Centre for Internatio­nal Governance Innovation (CIGI) and several other organizati­ons, identified two issues that demand Ottawa address the challenges posed by big tech.

“First, the nature of the data-driven economy is such that it structural­ly breaks markets because it features economies of both scale and scope, informatio­n asymmetrie­s; and, network effects which subvert both public good and fair market competitio­n.

“Second, by displacing our print and broadcast media in influencin­g public opinion, Google and Facebook have become the new Fourth Estate. But they are asserting this status and claiming its privileges without the traditions, discipline­s, legitimacy or transparen­cy that checks their power like that of traditiona­l media companies,” he said in an email to the Post.

“That’s why it’s critical that our policy- makers urgently devise regulation­s to deal with these two foundation­al issues; and, as the report shows, there is plenty they can and should do.”

The News Media Canada report focuses much of its attention exclusivel­y on Google and Facebook, saying the companies “extract unfair terms from news publishers without offering fair compensati­on for the utilizatio­n of the publishers’ news content.” It claims the situation has led to “an effective duopoly over the market for digital advertisin­g in Canada and its peer nations.”

“Their anticompet­itive practices have resulted in unfair, non-market, and coercive supply terms to news publishers,” the report says.

The comments come as traditiona­l publishers in Canada continue to bleed advertisin­g revenues on print products, while they meanwhile struggle to replace those earnings online. Facebook and Google alone soak up roughly 75 per cent of digital advertisin­g revenues in Canada, the NMC said.

Internet-based ad revenue in Canada grew from $ 2.2 billion in 2010 to $8.6 billion in 2019, according to the report, of which Google and Facebook accounted for $7.5 billion last year. Officials at Facebook Canada, for their part, say the attitudes of Guilbeault and other policy-makers overlook crucial details about how news is shared on digital platforms. The Australian model would effectivel­y force Facebook to pay for news shared by its users, rather than ordered by Facebook itself — a model that is unworkable for the company, they said.

News links shared on Facebook take readers back to the publisher’s website, they say, and account for a huge portion of online readers enjoyed by newspapers.

Ottawa has said it would likely introduce legislatio­n to address publisher complaints about news sharing, but has not yet made public what those specific changes might be. It meanwhile says it will ensure the resilience of madein-canada media content, also through legislativ­e or regulatory changes.

The News Media Canada report estimates that efforts similar to those proposed in Australia could help publishers recover $620 million in annual revenues, or roughly equal to the income it estimates Canadian firms will lose between 2019 and 2023.

The group recommends — similar to Australia — requiring digital firms to negotiate with a collective of publishers in Canada “within 90 days,” and introduce a “federal digital media regulatory agency” to oversee the new regime.

They also suggest the changes can be brought in without oversteppi­ng boundaries agreed upon in the newly signed United States- Mexico- Canada Trade Agreement ( USMCA), which sets some provisions around cultural content.

A third-party legal opinion cited in the report finds that Canada “retained an exceedingl­y wide ambit” in the area of news making under the new agreement, and could likely avoid major implicatio­ns under the deal due to various exceptions.

“These ‘carveouts’ allow the government policy space for the protection and promotion of Canada’s fragile cultural industries,” Barry Appleton, managing associate of Appleton & Associates Internatio­nal Lawyers, said in the report.

Government­s are assuming an increasing­ly hostile position toward massive digital companies, as their dominance of markets and ubiquity in people’s daily lives becomes better understood.

The U. S. Justice Department on Tuesday filed its long- anticipate­d antitrust lawsuit against Google, in which it alleges that the firm used anticompet­itive tactics to establish a monopoly in its search engine division. The suit largely centres around agreements the company signed with Apple to make it the default search engine on Apple’s Safari browser.

The landmark case marks the most aggressive push in decades by U. S. prosecutor­s to rein in big tech, and could, according to some observers, lead to a restructur­ing of the company’s business model if government is successful. American prosecutor­s are also contemplat­ing a separate lawsuit tied to Google’s online advertisin­g practices.

 ?? David Bloom / Postmedia news files ?? A poster featuring an image of Facebook co-founder Mark Zuckerberg, near 97 Street and Jasper Avenue, in Edmonton.
David Bloom / Postmedia news files A poster featuring an image of Facebook co-founder Mark Zuckerberg, near 97 Street and Jasper Avenue, in Edmonton.

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