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Jen Gerson: C-18 will hurt journalism, not save it
The news industry has real problems. This would make them worse.
By: Jen Gerson
Astute Line fans will already know that I had the privilege of testifying before the House of Commons Standing Committee on Bill C-18 last Friday. This is the bill that would massively empower the CRTC to oversee "deals" between major technology companies like Facebook/Meta and Google, and media outlets. Rooted in the assumption that "Big Tech" is massively profiting off struggling media outlets, and that government legislation is required to redress the power imbalance, the bill is modelled after one that passed in Australia. Supporters of the Australian bill say it has made $200 million available for local journalism there.
Okay, but as we've pointed out at The Line, Big Tech isn't profiting off our content — mainstream news makes up a small fraction of what these companies can monetize online; rather, Big Tech has out-competed media on advertising space.
Not so long ago, if you wanted to advertise anything from a local garage sale to the opening of a new Eaton's, there was basically only one game in town — the legacy media, in the form of a newspaper, radio, or television outlet. Twentieth-century journalism was largely funded by a mutually beneficial arrangement: advertisers paid for media companies to produce content, and the content attracted the audience the advertisers sought to reach.
The advent of the Internet broke that business model irrevocably. A potential advertiser can now use social media or other digital platforms to place ads that are usually cheaper and much better targeted to their customers. That's why the media is in the shit. The Internet has supplied us with audiences that are enormous compared to the past (which is why any accusation that people “stopped reading” us or “tuned out” is bogus) but we're less and less able to monetize those audiences.
From that perspective, Bill C-18 might make a kind of theoretical sense — it would use the power of government to force revenue back into companies that serve a greater democratic function. This is unfair, on the face of it — a business that has outcompeted another shouldn’t be forced to subsidize their rival, and that’s exactly what’s happened in the world of advertising — the big tech companies are better options than media companies for anyone seeking to reach a specific audience. It’s not even close.
Issues of fairness aside, the bigger problem is that I don't think it's going to work in the long run: I doubt that most Big Tech companies will stand idly by while the Australian model is replicated in more and more countries. If it costs these companies too much money, they'll simply stop distributing news rather than be forced into backroom deals to supply that news; in fact, Facebook has threatened to do this very thing. It would be a mere matter of blocking links to the websites of new organizations. Facebook already did exactly this for a time in Australia.
If I'm wrong, and the tech companies grudgingly go along with the demands, then there may be more money in the ecosystem for journalism — although I have no doubt that the majority of that cash will go to established incumbent media outlets like Postmedia and Torstar, essentially propping up their failed business models in order to perpetuate the status quo. Oh, I have no doubt that the odd shiny independent media outlet will be thrown a few coins, and then trotted out in public to demonstrate that C-18 is a success for smaller journalistic organizations. But, come on; the people who are lobbying for this bill will be its main beneficiaries. The bulk of the legal talent and lobbying efforts required to extract cash from Big Tech all lies with the legacy media outlets. They're also the organizations that still command the greatest reach. Of course most of this money will go to them; and in doing so, make it harder for smaller organizations to establish themselves and to compete.
If I'm not wrong, and these companies do simply use this legislation to stop sharing costly news links, then they will have deprived mainstream and independent media outlets alike a major distribution hub for our content. This will only make the current state of disinformation and information silos worse. You think there’s a lot of bad info online now? Wait until the companies decide it’s in their monetary self-interest to proactively exclude the good info.
On a last note, testifying before the committee was an interesting experience. I admit that it's one thing to be cynical in theory, and another entirely to find one's cynicism proved valid. It was absolutely astonishing to me the degree to which the meeting was nothing more than political theatre: none of the MPs seemed at all interested in seriously discussing the positives and the potential downsides of the bill. Everyone seemed to come in with their talking points. The Liberals asked questions of "their" witnesses, and the Conservatives likewise. I failed to appreciate how much of a sham the whole thing was until I had experienced it.
It was utterly breathtaking to me to hear one fellow witness claim that C-18 was some kind of pro-market model of transparency when there is nothing in the bill that makes the details of the deals reached between Big Tech and the media outlets public. Nor is there any mechanism to ensure fair or equitable funding.
It was astonishing to hear Liberal MP Anthony Housefather ask representatives from various media companies whether or not C-18 would impugn their integrity, and to hear every one of them, as if scripted, assure the committee that a government bill that would make a giant pot of money available to them would not, in fact, damage their integrity at all! Obviously! Media companies normally make a point of declaring conflicts and biases. I guess declaring biases and conflicts isn’t necessary when you’re testifying before Parliament and an MP asks if it would be cool if the government forced someone else to hand you a gigantic cheque.
Anyway, below is the draft of the remarks I prepared for the committee. I was only able to read about half of it before I ran out of time, which is my own fault entirely. The second half may be of interest to Line readers. And, of course, as I noted in that committee meeting, we at The Line are not interested in the government's money; we want to run a self-sustaining business that is not vulnerable to government whims or backroom deals to survive. We do that with the support of our subscribers, so thank you.
And if you agree with what I’ve said above, but have yet to subscribe, please do. We are counting on you to prove those demanding the bailout wrong.
Firstly, I would like to thank the committee for inviting me to speak. My name is Jen Gerson and I have worked in media for more than 15 years, in newsrooms across this country including the Toronto Star, Globe and Mail, Calgary Herald, and the National Post. As a freelancer, my work has appeared in the Walrus, Maclean's, the New York Times and the Washington Post.
At the moment, my co-founder, Matt Gurney and I, run a Substack-based newsletter called The Line that publishes Canadian commentary. There, I have published several pieces, by myself and by other writers, explaining my many concerns with Bill C-18.
The first major problem with this bill is that it is predicated on a lie. The bill adopts an ancient complaint of newspaper publishers; that aggregation based news websites and social media networks are unduly profiting by "publishing" our content.
But, of course, we know this isn't true. In fact, the value proposition runs in exactly the opposite direction. We publishers are the ones who benefit when a user posts a link to our content on Facebook, Twitter or the like; this free distribution drives traffic to our sites which we can then try to monetize through subscriptions or advertising.
This is why major media organizations encourage link sharing below all articles; it's why they have spent untold sums on maximizing SEO. It's why they literally spend money with digital news intermediaries to boost stories on these platforms.
If you need evidence that many of these digital news intermediaries are more valuable to publishers than the other way around, we need only look to the existence of this bill in the first place. Negotiations are sustainable only when the outcome of those negotiations serve the interests of all parties involved; if that were the case here, there would be no need for the federal government to overseeing these deals. Digital news intermediaries would be happy to negotiate for the use of our content because they would perceive value out of that deal.
Instead, what we have here is a form of rent-seeking behaviour; struggling media corporations are using every last iota of their dwindling financial and social capital to lobby for subsidies and regulations like C-18.
I fear that C-18 is going to backfire spectacularly, undermining the very goals that this it is trying to fix. For example, if organizations like Facebook/Meta respond to this legislation by simply restricting access to mainstream news articles on their site — as that company has openly threatened to do — who do you think will be most harmed by that decision? Facebook?
No. It will be Canadian publishers themselves who will be harmed by losing access to a major distribution hub. And then what happens? Do we think that removing news links from Facebook or Twitter would somehow create some digitized version of the glory days in which Canadians begin their mornings by loyally logging onto their local newspaper? Or are we risking the opposite effect? Would it actually strip mainstream media content from the websites and social media platforms where more Canadians live their online lives?
I fear the latter outcome; if you make it costly for digital news intermediaries to publish mainstream news content, they're going to make the very obvious financial choice; that is, they will distribute less mainstream news content, pushing more Canadians into semi-private information silos on places like Discord and Telegram, Slack, and Signal, platforms that the federal government has little hope of regulating in this fashion.
My second major concern is that the more that the federal government tries to help the media, the more it risks hurting our credibility. I respect that C-18 has attempted to create a framework that avoids a direct subsidy, but this is not a neutral market-based approach.
When the federal government tries to save the media, the media become legitimate targets for partisan attacks, which undermines our democratic role and function. We saw a few examples of that this week, with the leader of the official opposition Pierre Poilievre raising money off PPG member David Akin; Poilievre also took pot shots at another journalist, Dale Smith, on Twitter. These attacks on media are strategic and popular; journalists are not well liked by the general public, who already have a negative opinion of a press corps that is perceived to be on the take.
According to the Reuters Institute’s 2022 Digital News Report, trust in the Canadian news media has sunk to its lowest point in seven years, a continuation of a long-term downward trend.
The opposition leader has therefore concluded that attacking us benefits him, and I'm not sure he's wrong about that calculation.
To that end, I have real concerns about making media outlets dependent on revenue that is subject to the whims of the government in power. A future government — say, one led by Mr. Poilievre — will have no compunctions about undoing C-18 and other subsidies. The industry's dependence on these revenue streams makes us pawns of partisan politics whether we would wish to be or not.
My last beef with C-18 is that it will inevitably favour incumbent media players over innovative models, small outlets, and news start ups. We saw, for example, that when a similar bill was enacted in Australia, the biggest beneficiaries were Rupert Murdoch owned entities. And of course they will be: Smaller entities don't have the organization, political influence or legal clout to negotiate with Digital News Intermediaries in the same way that major media corporations do.
Further, Bill C-18 won't make those major media corporations sustainable. As has been reported this week, Postmedia intends to cut distribution for Monday newspapers across the country. I have no doubt more such cuts are to come regardless of the outcome of this bill. Many of Canada's newspapers are zombie businesses; shells of their former shells. It is difficult for me to convey just how hollowed out most of these institutions really are. C-18 will not give our news outlets enough money to actually improve coverage or fix their problems; it will just delay the inevitable collapse — and, in doing so, hamper the next generation of media that would attempt to rebuild from the ashes.
To quote Antonio Gramsci: "The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear."
An organization of independent media has argued for changes that could be made to this bill — and to the Income Tax Act — to make the funding generated through forced negotiation with digital news intermediaries more accessible to smaller media outlets. I'd be happy to provide the committee with some of the proposed changes. We at The Line signed onto this organization not because we believe that C-18 is redeemable, but rather because we believe that a more equitable approach to accessing funding to be the lesser of two evils. We will never apply for government funding, nor do we think it wise to establish a revenue stream through government-backed negotiations. That is not sustainable, in our view. We are subscriber funded, and will never seek a dime through C-18 or anything like it.
Lastly, I don't wish to leave this committee with nothing but negative notes. I would encourage it, instead, to focus on the big picture; you are concerned about disinformation, misinformation, and the corrosive impacts to democracy caused by a media industry in financial retreat.
Good. It is right and correct to be concerned about these things.
But you already have a mechanism with which to address these problems, and that is our public broadcaster. The federal government already provides extraordinary, arguably disproportionate, support to the media ecosystem in the form of a billion dollars annually to the CBC.
As private broadcasters and newspapers wither, it's the CBC that is going to serve a profoundly important role in Canadians' lives.
Ensuring that the CBC is practically, economically, and organizationally equipped for the interregnum is the appropriate way for the federal government to approach this problem.
Perhaps by providing a funding mechanism that is protected from partisan meddling; and by revisiting the broadcaster's mandate to ensure that it is more focused on providing news to supplement the private sector's decline.
Ladies and Gentlemen of the committee: I believe that you have correctly identified the problems facing the media, but C-18 isn't going to fix those problems, and may even make them worse. It is the child intended to correct an old beef of newspaper publishers — the very same publishers who lacked the foresight to prevent the collapse of their own empires with the rise of the Internet. For the sake of the new world yet to be born, I would ask you to reconsider this bill.
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