Matt Gurney: Australia, but in a bad way

We repeat our pledge to our readers: we won't take the money.

By: Matt Gurney

In recent weeks, as tech giants Google and Meta, owner of Facebook and Instagram, announced that they would be exiting the Canadian news market in response to the government's new law, C-18, anyone who's been paying much attention has heard the constant refrain of: "Australia." Sometimes just literally the word. Australia. It's been used as a kind of shorthand, as a rebuttal to critics of C-18 and also as a word of encouragement to those worried that Big Tech might not be bluffing.

Don't worry. Keep the faith. It'll be fine. Australia.

Australia!

And it makes a kind of sense, if you know the background. Australia pushed ahead with an attempt to legislate the big tech companies into supporting their local journalism industry, too. Google and Meta (which was still called Facebook, then) threatened to pull out, and briefly did suspend some services. But then after some tough bargaining, a deal was struck; the government there allowed exemptions to the law, which provided a loophole through which these companies could negotiate voluntary deals with media outlets. Google and Meta remain in business down under, and money continues to flow into the hands of local journalism outlets. This has been described, all in, as a success. That's why there's been the repeated references to Australia, and why the word itself has become weirdly talismanic.

Keep the faith! Big tech will blink!

Australia!

And yeah. We may well get an Australia-style deal, at least from Google. The question we need to be asking ourselves is whether or not that's a good thing, and whether “Australia” should be a word of encouragement, or of warning.

A note of caution first: Canada is not Australia, and a lot has happened since the agreements were reached in Australia. Other jurisdictions are no doubt watching what happens in Canada, and the big tech companies will want to make sure that any deal they reach with us is something that they're comfortable seeing replicated abroad. 

Meta, for its part, seems to be done, and — this is important — this is not some hypothetical, wishy-washy "Maybe we'll be done in the future, if we don't get our way." The Line has heard that Meta is already pulling out of their existing deals with Canadian publishers, though no one wants to say so on the record. Some reports have bubbled up online all the same. So that's damage done. Journalism and journalists will already be hit by that. And Meta doesn’t seem inclined to stick around in hopes of a better deal. In a statement to The Line, a Meta representative said, “Unfortunately, the regulatory process is not equipped to make changes to the fundamental features of the legislation that have always been problematic, and so we plan to comply by ending news availability in Canada in the coming weeks.”

By comparison, Google does seem to be open to some kind of deal, especially now that the federal government has blinked, signalling it is prepared to back off from the most strict interpretation of its own law. Heritage Minister Pablo Rodriquez, who admitted to being surprised when the big tech companies announced they'd pull out despite literally years of warning that they would do exactly that, has opened the door to softening the government's position when rolling out the regulations that will give the law full force. This must be done within six month of Royal Assent, so the clock is already running. 

So, Australia, I guess? Any deal would be a victory? A vindication? A good result after a weirdly ugly process?

No. Because based on reports on what The Line is hearing from multiple sources, the government's new plan is to simply figure out how much money Google will offer in order to save face, and to do the easiest thing with it — direct that cash to the legacy companies that have already cut journalism to the bone. Bell is firing senior anchors and shuttering whole radio stations, while asking the CRTC if it can get out of news entirely. It may be too kind to call Postmedia a zombie corporation, existing for the sole purpose of funnelling interest payments on debt back to American hedge funds. And Torstar, those poor souls, is in such deep crap that it apparently thought it might be better off merging with Postmedia! (That wedding seems to be off, at least for now.)

An injection of Google cash into these companies might save Minister Rodriguez further embarrassment. It'll certainly preserve some media executive jobs. It may stave off bankruptcies for some unknown number of months, or even years, allowing those high-interest debt payments to keep on being made. But it won't save journalism, which — correct me if I'm wrong — was supposed to be the point. 

But it leaves us with husks of legacy companies kept afloat by just enough coerced cash to allow the Trudeau government to claim a kind of victory. This doesn’t help anyone but the big tech companies and the politicians. This is the worst part of the Australian deal … and it’s what we’re tracking toward.

So Australia, sure. But in a bad way.

Let’s consider a best-case scenario: Google and Rodriguez hammer out a deal for $100 million a year (I pulled that number out of a hat, I admit, but the point stands even if it was higher). Rodriguez would probably have to further retreat from C-18 and accept contributions in kind as part of that figure: Google cash for scholarships, internship programs, things like that. But there would be some money. Who gets it? And who does what with it? 

Based on our understanding of the latest government proposal, the money would largely go to the big existing legacy companies. As it did in Australia. There would probably be some smaller, independent shops, thrown in to make it look like this is something other than a payout for the most powerful and well-connected industry players greased by regulatory capture — but those efforts will be tokenistic and largely done for optics.

The bulk of the cash will likely be divided between Bell, Rogers, Postmedia, Torstar, the CBC, Quebecor and the like. Divided thusly, the money won’t be enough to allow these companies to claim long-term sustainability, or to rebuild their journalistic capacities to what they were even a few years ago. But it may be enough money to prevent the market from actually doing what markets are supposed to do; simply foreclosing on companies that have no viable path to financial sustainability. Meanwhile, the independent outlets and chains that would have stood the best chance of replacing decrepit and declining zombie corps will receive a pittance, and be told to keep sweet and silent about it.

As we expect Meta to keep its word and continue to block news links, that means new media start ups will have a much harder time establishing a brand and building an audience than it did previously. In fact, there’s every chance that the industry as a whole will be financially worse off after C-18 than it was before — whatever share of the Google loot an outlet may receive won’t necessarily be enough to offset the loss of access to Meta’s platforms and the deals with major corporations that have since been cancelled.

On the whole, what this bill hopes to do is to keep a barely functional status quo journalism technically alive on a stretcher in the hallway, while ensuring it is nearly impossible to create viable or sustainable media replacements. This is like being put on life support the moment before natural death was about to occur. Or more bluntly even than that: It’s starving the grandchildren to feed grandma a liquid diet by IV. And it won’t even help grandma get better. She’s never coming home. Starving the kiddies just postpones her passing.

How these deals would be structured and who would owe what, to whom, is not something we are likely to find out — another problem with the Australian deal. Canada already lags in meeting every imaginable basic transparency metric. What we will see here would likely result in even more secrecy than already surrounded the big tech deals down under. And those deals, according to this 2022 article in the Columbia Review of Journalism, are “murky,” “with critical details guarded like they’re nuclear launch codes.”

Some best-case scenario. And remember: the scenarios get worse from there.

I understand the pressure media industry leaders are under to save their companies and keep their people employed. I do. I’ve lost sleep worrying about my people before (back when I had people). But there has to be some room for principle here. A media company that accepts funding from big tech after the big tech companies have been coerced by federal legislation, resulting in some kind of secret face-saving saving compromise that everyone, including the media employees, are contractually bound to not talk about, is no longer editorially independent. It is beholden to two problematic masters: the state and massive transnational tech companies, either of which can torpedo the deal at any time. Instead of speaking truth to power, any media company accepting such support will be forced to conceal the terms of the very deals that keep them alive. 

They’ll call it confidentiality. They’ll point to NDAs. They’ll say it’s a routine part of a commercial transaction. But the silence will really be a reflection of shame. This is the opposite of what journalism is supposed to be about.

But hey. It’ll help Rodriguez out of the corner he painted himself into, and that’s what we all joined journalism to do. Right?

So yeah. It’s bleak. But just for a moment, set aside the philosophical objections and consider the practical ones, including the danger of torpedoes noted above. Any such funding model is going to be subject to enormous downside risk of change, very sudden change, in either corporate policies or political direction. Are the media executives across the land confident that Prime Minister Poilievre would not scrap that deal and laugh while doing so? And if the answer is no, how will the existential doubt this presents affect future coverage? Not at all? Really?

Hell, even the Liberals’ own supporters agree with me: by nearly a two-to-one margin, they think the feds should avoid intervening further in the media industry because it erodes the editorial independence of the companies so intervened with.

Aren’t we the ones who bleat on about how a perception of a conflict is as bad as the reality of it? Why are half of Liberal voters better able to see this than the senior leadership of Canada’s surviving legacy media industry?

My Line colleague Jen Gerson and I had a conversation about all of this by phone on Wednesday. Someone close to the negotiations had hinted to us that it was time to lay down our arms and sign up for the deal, any deal, before we got left out in the cold. We know full well that other independent media outlets are considering giving up on their previous principled stands and just taking the money and running, like Billy Joe and Bobbie Sue did in that classic song.

After all, the bill has passed. It’s a fait accompli. Provided Google plays ball and doesn’t simply shut us all out, there’s nothing more to be done. “Selling out” is called selling out for a reason — you get paid. It’s lucrative. There’s no money be made in maintaining principles. Pride doesn’t pay the bills.

So Jen and I talked, and we just laid the question awkwardly out there: what’s the time to give up? Was it time to sell out? How much money would it take for us to even think about it?

Most fundamentally, what’s our price?

It’s important to marry well in life. I like to think I’ve married well in my personal life, but I also married well in my professional life, too. My work wife and I did not even need to discuss it. Jen and I were in complete lockstep. There is no amount of money that would make us comfortable with this kind of deal, partially because of our philosophical objections, but also because we do not believe any such deal would actually be stable in the long term. Once you begin the process of selling out, you’re on the path to ever greater and growing compromises, and for what? A deal that can be ripped out from under us with a single change in corporate direction or government in Ottawa? No thanks.

I’ll reiterate that point: in addition to being an ethically flawed monster of a bill, taking money from deals generated via C-18 is a bad business decision. It would tie our financial health to both government and big tech; it would subject us to a secret revenue deal that we probably could not disclose to our readers. And, lastly, in an industry that relies almost solely on personal credibility and reputation, taking this money would make it more difficult for our readers to trust us, and thus less likely to feel that our work presents them with a value proposition worth paying for. Why would they bother to open their wallets when they can just assume that we’ve got some secret deal with a tech titan? Seriously. Why?

Look, I get it. The bottom is falling out of the legacy outlets, and with surprising speed. And it’s not just the big guys. We are not in as tough a spot as larger independent outlets: we don’t yet have to make a payroll. So we can empathize with our peers, even as we disagree with them.

And we do disagree with them. So yet again, here’s our pledge: we won’t take the money. We are determined to take the slow path to success. We will make deals with advertisers if we find any that make sense to us. We are looking for sponsors for events we are planning to host. We will sell our product to our subscribers. And will do so with both confidence in our business model, and a clean conscience. 

That’s worth something, too.

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