Peter Menzies: Trudeau crippled Canada's media. AI might now kill it
Building the Online News Act and its subsidy regime sibling was all a lot of fun during the decade of sunny ways.
By: Peter Menzies
It will be two years in August since Facebook, prompted by the Justin Trudeau regime’s maladroit handling of digital legislation, departed from the business of carrying links to news in Canada.
You remember links, don’t you? URLs and all that stuff that you would find from using something called a search engine? How you would just type your query into the search bar and up would pop a selection of links from which to choose and, probably, discover the information you are looking for? Well, soon enough most of you will be explaining to your grandchildren what those were in much the same fashion as I discuss the good old days of newspapers with mine.
Links are in the process of joining the print industry, the Dodo, and the Pinta Island tortoise in the land of extinction. By the time the Online News Act was passed in 2023, you’d have thought the federal government would have had the benefit of some good advice on that and tried to adapt accordingly. But the authors of the legislation were so in the thrall of dying publishers who had seen their advertisers migrate to where the eyeballs are, that they went ahead anyway with a plan that would make Big Tech pay for carriage of links. Google essentially paid a ransom in order to be excluded by creating a $100 million fund for news organizations, while Meta/Facebook just walked away.
Apart from the news industry losing as much as a couple hundred million dollars in referral revenue via Facebook, nothing terribly bad happened. Despite Trudeau’s dire predictions, people still got all the emergency information they needed via Facebook, over the air, text alerts, or directly at government information sites courtesy of the internet.
Now, thanks to the rapid introduction and consumption of Artificial Intelligence (AI), all people have to do is ask a question and, rather than hunting and pecking through search engine-produced links, a useful summary is provided. It’s not perfect. Mistakes are made, but it is fair to say there were always errors in some of the information supplied on the links, in the newspapers, and on TV news.
This will either destroy what is left of the news industry or prove to be its salvation.
The latter could be the case only because AI needs reliable, factual, independent, and trustworthy information. News organizations are certainly not the sole source for that but, without them, all AI has as a resource are particulars provided by government and other public officials which, when you think about it, is pretty creepy. That should mean that Meta, Alphabet (Google), X (Twitter), Microsoft (which is far more competitive in AI than search), and others have a commercial interest in keeping journalism alive.
That doesn’t mean, of course, that all of the above are necessarily invested in sustaining the broken business models that currently provide the nation with the bulk of its journalism. AI might need Robert Fife, but it might not need the Globe and Mail.
With that in mind, it’s worth noting that Google has, according to Axios, recently added a tool to its ad managers that paves the way for publishers to more easily receive micropayments. This may be an improvement, but it's unlikely to be the sort of move that keeps the Toronto Star et al. from slipping under the waves of 21st-century reality. The difficulty in Canada is also that when Google created its $100 million fund for news, it retreated from commercial relationships with publishers who, with AI now taking over, might have had a stronger negotiating position. The floor the fund may have given them to keep the bailiff at arm’s length could very well also be a ceiling, because that’s how it works with collectivism.
Still, there’s a ray of hope for legacy news platforms, even if most of them likely still view Big Tech companies as parasitic predators.
That’s because AI also has the potential to deliver the final coup de grâce to news organizations — most of which are now either dependent on government grants and tax credits or, in the case of broadcasters, are looking for funding from the CRTC.
According to Axios, news sites are experiencing a significant drop in traffic in the U.S., and one can only imagine that with the loss of Facebook access in Canada, the situation is no better here. This is because while search engines respond to a query with a smorgasbord of website links, AI skips right past that and gives users the information they seek without having to waste time visiting the platforms that provide the information. Without an appropriate compensation framework, this could lead to AI killing the dependable media sources it relies upon.
That seems counterproductive, and one would hope Big Tech operators would care about that. Maybe they do. But I wouldn’t put money on it.
Instead of providing a policy framework that would inspire the sort of innovation needed to transition journalism into the 21st century, Canada chose to subsidize companies with broken business models. Those companies are now creepily focused on continuing to expand their dependence upon the good graces of politicians and are lobbying to make only those advertising dollars spent on Canadian companies (like them) tax-deductible as a business expense.
Building the Online News Act and its subsidy regime sibling was all a lot of fun during the decade of sunny ways. But now that an increasingly stern Prime Minister Mark Carney has introduced an era of austerity in which even the CBC, which he had promised to fund generously, is being asked to take a 15 per cent cut, life’s looking pretty grim.
Two years ago, the Liberals were hoping to claim they’d saved legacy media from Big Tech. All they really was stake it for AI to devour.
Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, past vice-chair of the CRTC and a former newspaper publisher.
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Internet search killed advertising, which was the primary source of revenue for journalism. Except for a small number of generally smaller publications, subscriptions never paid the bills. The business model died, and that was that.
All the other commentary about what killed the media is just arguing about bad management in the buggy whip industry. It wasn’t the woke, or the private equity, or Trudeau, and it won’t be AI either - regardless of the details of any of those things. Once the business model died, none of that mattered anymore.
Canadian news outlets care more about their bottom line than they do about the future of the information commons, and Canadian politicians care more about the fate of their parties than they do about the future of the country. Since the same impulse is at work in both spheres of concern, it's easy to recognize; less easy to understand is how it came to be considered responsible and ethical. Far-sighted our business and political leaders are not, nor do nation-building or the public interest seem to be priorities for them.