The NEWS

“Around 500 newsrooms closed their doors across the country… and they will continue closing their doors…..The status quo is not working because the money is going to the tech giants.” Canadian Heritage Minister Pablo Rodriguez

By Ray Rivers

July 25th, 2023

BURLINGTON, ON

OPINION

Is Canada’s news media under threat of extinction? Last year, Meta made more than US$23 billion in profit while Alphabet, Google’s parent company, made close to US$60 billion. Meanwhile news organizations, the vast majority being community based, are running out of cash. And even allowing for some new entrants into the business, the future for independent media is worrisome.

Both owned by the same corporation -they feed each other and control what you get in the way of information in a way that few understand.

Increasingly smaller generators of news content are not able to attract enough ad revenue to pay their staff. And to add insult to injury Google and Facebook news platforms don’t pay for the content they extract from the news providers and exhibit as their own. It’s a perfect way to make a profit. Lots of ad revenue, no serious competition and the content is free.

Some of the better known news outfits, like the Toronto Star or the Globe, have instituted paywalls. Some like CNN and the CBC keep their digital operations operating by cross subsidizing from their TV or other services. Some, like the Guardian, are begging for voluntary donations. And the rest are hanging on by a thread, laying off staff or shutting down completely.

Playing hardball with the federal government.

Buying subscriptions is a hard sell when there are a number of free news feeds around. And how many digital subscriptions can any busy middle class family afford and read? Polling indicates that 85 per cent of Canadians do not pay for online news subscriptions, and Canadians under the age of 64 usually check social media sites such as Facebook and Reddit first to get their news.

The federal government in 2021 introduced an income tax credit for subscribers of Canadian digital news organizations to help stem the bleeding. But, while a good idea in principle, it is too little and probably too late to make a difference. It is early days but this indirect subsidy is more like a small bandage on a large gaping wound, rather than a real solution.

Only online in the future ahead of us?

So this year the feds introduced the Online News Act. Based on pioneering Australian legislation, when fully implemented tech companies will be compelled, dragging and screaming, to make a deal and start paying for the content they get from news organizations like the Globe and Mail, the Toronto Star and the Burlington Gazette. The details are still being sorted.

Facebook and Google are not happy. They have announced that once the new law is implemented they will stop hosting Canadian news stories. Google is threatening to eliminate Canadian sources in its search function. And Facebook, playing hardball with the government, has already cut some subscribers off Canadian news content.

This is becoming a game of chicken. The feds, Quebec and BC have retaliated by cutting off the advertising they do with Facebook. According to the Parliamentary Budget Officer, the new legislation could inject around $329 million to the Canadian news industry. But that would only be the case were big tech to cooperate.

And they have mostly in Australia, with Facebook coming back to the table and offering compensation contracts to news content suppliers. However, as Australia is finding, their law is not a panacea. Big tech is paying for content based on the bargaining power of the news organization, more for Rupert Murdock and less for the smaller outfits.

Will newspaper coin boxes disappear?

There are a number of other options which could be taken. For example, given the sheer size of the tech companies in the market place, there could be restrictions on their uncompetitive behaviour. Governments could increase their advertising budgets and only advertise with the news makers proper. Perhaps the techs could be taxed out of the news business, allowing news to return to news providers and the tax revenue used as a direct subsidy, perhaps on some per-readership level or other criterion.

Under the current law the tech companies essentially become the employers as well as clients for the small news creators. How long will it be until big tech also dictates what they should be reporting, and more ominously what shouldn’t? Already, big tech uses algorithms to dictate what appears in your e-news in-basket.

Canadians might want to think about better supporting our own national broadcaster, the CBC, rather than relying for news on the big tech transnationals. The CBC has its problems related to programming and identity – what it wants to be when it grows up – but since 1936 the CBC has been an anchor and standard for news broadcasting on our airways. It is worrisome that the recent string of Conservative Party of Canada leaders keep talking about mostly eliminating the CBC.

“Democracy Dies in Darkness” is the motto of the Washington Post, a major US paper with a history going back to 1877. That’s not nearly as old as the Globe and Mail which started operation in 1844 and was printed on the first cylinder press in Canada West,. And there is the Halifax Gazette which began in 1752. Free and accurate information is one of the most important pillars of democracy.

Ray Rivers, a Gazette Contributing Editor, writes regularly applying his more than 25 years as a federal bureaucrat to his thinking.  Rivers was once a candidate for provincial office in Burlington.  He was the founder of the Burlington citizen committee on sustainability at a time when climate warming was a hotly debated subject.   Ray has a post graduate degree in economics that he earned at the University of Ottawa.  Tweet @rayzrivers

Background links:

Australian On-Line –   Canada’s On-Line –   Digital Ad Revenue –  Shattered Mirror –

Government Spending on Facebook –  Canadian News on Facebook –