We continue our special coverage of the Bill C-18 senate hearings. This is for the 2nd segment of hearing 8.
(Note: This hearing took place before it passed the House of Commons and Meta’s announcement that it will block news links)
The special coverage of the Transport and Communication (TRCM) senate hearings into Bill C-18 is continuing. After a long string of lobbyists trying to push their case for the legislation, we got a brief break with digital creators spelling out why this bill needs significant improvement. The break was only brief as the hearing then shifted to, of all things, lobbyists from Australia who were also pushing for the bill. So, lobbyists got yet another kick at the can at trying to build a case for this legislation. Unfortunately for them, that effort largely fell flat.
Before we get into this hearing, we wanted to showcase the previous hearings we covered to date.
Past Hearings Covered
Hearing 1 – Heritage Ministry officials / Lobbyists (1) / Konrad von Finckenstein
Hearing 2 – Missing/Not Available
Hearing 3 – Michael Geist / Peter Menzies / Lobbyists (2) / The CRTC
Hearing 4 – Alphabet / Google / Meta / Facebook
Hearing 5 – Lobbyists (3) / Lobbyists (4) / Western Standard
Hearing 6 – Lobbyists (5) / Lobbyists (6) / Dwayne Winseck
Hearing 7 – Lobbyists (7) / Digital News Organizations
As mentioned, in the previous hearing, we heard from Australian lobbyists pushing for Canada to adopt this legislation. The hearing got off to a rocky start for them and, as the hearing progressed, things just kept getting worse and worse for them. First, they accused people criticizing the legislation of “fake news”, but as the hearing progressed, they inadvertently admitted that what critics had to say was actually accurate after all. It was a pretty embarrassing showing that also mixed in a number of instances where witnesses were dodging questions and trying to stick with talking points that never really go anywhere.
So, that leads us to this hearing. As always, you can check out the video we are watching and listening to here. As the time stamps are a bit more weird this time around, the start time for this segment is at 19:52:41. So, with that, let’s take you inside these senate hearings.
Opening Statements
Randy Kitt of Unifor opened with his statement. He said that journalism is about holding power to account, telling Canadian stories and building community. Journalism is an essential element to a functioning democracy. Journalism in Canada is in crisis. Advertising revenue for community newspapers dropped 66% from 2011 – 2020. During that time, almost 300 newspapers either disappeared or merged with other publications. In broadcasting, it’s a similar story. News outlets are closing, consolidating, and downsizing. Unifors own membership numbers confirm this trend. In 2009 and 2022, to use the Toronto Star as an example, news has declined from 610 members to 178. A decrease of 70%. In broadcasting between 2017 and 2021, employment decreased by 16%. In the last year, almost every major news outlet has shrunk whether it be by layoffs, buyouts, or attrition. The result is less journalism, less local news coverage. Small town Canada will now get the majority of their news from major centres: Toronto, Calgary, Vancouver, and Montreal.
With these huge gaps in news coverage, Kitt continued, news deserts are created. Social media has proven to be an unreliable alternative. Unchecked opinion, Peddled mistruth has proven to divide us (well, the mainstream news has also been divisive in recent years as well, so it’s not an exclusively social media problem), pitting neighbour against neighbour. We are more polarized than ever because of it. A strong Canadian news media has the ability to build communities instead of tearing it apart. Where has all the advertising money gone? (supermarket rewards program, postal delivery…) American giants Google and Facebook has cornered the world in the advertising market. Their market share dominance is an abusive power where they dictate terms and price (Bill C-18 doesn’t fix any of that).
Google, Kitt said, is under investigation here in Canada and around the world for stifling competition, making it near impossible for publishers to compete (publishers are not in the search and social media market, so this is a false argument). It’s important to note that Google and Facebook don’t produce any news of their own (hence my point), local or otherwise.
Kitt asked how do we save local news. Unifor believes that a crucial part of the funding puzzle is Bill C-18 (if the goal is to completely destroy the journalism sector, then yes, Bill C-18 is seemingly destined to be an overwhelming success on that front.) Simply put, Google and Facebook must pay their fair share and contribute to the creation of Canadian news. Unifor supports the speedy passage of this bill (sad to see a union hate its own members so much) as we are almost too late to act. Without this support, more news outlets will close as they are already on the brink (and the platforms pulling the plug on news links will ensure the speedy demise of a number of those outlets, accelerating the process).
It is disheartening to note that, Kitt continued, as we speak, Google and Facebook, while in the midst of negotiating deals with publishers before this bill is passed are also threatening, and in some cases, removing news access to Canadians (this statement is highly misleading. The platforms can’t control access to news. What they are doing is dropping support for news linking which is a different thing entirely. So, it’s pretty rich of this guy to decry misinformation when he is a source of that misinformation.) This is a further abuse of power and market share and it shows that legislation is needed more than ever (no, it shows that your actions have consequences).
Kitt said that this government must not cower to these threats and instead, stand up to these monopolies and use every tool in their toolbox to ensure that publishers get a fair deal (too bad for you that the government has all but admitted that the so-called “toolbox” is empty at this point.) Unifor has evaluated Bill C-18 on the basis of three major themes. Inclusivity (the bill fails at this), accountability (the bill fails at this too), and transparency (the bill increases secrecy, so it really fails at this).
On inclusivity, Kitt said, the bill acknowledges that diversity must play a key role, smaller outlets must be included (Section 27 kicks a lot of those outlets to the curb), and the bill is also platform agnostic to recognize broadcasters and podcasters (Uh, no, it doesn’t really recognize podcasters. Podcasters from major media outlets, maybe, but everyone else is excluded.) Unifor submits that all eligible news outlets should be included (that is a meaningless line thanks to the word “eligible”.)
On accountability, Kitt said, Unifor maintains that this money should go towards news creation (the bill contains no mechanism to ensure that this happens. There’s nothing stopping the companies from hoarding the money for themselves and withholding it from journalism creation thanks to the way the bill is worded now). Hiring journalists to tell their stories and hold power to account is the most important metric to measuring the success of this initiative. Recipients of this money should also be held to account.
Transparency, Kitt said, platforms have ensured that the value, duration, and other terms of negotiation, thus far, are shrouded in non-disclosure agreements. Unifor submits that the terms of these negotiated deals should be made public (as of the state of the bill when these hearings took place, all that is needed to be brought to light is a total value and little else.) They do know that this bill will allow the CRTC to give us aggregated annual numbers as we currently receive in the broadcasting industry. Unifor would also suggest that arbitrators should also have special access to the value of these deals and other relevant confidential information so they can make informed decisions in the arbitration process (a static formula would be much better). Unifor has submitted amendments to the bill with these three themes in mind and they urge senators to send the bill back to parliament, strengthening these areas.
To sum up, Kitt said, the news industry is in crisis, local news is essential to the public good, and a functioning democracy. They know from the Australians that a bargaining code with an arbitration process can be successful (it wasn’t even that successful in Australia) and they believe that Bill C-18 is an improvement on the Australian legislation. Unifor supports the speedy passage of this bill. Let’s not get sidetracked by noise (says the person creating the noise), let’s get Bill C-18 passed and bring in legislation for the 21st century and ensure a stable future for local news (the dollars aren’t there in this bill to do so.)
Matt Hatfield of OpenMedia then opened with his statement. He said that he is there to talk about truth and about trust. Bill C-18 is built on the idea that platforms are collecting substantial money from the sharing of news on their platforms, revenues that woudl otherwise go to news outlets. That premise is simply not true. Now, we can squint at it and reinterpret it to something that is true. We could say that online platforms gain a lot from being part of every Canadian’s information diet. We need quality journalism in that mix, so why not ask platforms to pitch in to support it? He believes that.
Hatfield continued by saying that we could make it even simpler. We could say that these platforms earn a lot of revenue in Canada and they should pay more of that money back to the government for any purpose the government chooses. He buys that too.
He wishes Bill C-18 was built on either of those simple premises, Hatfield noted. Instead, it is built on the premise that platforms are literally diverting substantial revenue directly attached to the news people see and read online. Based on that false idea, Bill C-18 supposes with a few vague calculations and forced negotiations, we can refund journalism. A poor foundation doesn’t take much weight. News content is extraordinarily important. It has also never been very profitable in and of itself even before the internet. The overwhelming majority of ad content to all of the other functions that the platforms now fulfill like being bulletin boards, marketplaces, dating sites, and conversation spaces. That revenue simply isn’t associated with the reading and sharing of journalism.
Hatfield explained that the false idea that simply permitting links to news demands fair payment is not only a fundamental break with how the internet has always worked, it goes against what’s healthy for all of us. Encouraging linking to credible journalism to spread it as far as we possibly can. That’s led to a very obvious response from platforms. If they are benefiting inappropriately from the sharing of links, as Bill C-18 says they are, why not just stop sharing them? Would that be good for Canada? No. It would be enormously destructive.
But, Hatfield pointed out, Bill C-18 is so poorly thought through, that’s a perfectly logical and legal response. Maybe this complexity and mishandling effects is worth it if the money slated for Bill C-18 is going to go where it should. It isn’t. He’d like to ask senators, what journalism do senators think is most important to our democracy? He’d say two things: Local journalism that connects the people around us and builds a strong social fabric, and public interest journalism that demands a lot of time and money that holds the powerful in public and private life to account.
It’s overwhelmingly local and provincial journalism that has collapsed in the digital era, Hatfield explained, but not a single dollar in Bill C-18 is earmarked to reopen local outlets where news deserts have appeared. Because Bill C-18 negotiations is with existing publishers, and new revenue is connected with their existing web traffic, we’re overwhelmingly rewarding the few national chains still making a go at it and not revitalizing local journalism. Are we funding public interest reporting? No. Deals based on social media will reward outlets for their growth in shares and their clicks which strongly encourages national stories and inflammatory clickbait. Not slow accountability reporting.
Hatfield continued by saying that if we are actually looking at our actual journalism deficits or problems to be solved, the bill would’ve never been set up this way.
So much for truth, let’s talk about trust, said Hatfield. The mechanisms for determining who should be included in Bill C-18 and on what terms are simply too secretive and flimsy to serve. If senators only fix one part of Bill C-18, please fix this. He testified to the senators colleagues in the house on Bill C-18 last October, and since then, the world has changed a lot. Generative AI has arrived and it’s clear that the cost of producing credibly seeming, but false content of all types is falling to zero. He knows many of the senators in this chamber are frustrated from hearing from Canadians that have been severely misinformed. he’s sorry to tell senators that this problem is about to get much worse.
In the face of a likely flood of online misinformation, Hatfield explained, we are going to be credible trustworthy reporting now more than ever. But that reporting will only ever be able to separate itself from AI misinformation if there is a crystal clear chain of custody of how it is produced – of who is influenced, who is providing the funds, and how it impacts their credibility and independence. Right now, Bill C-18 does the exact opposite. We cannot enter into a new era of misinformation with our truth tellers enmeshed in a web of secret deals that are forced by government. Least of all when those negotiations are with the very same companies who are also making the large language models driving misinformation.
It is OpenMedia’s principle position that Bill C-18’s fundamental flaws go deep and should be rejected for a simpler and fairer media support bill. But if that’s not an option, they beg senators to at least make Bill C-18 fully transparent to every Canadian so that the relationships it creates can easily be understood and misinformation does not further balloon. Over 12,000 members of their community have reached out to senators to ask for fixes to Bill C-18. They hope senators will hear them.
Philip Palmer of the Internet Society Canada then opened with his statement. He said that the Internet Society has submitted a brief that outlines its concerns with Bill C-18 – many of which has been raised by others in this committee. They’ll concentrate on what they consider to be the regulatory heart of the bill – the power of exemption. Stated scheme of Bill C-18 is the platforms self-identify, negotiate commercial agreements to compensate news businesses for the value of their content, and then apply for an exemption. The exemption is to be the reward for compliance.
Palmer continued by saying that they believe, in contrast, that the exemption power will act as a disincentive to the participation in the scheme of compensation. Rather than a means to reward compliance, the exemption power represents a retrospective regulation for the relations between platforms and news businesses. Structure of the exemption power denies finality to the negotiation process, it threatens to destabilize the results of good faith negotiations.
Most importantly, Palmer explained, the exemption power forces platforms to subsidize a range of news businesses who have not qualified for commercially based compensation. Bill c-18 represents a contribution program with governmental, rather than commercial objectives. Their conclusions are based on the following factors: In the structure of the exemption provisions, fair compensation is but one of the 19 requirements that must be met for exemption. The platform must enter into agreements, but not merely (not sure why the Closed Captioning says “nearly” here) compensate news businesses for their content, it must contribute to the sustainability of the Canadian news marketplace. Fair compensation is not enough.
Second, Palmer said, news businesses with no real relationship with the platforms are to benefit from the agreements. The platform, seeking an exemption, must conclude agreements – even those that are non-compensatory. For example, the agreements must ensure payments that sustain independent local news businesses. The list of necessary beneficiaries of the agreements includes not for profits, news businesses that reflect the diversity of business models, news businesses that address diverse populations including including official language minorities and black and racialized communities.
Palmer noted that the Department of Canadian Heritage has acknowledged that many of these have no claim to compensation, but to earn an exemption, they must be paid. Separate requirement that ensures that indigenous news outlets both benefit from and are sustained by the agreements. To complicate matters further, the CRTC can impose conditions upon its granting of an exemption. An instance of regulation by exemption. The bill provides that Cabinet can set further conditions by regulation. The number and kinds of conditions are unrestrained by the legislation.
Palmer further explained that finality is undermined when the CRTC issues an internal exemption with the clear intent that the platforms open up concluded agreements, possibly including arbitration decisions, to conform to the desires of the regulator. Once granted, the CRTC has the power to revoke an exemption order. It is problematic that the government in council can make regulations respecting how the CRTC is to interpret the exemption requirements. This undermines the independence and the integrity of the CRTC.
Palmer added that the agreements between platforms and news businesses must ensure that platforms supervise the use to which compensation will be put and regulate the relations between the business and its news operations. The platforms become the direct regulators of news businesses. The CRTC becomes the indirect regulator of Canadian news rooms. A task for which the platforms have no expertise and for which the CRTC has no lawful basis. Taken together, the complexity of the exemption requirements acts as a disincentive to participate in the Bill C-18 bargaining scheme
Palmer then asked, why does the internet society care? Because these disincentives threaten to disrupt the functionality of the internet for Canadian users and by subsidizing manifestly non-viable news businesses, the scheme will impede innovation, the Canadian news market, and threaten the viability of digital first startups who are offering innovative news experiences to Canadians.
Questioning the Witnesses
Senator Paula Simons turned to Sue Gardener (of the Internet Society) and Hatfield and said that today, Meta, issued this statement on the California Journalism Preservation Act which is a little bit like Bill C-18, but it’s a bit more like a tax that creates a fund which Facebook said that they prefer here, but they are not very happy about this. She then read out the statement by Meta talking about pulling out of California. So, she’s wondering, if Facebook and Google insists to them that they are not bluffing. Does it seem to Gardener more or less likely that they will pull the news as more jurisdictions experiment with formats like Bill C-18 or the Australian model? In other words, if they are threatening to do with in California, shouldn’t that make us more or less worried about them doing it here?
Gardener responded by saying that, yeah, that is such a good question and she thinks that- Jesse Brown was here yesterday (reference to hearing 7, segment 2) and he said something that struck her. He said that, you know, he doesn’t think it is out of the question that Facebook and Google would make an example out of Canada to show other countries what happens when they are interfered with. That’s the way that she is reading this moment is that the stakes- like, she has asked herself why so much attention is being paid to Bill C-18 outside of Canada, and she’s said to the independent senators group previously that she thinks that the platforms were taken by surprise by what happened in Australia. They have no had some time to think, and she thinks that they are aiming to send a message and to use Canada as an object lesson.
So, Gardener explained, she thinks we ought to be more worried rather than less worried. Right? Because the threatening and the bluster is one thing, but if there’s, as Rod Sims said (reference to hearing 8, segment 1), the UK, Italy, the United States, California, etc., with stuff like that happening around the world, it becomes all the more important to nip it in the bud now, she would think.
Senator Simons said that she is just intrigued because when Facebook and Google has spoken to senators, they have said with big eyes, blink blink, that if it were only a fund, they would be happier. What California appears to be proposing is precisely what they said they wanted here, but they are having the same reaction of saying that they will block all news in California. It’s not exactly clear to her how you would do that for a state as opposed to a country. She guesses with IP addresses, but what should we make of a statement like that from Meta? Should it make us more or less willing to play chicken with them?
(I think it’s because the California JCPA is still demanding payments for links. The preferred fund model might be something like assessing how much revenue the platforms make and saying that you should pay X amount of dollars this year or next year. The California model still demands payments for linking in the end.)
Hatfield responded by saying that he thinks that this is a fascinating scenario. He doesn’t think that we can be certain what either Google or Meta intends. He thinks that Meta’s business model is so far from the news ultimately, that he thinks that they probably will at some point. They are certainly trying to de-emphasize it and he would not be surprised at all if they try to turn it off globally at some point. Google, he thinks, it’s harder to say. He does think that one of the issues with Bill C-18 conception as mentioned in his introductory speech, generative AI is going to change things a lot. So, the fact that we are tying support for news to a form of sharing of content, he thinks, is not a version of support for news that will last very long into the future. We should be aware that even if it works in some sense temporarily, it won’t work for very long.
Senator Simons then said that so it begs the question, she would think that if you are doing large language models and generative AI, that you are going to need access to news stories as fodder for your robot to, you know- if it can’t crawl news stories, it’s not going to be able to get information to answer the questions that is asked (time ran out).
Senator Rene Cormier then turned to Kitt and said asked if he understood well that Kitt proposed amendments, is that so? If so, did senators receive any information on that?
Kitt responded by saying that they proposed amendment to the House, not to the Senate, but he could give senators a copy of those.
Senator Rene said that he would appreciate to have that, of course. So, he heard that Kitt’s concerns are on diversity, accountability, and transparency, so he spoke about the issue of transparency in the other place, he would imagine that Kitt still has that challenge with the bill as it is as they are studying it. So, does he imagine that- to Kitt’s point of view, could section 86 which deals with the independence of the auditors report be made clearer as to its content. Does he think that could help for transparency (It would help that much more than a total of what came out of a deal would be extremely helpful, actually. Maybe a paper trail to show that the money did, indeed, go to the production of news, for instance.)
Kitt responded by saying that yeah, he thinks, currently, the bill provides for aggregate information from the CRTC and not individual deals. So, Unifor believes that the value of these deals should be made public as journalism is in the public interest and so the public should know the value of these deals. Short of that, he knows that there is a lot of pressure to keep a lid on that. Short of that, he thinks that arbitrators should have that information because how can an arbitrator rule on the value of a deal if they don’t know the value of the other deals are? So, it’s important that that information is there and if the CRTC is managing it as they manage confidential information in the broadcast industry, there’s not a lot of complaints about the way they handle that. He thinks that the aggregate numbers from the CRTC to be made public and those arbitrators getting the values of those deals so they can make informed decisions would suffice.
(This is honestly probably one of the few ways I agree with supporters of this bill. This bill desperately needs better transparency provisions. This call, at least from my perspective, isn’t about something stupid like the CRTC peering into the news rooms of the nation. It’s more about ensuring not only confidence in the system, but also ensuring that the bill is going exactly what it says on the tin – that it well and truly is about getting platform dollars and putting those dollars into actual news operations and news production. This as opposed to some CEO taking that money and using it to pay for personal vacations, Rolex watches, and telling the employees after that they can make do with less afterwards. Having proper transparency allows people to look at a news business, point out that they received, say, $125,000, and ask why on earth did they lay off staff afterwards. It allows, at least, the most basic levels of accountability here. You want public trust in a bill, accountability goes a long way in getting that trust. Personally, I don’t think any of these calls actually go far enough, but I’m all for steps in the right direction here.)
Senator Cormier said that yes, he understands that, but about the independent auditors report that could be made clearer, he asked Kitt that question.
Kitt responded that he has no comment on that. (A bit of a surprising of an answer, but alright.)
Senator Julie Miville-Dechene turned to Palmer and said that he came up with a very severe criticism of Bill C-18, let’s say it. Palmer was very critical of that bill. That being said, there are two things. It’s much easier to criticize than create a bill all to come up with a constructive solution. But she would like to know what Palmer thinks about the fact that the powers are not equal. If there was some conditions in the idea that there should be some exemptions in a bid to give some more powers to small media outlets. Does Palmer admit, yes or no, that there is differential powers when it comes to platforms. The great platforms have the biggest piece of the pie. There’s no perfect competition. She knows that Palmer is an advocate for free internet, but we are not there. We are in a society where we are trying to preserve our journalism and media outlets. We want to keep them alive. So, what advice do you give? It sounds good that government should not touch the internet and so on and so forth, but we are not there yet.
Palmer responded by saying that, first of all, he doesn’t like to criticize federal legislation. He’s been involved in the drafting of upwards of 25 or 30 bills to actually pass through parliament and he respects the drafting process and he’s very confident that he is familiar with how it works. He does have criticisms with respect to this legislation, and he does think that in comparison with the Australian model, the Canadian model is flawed, but he would call- it doesn’t lead to clean conclusions. The Australian legislation leads to deals, they’re done, they’re over. In Canada, we have deals done and, in order to escape further processes, we go for an exemption and the process goes on and on and potentially on.
Looking at it, Palmer said, he doesn’t see purpose of the exemptions. He would’ve preferred to see deals made. He’s not an advocate of the totally free and open internet. There has to be certain regulations. He does feel, however, that this approach to the internet is flawed and even if this legislation is passed, he thinks we’ll be living with serious conceptual problems for a long time to come and some very serious practical problems.
Senator Miville-Dechene said that Palmer talked highly of the Australian model, but Facebook didn’t do very many deals. It’s a half failure too. They just had no law in place, so now they are talking about having a law again.
Palmer responded by saying that the law is in place, but they just didn’t designate Facebook as a party. Frankly, he think that’s a cleaner way than the Canadian’s approach to who must negotiate.
Senator Andrew Cardozo turned to Kitt and noted his points about the CRTC. First of all, he just wanted to make a couple notes about the CRTC having been a commissioner of the CRTC. he wanted to share his personal views of it that often times people talk about it being a political organization. He was there for 6 years and when he was appointed, he was told that he wouldn’t have contact with MPs. He knew a few from different parties who literally had no contact for 6 years. In some cases, family friends whose families who they didn’t see for 6 years, so it was like being in prison for 6 years. Suddenly, they were let out and they see that their kids have grown up. In his experience,the political interconnection was not present or is very minimal.
Second, Senator Cardozo said, the work he thinks we’re talking about would be done by the professional public servants at the CRTC. Third, he doesn’t think there’s another government agency in government that has dealt with a similar industry. In fact, they do deal with broadcasters who are news makers and newspapers are not that different from broadcasters (depends on what angle we are talking about, personally). They are much less different than a lot of other areas. So, his question is, what is Kitt’s thoughts on the CRTC as the agency that would be doing this work.
Kitt responded by saying that as someone who has been advocating for the CRTC for many many years and has disagreed with many many decisions that they made, oddly enough, he was comforted by that decision – to put the regulation into the hands of the CRTC because, as Senator Cardozo said, it’s quasi judicial and it’s independent to a point and he knows there is directives, he thinks, from parliament-
Senator Cardozo said that which are all public.
Kitt echoed the comments and said that which are all public. He thinks that Unifor is comforted that the CRTC will handle it and its ability to mediate those deals and make sure that the balance is had.
Senator Cardozo said that it’s interesting. In his six years, he’s never heard anyone who has been comforted by the CRTC, so- (laughter in the room) (there was some talk over talk)
Kitt said partly that they are comforted by those decisions (microphone was muted for the first part of what he said.)
Senator Cardozo then turned to Palmer and noted that he talked about the free and open internet and he just wanted to take her to a bigger plain – partly what they are talking about here, but bigger. Just a discussion about ChatGPT and what’s happening with artificial intelligence and the rest. You got the owners and inventors of artificial intelligence asking government to do something. What is Palmers thoughts about what government should do with AI?
Palmer responded by saying that he is not capable of answering that question. He wished he could, but he just doesn’t know enough about AI and its implications. He’s met some people who have done some real thinking and it gives him confidence that some real thinkers are on the issue, but he’s afraid that he can’t help Senator Cardozo there.
Senator Cardozo asked Gardener is she has any thoughts on this.
Gardner responded by saying that she doesn’t think anybody can answer this question at all which is the problem. She means that AI may pose existential risk to humanity. It’s a possibility. That is what the people who signed the open letter. A lot of people calling for regulation that is what they are concerned about – that existential sci-fi risk that the robots take over and subjugate us or kill us. But, there are dozens- hundreds of risks. She means that just if you think about it in the news context, there are so many different pieces of it even in just that context: who is going to write the news? What if the news is “hallucinated”? There has been work done. News Garden organization in the United States did a test with ChatGPT where they had it generate propaganda, disinformation, in different voices from different perspectives and found it incredibly credible and persuasive. It’s also not supposed to do that. It has guard rails, but it did do that which is bad. Then there is questions about job losses (time ran out) just a lot.
Senator Pamela Wallin turned to Hatfield and said that he made a very important here. For those of us who have spent their life in journalism, we know that news has always been the loss leader. It did not generate money. It did not make money. They were subsidized by the selling of cars or the rental of apartments. So, when we talk about funding the organizations rather than journalism, she thinks that we are kind of fundamentally missing the point. She thinks that this also has an impact on the new media that we’re seeing develop because they don’t want money from government or big tech. They just want access to viewers, readers, eye balls and government is going to make that more difficult (I’m nodding in agreement a lot to this). Does she have a sense of what Hatfield is saying?
Hatfield responded by saying that yeah, he thinks to some degree. He thinks there is absolutely likely some types of reporting that needs some form of subsidy. To Senator Wallin’s point, it has always been thus. The subsidy used to come from advertising and non news sources. That’s not working any more. We’re sort of skipping a crucial step where people see that advertising is now with platforms and people are like, well that must mean that the fact that there is news on those platforms and there’s advertising on those platforms, clearly these two things are linked and they are taking value that belongs to the news. It is not the case. As a result, we are sort of setting up a system of Bill C-18 that fundamentally doesn’t really make sense which is where they were calling for a radically simpler approach of take money from platforms if you want to, but let’s make sure the money is going to where it actually needs to.
They heard from Unifor about news deserts, Hatfield explained. Is money from Bill C-18 going to fix news deserts? (No.) The outlets aren’t there to ask for the money. There’s no person for that money to flow in to. So, he thinks that we are losing track of what the actual problem is a little bit here and perhaps making a bill that’s not going to address our large journalism problems for that reason.
Senator Wallin said that yes, because there’s concern by many that the beneficiaries of Bill C-18 are likely to be the big players. National chains or the CBC and the CBC is, of course, already receiving more than a billion dollars in government subsidies. So, is Hatfield concerned that, in that context, if this bill passes, then the new, more innovative approach, the online news organizations that have reverted to a subscription base, people are actually responding to their content, that they may be somehow punished or neglected by this system.
(for me, undoubtedly. Whether news link blocks happen – in which case, many are just flatly screwed – or news link blocks don’t happen – in which case they’ll get stuck in regulatory hell where they get lost in the regulatory backlog or simply not considered “news” at all and get punished anyway. This as their larger competitors are raking in the free money.)
Hatfield responded by saying that yeah, some parts of the support can be interpreted as a subsidy against those startups. Particularly, he’s hearing in Australia, perhaps smaller outlets received slightly more disproportionately per journalist than the larger ones did. But, really, the majority of the funding should be going to the smallest outlets. In Canada, a lot of that funding looks to be going to the CBC. It’s wonderful and fine to support the CBC, but it’s unclear when the government can just increase their budget if needed, why we should be subsidizing that versus startup outlets that are not going to be getting that kind of support on that level.
Senator Wallin then turned to Palmer and noted that he also raised the concern about this being about government objectives, not commercial objectives and making, you know, these new players actually viable.
Palmer responded by say that yes, it’s- the problem of the, sort of, dressing of this as a series of commercial negotiations with the gun to the head of the big players in the form of monetary penalties, the primary issue, he thinks, is really the one that Hatfield has alluded to which is, is there really an appropriation of value in the news. If there is not, then really, what is this all about? The Australian model was never tested in the sense of it never went through arbitration processes where you would have counting evidence of this kind and that kind and expert witnesses and so on. Rather suspect that if this legislation comes in, we may actually see some contestation here in Canada and it would be interesting to see what the result is.
Of course, Palmer continued, again, the institutional biases that are reflected in the legislation sort of drive to a result, but it’s unclear – one of the things about this legislation is that it’s never been clear what it’s basic premise is. Is it that Google and Facebook are stealing the value of news or is it simply that Google and Facebook have built the better mouse trap in terms of being able to collect advertising revenues?
Senator Donna Dasko turned to Palmer and said that he certainly offered a picture of this bill causing serious problems, issues. He talked about disincentives and, especially, destabilizing for the environment, she guesses, about the internet – around news organizations. She wonders if there is anything Palmer would suggest – she hasn’t read Palmers brief yet – but is there anything that he would suggest that can be done with the bill in terms of, like, top priorities that Palmer might have for change. In particular, with respect to stability, uncertainty issues that he outlined. Is there anything that can be done in his view to sort of ameliorate the harms that Palmer sees?
Palmer responded by saying that he’s speaking out of school here because his society has not taken a position on this and has not put forward amendments. He thinks the- for instance, he thinks that the interim exemption power – power to issue intern exemption orders is probably a mistake. It’s- it’ll lead to blackmail – regulatory blackmail. It’ll force the reopening of concluded agreements which will destabilize the commercial players. He thinks those are major threats, so he thinks that would be one area that he would say could easily be fixed. he doesn’t think that it is very easy in the political context, but he thinks that, in terms of the legislation, that would be something that would be important.
Senator Dakso noted that Palmer focused on the exemption orders. Palmer mentioned 19 – there’s 7 listed, but she thinks that the detail brings up more than that if you look at each little clause within a clauses.
Palmer said that it’s because he went through and looked at all of the areas sub requirements and so he came up with 19. He may be modest in the-
Senator Dasko responded by saying that, yes, so would Palmer make any changes there?
Palmer responded by saying yes, he thinks the test should be have you concluded a sufficient number of agreements? Period. If you are going to have an exemption power which he doesn’t think really pays a whole lot of- he doesn’t think it’s a very profitable way to go. He doesn’t think it’s a very useful instrument because the main thing that you want, whether it is, as he says, whether it’s sort of an extortionary scheme we’ve come up with – if you want is agreements, get agreements. Don’t add all of this stuff where they got to keep coming back to the CRTC and satisfy this and satisfy that. The government could create regulations that could add further conditions to the 19 items they got already. These things, he thinks, are major flaws in the conception of the legislation and he thinks they will harm the ability to negotiate and get to deals.
Senator Dasko echoed him and said to just focus on the deals?
Palmer responded by saying that yeah, on the deals. Get the deals.
Senator Dasko said that to just get the deals done.
Palmer said that the virtue of the Australian system is that they got the deals. They went after the deals. It may not be perfect for Canada, but he thinks we may have introduced imperfections that were unnecessary.
Senator Bernadette Clement said that she asked the previous witness- Australian- about their economic model and they seem to be happy with the deals and they wanted them to be kept deliberately secret. It worked in the model. So, if Bill C-18 is what we are going to be getting here, how can senators make it better in terms of transparency? She knows that Kitt has amendments and maybe he could talk about that, but they didn’t want that, but here, they talk about transparency. Can they talk about the pros and cons about the transparency? She would think it’s more pro here and she thinks that this would be what we would want here and what should senators do to ensure that? (Huh, I thought that the Australian witnesses said that the additional transparency was actually a flaw that Bill C-18 identified and fixed in the Australian model. So, I’m a little confused by that question.)
Kitt responded by saying that he’s not sure that he heard that they didn’t want transparency, he thinks that it’s Google and Facebook that don’t want the transparency and they want the deals to be secret (Uh, I don’t remember that being a thing either. I actually think it’s the large media organizations that don’t want the transparency as they railed against the idea of the CRTC being in their news rooms in the process. They are not unanimous in these comments, but some of the large players were against the transparency if I remember right). He think that’s (some talking off mic) he thinks that we are all owed the transparency here and, as government, if we are going to impose the legislation and help these parties out, these news creators, they owe the public the knowledge of what these deals are worth.
Senator Clement asked if Kitt has any suggestions.
Kitt responded by saying that he thinks they would have to report it to the CRTC- you know, whatever the legislation says, they have to report to the public and whatever it is – whether it is the aggregate numbers or more specific numbers – they would argue more specific numbers, but if there was to be a compromise, the aggregate numbers and letting the arbitrators also know the values of the deals.
Hatfield said that he doesn’t think that the independent auditors report is adequate. He thinks that the public is going to have a lot of questions around what’s going on here, what the nature of the relationships are, and the more the CRTC is stacking on different government policy objectives for this process, the more people are going to want to know it’s being applied, what exactly was being done to bring in local content more or any of these long list of objectives. Frankly, not having any of that transparency on individual deals is really dangerous.
Hatfield explained that we’re entering a world where you or I or anyone could click a button and create a very plausible seeming extremely explosive untrue version of one of these deals and just leak it onto the web and claim it as the real thing. If we are barring showing the real deals and the internet is flooded with these fake deals and we’re saying, ‘go to these outlets and try to trust that what they are doing is credible’, we’re going to be seeing a lot more distrust of these outlets in the future.
Senator Clement asked if he has spoken to his counterparts in Australia because there’s a lot of positivity around that. Have any of the witnesses talked to them?
Palmer responded by saying that he talked to some Australian’s who take a less enthusiastic view of the workings of the Australian process, but he can’t say that they speak for any large group within Australia. He would just say, though, on the issue of transparency, transparency is a wonderful thing when you are talking about public processes, but this legislation is ostensibly about commercial deal making. That’s the guise of the legislation. So, at it’s core, you’re dealing with private relationships and transparency is the last thing most deal makers want.
Palmer notes that he doubts very much if PostMedia would really want the details of their deals with Google made public any more than Google would like to see that made public. If you want deals, you de-emphasize transparency. If you want transparency, you make it a public process and you create a tariff. That’s what the CRTC does with these various funds that they require people to pay into or approve the tariff that are proposed for Bell or Rogers. Then you have a public process and you know what the result is. But the government has chosen to go down the road of negotiations and bargaining. That’s incompatible with full transparency. Public transparency, and he thinks that there are compromises that you have to make in these things and one of the compromises is that in order to get these guys bargaining hard, you have to give them some room to manoeuvre within closed doors.
Senator Leo Housakos spoke about an amendment to a different bill. After that, the hearing was adjourned.
Concluding Thoughts
One thing is for sure, the witnesses really drew the lines on where they stood in their opening remarks. It was interesting to see that the scrappy nature of the witnesses did seem to go down as the hearing progressed. Senators seemed to sense that there was one area that both sides had common ground and that’s the need for greater transparency. Generally, the message was that there needed to be more of it with these deals. Palmer was the only one to throw in the caveat in that the bill is largely about enforcing private deals. So, you have the direct conflict if needing government transparency, but at the same time, deal makers don’t want transparency in private deals. So, things, at least for him, seem to get a bit murky which is definitely a point well taken. Indeed, the bill does confuse matters a bit in this area.
I think one really important point that was raised from Hatfield is that those who are critical of the bill are not really against subsidies of the media. In fact, many of us critics are actually all for subsidies. The issue people like us take is the way that this is bill is coming about these issues of funding the media. Tying it to the false narrative of platforms “stealing” news articles because they link to them and demanding that platforms must pay to link to them is a complete non-starter from the get go. It brings on a huge range of problems including whether or not small startups are going to be treated fairly under such a regime (spoiler alert: they are destined to not be treated well.) I think that’s one way that the bill rubs people the wrong way.
Of course, there is also that looming threat of the platforms dropping support for news links altogether and this is a point that was raised by Gardner there. A lot of supporters like to refer to Australia as this utopia of news where everything worked out and everyone is happy about it (not really the case, but I’m making a different point here). The thing is, the threat of other countries implementing a link tax was much more distant at worst and downright non-existent at best. So, the chess board was very different back then than what it is today.
Today, you have numerous countries threatening the platforms to pass similar laws in their countries so, as a result, you know have that exponentially greater financial ask of the platforms which only serves to increase the chances of them saying no. So, it’s not really a surprise to hear a witness point out that the risk is much higher – in fact, Garner explicitly pointed out this threat.
I suppose a large problem in all of this is the fact that this throws a major wrench into the senates efforts to fix the bill. How do you fix a bill that is beyond repair? How do you fix a bill where a major party in all of this is on the verge of just ditching providing that specific service to people, negating everything that was put into the bill? I’m not entirely convinced that this is a puzzle that the senate even has a shot at solving, let alone finding the will to find whatever compromise that could be found here. The issue is far too great to handle (and I say that in the vacuum of the more recent moves from Facebook, here).
I found it kind of interesting that, despite the rather scrappy start, the end of this hearing wound up being borderline sleepy in a way, though. I’m not sure if it was my imagination, though. Still, a lot of good discussion on this one.
Drew Wilson on Twitter: @icecube85 and Facebook.
