One of the responses to the dropping of news links is talk of massive bailouts. The sustainability of that is questionable.
The backfiring of Bill C-18 is happening. When the link tax bill passed, Meta followed through with their warned response and blocked news links. Some out there said that they wouldn’t last a week doing this, yet here we are into week 4 and there’s no signs of this reversing. A few straggling hardcore supporters, if you can believe it, still insist that this is a big fancy bluff and they’ll come back any time now… aaaaany time now (insert talking point drug fuelled twitching here).
Meanwhile, back in reality, Google has long ago announced that they will be doing the same at some point before the law goes into force. By all accounts, Google dropping news links would likely be even worse for publishers. Not only that, but Google’s move would also be combined with the negative implications for journalism outlets of Meta dropping news links.
Numerous newspapers have already begun transitioning to online as a cost cutting measure, keeping the organization afloat in the midst of massive layoffs. One thing is for sure, lack of innovation and years financial pillaging by venture capitalism has led to this moment of the hollowing out of the large news companies. What was once an unstoppable force of the ever-present newspaper has given way to questions about how to keep these news businesses afloat as they continue to get saddled with bigger debt loads.
One option that the government has floated was massive news media bailouts. As the audience for large news corporations continues to shrink, the government can foot the bills for now. Of course, as we’ve already found out back in January of this year, a bailout doesn’t necessarily mean news businesses can carry on with business as usual. In fact, it has already led to waves of layoffs.
The problems of bailouts don’t end with some companies basically taking the money and running. One thing that University law professor, Michael Geist, noted is that the business model envisioned by the lobbyists under the Online News Act is that 70% of all costs would be footed by government regulations:
8. News Media Canada, the lead lobbyist for Bill C-18, has now told the government that it wants the “temporary” support measures such as the Labour Journalism Tax Credit extended and expanded. The group is seeking government tax credits equal to 35% of labour costs. When combined with the roughly 35% envisioned by Bill C-18 (in the unlikely event that both Internet companies reach agreements), the groups wants 70% of news costs paid for government or through government regulation.
So, in the lobbyist ideal world, 70% of all costs are going to be footed by government programs. This is an industry that loves to say that they are the ones that hold government to account. If the government is up to no good, they are all too happy to expose such things to the public. This raises a deep ethical question here: are you really going to criticize an entity that is responsible for your paycheck? Not likely. Sure, some media companies like to talk a big game about being their own independent entity and taking (expletive) from no one, but the reality is that their livelihoods have never depended so much on one single source of revenue.
This is only the beginning of the problems with all of this.
With the platforms dropping news links, the invariable outcome is layoffs throughout the sector. Depending on how this is all set up, labour costs are going to drop, meaning that percentage is only going to go up. The only alternative is that subsidies drop as revenues crater due to a lack of traffic on online properties for a lot of these news outlets. One way or another, this weakens the position of the news organizations.
Then, politics enters the chat. What happens when a different government comes in? Specifically, a government who is backed by those who love to shout things like “murder the media” and “defund the CBC”? A government whose leader only sees the media as Liberal mouth pieces? You’re talking about a media industry who is already struggling to retain what audience they have, losing money left and right because of poor lobbying business decisions, and about to take another 35% revenue hit. The government suddenly has the power to pull the plug on any uppity news outlet and all it takes is one government who salivates at the idea of pulling the plug on some of these annoying outlets.
The bitter irony in all of this is that the Online News Act was envisioned as legislation that would better sustain a vibrant news sector. In response to Meta’s move alone, some outlets have already announced slowdowns to their operations. Google pulling out could mean further slowdowns and an increased number of bankruptcies. There will, no doubt, be some survivors, but the moment that bailout money gets pulled is when most end up getting finished off if they are finding ways of hanging on. The only thing the Online News Act has done was increasingly put the news companies in Canada out to pasture. So much for the law “saving” journalism as supporters loved to proclaim.
Drew Wilson on Twitter: @icecube85 and Facebook.
