A piece in the Globe and Mail speculates that the reason why the Online News Act is failing is because it’s not like Australia enough.
As the December 19th deadline gets closer to when the Online News Act experiences total failure, the Canadian media has shifted from being a firehose of propaganda to speculating why their “foolproof” link tax plan has failed. The reason for the seemingly inevitable failure is because the new law is built on a false premise that linking is “stealing” while failing to recognize how the basics of the internet and copyright law actually works. It was a law that never should’ve been passed, but it was fuelled entirely by defamatory accusations that anyone against it is either a card carrying Conservative party member or a shill for “Big Tech”. This as critics collectively shook their heads, remarking what a bunch of idiots the government is while ramming this bill through the legislative process.
The solutions to this massive policy blunder were quite simple. Don’t pass the law (before it was passed) or rescind it (which is where we currently are). Anything short of that is unworkable and critically flawed. Will such a solution bring about a restoration of how the internet should work overnight? No, that would take time. Still, it would be a critical first step in restoring sanity in this space.
In recent days, Canadian media outlets have seemingly started to realize that things might not go their way with this new law. Talking points they’ve held in recent years such as “But Australia!”, “It’s a bluff!”, “They can’t survive without our news content”, “Facebook would shut down overnight without news content”, and “They’ll come crawling back to us before the end of the week, just you wait” have all seemingly been flushed down the toilet where those talking points belong.
More recent reports seemingly include admissions that if Google pulls the plug, then things could get worse (something we predicted way back in September) or even the famous admission that maybe government should listen to Google after all.
While developments marked a very late, but much needed semblance of progress, such realizations may be more of a case of too little, too late given that the government, earlier this month, continued to insist that no, they really will get a deal! Honest! while continuing to refuse to “back down” (which would’ve been the correct move in this situation).
Recently, the Globe and Mail published a piece about the dire situation with the Online News Act. The opinions expressed were… something to put it politely. The article was published yesterday and the general idea is that if Canada just emulated Australia a little more, then we wouldn’t be in this mess. Yes, an eye roll is an appropriate reaction. The piece starts off somewhat innocently enough:
It’s been nearly four months since Meta began removing Canadian news links from Facebook and Instagram in response to Bill C-18. If Justin Trudeau’s government doesn’t change course in its dealings with Big Tech, history tells us it could be years before Canadian news returns to these platforms.
To fix this legislative mess, our lawmakers should be looking at how other countries have dealt with Big Tech and its use of news links in the past.
I mean, this is the media we are talking about. You can’t expect them to write these pieces from the perspective of someone who is knowledgeable on the topic these days. That’s just not how the media operates anymore. So, it’s little surprise we’re not off to the greatest start, but it could’ve been much worse. In this case, the author is conflating general regulation of “Big Tech” with link tax laws. Link tax laws have little to nothing to do with regulating “Big Tech” and is more about a massive shakedown to prop up legacy corporations who increasingly solely exist because of handouts rather than providing a service to the public.
Before anyone asks, yes, there are ways to regulate large tech companies. Whether it is setting a standard for privacy, regulating the ad tech sector, or controlling how much of a given industry they can have under their corporate umbrella, there is no shortage of viable paths moving forward with actually regulating these mega companies. A link tax, however, isn’t one of them.
The piece then goes on to describe two different outcomes. It more or less described the Australian model as the success story and Spain as the failure story. Credit where credit is due, this may be one of the rarest times I’ve ever seen large media companies ever utter the word “Spain” when talking about link taxes, so that acknowledgement that something did happen in Spain several years ago is certainly a welcome step in the right direction.
The author then goes a bit into why he figured that the Australia model worked:
Australia’s News Media Bargaining Code stipulates that “designated” digital platforms will be required to pay Australian publications for featuring news links on their platforms. To date, no digital platform has been designated, but that’s exactly why the law was hailed as a success.
Australia’s law allowed for exemptions if the tech giants could come to their own agreements with the media. According to a 2022 report by the Australian Treasury, the law, despite not being applied in a direct way, encouraged Google and Meta to strike at least 30 private agreements with Australian publishers, in which the tech giants forked over a collective AU$200-million.
The author then mentions the failure in Germany, so I’ll give bonus points for that one. The author then goes back to the main thrust of his argument:
On this issue, Google and Meta have proven to be ungovernable. Faced with legislation in several countries, tech giants have simply hit the off switch, just as they’ve done in Canada in response to C-18.
In the view of the platforms, it’s easy for tech giants to hit the off switch because, according to Google’s submission to Parliament, “Google does not earn or seek to earn meaningful revenue from news.”
How then did Australia win out where other countries faltered?
What Australia did was nudge, in a non-legal sense, tech giants into paying their fair share. They poked the beast, accepting that perhaps they didn’t have the bargaining power to fully legislate it. Anything more, and Google and Meta would have simply hit the off switch.
If Canada wants to secure a similar payday for its news industry, that’s what it’s going to have to settle for.
So, to summarize, in order for the Canadian government to extract trunks of cash and redistribute to organizations that clearly don’t deserve it, the Canadian model should more closely resemble Australia by offering a way for Google to be not designated in a more lenient manner. This by doing what Australia did and demand that Google strike deals with a select few news organizations and concluding that Google’s obligations end there. With such a system, the platforms would come back and all will be good.
There is, of course, a critical flaw with this thinking. It basically puts government in a position of picking winners and losers in the news online marketplace. In Australia, a lions share of the money extracted from the platforms went to portions of the Rupert Murdoch “news” empire (yes, the same guy that owns Fox News). A select group of newspapers managed to get a smaller amount of loot from the shakedown as well, but the overall effect of this is that it cemented the players who managed to chisel money out of the platforms while delivering a massive disadvantage to anyone else who dared to start up a small news outlet. Essentially, your operation would invariable go towards funding your business rivals, leaving new entrants in a permanent disadvantage in the market.
What is being called for in the Globe and Mail is a repeat of this mistake. A major criticism of the Online News Act is that huge portions of funding would go towards the CBC – a news organization that is heavily publicly funded by the Canadian government. Privately funded firms would operate at a disadvantage to the CBC permanently because not only does the CBC get hundreds of millions of dollars in taxpayer subsidies, but stand to gain additional tens of millions from platforms in what amounts to ill-gotten gains to boot.
What’s more, the further down the food chain you go, the worse this problem gets. For instance, the biggest privately funded players, which have a tendency of being owned by vulture capital organizations, would also hoover up a huge portion of the loot that the CBC doesn’t get. As a result, they would inherent a permanent market advantage over innovative smaller players who are actually trying to serve the public with higher quality content. What’s more, it would provide a disincentive for the larger players to even bother with this whole business of innovation and providing high quality content. Why bother when there’s going to be a multi-million dollar paycheck coming your way? Why not just revert to talking about the grass being green, hit publish, and call it a day? It’s not going to make a difference in the bottom line what you end up reporting on in the end.
If we are lucky in this scenario, a handful of smaller players might be able to collect the crumbs at the bottom. A deal might be struck with a select few news organizations where they might be able to get a few thousand dollars per year. It’s probably better than nothing, but when the market is so heavily distorted and tilted towards the larger players, there’s no such thing as a sure future.
That leaves the players that are outside of the system like Freezenet. You basically work your rear end off trying to provide the coverage that has long been sorely lacking in the news marketplace in Canada. You put on some Google Adsense ads to try and scrounge for pennies. Then, afterwards, you get that knowledge that part of the money that you probably should’ve earned is being redirected away from your outlet to the larger lazier fat cats at the top who have no interest or motivation in doing a reasonable job.
Ultimately, even if that kind of flexibility is introduced where a handful of businesses will mean Google is no longer designated, it creates a massive distortion in the marketplace and ensures that the smaller innovative players will likely never gain a foothold no matter what.
Even worse, it puts the federal government in a position to start picking winners and losers. So, the government can come in and say, “Hey! CTV liked my Online News Act! They are in. Freezenet criticized the law? Forget it, that small business dies!”
It’s probably not a huge surprise that the Globe and Mail would float this idea. After all, thanks to their wealthy backers, they stand to get a nice chunk of Google bucks in the first place, so they are highly motivated to advocate for an idea that gets them free money in the end.
Either way, though, it’s a terrible and unworkable idea. It puts us back to the problem of the media being dependent on the government for their paychecks. As a result, there wouldn’t exactly be an incentive to criticize the government in any crucial way. If anything, it would create even bigger problems with trust in the media – a problem that is already pretty bad.
The only way out of this huge mess is a full rescinding of the law. Just admit that this whole thing was a terrible idea from the beginning, put a check on that ego, and simply toss the Online News Act into the shredder. It won’t be a solution that gets results overnight, but it is a huge step in the right direction. Advocating for specialized deals is just advocating for an unfair marketplace that kills innovation and competition.
(Via @RobertFife)
Drew Wilson on Twitter: @icecube85 and Facebook.
