Our special coverage of the Bill C-18 senate hearings is continued. This time, we are covering the first segment of hearing 7.
(Note: This hearing took place before Meta’s test of blocking news links)
The long running special is carrying on. The recent string of hearings feature teams of lobbyists pushing for this bill. While this seems like obvious deck stacking lately, those lobbyists have repeatedly run into significant problems of coming up with an argument that supports this bill. Many of them were seemingly digging around for facts to support their arguments, but those facts were nowhere to be found. So, in a desperate move to add credibility, the lobbyists just opted to tell the biggest lies imaginable, literally inventing scenarios out of thin air to sell the legislation. With nothing else proving useful, senators pushing for the bill just took those obvious lies at face value – likely for the simple reason that they’ve got nothing else to work with.
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
So now we enter into this hearing. If you want to watch the video that we are watching yourself, you can check it out here. Otherwise, enjoy the summary and analysis!
Opening Statement
Paul Deegan of News Media Canada opened with his statement. He said that Bill C-18 permits publishers, who produce original news content of the public interest to come together to negotiate with big tech platforms. If negotiations don’t lead to a successful settlement, it goes to final offer baseball style arbitration. It builds upon the Australian News Bargaining Code which has seen more than 200 million Australian dollars flow to publications and and outlets in that country, both large and small (mostly the big players, though). The hiring environment in Australia has improved since the bargaining code came into effect (actually, it resulted in a wave of layoffs in the sector, but supporters aren’t letting pitiful little things like “facts” to get in the way of their arguments at this point).
Deegan continued by saying that they applaud the members at the Standing Committee on Canadian Heritage who worked together on a bipartisan basis to amend the bill and make it better. Specifically, they permitted small publications, mom and pop independent publications, where the family members run the newspaper, to count towards the two employee minimum (I’m sure it was a beautiful deck chair move on that Titanic before the sinking of platforms pulling news links from their services). On that, he wanted to pay a salute to Kevin Wah of Saskatchewan who really pushed hard for that amendment and worked with them.
Currently, Deegan continued, they have a David and Goliath relationship with big tech platforms (Actually, it’s a Goliath vs Goliath relationship). They have a power imbalance with them, but also a power imbalance among publishers. You see, with the prospect of legislation of regulation, dominant platforms started offering licensing agreements to many of their larger members. Effectively, platforms are picking winners and losers and dictating the terms. From their perspective, that’s not right ad that’s not fair (Don’t worry, after this bill passes, everyone in the sector will be losers to make things much more fair across the board). Now, don’t get him wrong, they are happy for their members who have been able to secure licensing agreements. But their aim is to make sure smaller publishers, like Sarah Holmes of the Gabrielle Sounder, (other examples), get a fair deal. Pierre-Elliott of La Presse next to him doesn’t have one either and all of these publishers should get the same type of deal that the Toronto Star has been able to secure – and so too should the ethnic publishers as well as the digital publishers who have been doing incredible work in journalism and expanding audience (not demonizing us, that’s a nice, albeit, rare change).
Bill C-18 isn’t a silver bullet, Deegan said, and anyone who is going to suggest that is kidding themselves (we agree on something here.), but we got to make sure that we have a news ecosystem where independent, fact based, public service journalism in this country can thrive. No piece of legislation is ever perfect, and they offer some amendments that will make a good bill better (Bill C-18 is a terrible bill).
The role of the CRTC should be further clarified to preserve news room independence, Deegan said, and Phillip Crawley of The Globe and Mail will speak to this, and to avoid ragging the puck, the timeline for negotiation and mediation should be tightened to 45 days each and the bill should come into force quickly (well, no time like the present to destroy the media sector, I guess). After senators study of Bill C-18, they hope that senators will invite them back to discuss other issues affecting the news business (government is pretty corrupt these days, so I’m sure you’ll get it as a well-funded lobbyist claiming poverty).
Deegan said that let him just outline three of them: federal advertising (he spoke at length of spending by the government on advertising). The CBC. The CBC should be free of commercial advertising. Right now, they are competing with them for scarce ad dollars on news and current affairs properties and that’s not right. Finally, anti-trust. The US has filed an anti-trust lawsuit against Google related to ad tech. It’s time for parliamentarians to amend the Competition Act to give our Competition Bureau the tools they need to do their job. We need a Competition Bureau that’s got more bite than bark (I’ll give him the thumbs up on this mainly for realizing that Bill C-18 does nothing on competition laws. Most people supporting this bill don’t understand this and think that Bill C-18 will somehow magically fix everything when it won’t by any stretch of the imagination.)
Back to Bill C-18, Deegan commented. The unfair, inequitable, and arbitrary imbalance they have currently where some platforms have favoured some publishers and not others demands the switch passage of this bill before Senators break for Summer (making demands now. Stay classy.) True journalism costs real money, so we need to do more and he hopes that they will be able to discuss this later today.
Brian Myles of Le Devoir then opened with his opening statement. He said that they unreservedly supports Bill C-18. So, senators must know that well before the government expressed its intention of legislating, they had signed agreements with the MSN in 2014, Apple News Plus in 2020, Meta in 2021 and Google in 2021 as well (great, so this bill doesn’t apply to you in that case.) Despite that, they intend to comply with the new legislation. These agreements are important for them. They have allowed them to rebuild their trust relationship with these partners (man are you going to be pissed when Meta and Google pull out of those agreements) and that was renewed and the understanding of this interdependency.
It is very important for them for publishers to have choice, Myles continued, a choice to negotiate individually or collectively with their partners (can we just voluntarily continue with the status quo of linking being free? Am I not allowed to choose that for my news site? Hello? Is this thing on?) and with all due respect, they have to think about the benefits they would have with direct negotiations which- as for- despite the lack of understanding from the media, platforms, publishers, and professors have said that Google and Meta have stolen their ad publicity and their content, but we have to remember that they have voluntarily allowed the circulation of content on Google, Meta, Instagram, Twitter and other platforms (thank you for being honest with that point!). They need the strength of these platforms to amplify their content and reach their users wherever they are.
It’s rare, Myles said, today, that a user will look at an internet version and go through the whole paper (just as a point of clarity, and I am agreeing here, this is not because the news site is bad. Every news website experiences this phenomenon where a user clicks on the article, reads it, then goes back to the platform afterwards. The user could be enjoying everything you produce, but still have this pattern of usage. That’s just how it is today with most users.) They do word click research and they share their resources as they find them there. In that context, they barely veiled threats of Google and Meta to turn off the taps for this journalistic content would have a dramatic impact on their ability to share all of that content (a lot of news organizations are in the same boat. Many of them with access to some kind of reasonable analytics app would see that a huge portion of traffic comes from Google and Meta properties. We’re talking figures like a third of traffic coming from Facebook or 80% coming from Google, etc. It’s why I say many in the news sector are in for an abundance of pain should the blocking of news links were to happen.)
They are, Myles continued, in a complex relationship of interdependency and complimentary that we have to keep in mind in the debate on Bill C-18. Despite all of that, it’s true that there is a power imbalance between the players here (I guess it was only a matter of time before things went off of the rails), and it’s because of this imbalance on the concentration of ad revenues on the digital side that we need Bill C-18 (a bill that doesn’t even begin to solve this problem). Bill C-18 could be improved, however, and it’s one of his disappointments as a publisher because that imbalance is not just of ad revenue.
In terms of subscriptions, Myles said, it’s the same thing. The application platforms have decided unilaterally what the percentage of revenues would be. They don’t have a choice of giving 15% or 30% in terms of the partnerships they have drafted with them, so the platforms, the subscription platforms, should all be included in Bill C-18 (Yeah, if you thought that Alphabet and Meta pulling services that help you was bad, just imagine when other parts of your revenue streams are put in jeopardy as well).
Myles spoke at length about linguistic diversity. He then said that they also have a concern about equity or equality in the negotiations that are to come. Legislators should ensure that the big enterprises or big businesses don’t have an exorbitant advantage of future revenues. They can wonder what the role of the CBC is, but it is the role of the legislator that might make CBC the biggest beneficiary in Bill C-18. There is a risk of an imbalance of human resources and finances that will be available for the major media outlets. (Senator Housakos noted that Myles was already over time)
Myles said that, in conclusion, they suggest that senators put a maximum allowable amounts and the best way to be able to do that is to base the negotiations on the cost of the payroll which is one in various areas around the world. The time to act is now. They can’t wait two years between the passing of the legislation and the regulations set out by the CRTC because that delay will serve people who are against it and undermine the reforms. So he hopes that this will be implemented quickly.
(Really weird logic to go from understanding that they have a complex interdependent relationship with the platforms and immediately flip to how they badly need the bill. This when he already has a deal in place on top of it all. It’s pretty bad logic here.)
Phillip Crawley of the Globe and Mail then spoke. He said he wanted to follow up on what Deegan said in terms of amendments tabled through News Media Canada. They represent the views of the Globe and Mail that has been articulated to Canadian Heritage since last year – specifically about the language in the bill about the powers of the CRTC. The Globe is a member of News Media Canada. The Globe has a different business model that many of the other companies, digital delivery, has transformed the revenue mix of their business and expanded their national audience.
When he started at the Globe in 1998, Crawley continued, print advertising was the principle source of the revenue – about 70% of the total was print revenue in those days with the rest being circulation subscriptions and single copy sales. Now, two thirds of their revenue comes from readers and users paying for content. Advertising is only 30%. So the business model is flipped on its head. They have about 330,000 subscribers, most of them digital which is the largest of any Canadian publication. They have also invested in their home grown software to create technology used to convert casual users to subscribers. They have a subsidiary business called Sophie which has a smart paywall technology that they now sell to media around the world.
All of that depends on the most important investment of all and that’s the quality of the content, Crawley said. People won’t pay if the content is weak or generic. They create exclusive content that only subscribers can read. That costs a lot of money each year to make sure they have the talent and resources to deliver that growth. some of their investigations can take more than a year to complete, but they are often game changers in terms of driving change. So, that’s why they win more awards for journalism than anyone else in Canada each year (hooray participation trophies!). He offered examples of the award nominations.
That’s why their owners, Crawley continued, still holds the Globe in their holdings. They have sold other newspapers around the world 20 years ago, so why hang on to the Globe and Mail? He spoke about what he thinks is their assets. That kind of quality of journalism drives businesses to access their content and pay for it through licensing agreements. That’s been happening for a long time. It has helped to boost their revenue even during the COVID years, through the arrival on the scene of global giants like Apple and Google. Their business and their content is a particular reason why they have signed multi year agreements with them.
So, Crawley said, it works for their subscribers and it works for the tech companies subscribers too. That’s a good relationship. Let him return to the importance of independent journalism and the trust that builds with readers and partners. It’s a core principle to the Globe and continues the tradition of respecting editorial freedom going back to Roy Thompson dating back to the 1930’s. So, it’s why he is asking the senate today to take a close look at the amendments to the language of Bill C-18.
Allowing the CRTC, Crawley said, to go fishing for confidential information from news organizations, particularly information related to editorial departments would be an overreach that’s best avoided. Minister Rodriguez and his staff has assured them that there is no intention to use the provisions to use Bill C-18 in that way. To remove all doubt, he urged to use the amendment that they are proposing. He then went into detail about the amendments.
One, Crawley said, remove the right of the CRTC to unilaterally designate a news organization as subject to the act. That’s Section 27(2). The intention of the legislation was to not regulate news organizations. So, participation by news organizations should be voluntary. (I agree with the goal of this, however, I think we are pointing to the wrong section. Other parts of the bill suggests that all news links is compensable, so in order to actually ensure that participation of this legislation is voluntary, news organizations of all shapes and sizes should have the choice of whether or not to have their links be something that platforms must pay for. I’m not entirely sure that removing Section 27(2) would do much beyond eliminate some sudden nasty surprises.)
He’d also ask senators, Crawley continues, to amend Section 53 which allows the CRTC to compel any information that deems necessary from a news organization. The information gathering powers of the CRTC should be limited to information necessary to confirm the eligibility of the news organizations or to investigate a complaint. They feel strongly that open ended powers that compel information are problematic in the context of news organizations. The CRTC should not have the powers to compel that information from news organizations beyond what is strictly necessary to administer the Act. (The problem is that this funding scheme is government compelled. The public needs to trust that the money is actually funding journalism and not just being dumped into stock buybacks or CEO bonuses.)
Unlike broadcasters, Crawley said, news organizations are not structured for detailed ongoing regulator reporting. They do not want newspapers spending precious resources responding to regulatory requests. (He was asked to wrap up as he was over time.)
Crawley said that he has one more section. Amend Section 86 that sets out the mandatory reporting. They are particularly troubled by the potential for government to compel information about their editorial. So, they feel that these amendments are reasonable and they would ask senators to support them.
Questioning the Witnesses
Senator Julie Miville-Decehene turned to Pierre-Elliott Levasseur and noted that La Presse is very discrete throughout this whole saga. Where is Levasseur now? Does he agree with what Le Devoir is saying on the idea that subscriptions are a good solution? That we shouldn’t condemn what’s happening between the platforms and the media and their negotiations? So, where does Levasseur stand? If she understands correctly, he doesn’t have any agreements with these platforms.
Levasseur responded by saying that, well, first of all, he thinks that each group has their own business model. He’s not there to comment on Le Devoir’s approach. He thinks Le Devoir’s model is working well for them. Crawley talked about his and it’s working well for him. They have their own which is more based on advertising income and it’s working well as well. So, he doesn’t necessarily want to comment on other people’s models.
In terms of the value, Levasseur continued, whether it is the “techno” platforms or what they create for them, he thinks that there is, indeed, an exchange of value. But, they don’t see any value coming from the platforms that is in line with their contributions (fine, set up a robots.txt and take yourself off of Google and the stop sharing links to Facebook. Not that hard.) They can see in Australia that they signed agreements that reflect the true value of the content and what they are giving them, if you will, and that they are then putting out freely (links. It’s called links.). So, without the threat of the bill, there wouldn’t be any agreements in Canada.
So, Levasseur said, what they hope is that they’ll find a way or that Bill C-18 will be passed so that they will be in a position to sign some agreements that are fair and equitable for all media in Canada. They don’t hesitate to say that they have attempted to sign agreements with the platforms for a number of years. La Presse and the great majority of media tried to sign agreements with google and Facebook and they slammed the door shut in their faces. They said that they don’t need you.
So, Levasseur continued, when there was the threat of the bill for the first time, and a similar bill passed in Australia, all of a sudden, there were some media who were able to sign agreements. Not all. they were choosing who would have an agreements and who wouldn’t and they were the ones deciding what would be the clauses – whether it would be ways to get out of it, the amounts that were accorded or granted that decide that. So, he would assure senators that Mr. Myles doesn’t have the same agreement as Mr. Crawley who doesn’t have the same agreement as the Toronto Star.
They dictate the conditions, Levasseur said, and they say who will have an agreement and who won’t. Who’s going to win and who’s going to lose. So, he’s giving themselves as an example, they negotiated an agreement while they were waiting for Bill C-18 and they have always been very favourable towards Bill c-18 and they have negotiated in good faith and one day, they stood up, called them and said that negotiations are over. He said, “what?” and they said “no”. Nothing came from it.
Senator Miville-Dechene said that, faced with that situation, they want to regroup. They are talking about some 500 groups that would be eligible, and in the face of that, Google is saying that they are going to withdraw if it doesn’t suit them. So, what does Levasseur think of that statement?
Levasseu responded by saying that, first of all, it is highly irresponsible for Canadians because whether they are francophones or anglophones, the reality is that it’s just highly irresponsible (no, it’s business common sense. You are just mad at them. That’s what it really is.) They have spent years where they have been focused on quality. It’s been their trademark for the last 130 years. They have demonstrated their ability to produce value for Canadians (good on you. Help yourself to the nearest cookie. Not relevant to the debate.)
Senator Miville-Dechene asked if this doesn’t worry him. Because as Myles said, if this comes to pass, this will be terrible for media.
Senator Paula Simons said that in Australia, which is the much vaunted model, in the wake of the Australian bargaining system, Rupert Murdoch slashed staff at his paper, laying off 1,250 journalists – one in twenty of all of them (I covered that and mentioned it to senator Simons via Mastodon. Thrilled that this got a mention in the hearing). So what assurances do they have that if this kind of arbitration works out for them, that we are not going to see similar cuts?
The second question, Senator Simons continued, is a followup to Senator Miville-Dechene, if Google and Facebook are honest in their menace (French word for “threat”), what is that going to mean of they cannot share their content on Google and Facebook?
Senator Simons clarified who she was directing the question towards. Myles raised the issue because if we assume that Google and Facebook are not bluffing, then you guys get nothing out of this deal plus you lose access to the eyeballs of Canadians.
Crawley responded by saying that Google is an important part of the ecosystem. 30% of their traffic comes from Google search (publishers need platforms more than platforms need publishers. That number certainly proves the point.) Their business could be disrupted quite significantly by the difference ChatGPT and generative AI is already making. That’s in only six months. So, the whole search business could be in a state of flux. So, they’re sitting there talking today about the current situation, but that situation isn’t going to be the same in 12 months time. The fact is that, at the moment, they pay quite a bit of money to Facebook. They pay a lot of money to Google to deliver eyeballs (assuming this is a reference to paying for advertising). They depend on audience. During COVID, their audience went up 25% digitally.
Senator Simons asked if they pay them.
Crawley responded that yes, they pay them.
Senator Simons asked how they pay them.
Crawley responded by saying that they pay them a monthly fee for service because Facebook enables them to reach an audience that they would not otherwise reach.
Senator Simons said that if Facebook and Google refuse to carry for any news, how is that going to work? Also, if Crawley has an answer to the question about- the Australian example is not a positive one. More than a thousand journalists lost their jobs in the wake of it.
Crawley responded by saying that if you look at what’s happened to journalism in the last 20 years, there’s lots of jobs that have already disappeared (not the question. A model was, in fact, put in place, yet it didn’t stop the tide of pink slips. The suggestion that came out of that story was that the link tax model doesn’t work to stem that tide. Also, the timeline is flawed. 20 years suggests that the platforms didn’t really have anything to do with the losses.) That has been a factor that has continued to bedevil the industry and news rooms are often very much smaller than they used to be. That’s pre Bill C-18.
Myles chimed in and said (pulled a couple of words from the floor audio as there was confusion between interpreters due to the fast change between French and English) that there is no silver bullet. There’s no one measure that will make a difference for everybody. They need to get all of the programs in place. They need Bill C-18. They need the tax deduction and the labour costs of the news rooms. They need IGL because there are various business models and he agrees with Levasseu in this department (look, I don’t take issue with funding models and tax credits. That’s fine. Knock yourself out. I won’t complain about that. It’s establishing this link tax is where I start having a problem with things because it runs a very real risk of causing damage everywhere in the news sector.) No business model is better than the other one. (This is a very fair comment. A lot of people out there like to say that one business model is better than the other or that people who employ x business model is an idiot. This is a terrible way of looking at things because it’s similar to the idea that there is a “best” music production software package. When you are comparing the more mainstream packages, there is no “best”, it’s “what’s best for you” or what you are most comfortable with. Same with a business model. Find out what works best for you and use it to your best advantage.)
Myles continues by saying that the search will be troubled because of AI, that’s for sure (I’m not so sure because search engines are actually developing their own AI to strengthen their offerings. I think the search engines are embracing AI). The impact, just to give you an average, the Le Devoir has 40% of its traffic comes from Google search and close to 30% comes from social, so yes, if Google and Facebook decide that they will shut down news content on their platforms, they will suffer a lot (I honestly can’t imagine up to 70% of my traffic going poof overnight. That can very easily mean the difference of a highly profitable website and a website that you wonder why one would even bother.) Direct traffic is less than 20%.
The days when a reader would open a newspaper from page one to the last page are gone, Myles added. People discover content by the means of social platforms and search. This threat is real. This is why he advocates for a quick answer between the adoption of Bill C-18 and the publication of the ruling regulations. It should be swift and efficient (this is the part of the perspective I don’t get. What is being asked, from my perspective, is a quick financial self destruction. They know the numbers. They know the risk. Yet, people like him are hell bent on bringing a quick end to the financial viability for their whole sector… so they can save their business? It doesn’t make any sense.)
Senator Rene Cormier turned to Crawley and Myles and said that Levasseu was saying that, indeed, the business models are different according to which media company it is and he imagines that the agreements are different as well with Google and Facebook. He would like- he knows he couldn’t give senators the content of the agreements, but could he talk to senators about the negotiation process they had with Facebook and Google and what are their fears in terms of the non-renewal of their agreements if Bill C-18 did not exist – in order to better understand how those agreements work.
Myles responded by saying that Senator Cormier has put his finger on the issue. These are agreements negotiated by private industries, but there is information circulated around the world. Enough, that he could say, it was the subject of a true negotiation. They did have the choice of making offers and counter-offers and don’t forget that they have started in 2014. They got involved with MSN and another platform in 2020. So, they were ready to entertain these negotiations. The issue is the scope. The bigger you are in the scope of the traffic, the better you’ll be able to negotiate an advantageous agreement. If not, they can go with the Australian model according to staffing costs.
So, Myles continued, Google asked for 20% and Facebook asked for a different percentage, but the one that is based on the staff costs is much more fair. If we put a cap on it, there are caps on tax credits in Canada and Quebec. He thinks it is $55,000 at the federal level and it’s higher in Quebec. So, you take a maximum salary amount in order to decide on the tax credits. So, you could do that in the same way. So, in terms of the scope, it’s more interesting for the bigger companies. He thinks that if they have a bigger diversity of voices, if they focus on the payroll costs. So, he’s not under the threat of Google or Meta, but if this disappears and the agreements disappear, all he can say to senators based on what he has read up until now in the world literature on the subject is that the platforms have already started to consider the fact that they won’t renew these agreements. (weird that he says he isn’t under any threat, yet acknowledges that the platforms could drop their news links and won’t renew these agreements. It’s kind of contradictory, really.)
Senator Cormier asked if the length of these agreements public information.
Myles responded by saying that that is part of the confidential clauses. They are not permanent agreements, they have deadlines and they are contracts. Nothing is eternal.
Crawley said that all of the agreements, some of which go farther back than Apple or Google. They’ve had licensing agreements with people like Dow Jones over the years. People value the particular business and finance content. But it’s a more complicated relationship than them just simply paying for use of their content. Google also provides financing for technological improvements for some of their products. So, they give support in terms of their knowledge rebuilding an app. Putting money behind an Android app. That is one example of the kind of the agreement. It isn’t just simply about the content.
But, Crawley said, they have specific requests in terms of the kind of content they want. Apple particularly likes personal finance business. They wanted it for their own subscription product.
Senator Cardozo turned to Myles and Levasseu and said that he would like to know if the current situation for francophone media is more difficult and more pressing than English speaking- anglophone media in Quebec. His second question is for Deegan. Deegan has asked for some changes. He knows that if they make changes and send it back, the bill may not come back in time or whatever. Is he willing to take that risk? Is it that important to him?
Levasseu responded by saying that the intent of the bill, as far as he’s concerned, is to find balance and not find balance (what?). It’s more- it’s about giving them the ability to sign a fair commercial arrangement (you don’t know the definition of “fair”, dude) for value that they believe they create for the tech platforms (give it up dude, it’s virtually non-existent). So they’ve been using their content (this is a lie), benefiting from this (much less so than the benefits news sites got out of this), and generating money from their content (also a flat out lie). The proof there is value is that they signed deals under the threat of the legislation (that’s not proof, moron). They’ve signed deals in Canada. They’ve signed deals in Australia. So they are not asking for a handout (yes you are. The whole point of the bill is to freeload off of the success of another industry). What they are asking for is the opportunity to negotiate a fair deal. That’s what they are asking for (you’re not getting it).
They should’ve had this deal, Levasseu continued, they should’ve been able to negotiate a fair deal because they have a duopoly and they are 500 different media in Canada and it is David vs Goliath (Goliath vs Goliath, dude). They could afford to just slam the door in their face (as is their right especially given the ridiculous ask in the first place). If that hadn’t been the case, they would have a fair deal in place (you’re not making any sense at this point). So, that, for him, is the purpose of Bill C-18 (you’re living in a fantasy land). He just wanted to remind people of that (well, it reminds me that this bill was built on lies). They create value for them (not really), the proof is out there (no it is not), and they don’t extract any value from it (this is another massive lie).
As far as Quebec is concerned, Levasseu continued, they each have a business model as Myles said. He’s got an operation that is profitable. They have an operation and this is public knowledge that it’s profitable. So, they have a business model that works for them (which is why you are crying poverty, got it.) They went through a digital transformation some ten years ago. They went through a second one of their business model in 2018 and both worked very well (if you have such a successful business model, why are you claiming to be broke?) They have invested hugely in innovation (LOL!). Every year, they do that. Tens of millions of dollars in investment every year in their advertising model (clearly this was badly invested given the results) because that’s important for news as it’s important for business intelligence in terms of their news rooms and the news they have there and they have the intention of massively investing in the news room over the next few years. Contrary to a lot of media, they have the same size of news room today as they had in 2008 and 2009.
So, Levasseu said, they haven’t neglected investments in that regard. However, clearly, they look at the needs of their readers and that is changing. It’s evolving very quickly and if they want to remain relevant, credible media want to remain relevant in the future, then that means they have to make significant investments in news rooms. Over the last few years, it was business intelligence and advertising revenues and it was done in terms of the structure and the future, he thinks, is in the news rooms. They need Bill C-18. (You need Bill C-18 like you need a blow to the face.)
Senator Cardozo said that he just wanted to ask Myles if the situation is different for francophones.
Myles responded by saying that he would say that the differences have several variables. So, papers that depend entirely on subscriptions, those who are dependent on print versions and those who have lived and evolved in markets where the demographics are in decline or in small markets, those are the three risk factors. He thinks it will be difficult for them with or without Bill C-18 (more difficult with if we are being real honest here). For free papers, these are risk factors everywhere and he would think that there would be risk factors in the English market as well.
Senator Fabian Manning turned to Deegan and said that the government has a rough estimate that this bill would create $215 million for Canadian news entities in the country. The Parliamentary Budget Officer, he estimates it to be about $300 million from the major corporate giants such as Meta and Google and others (my understanding is that it was just the two platforms in question). Whatever the figure, he’d like to know what happens when the companies – these major giants like Meta and Google – decide not to participate. Also, the Parliamentary Budget Officer (PBO) says that, in his estimation, three quarters of the funding that will be brought forward will be going to CBC and other large broadcasters such as Rogers and Bell. So, his question is, what does this do for the smaller players in the end.
Deegan responded by saying that, in terms of the estimates, they don’t really know what the precise number is. They know in Australia, it’s north of $200 million. That’s what Rod Sims, the former ACC Chair has said. So, based on population, the difference in size between Canada and Australia, they figure that it’s north of that. They couldn’t, frankly, understand the PBO’s methodology. In terms of the numbers, the inputs they put into it, they are not sure that makes sense, but it’s probably somewhere in the ballpark. In terms of the broadcasters being included in the bill, they are included in Australia, their sole focus is, really, on their own members and making sure they are getting a fair agreement. A Toronto Start type agreement for their smaller members is what they are looking for.
In terms of entering into negotiation, Deegan continued, what seems to be a proxy is based on news room salaries and wages for some of the agreements they heard about anecdotally. In their view, they would look to share, they form a collective, and Levasseu from La Presse is going to be key leader in their collective. What they aim to do is share the settlement on a per capita basis so that small players benefit the same as larger players. That’s the philosophy on it. (Ironically, you will benefit the same as the larger players – that same being you get nothing.)
Senator Manning said that, in regards to the hit it would take to the smaller players, does Deegan see it as detrimental to their operations going forward?
Deegan responded by saying not at all. The truth is, most of the larger players have deals, OK? La Presse doesn’t have a deal, Post Media doesn’t have a Meta deal, but most of the other large players have deals. This is really about the smaller independents getting a deal (you are hilarious). Google and Meta have done deals. They’ll tell you that they are in 120 communities. They have actually done deals with 12 companies, he believes (the joys of media consolidation). So, these are chains they have done deals with and right now, this bill, what they are really trying to solve for – what they are trying to solve for is the small mom and pops get the fair deal that the Toronto Star has got. (So, basically dodging the question entirely)
Senator Donna Dasko said that she is pursuing the topic of what happens if these platforms leave. In particular, Facebook. Not Google. Google has been a little- when they came there, she asked them what they would do and they said they haven’t decided yet. But Facebook has been quite categorical in speaking with senators and they have said that they are going to leave. They say that the news links in Canada are not of great value to them, they have said that their subscribers are not interested in news . In fact, some of them even despise news. What would happen, Levasseu and Crawley, what would the impact be if Facebook leaves?
Crawley responded by saying that if Facebook pulls out, millions of dollars would go away from the Globe and Mail point of view. They have a deal with them and it’s worth a significant amount of money. It’s been why they keep growing their revenue that they had additional licensing over the last several years as a result of these deals. But they have got a long term deal with Apple. Apple will continue to build their subscription models. There will be other players they can still work with (Yeah, I’m not sure MySpace is going to be a good replacement to Facebook.) If they are not- he hasn’t heard anyone else but Facebook and Google talk of the consequences. He doesn’t think Apple has said anything on this point. He’s more concerned about the threat of the independence of media rather than the loss of a few million dollars (that’s a very rich person thing to say). He thinks that’s a much more long term threat to their industry if we don’t get the language of this bill right.
The CRTC, Crawley continued, has not had a history of dealing with newspapers. They got vast experience in dealing with broadcasting, but not with newspapers – it’s a different industry.
Senator Dasko asked about what would happen to- what would be the impact on the press if Facebook pulled out?
Levasseu responded by saying that he thinks that it would be less than $1 million for them in terms of a financial hit. But, you know- to this, he thinks, it’s mostly about the United States. He thinks that they want them to know that they are worried about legislation in the United States. They don’t want this to spill over into the United States. Canada is a lot closer than Australia. So, he thinks this is more of a response not to the value of the value they create for them or that they create for them. He doesn’t think this is about a fair commercial arrangement. He thinks that they are worried that if this legislation creeps into the United States, it’s a much more financial impact for them (the US has been debating their version of the link tax for a long time, so I don’t think this would be a case of a link tax bill “creeping in” to the US.)
So, Levasseu continued, he doesn’t think that they are saying that there is no value in what they are creating for the platforms or what the platforms can create for them, or what they can come to as an agreement, he thinks this is a lot of smoke and mirrors (says the industry creating smoke and mirrors about how linking is stealing) basically to try and send a message to American legislatures to American media, if you do this in the United States, this is potentially what the platforms are going to do (so, basically admitting that it’s a foregone conclusion that the platforms will block news links and that this debate is borderline useless at this stage.) So, he thinks it’s a myth-
Senator Dasko asked that wouldn’t he still be able to enter into agreements with Facebook? They would want their money, right?
Crawley responded by saying that remember what happened in Australia right before the legislation passed, the three major Australian groups struck their own deals. The deals that were mentioned earlier with the smaller papers followed the passing of the legislation, but the Murdoch papers, the Fairfax papers, they all struck their deals beforehand and, obviously, they got their deals going back several years with many of these companies (always hilarious seeing the major news organizations saying that they are before senators fighting for the little guy. After all, they became rich multi-million dollar companies because they were so charitable with their competitors. A laugh riot.)
Levasseu said that just before the threat of legislation, there was no deals and with the legislation, they have to have a deal (not really.) So, if this legislation doesn’t pass, there is nothing that prevents Google or Facebook from pulling away from their existing deals (if the legislation passes, there is nothing preventing Google or Facebook from pulling away from their existing deals too) or simply the deals would have to have a timeline and then they’re not renewed.
Senator Pamela Wallin then turned to Deegan and Crawley and said that Deegan has said that the dominant platforms have been able to pick winners and losers, but with Bill C-18, Deegan seems to be willing to give that same power to the CRTC as a very inexperienced regulator. Why does Deegan think that’s a better circumstance? The second question is that Deegan talked fundamentally about the importance of advertising and the governments roll in advertising. We’ve all seen many local papers fail because government cut off advertising. So, the CBC is one of the biggest and will be one of the biggest beneficiaries of this bill. Does Deegan believe they should be cut off of their outside source of revenue?
Deegan replied by saying that, to answer Senator Wallin’s second question first, the answer is yes. The CBC should not be accepting advertising for news and current affairs. Also, on their website, if you type in Pamela Wallin on their news site, you’ll find a story about when Senator Wallin gave the (Wadina?) News back in 2017 the Senate 150 medal. Now they are out of business, right? In that letter that Ellison Squires wrote, her publisher letter, Senator Wallin referred to in the senate, she talks about advertising and the local community wasn’t advertising, local government wasn’t advertising, the feds weren’t advertising. He means, Senator Wallin has hit the nail on the head. It’s a huge issue. They need the feds to step up and- federal ad dollars shouldn’t be going to the CBC and, frankly, private ad sector dollars shouldn’t be going to their news and current affairs properties. They’re competing head to head with them.
Senator Wallin asked why is having the government as their regulator – the CRCTC – which clearly does not understand the print media – why is that better than having the platforms pick winners and losers?
Deegan replied by saying that because right now, with picking winners and losers, the problem is that we got losers. They got folks like the (Wadina?) News and that’s the problem. They have a market failure (ahh, back to the myth that all the media’s problems is solely the responsible of the platforms. Very standard lie from a Bill C-18 supporter). It isn’t working. So, they need a solution and that’s why they have come to government even though, frankly, they would like to stay as far away from government and the CRTC as they can – but they do need them. To Crawley’s point, though, they want to limit the role of the CRTC. They don’t want them snooping around in their news rooms and so the amendments that they proposed – to Senator Cardozo’s question earlier – they’ve talked to the ministers office, they’ve talked to the officials at heritage, they believe that these amendments are doable and they believe that senators can get them done (giving orders to the senate, a real winning strategy there),
They want both, Deegan continued. They want this legislation passed by the end of June (demands are really stacking up) and they want those amendments (they want it all, and if they don’t get it, then they are firing those senators for failing to work for them).
Senator Wallin then said that, to Crawley, he has found the mechanisms to survive with the deals of maintaining their subscription rates with selling paywall technology to others. Is it worth the risk of having the government, not, interfere and snooping in their news rooms in order for the exchange of cash which they are already getting through the deals they’ve signed?
Crawley responded by saying that he thinks that at a time where there is a- questions of trust in media, they want to make sure that trust in media is something that people believe in and he doesn’t think that’s helped if you allow, to Deegan’s words, the CRTC to snoop on what’s going on in the news rooms and have some say what would otherwise be the- a commercial agreement that is struck between the parties and what the value be found in those agreements.
Senator Wallin said that they already have suggestions from the ministers who actually considered that one of their rights. That they would make judgments about content. She’s assuming that concerns Crawley.
Crawley responded that it does.
Senator Leo Housakos said that his question has to do with the fact that Bill C-18 is, of course, a piece of legislation that would be followed up by regulations. As we know, it’s government and regulators that come up with regulations. We also have a long history in this country of government and regulators providing tremendous privileges to the big three – to our traditional broadcasters. He also thinks that, in his mind, that these broadcasters – Bell, Rogers, and CBC – have benefited immensely by these new digital platforms and have probably created the most competition to print media in this country. Now, we are creating a bill, which senators are calling on Meta and Google – the creators of these platforms – to come up with a figure – and we can debate if its $300 million or $400 million, but one thing that there’s no debate on: if Meta pulls the plug and Google pulls the plug – Meta, he believes, will pull the plug – that figure will go down even further.
In the mean time, Senator Housakos continued, CBC will continue to receive its $1.2 billion subsidy – which, to this day, they as parliamentarians, don’t know what percentage of that they are investing in their digital platforms which, again, are competing directly with print media. So his question is, he is very much in favour of the objective of this bill, he goes back to what Senator Manning and Senator Wallin said, he doesn’t see how it will help the smaller players compared to those three giants in this context. In all due respect Deegan, he appreciates some in the print media who have made deals directly with these platforms, but he is still very skeptical that the big three will get a disproportionate piece of the pie at their expense.
Deegan responded by saying that he hears the senator, and in terms of his own members, they’re trying to look out for the smaller independent players now. They represent all, right? They’ve got everyone from the Globe and Mail, the Toronto Star, La Presse, Le Devoir, but right down to these independents. His goal really is to make sure that those smaller players, which many of them are really on life support, frankly, in terms of their finances right now is- advertising has dried up and they are just trying to give them a fair deal (by representing the largest players in their membership, got it). He understands the concerns, particularly with the CBC, and one of the ways to start to level the playing field to Senator Wallin’s point, is the commercial advertising with the CBC in news and current affairs. They should not be in that game.
So, Deegan continued, they are trying to-
Senator Housakos asked should the big three be excluded from this piece of legislation? Bell, Rogers, and CBC. (that is a really good question to throw in there)
Deegan gave a stern look and hesitated for a moment. He then said that, so, his concern is really for their own print members and digital members. It’s not really for them to comment on them, but he thinks that they got to ensure that the small independent media in this country survive because you can’t just rely on the public broadcaster to serve those smaller communities and that’s essentially what is happening (so, better to basically take them off life support by driving the platforms to cut off news links, got it.)
Levasseur said that this isn’t a pool of money that they are going to decide what the size of the pool of money is and then distribute it. These are deals that they are going to negotiate with them. So, as long as they get a fair and reasonable deal for those that negotiate with Google and Facebook, they could get $200 million, CBC could get $100 million, somebody else- it’s not a pool of money that gets subdivided (this assumes that an unlimited amount of money will come from the platforms. He is on another planet if he thinks that the platforms would just give unlimited amounts of money away). It’s an individual negotiation. So, what they are looking to do- and right now, they are assuming that those who have deals- he thinks there’s been an assumption that those who have deals are not going to negotiate collectively. He doesn’t think that’s the case. He thinks that there are many people who have deals today that feel that they don’t have the size of deal that they deserve (this proves my point that the media companies will never be satisfied and keep demanding more money forever).
He thinks that what they are looking to do is say, Levasseur continued, OK, what’s the right mechanism for the deal, what’s the right deal, and then they are going to split it equitably between them. So, if, for instance, one group has a much better deal today, then why not that deal for everybody? (good luck figuring that out when the terms of those “deals” are confidential.) So why don’t they have as many people in Canada participate together and get that same deal? That’s what they are going to do and the broadcasters are then going to negotiate their deal.
Senator Peter Harder then turned to Deegan and Levasseur and said that Deegan said earlier in his testimony that he wants this bill implemented by this Summer. Deegan has also indicated some of the amendments that him and some of his members would like to see. He’s asking Senator Cardozo’s question directly, their’s is the obligation to do what is possible. If Deegan had one choice, what would it be?
Deegan responded by saying that he believes that he has faith that Senator Harder can do both (yup, just pure faith and nothing else. That’s the scientific way right there.)
Senator Harder said that he would certainly try, but he just wanted to have the order. He just thinks that important for all of them to hear. He then turned to Levasseur and said that senators have heard testimony from witnesses who have said that print media is a bunch of dinosaurs that are going to die (well, they have a death wish at least) and that senators are just slowing an inevitable death (you’re actually quickening the death) – they are incapable of innovation (keep beating that straw man, Senator. Sooner or later, you’ll feel like a winner). Could he respond- he knows that his organization in particular has been very innovative – what would Levasseur do further with a deal in place?
Levasseur responded by saying that he would continue what they are doing now which is on an advertising front if they are competing against Google, Facebook, and the big three and a lot of others. So they will continue to innovate in their ad products in their uh, uh, uh, user experience. He thinks that, most importantly, is that user needs have evolved. Reader needs have evolved and they, as media – traditional media – need to evolve with the reader (you’ve had over a decade and a half to do so). They need to put the reader at the centre of the, of the, in the centre. They need to adapt many things in their news room and many- the many ways they cover news over the coming years to ensure that they remain relevant to readers (he’s sure pounding that table a lot all of a sudden) so that credible media with tremendous rigour continue to be at the forefront of news distribution- news creation and news distribution.
S0, Levasseur continued, their expectation in the coming years- it’s an expectation, you know. But they, but they intend to invest, uh, important sums of money in the news room in the coming years. That’s their intent. They’ve done a very important job in terms of their- in terms of their technology, their ad infrastructure, their distribution products – the tablet, the mobile, the web (congratulations on figuring out the viewport CSS code. That’s largely what that is.) They think there is a big investment to be done in the news room in the next couple of years.
Senator Housakos offered the opportunity to witnesses to say a few last words in the last three minutes.
Deegan said that he’ll conclude with an earlier conversation he had with senator Manning. He told him that growing up in the town that he did, his dad subscribed to Time and Newsweek and that was his kind of window on the world. He thinks that this is really what this is about (living in the past?). This is about making sure people have access to quality news content. Right now, when you think of Meta, perhaps, blocking news, what will be left on their platform? (friends, family, close contacts, meme’s, a marketplace, conversations about ordinary everyday life, sharing video’s and personal announcements, press releases from companies, personal anecdotes of what government officials are working on, direct messages from government officials such as emergency alerts, messages from police- I could go on.) They are the plumbing of social media. In there, you got the clean drinking water which he would describe as news, but then you got all sorts of sewage: misinformation and disinformation (or you can just get the take of an idiot who doesn’t know what he’s talking about.). Really, what this is about ensuring that local news survives (and this bill ensures the swift death of that news).
The larger players have deals in place, Deegan continued, and they need to ensure that this legislation gets across the finish line by the end of June so that the smaller players, the independents, the mid sized players, get the same type of deals as the larger players (yeah, get themselves on the fast track of scrubbing themselves off the web.) That’s what he thinks that this is all about.
Crawley said that he would love to see the legislation approved, but he doesn’t want to see it passed in its current form. The language, as it stands would be, in his view, would be dangerous to the freedom of the media (not in the way you seem to think it is). So, that is, sort of, his plea to senators. Those amendments and to incorporate the language into the bill to protect them against that.
Myles said that he wants to emphasize the maintaining of programs and looking at initiatives to support small publications of local papers. Bill C-18 will he helpful to small operations, but won’t save them. It won’t be a miracle cure. They have to look at the size of the news rooms and if they take that model, the small operations will get less. So, the other way to ensure that there is fairness is that there are maximum amounts so that the biggest groups don’t get the biggest piece of the pie.
With that, Senator Housakos adjourned that part of the hearing.
Concluding Thoughts
Well, first of all, it feels great to have had an impact on these hearings personally. That question about the slashing of journalists in Australia was a huge concern for me and it highlighted the need for transparency and assurances that the money that would theoretically come from this legislation would actually benefit the work of journalism and not pad CEO bonuses and fund stock buybacks and whatnot. Obviously, the question was dodged very quickly because it pointed to a very serious fatal flaw in this bill – the lack of transparency and guard rails to ensure that the money that comes out of this bill isn’t embezzled by those at the top. So, huge thanks to Senator Simons for bringing that one up.
As for the rest of the hearing, I sometimes comment that the media companies are more often then not run by idiots and this hearing was a huge shining example of this. The witnesses here frequently provided unintelligible and contradictory testimony. For instance, on the one hand, those witnesses had no problem puffing out those rooster chests saying that they are the best in innovation. They are masters of this internet thingy and that they are generating advertising revenue left and right and that the content they produce is second to none. Then, right after, they whine and complain about how the platforms are unfairly taking their market share and stealing from them and if something isn’t done, they’ll practically fold under the pressure unless government saves them. I’m sitting here thinking, “uh, you know that the senators are listening to you, right?”
Of course, it wasn’t the numerous contradictory claims along the way. Other claims were completely incomprehensible. The witnesses sat there and said how much traffic they get from both Google and Facebook. One admitted that it totals 70%. Yet, at the same time, they sit there and say that they get nothing from the platforms and that the platforms are only extracting value from them and they get nothing in return. The claims are complete and utter nonsense.
I didn’t need to know later on that the platforms were going to pull the plug. It was very very obvious that this was going to happen on the day that this hearing was recorded. Some of these witnesses seem to really believe that magical thinking will allow the situation to resolve itself. They leaned hard on this mythology that since the platforms came back in Australia, that it will automatically happen here. What they don’t want to talk about is that, years earlier, the same situation happened in Spain. We got a VERY different result in Spain where Google did, in fact pull out. The carnage that brought onto the sector was immense and bankruptcies slammed the media sector hard in that country. This isn’t me making stuff up. You can still read the stories yourself today.
What I found especially bizarre is the point where one of the witnesses said that the platforms will probably pull the plug to send a message to the US publishers, warning them that this will happen to them if they push similar laws there. I can’t for the life of me figure out why he brought that up because that is a full on admission that the critics of this bill are correct when we say that the platforms will drop news link support. This while at the same time arguing that magical thinking and pixie dust will save the day and the bill will result in the platforms going back to the negotiating table. I seriously wonder if he even understood the words that were coming out of his mouth at all.
At any rate, I don’t think the bills supporters did themselves any favours here. If anything, they are proving that they don’t understand how the internet works, they don’t understand the consequences of their actions, and they bought into their own BS talking points and are sleepwalking towards a cliff. It’s incredible the level of idiocy I’m seeing here.
Drew Wilson on Twitter: @icecube85 and Facebook.
