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Google’s promised $100 million a year brings hope for Canadian news

Online media are relieved, but some newspaper publishers are still not happy

Canadian PoliticsMedia Canadian Business

Photo by Sebastian Hillig/Flickr

Google has proved that it’s not evil after all by coming through with $100 million a year for Canadian news, but history is starting to again repeat itself, as it’s still not enough for some newspaper publishers. The announcement last week that Ottawa had accepted Google’s offer to contribute a fixed amount annually to a fund, indexed for inflation, showed how flawed the Online News Act is. Google, whose founding motto was “Don’t be Evil” and whose guiding principles included being “a company that does good things for the world even if we forgo some short-term gains,” wanted nothing to do with its proposed bureaucracy of negotiating with collectives and going to final-offer arbitration if they couldn’t reach an agreement.

Ottawa must be relieved that the act has not ended up in total disaster, as online-only media might just about break even now after losing so much traffic when Meta dropped news from its Facebook and Instagram social networks in Canada to comply with it. Most are adapting by using other tools, such as email newsletters, but some are still hopping mad at the government. “We’re pretty angry about it, and we place the fault of all of this situation squarely with the government,” publisher Jeannine Taylor of Peterborough’s KawarthaNOW told an interviewer. “We don’t feel that the two tech companies should be forced to pay… I would like to see this particular legislation scrapped immediately.”

Village Media CEO Jeff Elgie said his first reaction to the news was relief. “Whether it was a dollar a year or a hundred million a year or two hundred million a year the relief was because they weren’t leaving the industry, which to me is way more valuable than any money we’ll ultimately get from it.” Village Media, which has 25 local news websites in Ontario and employs 90 journalists, should be in line for about $1 million from Google, as Elgie calculates that the 8,000-10,000 journalists in Canada should each be subsidized by something over $10,000. “Why should Google and Facebook have to pay us anything because they give us all this traffic for free… so if someone comes along and says here’s a million dollars just because, we’re thrilled. That’s fantastic.”

Reaction among newspaper owners was mixed, however, with the National Post calling the deal “a welcome development” and “a big step forward for the news industry.” Torstar owner Jordan Bitove, however, called it a “disappointment” and one the company couldn’t support. Bitove, whose private equity firm NordStar Capital acquired the Toronto Star publisher in 2020, has taken a hard line against Google and Meta. “If they’re taking 80 percent of our advertising then they should be paying for 80 percent of our newsroom,” he told Peter Mansbridge in June. “It’s probably north of 20-odd million dollars.” His understanding of how online advertising works, however, was as faulty as that of Prime Minister Justin Trudeau recently.

“They control the highways, the off ramps, they control the gas stations, as we all see,” Bitove told Mansbridge. “So when we post a story online, they take 80 percent of the revenue around that.” Instead Torstar is paid for the ads on its web pages, which are likely sold through an automated service that charges a commission for placing ads on computers based on what is known about the activity of users at their IP address. Google offers one of the most popular services due to the vast amounts of data it has gathered, and Facebook sells ads based on the interests of its members. The largest grain of truth in Bitove’s claim—and Trudeau’s—is that Google and Facebook are so good at it that between them they now sell 80 percent of online ads. Bitove’s reaction is reminiscent of that to the $50 million Local Journalism Initiative established by Ottawa in 2018 to appease the powerful newspaper lobby, which dismissed it as “a Band-Aid solution.” Publishers pushed for a full bailout, which they soon received in the form of $595 million over five years.

Google’s $100 million could be just the start for a Canadian news fund. Ottawa continues to pursue Meta for a contribution, and soon an estimated $830 million a year in tax revenues will be pouring in from its new Online Streaming Act. Then there’s the planned Digital Services Tax, which it is estimated will bring in $1.4 billion a year.

The possibility of Ottawa getting Meta onside, however, is slim according to Elgie, who has contacts there. “We’ve treated them so badly for so long they’ve left that game and are glad to be out of it,” he said. “To be fair, I understand that. We have villainized them. We have said that they’re evil, we’ve called them immoral, we have said they steal from us, we said they do nothing in exchange back for us. Why would you want to be friends with our industry when we’ve done that to them for the past few years?” Elgie told University of Ottawa law professor Michael Geist that despite getting money from Google, he wishes the Online News Act had never been passed. “As much as we’re holding our own, we’d be much further ahead if Meta was still in the business,” he said. “Facebook was our number 1 tactic. That’s the sad part if Meta remains out is that, even though Google is thankfully in, we might have been better off without the bill at all.”

Taylor said that KawarthaNOW has since recovered the traffic lost due to Meta’s exit from news distribution in Canada. “The silver lining is that our readership immediately flocked to, and recommended, our e-news and embraced our daily digest,” she told interviewer Luke Ettinger for the blog Lean Out. “They went direct to our website. So, by the end of August, our website traffic had in fact increased. So, thank you, Meta, we can exist without you.” Taylor admitted that she is still using Facebook because it is so popular with readers in her community and thus very effective in reaching them. “We’ve also created a new Facebook group called Kawartha Now Community, which is also growing. We’re rebuilding our community there. So, we’re still using Facebook in that regard. But we have to do things like screen captures.” Heritage Minister Pascale St-Onge, however, says that using this tactic means Meta is still sharing Canadian news and is thus subject to federal regulation.

Elgie reports that St-Onge has been more receptive to hearing from online publishers, or “at least her staff have,” than previous Heritage Minister Pablo Rodriguez ever was, so hopefully their input can help to limit any further damage to relations with Meta.

Marc Edge is a journalism researcher and author who lives in Ladysmith, BC. His books and articles can be found online at www.marcedge.com.

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