Front Burner - Canada's news outlets are struggling. Should Ottawa save them?

Episode Date: August 13, 2024

It’s been a year since Meta banned Canadian news on platforms including Facebook and Instagram, punching a significant hole in how audiences engage with outlets online.  At the same time, the continued descent of the outlets’ revenues has meant mass layoffs and closures, and the rise of news deserts around the country. Today, two journalists weigh in on whether Ottawa should further intervene and increase its financial support of news media, or whether it should heed worries about conflicts of interest and let hemorrhaging outlets fail. Justin Ling is a contributing columnist for the Toronto Star and the author of Bug-eyed and Shameless on Substack. Paul Wells is also on Substack, and spent decades writing for publications including Macleans and the National Post.For transcripts of Front Burner, please visit: https://www.cbc.ca/radio/frontburner/transcripts

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hi, I'm Jamie Poisson. So it's been a year now since Meta, the company behind Facebook and Instagram, started blocking news content in Canada. And a report from the Media Ecosystem Observatory says the consequences for this already ailing industry have been pretty dire.

It says engagement with Canadian outlets across all social media has plummeted over 40 percent and that Canadians are seeing less news because they don't seem to be seeking it elsewhere. Beyond that, our news media is still getting hit by mass layoffs. Outlets are closing and news deserts are forming despite supports put in place by the Liberal government. So today I want to ask two longtime journalists about what they think the path forward is for their industry and whether Ottawa needs to stage a much bigger intervention in an attempt to save our news media or butt out of it entirely. Justin Ling is a contributing columnist for the Toronto Star, and he just interviewed the heritage minister about our news ecosystem.

He's the author of Bug-Eyed and Shameless on Substack. Paul Wells is also on Substack under his own name. He spent decades writing for publications, including Maclean's and the National Post. Paul, Justin, it is always great to have you on the show. Paul, I think that I will start with you here. I just mentioned the report that concluded there's been some tough consequences following this year of Meta's news ban. But I wonder how big a role you specifically see Meta's ban as playing in the problem of how journalism circulates in this country. I think it adds to a secular atomization of the information market that had already been

going on for 20 or 30 years and has been accelerating. I think Canadians would do well to look at what Meta, I'm going to call it Facebook. Please. What Facebook has been accelerating. I think Canadians would do well to look at what meta, I'm going to call it Facebook. Please. What Facebook has been doing around the world, which is it's been getting out of the news business. It corporately found the events of 2014 to 2017 a bit hot. Facebook was intimately involved in sometimes violent local controversies around the world. It was blamed for Brexit, for the election of Donald Trump. And rather than fight those fights, it's decided to get out of the news business in a bunch of places. And in Canada, where the government was effectively taxing news links, it has had the effect that is usually sought by taxes in other domains. When we tax

tobacco, we expect people to use less tobacco. When we tax alcohol, when we tax burning carbon, the expected and intended effect is to reduce all of those phenomena. And similarly, there's a lot fewer news links on the internet because the government decided to tax them. And so a lot of this effect should not have come as a surprise to anybody. Right. Though that wasn't the intended purpose of it, right? The intended purpose of it was for Meta to make a deal with news organizations, much like Google has, right? So that they pay out money to these news organizations when they surface their content. It is as though the government had taxed tobacco use to fund the healthcare system and then found itself in the position of pleading with people to keep smoking.

Justin, do you want to come in here? I mean, I mean, the government, there was a deal that was made with Google, right? This is a historic development. It will establish a fairer commercial relationship between digital platforms and journalism in Canada. Google has agreed to pay about $100 million each year to Canadian news outlets, a discount compared to the government's previous estimate of $172 million. So Google didn't take news off of its search, obviously. And so is that good? Is that working? How do you think that that's going?

I mean, is it working? I mean, it depends on what the question is, what the point of the system itself is, right? Is the point of the Online News Act, to give Paul's example, we tax cigarettes because we kind of accept that people are going to smoke. We say there's nothing we can do about it. And therefore, all we can kind of do is manage the costs of this social ill, right? Is that what we're doing? Do we accept that Google is just here to stay, that Facebook is always going to be part of the infrastructure of the internet? If we accept those things, then the Online News Act is a perfectly sensible piece of legislation, and it is a smashing success, at least in terms of Google, because we're shaking the company down for a little bit of change. But is it working in the sense of is it dealing with the actual problems that arise from Google and Facebook's virtual oligopoly on the advertising market online?

Working in terms of keeping our news industry sustainable? Is it working in terms of trying to break up this anti-competitive behavior? No. In fact, this regulation entrenches all of those problems. We are going in the exact opposite direction as the U.S. and EU, both of whom are challenging the advertising oligopoly instead of trying to regulate and keep it kind of static and in place. It's a decision that could have Google bosses scrambling. Two years after launching an investigation, European Union regulators have laid out charges against the tech giant of anti-competitive practices,

threatening to break up its digital ad business. A federal judge has just ruled against Google in a massive antitrust lawsuit. That suit involves its core business, online searches. Just for people listening, give me a little bit of an explainer or Cole's notes on how it does work and then what other options they might have had here. Yeah, and I'll try to keep this as short as possible, but I think it's really important to understand exactly what this oligopoly is and what it does, right? glut of information to tailor advertisements and to become basically the only players in the game in terms of online advertising. They have managed to basically destroy the direct ad business that

we kind of knew from the newspaper and the TV era where advertisers went directly to an ad person inside the company. That's over. Everything now runs through Google and Facebook. And those two companies basically managed to drive prices to a rock bottom so that no one else could compete and then started taking more and more and more of the cut, effectively bankrupting everybody who relied on that advertising as their business model. The Online News Act basically says that is wrong. And to fix it, we're going to ask that you pay us a little bit of the money back that you functionally stole through building an anti-competitive market.

The alternatives are what the EU and the US are doing. The American Department of Justice has just last year, I suppose, launched a sprawling antitrust case against Google, alleging that they corrupted legitimate competition in the ad tech industry. That's a direct quote from their filing. And in the EU, and Pierre Polyev, I would think would love this, the EU listed these two companies as well as a suite of others as gatekeepers in the industry and are seeking to regulate their ability to surveil users and to use their position in the market

to push out smaller, innovative competitors. So we are the worst of all worlds here, and we are ignoring some really good ideas on the table on how we can challenge this anti-competitive market that we've allowed to kind of cement itself. Paul, I wonder how you might respond to Justin's position there that essentially the Canadian news ecosystem is in the very dire straits it is in now because of these oligopolies and because of a government that hasn't done enough to kind of break them up or regulate them. Well, I certainly agree that news gathering, as we've known it basically all of our lives, is in the worst shape it's ever been and probably in better shape than it will be in tomorrow. And that the internet has everything to do with that. And I think that there is room for governments and regulators to investigate whether the web giants constitute trusts

and need to be busted up. But we shouldn't get our hopes up too high. New technology, smartphones have not only laid waste to journalism, they've laid waste to other longstanding and highly profitable industries. Everybody in the world used to have a camera and now they just take pictures with their phones. What does Apple and Android owe by right or law to the successors of Polaroid and Kodak? Things change. And there has come along a new technology that makes it more attractive to advertise on this new technology, the internet, than it used to be to advertise in your local newspaper. I mean, I would argue that your local newspaper used to constitute a trust. It used to be the only place in your town where you could get other people's attention if you wanted to sell a futon or rent out an apartment or offer tutoring lessons or anything like that. And by virtue of that, traditional news gathering was, for 100 years, an incredibly profitable

line of work. And it funded a huge amount of journalism. I think that model was doomed from the day Al Gore invented the internet. And I think Google and Facebook are symptoms of that new world. And if they didn't exist, there'd be other companies that would be making similar killings. And I don't see how we get back to a world where most of the merchants in a small town had to pay the newspaper if they were going to be able to do business. I think that's just gone. Yeah. I mean, I think a lot of people might agree that we're never going to go back there, right? But I feel like the concern that a lot of people have is that we need to get to some sort of place where we have some kind of stable

media in this country that is able to hold the powerful to account, right? So Ottawa has been trying to try and stop this bleeding. They have this tax rebate for digital news. There's $75 million a year for subsidies for wages, a $600 million media bailout. Essentially, the Liberals secured, as we just talked about, $100 million a year from Google. Do you think that this is the direction that we should be heading in when it comes to trying to keep some sort of robust media going in this country? I don't think it is the right idea because I worry about the likely result and I worry a lot about the obvious cost. Justin's right. The amount of money that the government has put into it is not nearly enough to even staunch the losses in terms of jobs and

audiences from large news organizations. We're a year and a half from Pablo Rodriguez when he was the heritage minister saying that the government's objective was to keep newsrooms open. And large numbers of newsrooms have already closed even since he said that. But say we found a magic way to make the Globe and Mail have as many employees as it did in 2010. There's two problems. First of all, the Globe would not have as many readers as it had in 2010. The audiences have scattered to the winds and you're not going to get the concentrated, engaged, democratically virtuosic audiences that are supposed to be the goal of these policy measures. People are still going to get their stuff off of TikTok and YouTube and gossip and hearsay. And in many cases, in large numbers of cases, they're going to prefer

those sources to the ones that you and I think are legitimate. And the obvious other cost is anyone who doesn't like anything they read in any newspaper or hear on any broadcast network in Canada will immediately conclude that it sucks because the government has bought and paid for this news source. And that's not only people on the right in this country. I hear this sort of stuff all the time, paradoxically, from people on the right in this country. I hear this sort of stuff all the time, paradoxically, from people on the left and people who support the liberals. But it gives everyone the pretext that everyone is looking for to not trust what they don't like to

read. So then what's the solution to just let them die? What do you think should happen instead? I do think a little applied fatalism would come in handy. I think we need to understand that the fantastic, beautiful world that is portrayed in movies like All the President's Men was a fascinating phenomenon of the pre-internet era. And it's not coming back. Bernstein, are you sure on this story? Absolutely, Woodward. I'm sure.

And for those who don't think that's satisfying, then you can take Justin's advice. And I'm very happy that he's here because I, I'm conscious that I'm basically the bringer of no hope in this debate. So over to you, Justin. Yeah, well, no, and Paul, I appreciate you're here because normally I sound like a pessimist and it's really nice to be contrasted with somebody who has an even more dour outlook than I do. Just let it, just let it die. But seriously, Justin, like, Paul, I don't think you're making the argument that you just want them all to die, right?

You're saying like, you stop subsidizing them and then maybe something else will, hopefully something else pops up in its place that's more innovative. That's, is that the argument that you're ultimately making? I mean, I think a lot of that will happen, is happening. I'm increasingly impressed by a lot of the

online newsletters that cover local news environments. There's more and more really good journalism about Ottawa that's being done by startups I haven't heard. But I also don't think it will come close to resembling the news landscape that we grew up with. And I think that there are attendant huge problems for our democracy in that. Yeah. But I mean, I keep thinking of ways in which the world we might hope to reconstitute wouldn't look like the world that we're used to. Here's one. Say there's armies of government funded or meta funded or Google funded journalists marching

across the land. They still won't be able to get a political leader to answer their questions because political leaders have learned 15 years into learning. They don't have to pay any attention to any of us. The prime minister of the country can claim that he's not doing anything today, even as he's traveling to cities across the country to do things. And there's not a damn thing we can do about it. That's another thing that's not coming back, even if Justin and I and all of our friends have jobs. Hi, it's Ramit Sethi here. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. Hi, it's Ramit Sethi here. You may have seen my money show on Netflix.

I've been talking about money for 20 years. I've talked to millions of people and I have some startling numbers to share with you. Did you know that of the people I speak to, 50% of them do not know their own household income. That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. Justin, let me bring you in here. What do you think about what Paul's saying here?

So I realize it's going to sound like maybe I'm funded by some, you know, Facebook-hating oligarch or something, but I have to insist, everything we're talking about fundamentally traces its roots to this oligopolization of the online search market, the online social media market. And I'll give you just a couple of examples, right? You know, the defunding of our newspaper advertising market, you know, for, I'll give you the example of PostMedia, has siphoned off about $450 million in annual revenue from that company. There's no coming back from that.

And we have to accept that the quality of those publications has gone off a cliff, right? So we've simultaneously watched a company lay off just hordes of journalists and staff and editors and layout people and everything else, just at a time when they're becoming more and more reliant on government to keep the lights on. Of course, people are going to make the connection between the introduction of government money and that decline in quality, because why wouldn't they? And then we have to recognize that just to keep itself alive, or, you know, that's what they tell shareholders anyway, post-media had to acquire more and more debt and buy up more and more properties, right? A lot of people in our industry keep telling people, oh, no, things are great. Journalism's still doing wonderful. We're doing the same work we always have been.

We're just as hungry and sort of committed to the cause as we've always been. But we're just lying to people. The quality of everything has gone down and people are smart enough to see it, right? So I think we do have to recognize that if we started wildly subsidizing our newspapers or our TV stations or whatever again, it would lead to an increase in quality and people would notice. Now, that doesn't fix the problem because we are still in a system that is dominated by Facebook and Google, who not only control the advertising market, they also control who gets to see our content, which is the other part of this problem that we don't talk

about enough. This is, again, a thing the government could help fix by, for example, requiring algorithmic transparency from these platforms, requiring them to tell the public how they recommend or don't recommend certain publications, requiring a certain level of ownership of our algorithms, allowing Canadians, for example, to prioritize high quality news in their search feeds and deprioritize junk partisan news sites, right? Like I love the idea of encouraging entrepreneurs and startups to come in and start eating some of the rotting wood of our legacy players. The problem is the deck is stacked against them in the same way the deck is stacked against Post Media and the CBC and everybody else, it is an unfair, uneven playing field.

And I can tell you, yes, there are some great startups. You can look to something like The Logic, which covers innovation and does a fantastic job. The Halifax Examiner in Nova Scotia. But for every success, there's 10 dead startups that should have succeeded, that had a great product, that had great journalists, that no one was reading because they couldn't reach a market. I just want to be clear about the argument you're making here. Like, obviously, you have been making the argument since the beginning of this conversation that there needs to be far more aggressive regulation of the big tech companies.

But are you also making the argument that you think the government should be subsidizing journalism more? I think it's an option. Listen, I think we really have two options here, right? Everything else we do, whether it's shaking down Google, whether it's creating a new model to let journalist outfits be charities, whether it's subsidizing online news subscriptions, all this stuff, that's nice stuff along the fringes. That's currently rearranging deck chairs.

If we can figure out some other stuff, it might be nice pot sweetener stuff. But fundamentally, what it comes down to is two things, right? These companies are rigging the market both in terms of revenue and distribution. And if we want to create a fair market for both of those things, we need to go after these companies, right? I think that's my preferred method. It won't be super quick. It will probably require a lot of pain in the interim as the market reorients itself and repairs itself.

But I think it is the long-term sustainable model, and it has the knock-on benefit of not leading to direct subsidies, right? The second option is just wildly increased direct subsidies. The European Commission recently did a study and found that their member states subsidize, on average, the public broadcasters of their states alone, $75 per person. Canada is somewhere south of $40 per person, if you include the CBC and all of our journalism subsidy programs together, right? So we're just not paying the same level as other states that are much more successful in providing a high quality product. So if we want to do that, we could double our subsidies and actually deliver something that makes people proud and happy to read the news

again. But like Paul points out, that has a lot of negative consequences as well. Paul, do you think that those are realistic ideas? Well, I can certainly introduce a large, obvious, confounding variable, which is that the political leadership that is likely to be contemplating these solutions in about a year is a conservative government led by Yair Poyev. And he, not only does he think government subsidies of news organizations is a terrible idea, he transparently uses it as a pretext to discredit any journalism that he doesn't like. Which outlet? Canadian Press. Ah, okay, Canadian Press. So, of course, you are a tax-funded media outlet and spreading Justin Trudeau's message. So, you're interrupting me again. You're interrupting me again. I am answering the question. It's funny, when all this stuff was being contemplated in 2017, I wrote a column for the Toronto Star in which I said, look, any system that is created, you should imagine whether you're still going to like it if Pierre Poiliev is in charge of it. Because one day somebody like him will be.

I've screwed up a lot of predictions, but that's one of the most prescient things I ever wrote. Almost, I've screwed up a lot of predictions, but that's one of the most prescient things I ever wrote. And in the interim, it puts every working journalist in the country, especially every political journalist, in an objective conflict of interest. As we define conflict of interest when we write about it in other fields. In other words, it actually doesn't matter that the difference between the liberals and the conservatives on this policy file doesn't affect the behaviour of a given journalist on a given day. The conflict exists if a reasonable observer could wonder whether it affects journalists' behaviour. Yeah, perceived conflict of interest, yeah. Exactly. And that is not the fault of the overwhelming majority of journalists in this country, but it is part of their existence for at least the next year. And all of us have heard from readers or from audience members who make that assumption the minute they read something they don't like. Yeah, I know that well as someone that works for

the C here. Like, what do you think is going to happen in the next five years? What do you think that the ecosystem is realistically going to look like? I think local journalism is going to continue to be in very big trouble. I think none of the solutions that the current government has found have done much to revive local journalism,

even when they directly pay for it through the local journalism initiative, which has funded some fantastic reporting. I think there's going to be more and more independent players doing their best the way I do on Substack with mixed results. I do think there's going to continue to be a malaise. And the mistrust that's a feature of our modern era in anyone who purports to be a gatekeeper or an arbiter of what's right and wrong will continue to be leveled against journalists by audiences. And so the grand notion of journalism as a fourth estate that keeps everybody else honest is not going to be given much credence by audiences. But there's still going to be books. There are still going to be newspapers.

There are still going to be broadcast outlets, great or small. And increasingly, I feel like I want to say to my colleagues, practitioners who today happen to have jobs, what are you doing today to make your journalism fantastic? What are you doing today to help people understand what's going on better, to get around the people who don't want to give you information to the information that needs to be got anyway, and to leave people less confused at the end of the day than at the beginning. Because while we wait for the universe to shake out, it's down to us. It's down to me. And I sometimes think that some colleagues let the day-to-day hassle of the job distract them from their obligations. Yeah. let the day-to-day hassle of the job distract them from their obligations. Yeah.

Justin, why don't I give you the final word here? I think the question I was thinking about asking you was what you're worried about in the next sort of five years. What kind of impacts do you think that this could have on our democracy, on our discourse? No, that's exactly what I want to talk about. Let me just tease out a couple of trends here really, really quickly. So the short term, we are seeing a proliferation of shady fly-by-news, usually ideologically or partisan-motivated websites that are claiming to be local, that are claiming to be investigative, that are claiming to be unbiased and fearless and so on and so forth, adopting kind of the cloak of what journalism used to be and asking people to reimagine journalism of a bygone era. But in fact, they're junk, they're partisan, they're untrustworthy, they're unreliable. In some cases, they're propaganda or fake news, right? The problem there is that many of these outlets do

not have the same financing issues because they have deep pocket donors or many kind of small donors who think they're committing to a cause as opposed to journalism, but they are increasingly being recommended, whether it's by Donald Trump or whether it's by Pierre Polyev. They're being endorsed and encouraged along by political players who see them as both a challenge to the journalism industry and a useful vector for their political message. That's really terrifying because it's both eroding trust, eating our lunch in terms of ad revenue, but also delivering an inferior product and worsening the overall polarization problem we're facing. We are facing more and more of a sort of decentralization of our journalism. More and more of our journalism is being aggregated into YouTube explainers, or being broken down on podcasts, or being shared via screen cap on TikTok. In some sense, that's a really good thing. More people are getting our journalism, but it's also leading

to a audience cannibalization problem. People don't need to read the National Post or the Toronto Star anymore because they're hearing it summarized by their favorite TikTok star or they're getting it as a recap via Substack, right? These are things that we need to kind of be watchful for. We also need to realize that quality is going to keep going down. Like we're in a world now where we're not going to have full-time reporters in some provincial legislatures. time reporters in some provincial legislatures. We're already seeing many of them gone from city halls and we're seeing the volume of journalists in the press gallery in Ottawa at probably its lowest levels since the early 20th century. This is going to lead to a missing piece of the coverage that is going to just further lighten the accountability for government while also

furthering distrust in the general public. These things are all really bad and nothing I see right now is going to change any of these trends in the short term. But, and here's the kind of vaguely optimistic note I'll end on, we are going to benefit from the EU and the US going after these oligopolies. It would be great if we could join them. going after these oligopolies. It would be great if we could join them. It would be great if we could shape the outcomes by using our political power to participate in either of those processes,

complement them or compete with them. But nevertheless, we're going to see a world where likely the DOJ is going to win their case against Google. Almost certainly the EU is going to force changes through like it has with other regulations in the past. And Canada is going to benefit from those things. And there's actually also possibly a world where Pierre Polyev is cheering that on as, you know, a guy who has at least nominally kind of taken aim at anti-competitive behavior in some markets.

Maybe that's a little too optimistic on my part, but I do think there's a point in the horizon where some of these variables are going to change for the better. Well, it's always great to end this conversation on a vaguely optimistic note. Guys, that was great. I myself am going to hold on to Paul's little nugget there, advice for journalists to just keep going. So I want to thank you both for coming. Thank you. It was fun. Thank you. It was fun. Thank you.

Thanks. All right. That is all for today. I'm Jamie Poisson. Thanks so much for listening. Talk to you tomorrow. For more CBC Podcasts, go to cbc.ca slash podcasts.