Front Burner - Google, Meta to block news in Canada

Episode Date: July 4, 2023

It's a Canadian media power play unlike any other: Alphabet and Meta are fighting back against the Canadian government's Bill C-18. And caught in the middle is the news media.  The Online News Act �...�� was supposed to make tech giants pay for posting news stories to their platforms.  Now Google and Meta say they aren't going to pay. Instead — they'll remove Canadian news from their sites and apps. It's a move that will make it more difficult for Canadians to access news. And may very well plummet news companies further into the red. This all comes as news companies are cutting back, looking at mergers, trying to get out of obligations of providing local news to Canadians. Chris Waddell joins Tamara Khandaker to sort through this. He's a former professor at  the School of Journalism and Communication at Carleton University. He's also the publisher at J-Source, a website dedicated to the Canadian media industry. For transcripts of this series, please visit: https://www.cbc.ca/radio/frontburner/transcripts

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Starting point is 00:00:00 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 Tamara Kandaker. So I don't love starting the episode this way, but last week was a terrible week for Canadian media. Google and Meta, the parent company of Instagram and Facebook, both announced their plans to block links to stories from Canadian media outlets. Which means if these plans go through,
Starting point is 00:00:52 when you Google something, your search results wouldn't include links from places like the Toronto Star, the Globe and Mail, or the CBC. This is in response to the Canadian government's Online News Act, formerly known as Bill C-18. It just became law, and it's designed to help the financially the Toronto Star and many other smaller newspapers, are talking about merging. They say they're trying to create greater scale so they can respond to the existential threat facing the media industry.
Starting point is 00:01:39 But critics are worried about what this merger would mean for access to news and the diversity of perspectives in journalism. Chris Waddell is a professor at the School of Journalism and Communication at Carleton University, and he's on the show today. We're going to talk about what Google and Facebook refusing to share Canadian links could mean for the country's news industry and the country that relies on it. could mean for the country's news industry and the country that relies on it, what post-media and Nordstar joining forces could mean for the average news consumer, and whether the Canadian government's approach is helping or hurting. Hi, Chris. Thanks so much for doing this. Thanks very much. So the Online News Act, it was supposed to be the thing that fixed the financial problems that news
Starting point is 00:02:33 companies in Canada have by making Google and Facebook pay news outlets to publish links to their content. But now it looks like this plan may end up doing the opposite in that it's backfired a bit. So can you just explain the turn that things took last week? Sure. In part, some of it is that people have been warning the government for quite a while that the plan wouldn't work. The government thought that it would. But Facebook and Google have both been saying for quite a while that if the legislation passes, they will then stop carrying Canadian news and information on their sites. So the legislation passed. First, Facebook have been saying this for several weeks. But the way the bill is drafted doesn't allow for negotiations outside the framework of the legislation. So there are no negotiations
Starting point is 00:03:20 currently. We are proceeding towards ending the availability of news permanently in Canada. We wish we weren't here, but we are here. And there is really nothing at this point that's going to alter that trajectory. Last week, Google said it as well. The issue for Facebook and Google is Canada is not a large market for them. So what happens here isn't a financial issue for them, but they're afraid that if Canada passes this law and this law takes effect, then other countries will follow and the precedent that Canada sets could be more damaging to Facebook and Google further down the road. Google has said it will start blocking Canadian news links on its search news and
Starting point is 00:04:00 discover products. And yeah, what does this mean in a practical sense? What it's going to mean in a practical sense is that it's not going to be, you can't use Facebook and Google to find news stories. News organizations have used Facebook primarily to post their stories for quite a while. And that will be more difficult to find, if not impossible to find. It's still not clear exactly who is going to be identified as a news organization. So it's all still kind of fairly nebulous. And Google has said they're still hoping that the regulations that will be put out will allow them to change what their current plans are now. So we're in kind of a holding pattern until we see, first of all, how the government plans to introduce regulations to
Starting point is 00:04:43 try to implement the legislation. And the legislation is not supposed to come into effect for six months. And then we'll have to see if the two social media companies decide that the regulations, as they're published, are not what they're afraid they're going to be, and that they may change their view. So we're going to have to wait for a while to see. But the end result could be that there will be less or no Canadian news on both Google and Facebook. Right. And it's worth noting that we're still going to be able to see international news
Starting point is 00:05:11 on Facebook and Google. So things like BBC or CNN, those links will still be posted. I wonder, I know you mentioned that there's still this regulatory process that we have to go through, but do we know anything about what this would mean in terms of being able to share links privately? Because Facebook has a messenger service, Google has Gmail. Do we know anything about that at this point? Not really. It's really going to be we're really going to have to wait and see what the regulations are and actually see what the implications are if Facebook and Google actually go ahead and do what they say they're going to do. How you make a good point about you still may be able to share some,
Starting point is 00:05:47 but in fact, one of the big users in sharing news has been news organizations themselves. They post a lot of stories on Facebook because that gets then into a broader audience and people may click on it and see it. So news organizations, in part, will be big losers if, in fact, this happens. Not only will they have lost the revenue, because if Facebook and Google decide that they aren't going to have Canadian news on their sites anymore, obviously there's no revenue to distribute back to the news organizations, and they're losing a primary way that they are able to broaden their appeal beyond their own news organization and their website to try to attract other people.
Starting point is 00:06:24 This actually has a fairly long history. And for quite a while, news organizations were thrilled to be able to post their stories on Facebook and to have their material on Google as well. And they did that because they thought it would, not only thought, it did, it would drive people to their own news sites, whether it be the Globe and Mail, the Toronto Star, the National Post, or a local publication. And then the news organization would be the beneficiary of the people that have been driven to the site. And there's ads on those news organization sites. Their audience numbers would go up and their advertising revenue would be all right.
Starting point is 00:07:01 The problem turned out to be that once people were driven to a news organization site, they'd read the story that they had originally seen on Facebook or on Google, but they wouldn't hang around on that news site. So the benefit that news organizations thought they were going to get from having the traffic driven to them, in fact, has turned out not to be true. And at the same time, news organizations have done very little to try to encourage people to stay on their sites once they show up there. In a lot of cases, the news sites aren't particularly well designed. In other cases, you've got to wade through three or four ads if it's a video in order to be able to see something. So on some levels, it's not surprising that people only look at the one story and then they leave. But rather than actually try to fix their own sites, they decided that they would try to force government to force Google and Facebook to pay
Starting point is 00:07:48 them for the fact that the advertising's disappeared. And that's where we kind of have been for the last two or three years. Now the bill's finally passed, and we'll see exactly what it means. I just wanted to recap something that you said earlier, which is Google and Facebook, they're saying that they don't want to comply with this legislation because publishers benefit from sharing content on their platforms, whereas news isn't really valuable to them at all. And they're opposed to this legislation because they say that this law could force them to pay unlimited amounts of money for the sharing of links on their platforms. We send millions of visitors to their sites for free.
Starting point is 00:08:41 Google News costs us millions to operate, yet it delivers zero revenue. If we must pay publishers simply for linking to their sites, making us lose money with every click, it would be reasonable for us or any business to reconsider why we would continue to do so. But the government's rationale is that Facebook and Google control most of the online ad market. And they are making a lot of money from the sharing of links because it's keeping people on their platforms and they're selling the ads. Definitely these two because they're dominant. They have 80 percent of all the revenue, the advertising revenue every year. So that's that's a huge amount of money going to them and not to our traditional media,
Starting point is 00:09:25 not to the real newsrooms across the country. What do you make of that? And how are we supposed to understand the two sides of this argument? Well, I think probably there's a little bit of untruth perhaps in both sides. Certainly Google and Facebook do make money from the ads that appear on their sites. They make money because they place ads directly on their sites. And then people who see the story that's been posted on the Facebook or Google site may see the ads as well. So there is some money being made there. The other side of it, though, is what I mentioned earlier,
Starting point is 00:09:59 which is that Facebook and Google really aren't concerned about the Canadian market all that much. They're concerned about precedents being set. And Australia tried to do this several years ago. Canada is now trying to do it. And other countries are talking about doing it as well. So their concern is really that a Canadian law, if it goes into effect and money is then start to be transferred to news organizations, other countries will try to do the same thing.
Starting point is 00:10:22 From the government's point of view, it's a little bit disingenuous in talking about google and facebook making the money google and facebook made the money initially because advertising that used to be in news organizations was all has been disappearing for quite a while for over 10 years now it's been moving online it's been moving to other ways and news organizations have been unable to replace that income. And so government makes the argument that Facebook and Google, because they've designed a better system for advertising, should be forced to pay money to the news organizations. That's a contentious argument, and not all news organizations that have started up online only, not the traditional print that most of this has been in discussion about. And they're doing quite a bit better because they have a different strategy and a different approach to working with Google and
Starting point is 00:11:16 Facebook than perhaps the mainstream media have. So I've seen this move by Google and Facebook described by politicians and by journalists as bullying. Essentially, people are saying that these companies are brazenly sort of disrespecting the government's attempt to check their power. The fact that these Internet giants would rather cut off Canadians' access to local news than pay their fair share is a real problem. And now they're resorting to bullying tactics to try and get their way. And Meta, Google, they all know that my door is always open,
Starting point is 00:11:58 they have my cell phone, so I'm up into discussions, but I will not accept threats like that. What do you make of that? What does it say about the power that these companies have that they can just decide, all right, no more links to Canadian news here? They have the power because they designed a better system for advertising than the media had. Now, advertising, if you're an advertiser, advertising on Facebook or Google is cheaper than it is in mainstream media. You can target it more directly because you can target it to people with a certain IP address. You can target it to, if you're an advertiser buying an ad, you can target
Starting point is 00:12:35 it to a certain region or a certain community. Mainstream news organizations aren't able to do any of those things. They've been outsmarted in the advertising business and they don't like the fact they've been outsmarted and they haven't figured out a way to actually get around that. So that's kind of where we are at the moment. 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.
Starting point is 00:13:17 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. So let's pivot a little bit because there was also other really big news in media last week.
Starting point is 00:13:58 One of the criticisms of C-18 has been that it doesn't address the problem of concentration of ownership in the media. And I feel like it's worth noting that because last week there was another piece of news that shows the industry is heading even further in that direction. It came out that Post Media and Nordstar, which is the company that owns the Toronto Star and a number of other papers, they're talking about merging. And these are Canada's two biggest players in newspapers. What do you make of that proposed merger? Well, it's interesting to see what's going to happen. The way it's being set up is Toronto Star is being separated from all the rest of what might be merged. And as you noted, the North Star
Starting point is 00:14:43 owns the Toronto Star. It also owns about 70 community papers under the Metroland banner and also owns other papers, mostly in Southern Ontario. Everything except the Toronto Star would then be merged with Post Media, which also has its own community division and its own larger community newspapers like Calgary Herald, Ottawa Citizen, Montreal Gazette. Toronto Star would retain, stay as a separate entity. And that may give the Toronto Star a better chance of surviving because it can then sell, it's got a large area in which it can sell online subscriptions. And the big challenge for news organizations is to persuade people to buy subscriptions and that can keep them
Starting point is 00:15:22 alive. For the rest of everything else, I suspect that if it follows the trend of what we've seen with PostMedia, as it's made several attempts to try to survive in the last few years by merging or taking over other entities, if this goes through, it will take the properties it gets from the Toronto Star, integrate them with their own properties, and we'll probably see more news organizations shutting down as an attempt is made to try to consolidate things in an area where there may have been four or five community newspapers. Maybe there'll only be one that will now serve that whole larger geographic area. The problem with that, of course, is that audiences then see that what used to have a lot of local news in their own community paper, now has much more regional news
Starting point is 00:16:05 and not so much local news. And they start to say, well, why are we spending our time buying this or reading this when it doesn't really have news that affects me in my own community? And that's been the trend on the last few years for post-media. And there's nothing in this proposed deal that suggests that that would be any different in the future. Right. But that's, I guess, what they've been claiming would happen as a result of this merger. They're saying that they want to merge because then they could pool their resources and they would have less debt, which would mean better access to news for people across the country. But you're saying that there isn't really anything to guarantee that that would happen, right? There's not really anything that would guarantee that happen. You're right. Postmedia has a huge
Starting point is 00:16:44 debt load at the moment. And the proposed deal, at least what we know of the proposed deal, would see that debt converted to equity. So people who hold that debt at the moment would get shares in the bigger PostMedia. Still, that doesn't stop PostMedia from losing money. And they've been losing money for quite a while now, in part because of the interest cost. It's true. But they've also been losing audience. And their audience has been going down consistently. So fewer and fewer people think that the product that's being produced
Starting point is 00:17:09 is worth reading. And that's partly because what we've seen over the last few years is as advertising has moved away from newspapers and their websites to Google and Facebook, news organizations have responded by cutting the number of reporters they have. So when they cut the number of reporters and editors, that means the news organization is producing fewer stories, and the stories may not have the same depth because some of the people being lost, maybe people who are specialist reporters, or people who are long-term employees and have the perspective and the context and the history that you need in order to tell good stories and to hold people accountable in communities as well. As the number of stories declines, the next phase is people look at it and say, well, there's not the stories here that I used to see. Why am I still paying or
Starting point is 00:17:55 subscribing? And then circulation falls. Advertisers then say, well, we're not going to pay as much money as we used to pay because there's not as many people reading this. So they cut back further on the advertising they're still buying with the news organization, which leads to another round of cutting reporters, less stories, fewer readers, etc, etc. And that's the spiral that we've been in for the last five or six years. There's nothing in this deal at the moment from what we know of it that indicates that anyone is prepared to reverse that spiral by maybe hiring more reporters, trying to do more news, trying to maybe decide that you can't be everything to everyone and you have to be more narrowly focused in order to survive. The other thing that I feel like is worth
Starting point is 00:18:34 mentioning, there was a very emotional reaction to this online last week because a lot of people never thought they'd see the day that a paper like The Star, which has always been this bastion of progressive journalism, would become tied to post-media. And you mentioned that The Star would be a separate entity. What would this deal mean for the Toronto Star and for the diversity of perspectives in news more generally? The Star is being split off because when Jordan Beethoven and his original partner, Paul Rivette, bought the star and bought Torstar with the Nordstar Capital, they committed themselves to what were called the Atkinson principles, the editorial philosophy that's
Starting point is 00:19:15 governed the star right from its days in the 1930s and so when it was run by Joseph Atkinson. So I think by hiving the star off as a separate entity, I think you're going to see Mr. Bidoff try to continue following those principles and keeping the paper in the ideological position, which is either small L or big L liberal, depending on year to year. Stay with those, because that's been the bread and butter of their paper, and so they will keep that. The question is what will happen to all the rest of the papers that didn't necessarily have to follow those same principles and had some degree of independence before. They'll now be moved in with post-media, which is the opposite of the small L or big L liberal. It's small C or big C conservative. And they've been quite
Starting point is 00:20:00 willing in the past to have all their papers reflect that conservative point of view. So we'll have to see what happens on that end. But I think the star itself may in fact even be in a better spot on its own rather than having all the rest of the other papers tied into it if they're all losing money. Another bleak development from last week that I wanted to touch on briefly on the broadcast side of things is Bell Media, the owner of CTV, laid off about 1,300 people last month. And they're also looking to pull back on their commitments to local news. What's going on on that front? Are they facing the same kinds of issues as newspapers with declining ad revenues and trying to compete with the tech giants? Or is there something else at play there? There's a couple of things at play. That's certainly one thing. Advertising on television has been going down as audiences
Starting point is 00:21:00 have been moving away from television. And that means less advertising revenue, as we talked about before. The other thing that's happening advertising revenue, as we talked about before. The other thing that's happening, though, is the basic business model for private television in Canada has been to do news and information on local communities, and then largely do buy American programming and run it in the evenings from 7 o'clock to 11 o'clock at night. Then you do local news at night. The private broadcasters have made most of their money from the advertising on those dramatic programs, comedy programs, entertainment programs,
Starting point is 00:21:29 more recently, some quote-unquote reality shows. But what's happening is the producers of those programs in the United States are saying, well, we've always licensed these to broadcasters in Canada, but maybe we shouldn't keep on doing that. Maybe we would be better off to just put them on our own streaming services or license them to a global streaming service. And that way, we'll have a much bigger audience and we can get a lot more money for our programming.
Starting point is 00:21:53 The problem that creates for Bell and for global as well is that they would lose significant amounts of advertising they now still have. And the second part is they would have to find program to replace that programming. And finding the other programming costs money. So they're both losing money and have to spend more money. And so what they're trying to do is say that we have to cut back on how much we spend on news. And they make arguments that they're losing a lot of money on news. Well, they've always lost money on news.
Starting point is 00:22:21 News is not a money-making proposition. And it's also important to note, I think, that Bell's parent company, BCE, Bell Canada Enterprises, had a first quarter profit of three quarters of a billion dollars, just a little more than $750 million. So the CRTC is going to face a very interesting question about, do broadcasters have any sort of public responsibility or public duty to the communities that they've served. And if that's the case, then maybe the fact that they're losing money at the moment might suggest they need to be subsidized by their parent company in a different way. We'll see how it plays out. It's going to be a very difficult decision for the CRTC.
Starting point is 00:22:55 So we'll see where that comes down. So, Chris, as someone who watches the industry closely and studies it, it's kind of a big question, but what's your sense of what all of these shifts are doing to the quality of Canadian news? There's no question that there's been a decline in the quality of Canadian news? There's no question that there's been a decline in the quality of Canadian news. The breadth and the quality, and in some communities, there's been almost no news now when there used to be news before.
Starting point is 00:23:32 So, and that's the result of all the squeezes and changes and layoffs that we mentioned earlier. The other part of it though, the part that we haven't talked much about is there are news organizations out there that have new approaches and new ideas that are actually doing quite well. I can point to one is called Village Media, which is started in Ontario,
Starting point is 00:23:50 moving into communities where the local newspaper had shut down. They've hired some of the reporters that used to work in those communities. They're only online. They're not trying to print anything, so they don't have any of the printing and distribution costs. And they're now in a bunch of communities in Ontario and a lot of other places. And are also working with Facebook and Google and are very much opposed to the whole of C18. The other thing that's happening is that the new entities that are starting out and are being successful tend to be ones that are focusing on one or two issues rather than trying to cover the whole range from national, international,
Starting point is 00:24:25 local, sports, entertainment, lifestyle, et cetera, et cetera, that some of our traditional news organizations have done. And having a much more focused approach lets their reporters become much more knowledgeable about the issues they're covering. And the quality of the journalism they're producing has led to people saying, this material is very good and better than anything I can find anywhere else and so I'm going to subscribe so we've got publications out there like the Narwhal National Observer the Tai in British Columbia there's a bunch of others as well that are that are not nearly as big as the old ones but it's not all a disaster and it's not the whole world falling in on itself it's part of a it's part of a big transition and we're in the midst of the transition at the moment. And I think it's possible that when we're in a transition, sometimes you need the old
Starting point is 00:25:15 established entities to fail and get out of the way to let new people come in and take their place. Until it's happened and the new people have arisen and started up, it's hard to think that things might actually be okay. But there are some opportunities and there are people with ideas and with a bit of money that want to take advantage of those opportunities. So while it's bad on the big picture, we're in a period of upheaval and change. And the result of it all may not be as bad as it appears when night is at its darkest. Yeah, that's good to hear. I love the optimism. So given this reaction from Google and Facebook, the government may find out that C-18 is not going to work the way that they wanted it to.
Starting point is 00:26:00 And so if C-18 isn't the fix, what do you think is? Well, I think the first and most direct thing is to let things play out and see what actually happens. Some of the news organizations had already set up deals with Facebook and Google. Also, if we start to see some news organizations actually completely shut down, that creates opportunities for new organizations to come along. Facebook and Google still provide a lot of exposure to news stories by the fact that they run them on their site and people click on the links and go to the news site. News organizations' challenge is to figure out how to keep the people there. And so far, they've been unable to do that, but that doesn't mean that's impossible.
Starting point is 00:26:47 And that's something they have to do as well. So essentially, are you suggesting that the government shouldn't do anything to bail out these companies? The government has already done a lot to bail out these companies. $600 million on labor subsidies and also on a small subscription tax rebate if you subscribe to an online digital publication. That money was given out to news organizations with no requirement that news organizations do anything. And what we've seen in the four or five years since that happened is continued contraction, continued shutdown, continued layoffs and shrinkage and more shrinkage. I'm not sure that government is actually the right organization to try to respond to a
Starting point is 00:27:31 fluid situation with policies that aren't particularly fluid and are fixed in time. So I think it's better to actually wait and see where the chips fall and what actually happens. Chris, thank you so much for unpacking all of this with me. I really, really appreciate it. Sure. Thanks very much. That's all for today. I'm Tamara Kandaker. Thanks for listening to FrontBurner.

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