Front Burner - Google, Meta to block news in Canada
Episode Date: July 4, 2023It'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
Transcript
Discussion (0)
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,
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.
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
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
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
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
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
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,
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.
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.
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
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.
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,
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,
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.
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
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,
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
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.
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.
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
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
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
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
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
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
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
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
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
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
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,
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.
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.
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.
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.
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,
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,
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
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.
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.
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
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.