The Paul Wells Show - How Bill C-18 is threatening a local news empire

Episode Date: September 20, 2023

As traditional news organizations have faced a steady decline, the online local news network Village Media has been thriving in small and medium-sized communities. But as the government and tech giants have gotten into a standoff over Bill C-18, the Online News Act, Village Media has been forced to pause their growth. Their CEO Jeff Elgie talks to Paul about how C-18 has hurt his business, and what’s at stake.   You can get a premium version of this show with extra content by subscribing to Paul's newsletter: paulwells.substack.com

You know the old joke, I'm from the government and I'm here to help? We have always been nervous about this bill and especially kind of the the foundations on which it was built. Today, why Jeff Elgee looked like the future of local journalism until the Trudeau government decided to save journalism. I'm Paul Wells, the Journalist Fellow in Res looked like the future of local journalism, until the Trudeau government decided to save journalism. I'm Paul Wells, the Journalist Fellow-in-Residence at the University of Toronto's Monk School. Welcome to The Paul Wells Show. So here's the thing. The news sucks. Including the news about the news.

Just last week, Metroland Papers in Ontario said they're going to turn 70 newspapers into online-only products. 600 people are out of work. In June, it was Bell Canada. 1,300 jobs lost. It just goes on and on. Have I mentioned I used to work at Maclean's? Against that steady drumbeat of lousy news, what Jeff Elgy has been building at Village Media looks like reason to hope.

In just over a decade, from his headquarters in Sault Ste. Marie, Ontario, he's built a little local news empire with more than 200 employees in a bunch of small and medium-sized communities. He pays salary and benefits to real reporters in places like Timmins, Barrie, North Bay, Guelph. Then the Trudeau government brought in Bill C-18, the Online News Act, which is designed to make big web giants like Google and Facebook pay for linking to news organizations. The Liberals said big companies are making record profits while local journalism suffers. It's time to fix that.

Well, guess how that worked out. Facebook has stopped carrying links to any news at all. Google is threatening to do the same. Village Media has lost so much business, it's put its growth plans on hold. If Google follows through on its threat, Village Media could be out of business. One thing that's amazing to me is that Justin Trudeau has had a bunch of heritage ministers, and not a one of them has ever talked about any of this with Jeff Elgy. The other thing that's amazing to me is that Jeff Elgy has actually managed to stay calm enough to talk about any of this, usually. He's been figuring out how to survive for years. He's what small business in Canada looks like. He just wishes the government wasn't quite so eager to help

or quite so lousy at it. Jeff Elgy talked to me from Village Media World Headquarters, which are actually pretty swankyy in Sault Ste. Marie. Hey, Jeff Elgy, thanks for joining me. You're very welcome. Thanks for having me. What got into your head to start a news company in 2012, 2013? Like, were you hit on the head? Even by then, you must have known it was not a guaranteed income proposition. Well, I actually, I didn't really know that. I had a bit of a different experience. So before I did this, I ran a digital agency. And over 20 years ago, we actually built the first version of what is now the first and primary site in our network,

which is suit today.com. And so I kind of watched it from the sidelines for the first 10 years or so build up a massive audience didn't really make any money, but I saw a lot of potential in it to make money. So I started village by kind of taking over a majority interest in that site and was excited to kick it off. What's the local media landscape in Sault Ste. Marie looking like in the early 2010s? The Sault Star, I think, was the paper there? Oh, yeah. Well, so it's still here. In fact, the landscape really hasn't changed all that much. There's been a couple of smaller digital competitors come and go. But otherwise, we have a post-media daily paper, which is the Sue Star. We have a post-media weekly paper, which is Sue This Week. We have a local

CTV station. We have multiple Rogers radio stations. So there's a healthy media landscape for a town of 80,000 people here. So what was your play? How did you insert yourself into that? Well, I won't take full credit because it kind of happened even before I took it over. And I think the play really was to do news a bit differently. So it had a little bit more of an edge to it. We really embraced digital, of course, because that's all we did. That's all we thought about. So while the paper was worried about writing for tomorrow, you know, we were breaking news all day long, you know, and so we were much, much faster at getting it out and being very comprehensive in our coverage. So it was just that it was just we were we really embraced digital. How's the money? The money? Well,

the money is good. I mean, village has been profitable for years we're now in 21 communities and we finance that expansion out of our operating profits um you know if you look at the money in a site like the sioux which to be fair is our our most profitable site the margin would be massive as a one-off community we keep our margin at kind of a purposely set rate of about 10% because all the rest of the money goes into a new site investment. But the money can be quite good once you have scale, especially. I looked on the website and on a couple of your websites, and there's an extraordinarily dense offer.

Like, I mean, I grew up in Sarnia. I'm used to the papers having kind of a few stories a day. And you guys have really loaded it up with news. Is there actually that much going on in a place like the Sioux? Well, there's tons going on, but I would say kind of our approach is broad-based coverage, right? So on our sites, you'll see a lot of original reporting. And typically in our communities, we have the largest newsrooms in the communities now. But you'll also see a lot of original reporting. And typically in our communities, we have the largest newsrooms in the communities now. But you'll also see a lot of service journalism work. So for example,

if it's February, and there's a blizzard outside, and the school board sends us a note at 5am saying the buses are cancelled today, we'll have that up on our site in half an hour or less. So you'll see a wide range of information. And some of it's not kind of the big J, you know, journalism that people celebrate often. But to us, we're providing a broad based community service of information and news. You'll also find things like obituaries, which are really popular on our sites, you'll find weather, you'll find a little bit of things like webcams, or horoscopes, or crosswords, even. So it's really, you know, I would say, as I always laugh, it's not rocket science. It's kind of that old bundle that a daily newspaper used to have, right?

A whole bunch of information. It's funny. I often think about that as the stuff that has been first to go as newspapers fall on hard times, but that used to be the first stuff that people used to look for. My parents moved out of our longtime home several years ago when I was looking through the stuff that my mom had kept. And part of it was all of the scores for every category in the annual music festival, right? Because I was trying to play the piano.

And she wasn't just keeping track of what marks I got, but what marks all of my friends got in their various events. And this was like the thing that she was going to be checking out that day in the newspaper, you know? And of course in the nineties, they stopped doing that. And, you know, with results that we've seen. Absolutely. Yeah, no. And I think it's especially in, you know, relatively small communities, you know, we're typically in communities under 150,000 people.

People love to know what's going on. So how many journalists do you now employ and in how many markets? So we're about 150 total staff, and 90 would be in the kind of newsroom news teams. And we're in 21 communities, and we have a couple of business specialty publications as well. Okay. And recently, you've also been publishing the Trillium, which is a Queen's Park. It's the local newspaper for Queen's Park, as it were.

You got it. Yeah, it's a bit of broad based coverage on Ontario politics, as well as some insider information. And I believe we are measurably the largest press bureau inside of Queen's Park now. Now, the reason I asked you and kind of drew you out on all this was to emphasize, to me, an interesting point as we get into the C18 debate, which is you are the growth in local reporting in Ontario over the last decade. Everyone else is like, is fleeing and collapsing, and you're moving in another direction. We certainly have been. I mean, we started with, you know, six people 10 years ago, right? And now we're 150. And we started with, I think, two or three journalists in those days, and now that's

90. So that's all we've done is grow constantly for 10 years. And actually that accelerated through the pandemic. You know, when COVID started, we thought we were going to have to shrink and we did the absolute opposite. We pretty much doubled in size or more since then. But there are others like us. I mean, we might be the largest in the province at this point probably as a digital publisher, but there's a lot of great digital publishing success stories,

you know, all across Canada. Now, before the federal government legislated on this odd sort of forced negotiation regime that is C18, did you have a sense, did you have an emotional response to the presence of Facebook and Google in the Canadian advertising market? Well, that's a loaded question. So, you know, you know we as i say have been brought up with the platforms right so we don't have this view of the way things used to be before google and facebook we've built a business on the backs in some sense of google and facebook in the sense

that we've used them sometimes i say jokingly we've abused them to make their audience ours. So when we launch new sites, we use Facebook to seek out audience and help build the habits with them. And Google know differently. So certainly we've learned how to use them for good in that sense. They've been excellent partners of ours. They've done a whole bunch of things for the industry too, whether it's providing tech or workshops or in some cases funding. But we also recognize that on the other side, they are aggressive, very worthy competitors in the advertising space. And so they certainly take

a lot of ad dollars out of the ecosystem, but they have great products. I mean, this is the reality is they've done something really good. They reach a lot of people. They're very sophisticated. We've learned that there's a place for us as well. We have advantages that we can offer, especially local businesses in our communities that Google and Facebook cannot. And so we've learned to kind of coexist with them in that environment and that's fine. Okay. So over the course of the federal liberal second mandate, basically starting in 2019, they start to make noise about how it's untenable that these web giants have all the revenue and the organizations that are doing the journalism have less and less revenue. And so there's got to be some sort of mechanism for moving the money from there to here. How closely did you follow that? What did you think of that as a general proposition? I have been following this for as

long as the conversations have started, like even pre-Shattered Mirror report days, so many years ago. And we have always been nervous about this bill and especially kind of the foundations on which it was built. And those foundations in those days were the industry lobby coming out and saying that Google and Facebook steal our content. They don't give us anything in return. And we kept saying, look, there's nothing further from the truth. They don't steal our content. If you feel that they're stealing your content, then you can actually just disable that in about a minute. You know, you can actually put a little line of code in your website that disallows Google from crawling.

You can also stop putting your content willingly onto Facebook. So to us, this was all just a lie. It literally was a lie. This is just not true. It's not the way that it works. So we fought against it because our biggest concern was that you would scare the platforms away. You know, that they would deprioritize news, especially Facebook.

And here we are. That's exactly what's happened. So we have been speaking out against this bill before it was even called C-18 for fear of this exact outcome. Now, Shattered Mirror, which you mentioned, was a report that the Public Policy Forum put out in, golly, 2017, something like that? Yeah, about that. Yeah, I think it's been more than five years now.

And it was authored by Ed Greenspawn, who's the president of Public Policy Forum. Public Policy Forum is a think tank. Ed's a former editor of the Globe and Mail. And he wrote this report which made the case I just sort of made, which is that revenue is collapsing for traditional media. Newspapers are closing all over the place, and that's got to be fixed. And meanwhile, these web giants have been accruing just gigantic amounts of revenue. So that's a good place to go and look for the money

to save Canadian journalism. Yeah, and that's true. And I think, to be clear, as much as I don't like C-18 because of the foundations of it, we're not necessarily against the notion of Google and Facebook supporting journalism in a certain way, just not the way that it's come about. And I don't think the Shattered Mirror report prescribed this outcome. I think it wanted money to flow, but it didn't want money to flow this way. And I don't think Ed would, you know, I don't want to put words in his mouth, but I don't think he would think this is an ideal outcome as to the state we're in.

Yeah. And I should make it quite clear, I'm bending over backwards to be devil's advocate for C18. I think it's a monstrous claptrap. I wonder whether it's some kind of practical joke, but this is not supposed to be my ranty podcast. Fair enough. So what is the mechanism that C18 proposes? In the first place, it strongly suggests that the web giants should sit down and organize revenue sharing negotiations with news organizations. But there's a but.

If that doesn't work, then feds are just going to take their money and give it to you, to the news landscape. Well, I mean, I guess things have changed even as recently as Friday since they've published their draft regulations, which now prescribes that they need to give us a percentage of their global revenue or the Canadian proportion of their global revenue at 4 Canadian proportion of their global revenue at 4%, which if you kind of do the math on Google, that's roughly 16 to 18% of their profit.

They want to say, you turn this over to the news industry. I mean, that sounds preposterous. Could you imagine any business where the government comes along and say, you're going to give 18% of your profit to this group of people. But again, I mean, the problem, I think specifically with Meta, Facebook and Instagram, is that they fundamentally disagree with the bill, because the bill basically says you're stealing content from us. And Meta is saying, well, wait, the publishers are putting all this content on our platform because they get a whole bunch of traffic back for free for it. We're not stealing anything. Therefore, we're not paying like We don't want to pay because what you're saying we're doing is absolutely not true. I think if you had gone back in time and said, look, the bill could be super simple. The bill

could say, look, if a platform, a large global tech platform takes X percent of ad dollars out of the Canadian ecosystem, then perhaps they should give a percentage of that back to support journalism, put it in a fund, distribute it across news companies. Great. But that's not what the bill says. So what might be acceptable, what you might think would be a reasonable way for the government to proceed would be to impose essentially a digital ad revenue tax. Maybe on everyone, maybe including on you, but in the nature of things, the web giants would pay a lot more and then that would go into a media development fund or some damn thing. Absolutely. And I think the platforms agree with that kind of thinking. They've always

said, look, we want to support the news industry. We already do support the news industry, but not in this way. And again, this way, the thing that they do that triggers this obligation to pay under this law is that they link Facebook links to news stories and Google links to, you know, when you do a Google search for interviews with Jeff Elgy, Google shows me all the recent news organizations that have interviewed you. And this is seen as nefarious because it's seen as Google and Meta making money off the backs of these news organizations. Right. And so the technical term is called a digital news intermediary, meaning that they're in between the audience and us. And so that's the

out for Meta, right? They're saying, okay, well, we just, we won't do that anymore. So we don't get captured by the bill now. So we're just going to not link to new sites, period. And we're going to get to what effect this has all had on you as a company. But the two assumptions that strike me as ridiculous about this is, first of all, the linking is stealing. That linking is something that the web giants do in a clandestine fashion or without asking, or they just barge in and grab the material. Whereas every traditional news organization I worked on had their fingers crossed that they would get a lot of traffic on Facebook and high visibility on Google. Absolutely. And the second assumption is that the largest part of the business model of these

massive global organizations is their relationship with news. That the overwhelming majority of people who are on Facebook are on Facebook looking for news updates. Right. Which is, again, I can only call this lunatic. It seems to me most people are on Facebook to look at their neighbor's cats. Right. Exactly. And now that's proven to be true, right?

Already the research reports are coming out that are basically saying engagement on Facebook has not declined whatsoever. And actually what we're hearing is that sentiment, positive sentiment has actually increased on platform because news isn't always happy, right? And maybe people don't want to see negative things on Facebook anymore. They do just want to see the cats and pictures of food and people having good times, right? It was ludicrous to think that we were responsible for the success of their platform. I mean, if you look at Google, it's not all that different. I mean, Google indexes a massive amount of information, very different, obviously, than Meta is in the way they operate their business. But Google makes their money on search. And so people buy ads on search, you're searching for a new car,

on search. And so people buy ads on search, you're searching for a new car, you're going to see ads for car companies. People generally don't buy ads related to news articles. Like if you're searching for Jeff LG interviews, you're probably not going to see an ad on Google. So while it might represent a reasonable percentage of search, it's not going to really measure out to a large percentage of the revenue because it's not high value words that people are searching for. And you can just test that out. Go start looking for news stories. You're not going to see a whole percentage of their revenue because it's not high value words that people are searching for. And you can just test that out. Go start looking for news stories. You're not going to see a whole bunch of ads around them versus if you start going to look for a new Toyota. Okay. So I get it. So if I'm looking for cars, then Google's going to offer me up ads for cars. But if I'm looking for hurricane news, I'm not going to get ads for the best hurricanes.

You got it. Okay. But the upshot is that Facebook meta has said, if we're going to be charged for linking to news, we're simply going to stop carrying links to news. And Google has not done that, but they hold the option to do that in reserve. So suddenly your stuff is not on Facebook. What effect has that had on your business? So us specifically, Facebook, you know, kind of in the months leading up to this. And to be fair, I think since the discussions of this bill started, Facebook has been slowly weaning itself off of news. We have seen since the prime days of Facebook liking news

on platform, a kind of slow decline up to about 17% of our traffic pre the bill was coming from Facebook. Now that's a lot of traffic. I would say in new communities where we've launched in the last year or so, a higher percentage of our traffic comes from Facebook because we're actually not only just publishing our stuff there, we're paying for traffic to help develop that market to a point of maturity. So for new markets, it's even more important. Now, at Village Media,

we have pretty diversified distribution of channels. So people come to us direct because they build up a local news habit. So they want to see like the book market or make it their homepage that come every morning. They add us to their home screen on mobile, they subscribe to our newsletters, they find us through Google. Some publishers, though, who don't have that distribution ecosystem, they could be losing right now. And we know some publishers that are losing 30, 40, 50% of traffic

between Facebook and Instagram. It's devastating. My understanding is that the upshot for Village Media in the most concrete terms is that you decided to put your growth plans on ice. You were looking at new markets and stuff like that. You decided to hold off on that. Yeah. Around April, I think it was, we announced a full pause on any new community launches and any new hires of journalists, other than, of course, if we need to replace people. But we put a full pause on growth. Can you tell me where you were planning to expand? So all over Ontario is our priority. So Village, we license technology outside of Ontario, right across Canada. So we have about 150 sites on our platform. But for our own and

operated properties, basically small to mid-sized communities all throughout Ontario. And we have a priority list, I would say about 15 communities that we want to be in, you know, or wanted to be in over the next couple of years. That list will change from time to time, depending on what happens in the industry. For example, if a daily newspaper closes or something like that. But yeah, 15 or 20 kind of priority markets in Ontario were on the list. Are the next 15 markets as promising as the last 15 were? I mean, are you moving into harder and harder territory? I wish I could tell you that we've perfected the prediction model. So what we've learned is that probably 80% of the time

we're right in the sense that we still have a couple markets that don't really work that well. And we think every time we learn about that, we avoid it for the next time around. So it's hard to say. We've launched some markets recently that are excellent markets. We have markets that are older than that that don't perform as well. A lot of it comes down to a mix of the competitive makeup in the community and the media sector. A lot of it comes down to a mix of the competitive makeup in the community and the media sector. A lot of it comes down to our staffing. A lot of it comes down to people's news habits and in particular, how they identify with their community. So it's, it's hard

to say for us, those 15 or 20 markets, they look like the right kind of fit for village. They have a certain degree of isolation. So it's not right in the GTA. They're a certain size. We expected they would generally perform well, and a couple of times, we'll get it wrong. Is most of your writing that appears on your sites freelance, or is it salary and benefits? Salary and benefits. 90 full-time journalists in our freelance budgets would be, I'm going to guess, 5% of our spend, maybe 10% on the upper end. This is a land that I thought had vanished. Salary and benefit for reporters, including a couple of friends of mine, Michael Friscalante,

who's running suit today these days, used to work with me at McLean's. He is our editor-in-chief now. Yeah. So the lack of traffic from Facebook has put your growth plans on ice. If Google were to jump in, I mean, Google is a much more common intermediary between readers and the news than even Facebook is. So if Google were to back out, you'd be in serious trouble. Yes. How serious? is? Well, Facebook 17% and kind of pre Facebook pulling out Google's proportion of our traffic is about 32%. So basically between the two 50% of traffic would be lost. So in a business that is reach based and ad based, our revenue is highly correlated to our traffic, because we're selling

ad impressions, right? If we can't deliver those impressions impressions we can't sell them or we have to refund them so you know i don't care what kind of business you run but take away 50 of your realizable potential revenue uh overnight and that's not a good story you know would we would we be bankrupt you know in a month no uh we would have to make substantial changes to the business. We would have to scale back the business to survive. Okay. So they passed the law. It's not yet in force, but we're in the period when theoretically everyone's supposed to be sitting down and figuring out these revenue sharing deals. And then the effect of it is that your growth plans are on hold and your existence is at least theoretically threatened if Google were to respond the way that Meta has. And the astonishing thing is that almost everyone who looked at Bill C-18 when it was still a hypothetical said, this is what's going to happen. If they are made to pay for linking to news, they will simply stop linking to news. Is that a case that you made to the government?

Yes. I mean, this is, yeah, for many years, this is why we've, you know, been going on interviews and putting our hand up and writing government, talking to Heritage and speaking in front of the Senate is these platforms are very important to the future and health of the digital publishing industry. And don't kill the traffic you know don't scare them away what response did you get before uh i mean this thing came in a lot really at the end of the last parliamentary session so what response were you getting in october and january and may when you said look this is really not going to work crickets i mean honestly from from the government that they'll listen to us.

I mean, to be fair, some of the staff from Heritage would sit down with a number of us publishers across the country. But, you know, our requests have been largely ignored. Have you met with a Heritage minister about this stuff? No. We have now requested again a meeting with the new minister. We're kind of promised that will happen at some point. But now I'm concerned that the staff is probably shuffling as well, because this happens when ministers change. And so there'll probably be almost no continuity on

the communication lines between this minister switchover. Okay. So when you talk to the government, who do you talk to? Well, typically would be some MPs, you know, some will reach out, will'll reach out to others, senators, but typically the Department of Heritage, so heritage staff. And you belong to some of the news industry associations that actually have been advocating quite strongly for C18. We are members of News Media Canada who really took the lead on this, and we were aggressively against it from the beginning with them and they certainly know that so we have been very much offside so we're members of the association we certainly don't see eye to eye in that sense we're also members of a new association called press forward

which is a lot of smaller uh independent publishers and we're much more on side uh with them and then we have another group that we've it's kind of an informal collaboration of publishers called the local news collective which is actually made up of 47 different publishers and about 400 sites across Canada. And we also, generally speaking, I won't speak for every single publisher, but the bulk of the collective also does not like this bill and the outcome. So I honestly don't really know who loves this bill anymore. I mean, the Globe and Mail doesn't love it anymore. They've published a number of articles about it. So we work with a lot of the midsize publishers. We work with the lifestyle publishers like the blog TOs, the Narcissists of the world.

None of us want this bill. So I don't know. It's really hard to say these days who's really fighting for this thing. Easy generalization that might be ungenerous is that this whole thing has been backed by all the old, large, traditional news organizations whose model has been failing for years. Yes, but even some of them aren't on side with it anymore. I mean, that's the thing. Again, the global mail is really not on side with it now. They're not favorable towards it. You know, companies like Black Press, Glacier Media, these are large newspaper with it now. They're not favorable towards it. You know, companies like Black Press, Glacier Media, these are large newspaper companies out West. They're not happy with the outcome of it.

So sure, there may be a couple of big ones out there, but I think the support has certainly been falling quickly. And yet the new heritage minister, Pascal Sénange, her language is not, let's see if we can retool this. Her language is blaming the web giants for ruining canada yeah yeah we were hopeful that things might change but it doesn't sound like it has it's just full speed ahead you know blame them don't acknowledge the support they've provided the industry or the value of the traffic we get for them and carry on with what was already happening

so what on earth is likely to happen next? What should happen next, in your opinion? What's likely to happen? I mean, at this point, Facebook came out very quickly, or Meta, sorry, came out very quickly and said they're still out. The draft regulations did not solve any of their concerns, so they're still out. And I keep saying that, in my opinion, the longer they're out, the more likely they will remain out. So that's meta. You know, with Google, from my view, and I certainly wouldn't speak for them, but I don't think these regulations are satisfactory for them. So there's this 30 day window of consultation, where my guess is they'll continue to discuss and negotiate with the

government. And I really, well, I have two views. One view is, of course, I hope they stay in, because if they're out, to me, that's the end of the industry over time. The industry doesn't survive. Certainly, digital publishing never will have a chance to drive, or the bulk of it, from a local news standpoint. in some ways i think if they pull out it would force the government because the industry would be in such a bad position to actually rescind the bill and do something more substantial so so i kind of have two sides of thought there my guess is through some kind of negotiation that google and the government will come together and that means probably a less amount of money than what they've asked for.

I think they're asking about 167 million from Google. And prior to that, Heritage at one point had said 100 million from Google. So I think Google, if they can get it down to 100 million from them, maybe that will be satisfactory. I mean, really, what it's all about is getting exempt from the bill. That's kind of the game here, right, is that you really can't comply with the bill. So you need an exemption. You need a path to exemption, which has a cap, a total amount of funds that you'd have to deploy.

So I think if Google's confident they can get the cap to a reasonable amount and they can get the exemption from the bill, they'll stay in. But I don't know for certain that that will happen. get the exemption from the bill, they'll stay in. But I don't know for certain that that will happen. So if somebody got drunk in Ottawa and made you the minister's policy advisor, what would you tell her to do over the next five months? I would encourage them to do whatever they could to keep Meta in and Google in. It seems like there's absolutely no probability that the government would rescind the bill, walk it back and create a new bill. That sounds like there's not even an option on the table. So somehow through these regulations, they'd have to solve Facebook's concerns and Google's

concerns. And that's certainly what I would be encouraging. Because if you want, the whole purpose of this was to help support journalism jobs, right, and support the industry. And now it's doing the absolute opposite. So the outcome should be to get them back to the table and work out an acceptable relationship with them. I should change directions a bit because I expect there's going to be some of my listeners who are just driving themselves crazy right now because we are treating Facebook and Google as

at worst neutral actors in society and maybe almost as the heroes of the piece. And yet social media are a big problem. Twitter has morphed into this weird social force under Elon Musk. Facebook, one of my guests last season was a guy named Max Fisher from the New York Times. He's written a whole book about how Facebook

probably helped to cause a civil war in Myanmar, how Facebook in places in Germany where more people have internet access and Facebook accounts, anti-immigrant sentiment is higher. I mean, Facebook is in some ways a highly problematic social force that people don't understand.

And so that makes it very attractive to the government to say, look, they're the problem. We're here to fix it. They need to pony up. How do you respond? Look, I, for most part of that, fully agree. I think Facebook has been terrible for society in many ways. I think they've done many evil things, knowingly or not. But it's now going to be worse because people aren't leaving Facebook because news isn't there. And so now anything that people are going to be exposed to is not going to be fact-based journalism anymore. You're going to have more misinformation spreading in Facebook than ever before. It's going to deteriorate democracy because you're not going to have a large part of society who doesn't seek out news

every day. I mean, this is the sad state of the world today, right? As people care less and less, they vote less and less. They're way less informed than they used to be, but at least they passively got exposed to news while they were on Facebook. Now that's gone. So now it's even worse, but this bill doesn't solve that. This bill doesn't make Facebook a better place one way or another. It has nothing to do with any of that. It's just about a business arrangement between news and us. Maybe the Online Harms Act will tackle that next. But this bill is not about making Facebook a better place for society.

And in my opinion, it has in fact now made it much worse. The thing that I find astonishing in all of this is that a succession of cabinet ministers whose job has just overwhelmingly been about getting these acts through have not seen fit to sit down with the people who represent a new generation of Canadian journalism and ask you questions. That seems to be a prerequisite for legislating is to ask the people who are going to be affected, what do you think of my proposed solution? Is it too late to even think about doing stuff like that? So they are now asking us for consultation

on the regulations. But certainly leading up to this bill, they didn't want to hear from us. And I think it's because we had a different story that they just seemed not interested in hearing, quite honestly. Was that a surprise? Nothing surprises me in this industry now. You know, I mean, things happen. And look, I'm from a small town, Sault Ste. Marie. I'm an entrepreneur, a business person. I love this business. Things happen in Ottawa that I don't understand.

And there's people that lobby government that I don't understand. I mean, so it does not surprise me, you know, that there are people that do not want stories like ours told because it goes against the narrative that they want out there. What's the best thing that happened at Village Media in the last month? I want to try and close on a bit of a happy note. The best thing that happened last month. You know what? We have stuff, great stuff that goes on all the time. Our staff are tremendous.

The journalism is great. We give back to our community. So one of the best things that happened, for example, is we have something called our Community Builders Awards that we have in a number of our communities where we celebrate extraordinary citizens with a whole process of nominations and judging and then giving awards and having events for these people. Any time that we're giving back to the community, to me, is a great time for Village. We have things called Random Acts of Kindness. In fact, today we publish a story about our soup kitchens the shelves are empty and we have the ability to unite the community and and we have

a team right now working on how do we fill those shelves how do we work with our audience how do we work with our local businesses to restock the soup kitchen that that's why i fell in with this business the ability for us to impact communities in such a positive way is, you know, we live for that. The impression I get is that that is not threatened, that you plan to be able to keep doing stuff like that, shining a light on good things in these communities, but that you're not going to be able to do as much of it as you hoped because of the web giant's reaction to this law. Yeah. The sad reality, at least for some period of time, is if Meta stays out,

and no matter kind of what money flows out of C18, if it ever does, I don't see us launching new communities. We have a very, you know, kind of finely tuned model for launching new markets. We have a 100-page playbook that talks about how launching new markets. We have a hundred page playbook that talks about how we do it. We have very specific tactics and Facebook has always been a really important one. And now that path to a market's maturity and profitability is completely disrupted. So, you know, it's been 10 years of Village. We're celebrating our 10 year anniversary in November at a large party we're going to host. And it's sad that we might switch from focusing on growth, which we've always done.

We've taken our operating profits and instead of giving the money to shareholders, we launched new communities. And everyone's on board with that. And sadly, it might be time to switch paths, switch to focus of profit and not growth. That is sad for the state of journalism in Canada because you've discouraged entrepreneurs like me and many others to invest in the industry. I mean, that's the thing is the industry will not make sense for investment if these platforms are out.

Okay. Well, you have been very generous in laying out your dilemma for us today. I really appreciate you taking the time. Thanks very much. Thank you for having me. Appreciate it. And thanks for listening to The Paul Wells Show. The Paul Wells Show is produced by Antica in partnership with the University of Toronto's Munk School of Global Affairs and Public Policy. Our producers, Kevin Sexton. Our executive producers are Laura Reguerre and Stuart Cox. If you subscribe to my sub stack, you can get bonus content for this show as well as access to my newsletter. If you're enjoying the show,

spread the word. We'll be back next Wednesday.