A few years ago, the federal government began gearing up to exert more control over the internet. C-11 tackles online streaming. C-27 will tackle privacy. There's legislation expected soon aimed at combating online harms. And there's C-18, the Online News Act, which was released in April and is wending its way towards becoming law, which will require platforms (primarily Facebook and Google) to pay publishers for hosting links to news stories.
C-18 will be bad for journalism and bad for Canada. Here's why.
A Faulty Premise
The stated premise of C-18 is that by making links to news material available on their sites, platforms are taking value from publishers, and so they need to be forced to compensate publishers for that value to "enhance fairness" in the Canadian digital news marketplace.
But that premise makes no sense. We know that because news publishers have always been able to opt out of appearing in Google search results, and they don't. In fact they do the opposite: they vigorously compete to maximize their presences on Google and on Facebook. News publishers want to appear on those platforms, because that's where people are finding news. When someone sees a story on Google or Facebook, and clicks on it or shares it, that brings traffic to the publisher's site, increasing its reach and its revenue. Being on Facebook and Google helps publishers. If it didn't, they would just opt out.
The real basis for C-18 seems to be slightly different, and rooted in long-standing complaints from newspaper publishers that big internet platforms broke their business model, and should therefore be required to compensate them for their losses. You could call this the 'you broke it you bought it' premise.
So let's unpack that.
A Broken Business Model, But No Villain
It is true that the internet broke the business model for newspapers.
Newspapers had been financially healthy for decades, but when the internet came along, the landscape shifted under their feet. Sellers could now advertise on Craigslist, or put their products on eBay or Amazon, or build their own sites and market directly to consumers. That meant fewer dollars got spent on traditional advertising.
Of the dollars that remained, newspapers' share took a nosedive. That's because the internet made it possible for anyone to be a publisher, which meant a massive increase in the number of places (blogs, specialist sites, social sharing sites, fan sites) where ads could be placed, shifting dollars away from traditional publishers. And, platforms like Google and Facebook developed micro-targeting tools that made advertising way more efficient and effective, and in exchange for that innovation those companies began to take a cut of the proceeds from ad sales.
This development has been financially catastrophic for the news industry. In Canada, it has resulted in the shutdown of hundreds of news organizations, and the hollowing-out of many of our major news institutions.
But importantly, this is a tragedy without a villain. It is normal for technologies to evolve and open up new capabilities, for innovation to happen as a result, players to compete, and winners and losers to emerge. That's how markets work, and it's not usually deserving of intervention by the federal government.
What's different about the collapse of the news industry, though, is that it's happened to the news industry, and journalism is correctly understood as essential to the functioning of democracy. Journalism is a public good and when it is performing well it strengthens the societies in which it operates. Democratic governments know this, and that's why they don't want to let the industry collapse. They are right to want to make interventions to support and encourage a thriving, healthy news industry.
The Wrong Kind of Government Intervention
But this particular intervention is misguided and won't get us there.
Imagine it's the 1920s. I am a buggy whips manufacturer, and you make cars. Bill C-18 is the federal government saying you need to give me money because nobody is buying my buggy whips. And you have to do it forever.
Maybe that sounds reasonable. We need journalism, and if the market isn't going to provide it, we need to find some way to keep it going. But the buggy whip in my analogy isn't the news. The buggy whip is advertising dollars flowing into the news industry. And that's where the government is making its mistake. To intervene to support good journalism makes perfect sense, but to intervene to try to revive a now-long-dead business model does not. It's not an appropriate role for public policy and it shouldn't happen.
C-18 misdiagnoses the problem as "news publishers aren't getting their fair share of ad revenues." The real problem is more like "we need to find new sustaining business models for the news industry, because the old one is dead and gone." Or perhaps "if the market won't support quality journalism, we need to find some other way to do it."
Private Players Are Experimenting to Solve These Problems
For 20 years now, startups and established players in the journalism industry have been working, with varying levels of success, to solve these problems. There has been a lot of experimentation.
Paywalls have emerged as successful for some. Others are making their work available for free, and relying on a subset of their users to voluntarily pay to keep them afloat, using tools like Patreon, or by developing their own membership models, or by getting charitable status and offering tax-deductibility for donations.
The federal government has made it possible for journalism organizations to register as charities, and has introduced tax credits to nudge people into being willing to pay for news. Some companies, like Village Media, have found success creating new models for local advertising. The federal government itself is creating and administering programs to directly fund certain kinds of journalism, and private foundations are directly funding journalism too.
Some of these experiments are really promising. Some aren't. But they are all necessary. As Clay Shirky said in his famous essay "Newspapers And Thinking The Unthinkable," way back in 2008, answering the question "’If the old model is broken, what will work in its place?’
The answer," he wrote, "is: Nothing will work, but everything might. Now is the time for experiments, lots and lots of experiments, each of which will seem as minor at launch as craigslist did, as Wikipedia did, as octavo volumes did."
That's where we're at right now. You can't look at today's startups and small indie players—The Resolve, The Narwhal, Indiegraf, Canada's National Observer, Village Media, Taproot, New Canadian Media, Canadaland, and dozens of others—and say that one has found the solution. But you can say this is how we'll get to solutions. That is why the government should be aiming to encourage experimentation.
C-18 does the opposite.
What Would Happen if C-18 Became Law?
Let's talk about what C-18 proposes to do, and what its effects are likely to be.
C-18 will require Google and Facebook to make agreements with news publishers to compensate them for Google and Facebook “making available [publishers’] material,” to increase “fairness” in the marketplace. If a publisher can’t reach an agreement with Google or Facebook that satisfies them, they will be able to ask the CRTC to appoint a mediator to help them reach a deal and if that fails, to appoint an arbitrator.
This process will benefit big legacy media companies at the expense of startups and indie publishers. Big legacy media companies have deal-making capacity and lobbying power and presence in Ottawa. The platforms will make deals with them first (indeed, they have already been doing so, in anticipation of this legislation) because they know that if they don't, they risk getting dragged in front of the regulator.
We know the big guys will benefit because that's what's happening elsewhere. Last February, Australia brought in the News Media Bargaining Code, upon which the Canadian legislation is modelled. Since then, it's estimated that about 90% of revenues negotiated as a result of the new law have gone to Australia's three largest media companies.
We can expect things to play out similarly here. In fact, they already are. In anticipation of this or similar legislation, Google has struck deals with the Globe and Mail, the Toronto Star, Le Devoir, and the Winnipeg Free Press, as well as some smaller organizations.
Meanwhile, many small and indie publishers are actually excluded from C-18; the bill excludes operations that employ fewer than two journalists, and excludes those "primarily focused on a particular topic" in favour of those that make general interest news.
Why a focus on general interest news? Presumably it's because the market today isn't creating the kinds of large institutions that are necessary to make general news, nor is it sustaining those that still exist. What we're seeing is a burgeoning number of tiny publications covering a specific niche, like climate change or the Asian diaspora in North America or health news for racialized people. That makes sense, because people are most likely to pay for news they personally care about and feel connected to. It's harder to make people pay for general interest news, especially if they don't see themselves reflected in it. That's a bit of a conundrum for policy-makers, who quite reasonably see a shared base of general knowledge as something that can bind a country together and create social cohesion.
It's reasonable for the government to want to support general interest news. But there's no need for that to come at the expense of specialized coverage.
And so to sum up: in practice, C-18 will favour large, legacy news companies, which will stifle exactly the kind of user-focused innovation that's necessary for the industry to work towards financial sustainability, and which would support healthy competition for audiences.
C-18 will also exacerbate and deepen existing market incentives that are bad for journalism and bad for an informed public.
The market right now is incentivizing the creation of low-value journalism (clickbait, hot takes, listicles, sharebait) and the shuttering of journalism that's expensive to make or is targeted at small audiences (investigative, accountability-focused, local, and journalism aimed at underserved markets).
Because C-18 doesn't provide a basis for how platforms should determine what to pay publishers, the platforms are making payments largely on the basis of audience size and volume of stories. This won't challenge the existing incentives to make cheap, low-value content: it will reinforce them.
There are other problems with C-18. Here are a few.
Bill C-18 Would Also Reduce Canadians' Access to Journalism
There's an old Ronald Reagan adage that if you want to see less of something, you should tax it. By forcing platforms to pay publishers for links and snippets to news material, Bill C-18 creates a disincentive for platforms to link to news material.
In the case of Facebook, news makes up a very small part of total sharing, and therefore doesn't contribute much to its bottom line. As Facebook told Australian regulators when Australia was developing its News Media Bargaining Code, "If there were no news content available on Facebook in Australia, we are confident the impact on Facebook’s community metrics and revenues in Australia would not be significant." When the code passed the Australian Senate, Facebook briefly blocked all Australian news from being shared on Facebook, and blocked all news from being seen or shared by users in Australia.
Facebook already sees news as a headache, and is aiming to deprioritize it. What if Facebook blocks Canadian news? Will policymakers force it to unblock? That would open up a whole new can of worms, which the government should be aiming to avoid.
Here’s another thing. Bill C-18 includes language barring Google and Facebook from acting in any way that "unjustly discriminates against [a publisher]," "gives undue or unreasonable preference to any individual or entity," or "subjects the business to an undue or unreasonable disadvantage."
A strict reading of that language could pose a problem for the ability of Google News to serve its users. Google's news algorithm ranks and displays results based on factors like user preferences and interests, originality, timeliness, local relevance, and how many people are clicking on a story, with the goal of surfacing stories its users will find helpful. What happens if a publisher feels like it doesn't rank high enough in Google News results, and makes a complaint to the CRTC?
Bill C-18 Would Also Increase Commercialization of the Internet
C-18 imagines a world in which Google and Facebook pay news publishers for linking to news because, the government maintains, to "make available" content of value requires "fair compensation." Imagine if that premise were extended further.
The internet was designed to be open and to grow organically without needing licensing, permissions, or approvals. The ability to link freely is at the heart of that openness. This is well-understood, and was supported by the Supreme Court of Canada in its 2011 Crookes v. Newton decision, in which the court described the ability to link as "indispensable" to the internet's capacity to disseminate information, which it described as “one of the great innovations of the information age” whose “use should be facilitated rather than discouraged."
With Bill C-18, the federal government introduces friction to linking, and brings us closer to an internet that's fundamentally commercialized, where what we get to see online is determined by private corporate deals. That's not in the public interest, and it breaks what is truly new and good about the internet relative to, say, radio or TV.
C-18 Would Also Weaken Public Trust in the Canadian News Industry
If news organizations became dependent on money from the platforms to sustain their operations, as they surely would with the passage of Bill C-18, this dependence would create an incentive for them to pull their punches in how they covered the platforms. Even if they didn’t, readers would likely suspect it anyway. As Canadians began to realize that big Silicon Valley tech companies were significantly funding our news industry, they would trust the news less.
The same would be true—maybe even more true—for government involvement.
Let's be clear that government involvement in the news industry is unavoidable. The market doesn't itself produce good-enough outcomes, and government involvement is therefore necessary. That's why we have the CBC, Can-con regulations, the Canada Periodical Fund, APTN, and countless other government interventions.
As needed as these kinds of interventions are, however, they definitely come at a cost.
For journalism to be trusted, it needs to be—and perceived to be—independent from government, and willing and able to be critical of government. When journalism is dependent on government funding, that's far more difficult. Bill C-18 deepens government involvement in the industry. This creates an incentive for the industry to be soft on the government, and it will further reduce trust in journalism.
And anything that reduces trust in journalism is dangerous — especially right now.
Trust in news media and other institutions of democracy have been declining for decades. The internet weakened the news media's gatekeeper role, which created the conditions in which misinformation and disinformation could flourish. And flourish they have, particularly during the pandemic. Belief in conspiracy theories has skyrocketed, and whole segments of the population seem to have entirely opted out of fact-based reality.
In this context, to further erode public trust in journalism is the exact opposite of what governments should want.
As if all this were not enough, there is one more piece of the puzzle that will weaken public trust if Bill C-18 becomes law: the bill proposes to make all related financing deals secret.
The deals are secret today, and they'll stay secret. Twice I've seen people ask Richard Gingras, head of Google News, whether Google will make public the terms of its deals with Canadian news organizations. Both times he's demurred. The terms of the deals, and the amount of money changing hands, will never be made public, which means there will be no accountability to the public in terms of C-18's impact.
We Can Blame Australia for this Sad Situation
So, how did we get into this mess? As it turns out, we can blame Australia.
Last year, the Australian government created the News Media Bargaining Code, upon which C-18 is modelled. It grew out of years of lobbying by Australian-born press baron Rupert Murdoch, who in 2009 began an orchestrated campaign against Google, condemning it (and sometimes also Facebook) as "plagiarists," "kleptomaniacs" and "parasites" that "steal stories," insisting that they benefit from hosting links to news stories, and demanding they begin to pay publishers to do it. The Australian law was supported by large incumbent Australian media organizations (including the public broadcaster after it was guaranteed a cut), and was opposed by indie and small players.
The same thing is happening in Canada. In a blog post last April titled "How Did News Media Canada Get Bill C-18? The Lobbying Records Tell the Story," University of Ottawa law professor Michael Geist reported that News Media Canada, the lobbying arm for news organizations such as Postmedia and Torstar, had held 52 meetings with ministers, MPs, and senior government officials as C-18 was being developed. "This," Geist wrote, "represents an astonishing level of access and may help explain why the concerns of independent media and the broader public are missing from the bill." Small and indie media originally opposed C-18, but when it became clear it would likely pass, they switched to calling for tweaks so they wouldn't be shut out from its benefits.
We (and other countries) are on the road to enacting a law that attempts to placate entrenched industry incumbents, by trying to turn back the clock to a time when they were healthy and thriving.
There is a Better Canadian Policy Option
What should happen instead? Bill C-18 should be scrapped as fundamentally flawed, and replaced with legislation that correctly diagnoses the problem and offers real solutions.
Here's where solutions lie.
In 2017 in its Shattered Mirror report, Ottawa think tank the Public Policy Forum called for the government to start collecting sales tax on foreign companies selling digital subscriptions and advertising in Canada, as it does from Canadian companies. Quite apart from any challenges faced by news organizations, this is a good idea all by itself—to close a loophole that simply shouldn't exist in the current tax system.
The PPF went on to propose that the government use the resulting estimated $300 to $400 million a year to set up a fund supporting journalism in Canada, similar to the Canada Media Fund, and administered by an agency independent from government.
Many of the Shattered Mirror recommendations were put in practice but somewhere along the road to C-18, the proposal for a fund fell by the wayside.
It should be revived.
A fund for journalism is a good idea. In fact, it's essential. The market used to be able to support quite a bit of good journalism, and now it can't. Innovation to support new models makes sense and needs to be encouraged, but we can't count on it succeeding in producing what we need. (Indicators so far suggest it may end up best able to serve specialized topic areas, people with a high level of news interest, and people with money to spend on news, leaving aside the very people who are most susceptible to misinformation and disinformation.)
Journalism is a public good that leads to positive social outcomes for everybody, and so it makes sense to support it with public funds. The government, therefore, should make a fund. It can ensure the fund is "budget neutral" by closing the existing tax loophole. But it shouldn't link the two.
A fund would accomplish the major policy objective of C-18, to support the production of journalism. But it would be different from C-18 in important ways.
It would remove the false "unfairness" premise, which is important both for reasons of basic intellectual honesty, and also because we wouldn't then be on a slippery slope where ordinary internet linking risks being viewed (and enshrined in law!) as "taking value." It would not hand over to Silicon Valley tech giants enormous ability to shape and control the Canadian news landscape. And it would create a mechanism enabling the government to pursue actual policy objectives supporting an informed citizenry.
What should those policy objectives be?
The government could design a system that rewards publisher experimentation with business models, with the goal of helping the industry regain financial sustainability.
The government could make targeted interventions to support journalism that provides high public value, and which the market isn't currently providing: local journalism, investigative and accountability journalism, journalism targeting Indigenous audiences and other underserved communities.
The government could choose to support initiatives designed to appeal to low-news-interest audiences. Some Canadians are now opting out pretty much entirely from news consumption. That's dangerous, and it makes sense to try to lure them back.
The specific policy objectives that should underpin a fund is of course a whole discussion unto itself, and one that would ideally be informed by a clear understanding of how the news landscape, and news audiences, have been changing. Developing objectives and figuring out how to achieve them would require vision and courage. It wouldn't be easy. But it's what the moment demands.
Bill C-18—which is really no more than a shakedown of the platforms in order to prop up the dying business models of legacy incumbents—just isn't good enough. It's lazy and it's not in the public interest. Canada deserves better.
About the author
Sue Gardner is an advisor and consultant to start-ups and philanthropic organizations operating in the technology and journalism space, and is a board member of Privacy International, the Organized Crime and Corruption Reporting Project, the Canadian Anti-Hate Network, and Wiki Education. She is the former long-serving executive director of the Wikimedia Foundation, and in 2021-22 was a visiting McConnell Family Professor of Practice at the Max Bell School. She has never received payment from any digital platform or from any of the journalistic organizations who would likely be affected by Bill C-18.
