Holy Joe Atkinson must be spinning in his grave. Earlier this year his nervous descendants sold off – for a pittance – the Toronto Star he turned into a journalism and social justice giant. Now that the country’s largest daily is in the clutches of private equity player Nordstar Capital, it is linking arms with the U.S. hedge funds that own most of Canada’s other major newspapers in a shameless cash grab. A few weeks ago, its new Public Editor joined the chorus of industry association News Media Canada in demanding a “new regulatory regime to safeguard trusted journalism.” The “free ride” for Google and Facebook must stop, wrote Bruce Campion-Smith as part of a NMC campaign urging Ottawa to halt their “monopolistic” practices.
This is more than just an arm wrestle over digital ad revenues, the bulk of which have been snapped up by Facebook and Google. . . The two companies have used their market dominance to unfair advantage to control 80 per cent of digital ad revenues while not providing “fair” compensation for news content.
He’s right. It is more than just an arm wrestle over digital ad revenues. It’s also an arm wrestle over online streaming services. Ottawa is about to make changes to the Broadcasting Act that will regulate the Internet for the first time in Canada. After years of promising “no Netflix Tax,” the feds have finally caved in to Big Media’s lobbying efforts to tax and regulate online video. The price tag is an estimated $800 million. I’m sure you realize who will end up paying.
But it is also an arm wrestle over digital ad revenues. Newspapers once got rich selling classified ads, but most of those have gone online to websites that offer cheap (or even free) ads. Facebook and Google have scooped up most of the rest by simply building better mousetraps for ads. Google gets about half of all digital advertising revenues by planting cookies on your computer that follow you around online to find out what you’re interested in. Then it sells ads tailored to your interests that show up on whatever website you are visiting. It is doubtless the perfection of target marketing. Facebook gets about half of the rest by letting people connect with others online and then slipping in the occasional ad.
Such technological cunning is unfair, Old Media seems to be saying. That ad money used to be theirs, and they want it back. The newspaper lobby is leaning as hard on the feds as the broadcasting lobby did, and they have the combined might of the nation’s press behind them. They want Ottawa to impose a “link tax” that will pay them every time someone posts a link to one of their news stories. Linking to journalism on the Internet, they claim, is nothing less than “content poaching.” It’s a bone-headed idea that has been tried elsewhere to no avail. Now it’s being tried again in Australia, and NMC is jumping all over that fact to try and persuade Ottawa to attempt it here.
Unfortunately the newspapers are playing checkers while the tech giants are playing chess. All that Facebook and Google have to do is stop linking to news websites to avoid paying the tax. Traffic to those sites will drop off, and *ouch* you’ve gone and shot yourself in the foot again. University of Ottawa law professor Michael Geist has been all over this with some brilliant analysis. So much so that Ottawa is apparently re-thinking the wisdom of such a tax. NMC is mounting a major counter-offensive, and the Star is all-in.
Its latest contribution to the debate comes from Vancouver correspondent Joanna Chiu. She’s been riding the Link Tax Express for a while now. She seems earnest enough, posting on Twitter that “I worked with editors on this piece with zero input from Torstar executives and in fact the piece includes some sharp criticism of media leaders’ handling of financial crises.” I am sure those Torstar executives are nonetheless delighted with her work.
Under the headline “Why Canada’s media industry is in more danger than you think — and what we can do to save it,” Chiu does her best to muddle through the technological and economic forces that have made it so difficult for her and other young journalists to find and hold a newspaper job. She starts her story the way any good feature should – with an anecdote. This one is about her hometown Tri-City News in the eastern suburbs of Vancouver. It has enjoyed a local monopoly since 2015, when the competing Tri-Cities Now closed down. Chiu laments this without mentioning how the local news monopoly arose, which is the real reason Ottawa should take action. She fails to mention that local news is also covered by the Vancouver Sun and Province dailies, although their newsrooms were merged in 2016 in another glaring example of federal inaction.