Wednesday, November 11, 2020

Torstar . . . er, Nordstar going all-out for cash

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. 

Chiu posted a link to her article on Twitter which at last glance had garnered 385 likes, 215 retweets, and 93 comments. Now THAT is social media savvy. The first dozen or so replies were from herself in what turned into a veritable tweetstorm of alternating explanation, rationalization, and quotation from her article. “I wrote this to try to investigate what's going wrong with my own industry, and the impacts on wider society,” she explained. “Since I returned to Canada from working overseas, I've faced two rounds of layoffs at my paper,” she continued. “I'm honestly surprised that I still have a job at this point.”

Her angst points up the so-called “precariate” in which journalists of her age must usually find work. It is heartbreaking but not inexplicable. Chiu just doesn’t explain it very well, preferring to rely on NMC’s explanation. “Market failure is an economic situation where free market forces like supply and demand don’t function as they should,” she tweets, “and this is what's happening to media industries around the world.” Au contraire, free market forces like supply and demand continue to work just fine. The problem is that consumers no longer demand newspapers because they can now get a cheaper and more timely substitute for what they provide.

Then she tweeted a link to her story’s sidebar. “Here is a list of more than 250 Canadian newspapers that ceased publication since 2013.” That’s when my head achieved liftoff from my torso and went into several orbits around the sun. OMG, as the kids say. I study Canadian newspapers. There are fewer than 100 dailies and about 1,000 community newspapers. The loss of 250 titles in seven years would be an industry evisceration. I was thus keenly interested to look at her list. Most of the titles were of newspapers I had never heard of before and were no doubt these giveaway local “shoppers” that land on your doorstep unbidden. Some were of commuter dailies, a species which once flourished but has now gone extinct. Some were Ontario community newspapers Torstar itself closed after a dodgy 41-title trade with Postmedia which now finds both chains under federal investigation on possible criminal charges of conspiracy to reduce competition. Now that's chutzpah.

Soon after achieving re-entry of my cranial module, I dashed off a letter to the editor of the Star.

Why Canada’s media industry is in more danger than you think, Chiu, Nov. 9

The Star exaggerates the number of newspapers lost in Canada recently and fails to report the real reason some have been closed or merged. It is not true that “at least 250 Canadian newspapers have shut down since 2013.” Data on the News Media Canada website show there were 974 community newspapers in July compared to 1,019 in 2013; 72 paid dailies (94 in 2013); and five free dailies (19 in 2013). We thus have 81 fewer newspapers now than in 2013. Most of the closures and mergers have been a result of questionable corporate horse trading. The Tri-City News you point to in Greater Vancouver is a perfect example. Its monopoly was created when Glacier Media acquired it from rival chain Black Press and closed its own Tri-Cities Now. The two chains traded 14 newspapers in 2014 and closed or merged most competing titles, which somehow failed to attract Ottawa’s attention. A similar 2017 trade of 41 mostly Ontario titles between Torstar and Postmedia, which saw almost all of them merged or closed, is under investigation by the Competition Bureau on possible criminal charges of conspiracy to reduce competition. The real reason Canada’s media are in danger is misinformation like this, which brought the ongoing $595 million news media bailout and now seeks to wring billions out of Facebook and Google. Supporting research can be found on my website at

I have no expectation they will print my letter. They never do, or even respond to my offers of op-ed explainers. So I tweeted it in bite-sized replies to Chiu’s tweet. Then I realized the most delicious irony of all. On doing a database search to ascertain its page placement, I saw that her article and its sidebar never appeared on the Star’s pages, only on its website. Maybe it will see print if it gets enough likes. Alongside my reply, of course. I’m all-in on that.

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