Canadian Media Is Looking Bleak

Casey Newton, in a paid issue of Platformer which I was able to access freely via a link in yesterday’s Tabs:

I have suggested before some of the alternate ways in which lawmakers could choose to address declining revenue for news publishers: tax the platforms’ ad revenue; fund public media; or offer tax incentives to small and medium-sized publishers, who have been hit hardest by the transition to digital media.

Unfortunately, those proposals lack the emotional satisfaction that comes with kicking an unloved tech giant in the teeth. And so instead we have this: a tax on displaying links, the kind of thing that if extended to the rest of the web could effectively break the internet.

And it would be one thing if we knew for certain that this law, no matter how ill conceived or harmful to the web, would actually offer sustainable funding for journalism. But neither Australia’s law nor Canada’s requires that a majority of the money given from publishers to platforms goes to support actual journalism. (Canada’s law requires only that “an appropriate portion of the compensation will be used by the news businesses to support the production of local, regional and national news content,” whatever “appropriate” might mean.)

Newton’s ideas for keeping media aloft, in the first quoted paragraph, sound alright to me. Unfortunately, they are not the things being attempted in Canada. Years before Bill C–18 — the Online News Act — was passed earlier this month, tax incentives have been provided to consumers who purchase Canadian news subscriptions, and another incentive for print media organizations. So, how are they working?

Sarah Scire, of Nieman Lab, reporting on a new paper (PDF) by Issie Lapowsky and Jason White of the University of North Carolina:

One finding that stood out to the research fellows was just how big of an impact the 25% labor tax credit has had in small Canadian newsrooms. The publisher of The Tyee in Vancouver, British Columbia, told Lapowsky that the news org expects to receive $200,000 in credits, or roughly 10% of the publication’s overall budget. Similarly, the CEO of Canada’s Village Media — which operates local news sites across Ontario — told the researchers, “It’s impossible to say that it has not made a significant positive impact on us.”

The digital subscription tax credit, meanwhile? As Nieman Lab reported last year, it’s been a bit of a bust. The researchers blamed a few factors, including a gap between point of sale and reimbursement for the new consumer, the size of the benefit (a paltry 15% of the subscription price), and the fact the credit only applies to written news, excluding audio- and video-based news publishers.

The Tyee and Village Media both meet the criteria established by the Canadian government for these incentives, but the qualifying process was controversial when it was introduced. From the paper (still a PDF):

The package quickly came to be referred to as a “bailout” for legacy newspapers, including major publishers like Torstar and Postmedia, the latter of which is majority-owned by the New Jersey hedge fund Chatham Asset Management. Critics pointed to a meeting between “press barons,” including Postmedia’s CEO Paul Godfrey, as evidence that incumbent players, responsible for so many journalism layoffs, were using the policies to enshrine the power of legacy newspapers to the detriment of smaller upstarts. News Media Canada, a top industry trade association, was also represented on the panel that drafted criteria for [Qualified Canadian Journalism Organizations].

Torstar was acquired in 2020 by NordStar Capital, claiming in a news release the new owners would “ensure a future for world-class journalists and world-class journalism”. Then, yesterday, news broke that NordStar and Postmedia were talking about merging.

Josh Rubin, Toronto Star:

In a press release issued Tuesday afternoon, NordStar described a potential deal that would see NordStar and Postmedia each having a 50 per cent voting stake in an as-yet unnamed company which would control most of the combined assets of both companies.

As the bigger Canadian media conglomerates are slowly merging — seemingly into a single company — it is increasingly important to support local and independent publications. Where I live, there are plenty of list-makers and wire service republisher, but there is a dearth of local reporting.

Update: NordStar and Postmedia might be calling it off.