Pixel Envy

Written by Nick Heer.

Here Comes the Online News Act

John Paul Tasker, CBC News:

The federal Liberal government introduced legislation Tuesday to force digital giants to compensate news publishers for the use of their content.

The new regulatory regime would require companies like Google and the Meta Platforms-owned Facebook — and other major online platforms that reproduce or facilitate access to news content — to either pay up or go through a binding arbitration process led by an arms-length regulator, the Canadian Radio-television and Telecommunications Commission (CRTC).

That these two companies — which, combined, account for 80% of Canadian online ad revenue — have made it far more difficult for publishers, generally speaking, to maintain their ad-supported model of funding is not news. This problem is not limited to Canadian media outlets; this is a worldwide issue.

One justification I can almost buy for taxing these large platforms is because they have consolidated online advertising revenues to fund two American companies. But the act of linking out is a laughable rationale:

Heritage Minister Pablo Rodriguez said Canada’s news businesses should be compensated for helping Google and Facebook attract eyeballs.

“The news sector is in crisis,” Rodriguez told a press conference Tuesday. “Traditionally, advertising has been a major source of revenue for the news business. That’s less and less the case. I would say the reality is grim.”

Google and Facebook use news content on their sites “without really having to pay for it. With this bill, we’re seeking to address that market imbalance,” Rodriguez said.

That is not really the imbalance, is it? Google and Facebook send traffic to news websites and display, at most, a headline and snippet of a given article. It is the advertising market where publishers have been unable to keep up, though that is partly true because individual newspapers in Saskatoon and Saguenay do not have the infrastructure to create a mechanism for tracking people all over the web to create ad profiles.

Michael Geist:

The government’s plans effectively require compensation without something deserving of compensation. That is best described as a shakedown. The availability of news on Internet platforms is largely limited to links to news articles that refer users back to the original source (full length articles are licensed). There is no copyright violation for linking to content, the posts come from users or the media companies themselves, and there is value to the publishers in the form of the referrals to the full content.

[…]

This is not to suggest that the news has no value. Obviously it does. However, the news has limited value to the Internet platforms, which represents a tiny fraction of overall traffic. In considering how platforms have responded to similar measures in the past, previous attempts to mandate licensing of news articles in Spain and Germany led Google to remove the content from its news service. As a result of the Google news shut down in Spain, studies found publisher website traffic dropped by 10 per cent, demonstrating the value that free referral links provide to news publishers.

This is like requiring compensation for a bibliography. Is the Heritage Minister planning on going after high school essay writers next? They also excerpt materials, citing each instance with links.

I view this law with slightly less doom-and-gloom than Geist, though I still find it unfavourable. Geist writes that traffic to news websites in Spain dropped by 10% after the federal government there imposed a link tax, citing “studies”. But a report from the not unbiased News Media Alliance found little long-term effect on Spanish news sites, and Google News is set to relaunch in Spain this year after adopting a model similar to Australia’s.

But, while the model there has been a financial windfall for some publishers, it has not necessarily helped independent outlets. Tasker, CBC:

According to the Australian Competition and Consumer Commission, more than $190 million has been paid already to Australian media companies since the model was enacted last year. The big winners have been legacy media and larger media outlets.

The Canadian proposal is, according to Tasker, similar to the Australian one and, according to Geist, it seems likely to produce similar results. The CBC, Postmedia, and a handful of others will be rewarded handsomely, while independent publishers will still fight for directly-paying subscribers. Large technology and advertising companies will continue to be large and dominate their markets, and publishers will need to run to them hat in hand for their monthly stipend.

The good news, if there is any, is that the market for small publishers is growing in Canada and the United States. Keep supporting your local startup news-gathering operation directly, because link tax laws like these probably will not be helpful.