This article originally appeared in the Hub.
By Peter Menzies, June 11, 2024
An ad hoc collection of independent operators has won the right to chant “Who’s your Daddy now?” to Canada’s largest media moguls.
Google had a choice between two bids for the right to be in charge of the $100 million fund it had agreed to finance in exchange for an exemption from the government’s disastrous Online News Act. One group was composed of the CBC, the Canadian Association of Broadcasters (CAB), and News Media Canada, which represents large legacy newspaper companies. The other—the freshly founded Canadian Journalism Collective (CJC)—includes 12 much smaller organizations such as Pivot, The Resolve, IndigiNews, Village Media, and the Canadian Association of Community Television Users and Stations.
Google made its choice to go with the CJC group, it said, because their proposal was most closely aligned with its principles and the intent of the fund to offer “diversity of representation, a robust governance structure, a high level of transparency, and assurance that as much funding as possible would go to news organizations.”
The winners will now be scrambling to put their governance structure in place. The losers are left to mutter behind the steering wheels of their BMWs. Google meanwhile waits expectantly for its exemption application to be approved by the Canadian Radio-television and Telecommunications Commission (CRTC), which is pretty much in charge of Canadian journalism now.
Both winners and losers still qualify for the Google loot, but—perhaps poignantly—those who drove the Online News Act bus will now be sitting much further toward the back of it than they may have expected.
The CJC, whose members were fearful they’d be steamrolled by large corporate entities such as Bell Media and Postmedia, will be overseeing key decisions such as newsroom jobs eligibility, dispute resolution between recipients, audits, and the details of an agreement with Google that’s expected to involve $100 million a year for five years, adjusted annually for inflation.
The percentages of how the cash will be distributed were already negotiated by Heritage Minister Pascale St-Onge when she cobbled together this last-minute deal to avoid disaster and keep Google from banning news links in a manner similar to Meta. Rather than face the global cost repercussions of conceding to a legislative shakedown inspired by Canadian publishers accusing it of theft, Meta banned news links on Facebook and Instagram last August, ending any possibility the allegation could be repeated. That move will cost the news industry an estimated $200 million annually and was particularly devastating to small startups and innovators trying to build audiences.
The CBC, which employs roughly one-third of Canadian journalists, will get $7 million, radio and TV broadcasters $30 million, with the remainder to be divided between print and online news producers approved by a government-appointed panel.
Google, meanwhile, is winding up its News Showcase program, which means there’s a good chance some publishers will be getting less money from the tech behemoth now than they were before they launched their ill-fated shakedown. Who’s your Daddy, indeed?
The leadership of the fund faces key decisions. For instance, news organizations were asked to submit the number of journalists they employed in 2023. That appears to mean that companies such as Bell Media, which got rid of more than 400 journalism-related staff earlier this year, could be eligible to receive money to subsidize ghost jobs.
Should those numbers be locked in for five years, the industry would essentially be fossilized in the past, severely handicapping startup efforts and innovation.
It was notable that a great many platforms published the Canadian Press story concerning Google’s decision without mentioning their own financial interest in the matter, which is something that even a couple of years ago was routinely considered standard journalistic practice. That speaks to the matter of transparency—something that ultimately could be up to the CRTC, which has its hands full these days.
Its decision last week to hit foreign streamers with a 5 percent levy on Canadian revenue (some of which will go into still more funds to subsidize journalists) was met with a sigh of relief from those involved in the user-generated content business such as TikTok and Facebook who are off the hook for now. For others—particularly Spotify, which is at best a breakeven business—the burden may be more than they can bear.
“In a devastating blow to artists, the Canadian government chose the past over the future by demanding that streaming services pay a protectionist subsidy to radio,” according to a statement by a Spotify spokesperson. “Streamers already pay 8.5x more in royalties than radio and are the engines of growth for Canadian music.
“Spotify alone, which contributes two-thirds of revenue to rights holders, has generated billions of dollars for the Canadian music industry.”
Amazon told Cartt.ca that it is “concerned by the negative impact (the decision) will have on Canadian consumers.” And “We are assessing the decision in full, but this onerous and inflexible financial levy will be harmful to consumer choice.”
The Digital Media Association, which represents Amazon Music, Apple Music, and Spotify, was, according to president Graham Davies, “deeply concerned.”
“As Canada’s affordability crisis remains a significant challenge, the government needs to avoid adding to this burden.”
Nor was Wendy Noss, head of the Motion Picture Association – Canada (Disney+, Netflix, Hayu, Paramount+, and PlutoTV) too pleased.
She said the decision “reinforces a decades-old regulatory approach designed for cable companies” and “will make it harder for global streamers to collaborate directly with Canadian creatives and invest in world-class storytelling made in Canada for audiences here and around the world.”
Potential beneficiaries of the decision were of course much more kind. The Friends of Canadian Broadcasting, who said streamers have contributed “nothing,” crowed that the decision marked “the end of their free ride.”
The Canadian Media Producers Association, whose most recent report showed that the domestic film and television business has, thanks to foreign investment by streamers and others, more than doubled in size in a decade to become a $12 billion industry, called the decision a “watershed moment.”
It’s certainly that. The battle is engaged.
Peter Menzies is a Senior Fellow with the Macdonald-Laurier Institute, a former newspaper executive, and past vice chair of the CRTC.
