This article originally appeared in the Hub.
By Peter Menzies and Konrad von Finckenstein, June 21, 2023
The establishment of a truly independent journalism sustainability fund and the de-commercialization of the CBC are two of several vital policy actions required to ensure the long-term health of Canada’s news industry.
With the likely passage into law this week of the Online News Act (Bill C-18) prompting Meta to begin disengaging from carrying news links, Google contemplating something similar, Bell laying off more journalists, and Postmedia running out of cash, it’s clear the government’s approach to sustaining journalism is failing.
Heritage Minister Pablo Rodriguez is now overseeing a chaotic blur of uncoordinated policies involving C-18, the Canada Periodical Fund, the Local Journalism Initiative, and the Journalism Labour tax credit. Two of those are due to end, the periodical fund is irrelevant in the digital age, and C-18 is about to backfire.
As a stable alternative, we propose a multi-pronged policy approach that establishes a level, market-based, domestic playing field, accepts that not all media will be able to survive the disruption of the digital age, fosters innovation, taxes web giants to support journalism in a stable and predictable fashion, rewards subscribers and ensures the Canadian Radio-television and Telecommunications Commission (CRTC) positively contributes to the journalism ecosystem.
Allowing the CBC to sell advertising while receiving $1.2 billion in federal subsidy distorts the national news environment to its detriment. We believe there is an important role for a national public news provider but CBC must be de-commercialized over the air and online, its scope sharply re-focused and its content made available to other domestic news organizations.
Those three actions would free up $400 million in revenue for which private news organizations could compete, would establish a focused public broadcaster, and would allow all journalism providers to benefit from, instead of being punished by, government funding of the CBC.
A Canadian Journalists Fund should be established by statute and sustained by a levy on advertising revenues earned in Canada by companies such as Meta/Facebook, Alphabet/Google, and others. The governance of the fund would be by the industry alone, transparent by law, and fire-walled from the government to ensure the maintenance of public trust.
There would be no linkage to the volume of content/links posted by news organizations, as is the problematic case with the Online News Act. The fund would be accessible to all industry-verified news organizations on a per capita/journalist basis and news providers would still be free to use social media to build readership and make other commercial deals. The only role the CRTC—which has an invasive part to play through C-18—would perform would be to ensure that Big Tech companies are not abusing their market power.
The government-funded CBC would not be eligible to draw from this fund, which would only be available to companies whose primary business is the production of news.
Participation by the social media platforms and search engines would be unavoidable. But, provided the levy is reasonable and responsible, they will get the cost certainty they’ve been asking for, and all parties avoid endless haggling, cost accounting, mediation, and court appeals.1
It is widely accepted that the reporting of news in a fair, accurate, and balanced fashion is one of the elements required for the smooth functioning of a modern liberal democracy. It is also understood that government involvement in that support can undermine that which is most vital to a news organization’s survival: public trust.
Building a national news industry policy is, therefore, a tricky business.
We don’t pretend to provide all the solutions. We do believe, however, that recommended policies such as the 100 percent tax deductibility of news subscriptions are sensible, doable, and when coordinated, create a stable foundation for a diverse and trusted industry. News organizations, while assisted by the policies we propose, will still have to compete for readers and will only survive through the quality of their work.
Journalism producers will need to form a national association that can fairly represent the entire industry and transparently manage the fund. The industry and policy-makers also need to accept that not all companies will survive during a period of disruption such as the one underway. While that is regrettable, that is not evidence of market failure—it is how markets work.
What is necessary is not the right to eternal life for all companies involved in producing journalism, but that the craft has a fighting chance to transition from unstable business models to those capable of sustaining quality journalism in the years ahead.
Konrad von Finckenstein is a senior fellow at the C.D. Howe Institute. Previously he was chair of the CRTC. Peter Menzies is a senior fellow at the Macdonald-Laurier Institute. Previously he was vice-chair of the CRTC.