Delivering on the Minister of Canadian Heritage’s (PCH) mandate letter commitment, the Department is currently conducting stakeholder engagement to inform policy development that will ensure that the revenues of web giants are shared more fairly with Canadian creators and media, with a view to contributing to a healthy Canadian information ecosystem.
B. Background and Current Status
Canada has an estimated online advertising market of $8.8 billion. Advertising is a chief source of revenue for Canadian media organizations. Since 2008, the newspaper industry has experienced a significant decrease in overall revenue from $5.5 billion in 2008 down to $2.7 billion in 2018, which represents a 51 percent revenue reduction in the last 10 years. Advertising revenues are migrating towards the major online platforms known as GAFA (Google, Apple, Facebook and Amazon).
The COVID-19 pandemic has exacerbated the already-difficult financial situation of media organizations. Because of the pandemic, there have been 50 community newspapers that have ceased operations and more than 2,000 jobs have been cut. It is not yet known how long the COVID-19 pandemic will continue and what the long-term impacts on advertising in the Canadian media will be.
Recent reports have called for the Government to examine and take action on the issue of news media remuneration:
In the course of the statutory review of the Copyright Act (2019), the Standing Committee on Industry, Science and Technology (INDU) called for a study to investigate issues relating to the sharing of journalism online, including the remuneration of journalists, revenues of press publishers, and competition in online markets (Recommendation 15).
Recommendations from the Broadcasting and Telecommunications Review Panel Report (January 2020), included levies on certain broadcasting undertakings to contribute to the production of news content (Recommendation 71), and regulation of the relationship between social media platforms that share news content and news content creators (Recommendation 72).
C. Strategic Considerations
Canadian news media and digital platforms have different views on the issue of news media remuneration.
Members of News Media Canada argue that digital platforms, such as Google and Facebook, have had a disruptive effect on market competition, and have exploited regulatory gaps to gain more power and influence in this space. Members of News Media Canada have called on the Government to follow the example of Australia, who have put in place a framework that allows news media organizations to collectively bargain with digital platforms.
Many digital platforms have asserted that they benefit Canadian news media by providing free distribution of their news content, and generate advertising revenues for Canadian news media by directing online traffic to their individual news sites. However, many Canadian news media believe that these practices inhibit their capacity to build a sustainable online business model and they take issue with the following:
lack of meaningful bargaining power for media over the way elements of their news are featured on digital platforms;
sharing of user data;
unpredictability and lack of transparency in the algorithmic changes made by digital platforms;
duopolistic control of the digital ad market by Google and Facebook.
A number of like-minded countries have begun taking action to support their domestic news media. PCH is monitoring these approaches and has engaged with these jurisdictions to gather lessons learned and identify best practices. Key international approaches to fair news media remuneration include:
Australia: The News Media Bargaining Code, which passed into law in February 2021, creates a framework for registered news media and designated digital platforms to negotiate in good faith for financial remuneration for the use and reproduction of news content. A final offer arbitration process would be used if both parties cannot come to a negotiated agreement about remuneration.
Google and Facebook viewed this as overly intrusive in their business activities, particularly in terms of imposing requirements to share user data with publishers and requiring notice of algorithmic changes. After discussion with both Google and Facebook, the Australian government amended the Code to give digital platforms one month’s notice before changes are formally designated, giving them more time to negotiate agreements outside of the Code; and clarifying that publishers will be paid in lump sums, rather than per click on news article links.
France: In July 2019, France transposed a “neighbouring right” for press publishers into its domestic law. This creates an obligation for news aggregators to compensate press publishers for the use of extracts of their articles online, known as “snippets”. Google reacted by unilaterally refusing to display article extracts and other publishers’ content unless the publishers granted permission to do so for free.
In April 2020, France’s competition authority issued an interim order (which was later confirmed in Court) requiring Google to negotiate in good faith with press publishers over payments for use of copyright-protected content on its news, search and discovery pages – this included retroactive payments dating back to the introduction of the law. Google has signed a series of licensing deals with France’s largest news publishers to display their content. Google is still facing a hefty penalty for not having agreements with other publishers, such as Agence France-Presse (AFP).
In Canada, there is currently no comparable right under the Copyright Act to address article extracts or “snippets”.
The Department is currently conducting stakeholder engagement to inform the policy development process regarding the commitment to ensure that the revenues of web giants are shared more fairly with Canadian creators and media. PCH’s engagement will allow officials to gather information, facts, and economic data from existing contacts as well as to solicit views from a broader cross-section of stakeholders that includes both legacy and digital media, broadcasters, Indigenous publishers, academics, equity-seeking groups and tech companies.
