Questions & Answers on the Online News Act
Q1 - Why is this bill needed? Why is it important to “level the playing field” between digital platforms and Canadian news businesses?
- News and information media play a vital role in fostering an informed citizenry and act as the cornerstone of any healthy democracy. News and journalism serve to inform communities, drive civic engagement and counter the rise of disinformation on digital platforms. Without intervention, the health and future of this vital industry is at risk in our country.
- Bill C-18 seeks to address this important issue for Canadians by:
- Preserving access to quality and reliable news;
- Countering the rise of disinformation by supporting fact-based journalism; and,
- Restoring and strengthening local journalism.
- The bill addresses a fundamental problem underlying the news industry crisis, namely that digital platforms have built a hugely successful business model partially through the use of news content without compensating news organizations for that use.
- Digital platforms only started reaching deals in Canada once the Government started to signal it would act. If the government chooses not to pass legislation, there is no guarantee that the deals currently in place will be renewed in the future.
- Governments in Europe as well as Australia have recognized this and have been acting.
Q2 - Will this regime resolve all the problems Canadian news media face?
- Bill C-18 is not a silver bullet. It will provide the industry with some stability by increasing the funding available to news businesses. News businesses will be able to better plan for the future, independent of Government.
- The bill is an addition to existing and planned support for smaller players or businesses from underserved communities (e.g., Canada Periodical Fund, Local Journalism Initiative and Changing Narratives Fund).
Q3 - How does Canada’s proposed model compare to other international regimes?
- Canada’s approach builds on international models that have succeeded in achieving fairer compensation for news media. The bill is modeled most closely on the Australian model, which has resulted in deals between platforms and news businesses that represent a meaningful amount of editorial expenses. The Australian approach also resulted in lessons learned, which were taken into account in drafting the Online News Act.
Q4 - What are the differences between the Australian regime and the proposed Canadian regime?
- The fundamental elements of both regimes are the same: an obligation on dominant platforms to negotiate with news businesses for the use of their content, with minimal government intervention.
- The Online News Act sets out a clear mechanism and criteria in legislation to guide the exemption process. Exempt platforms would remain subject to key elements of the legislation, like data collection, to ensure ongoing oversight.
- The code of conduct and undue preference provisions are designed to commit the parties to negotiating fairly and transparently. Further, the CRTC will be required to publish an annual report of aggregate data on the value of commercial agreements, without revealing any commercially sensitive information, to provide the public with a measure of the impact of the legislation on the Canadian digital news marketplace.
Q5 - Why choose the CRTC as regulator? How much time will Bill C-18 take to implement and how much will implementation cost?
- The CRTC has expertise in many of the areas required for this regime.
- The CRTC’s expertise in mediation, creating procedures surrounding final offer arbitration between parties and providing dispute resolution mechanisms in the broadcasting and telecommunications sectors, including undue preference and codes of conduct.
- The CRTC is accustomed to operating within an environment of significant regulatory independence, which protects free speech and journalistic independence.
- The 2022 federal budget allocates $8.5 million over two years to help the CRTC establish a new legislative and regulatory framework for Bill C-18. After two years of bridge funding, the CRTC would recover its costs from platforms.
- The Minister of Canadian Heritage would be responsible for proposing Governor in Council regulations on criteria to designate and exempt platforms. The government intends to make these regulations as soon as possible after Royal Assent.
Q6 - Who will be included in the regime: which news organizations and which digital platforms?
- News businesses
- The regime is open to all news businesses that meet the eligibility criteria, regardless of medium.
- All news businesses that are designated as a Qualified Canadian Journalism Organization (QCJO) are eligible.
- News businesses that are not already designated as QCJOs, such as broadcasters or foreign owned businesses that operate in Canada, will have to demonstrate that they:
- Regularly employ two or more journalists in Canada;
- Operate in Canada;
- Are engaged in the production of news content that is focused on matters of general interest and reports on current events
- The CRTC would decide if a news business meets these criteria.
- Digital platforms
- Platforms that make available news content and have a significant bargaining power imbalance with news businesses may be subject to the Act.
- A platform has a significant bargaining power imbalance if it is large (e.g., in terms of revenue) and occupies a prominent position in Canadian markets that are strategic or essential for the provision of news (e.g., the search engine market and the social media market).
- News aggregators, which focus exclusively on news and typically license news content, would not be considered to be operating in a market with a strategic advantage and would not be captured.
Q7 - Why must news businesses “regularly [employ] two or more journalists in Canada” to be eligible for the process in Bill C-18?
- The two-journalists criteria is drawn from the Income Tax Act’s (ITA) Qualified Canadian Journalism Organization (QCJO) regime. Two employees ensure some degree of editorial oversight, which contributes to appropriate journalistic standards and processes. This criteria can be objectively applied and promotes efficiency between the Online News Act and the tax credits.
Q8 - Will all commercial agreements between news businesses and DNIs be made publicly available? How will the regime ensure transparency related to commercial agreements?
- No, the terms of commercial agreements between news businesses and DNIs would not be made publicly available. Agreements are confidential and may contain commercially sensitive business information.
- To increase transparency, the CRTC will be required to hire an independent auditor to prepare an annual report on the value of commercial agreements, without revealing any commercially sensitive information, to provide the public with a measure of the impact of the legislation on the Canadian digital news marketplace.
- Additional measures that aim to increase transparency within the regime include:
- Clear and objective criteria for application and exemption; and
- Transparency within the code of conduct to ensure parties have the proper information to make informed business decisions.
Q9 - What is the rationale to allow platform exemptions from the regime? Is it a loophole?
- One of the primary objectives of the regime is to drive parties towards making voluntary commercial agreements with minimal intervention from Government. Mandatory negotiation is intended as a last resort. The exemption power is a mechanism to recognize the contributions that platforms voluntarily make to the Canadian news ecosystem.
- To be exempt, platforms must demonstrate that the agreements they have made with news businesses contribute to the sustainability of the Canadian digital news marketplace, including the sustainability of independent local news businesses.
- Further clarification of the exemption criteria and the application will be set out through Governor in Council regulations. This will provide flexibility for the bill to adapt to the ever-changing marketplace. The regulatory process will provide Canadians with an opportunity to provide comments on the draft regulations.
- The CRTC will establish how the exemption process will unfold. Once the CRTC determines whether a platform is exempted from parts of the Online News Act, it will publish its decision, including reasons for its decision, on its website. The CRTC can also review its decision and repeal an exemption.
Q10 - Isn’t this just a link tax? What benefit can be derived from including hyperlinks as a basis of negotiation under the regime? Won’t it break the Internet?
- The Bill does not set a price for creating hyperlinks, nor does it set a cost for clicking on these hyperlinks. The Bill imposes an obligation on dominant digital platforms to negotiate in good faith on all ways that news content is made available to users. This includes reproducing, indexing, aggregating, or ranking the content. This ensures news outlets will be fairly compensated for the full value that the platforms draw from their content. Learning from Australia’s experience, the approach is flexible, allowing the parties to reach deals that focus on the uses of content that benefit them both.
- Bill C-18 won’t break the Internet. Large platforms act as gateways to news and information content. They also dominate the Internet advertising market. Right now, they are not incentivized or required to fairly compensate news media and to support the production of Canadian news. The lack of revenue flow to newsrooms caused by this structural imbalance poses a real challenge to the production of quality, public-interest news.
Q11 - Will there be any news media left aside by this proposed regime, particularly the collective bargaining aspect? If so, what will the Government do to support these news media?
- The proposed framework covers a wide swatch of the media landscape in Canada, although media that do not have a significant presence online are less likely to benefit. The Government currently supports a variety of smaller outlets through funding programs such as the Canada Periodical Fund and the Local Journalism Initiative.
- Collective bargaining would allow news businesses to negotiate as a unit. This has the potential to allow small and diverse news businesses to pool their resources to better negotiate with digital platforms.
- Exemption criteria require that digital platforms reach commercial agreements with a range of news businesses that appropriately reflects Canada’s diversity. The exemption process will ensure that digital platforms are negotiating agreements with smaller news businesses as well as larger ones.
Q12 - What will be the impact of the regime on the general public? For example, will Canadians be able to see or read more public interest Canadian news?
- The objective of the regime is to provide additional revenues that will support the production of news by eligible organizations. Former Chair of the Australian Competition and Consumer Commission has stated that Australian news businesses have received $140 million as a result of the Australian code. News media expect that the value for the Canadian industry as a whole will be in the range of $150-$200 million annually. The Parliamentary Budget Office report estimates that news media could receive $308.4 million in the first year of implementation.
- Due to the evolving global context and specific Canadian circumstances, outcomes different from Australia are possible.
Q13 – Why doesn’t the regime include a funding formula?
- Bill C-18 proposes a market-based approach that seeks to ensure digital platforms and news businesses reach fair commercial agreements based on market value. Rather than prescribing the amount that digital platforms must pay, and to whom, Bill C-18 will allow the Government to remain at arms length from commercial deals.
Q14 - Why is CBC/Radio-Canada eligible to participate in the regime?
- CBC/Radio-Canada is a significant source of trusted news content. The national public broadcaster and taxpayers have a legitimate interest in ensuring CBC/Radio-Canada’s value is recognized and compensated. Revenues earned from the Online News Act will be reinvested in the broadcaster.
- In Australia, both public-service broadcasters, the Australian Broadcasting Corporation and the Special Broadcasting Service, were scoped into the regime.
Q15 - Why did the Governor in Council refer back for reconsideration CBC/Radio-Canada’s licence renewal decision?
- The Governor in Council received sixteen (16) petitions from interested parties asking it to set aside or refer back the CRTC’s decision renewing CBC/Radio-Canada’s licences. After careful consideration of the petitions, the government found that the CRTC decision detracts from the policy objectives in the Broadcasting Act and asked the CRTC to reconsider the decision. The CRTC will need to ensure that the CBC/SRC continues to make a significant contribution to the creation, presentation, and dissemination of local news, children's programming, original French-language programming, and independent productions.
Q16 – What will happen next?
- The CRTC will reconsider the matter and may rescind or confirm the decision either with or without change. The CRTC will announce plans for the reconsideration process in due time.
- The new broadcasting licences and their conditions have already taken effect as of September 1, 2022, and will remain in effect until the CRTC amends them (or not) in its reconsideration decision.
Q17 - Why didn’t the decision to refer CBC/Radio-Canada’s licence back to the CRTC address the Corporation’s reliance on advertising and branded content (i.e., Tandem)?
- Any change to the Corporation’s funding model falls outside the scope of the petition to the Governor in Council process.
Q18 - What are your views on CBC/Radio-Canada’s reliance on advertising and branded content (i.e. Tandem)?
- Like many public broadcasters, CBC/Radio-Canada relies on a mixed revenue model that combines public funding and commercial income in order to deliver its mandate. As an independent Crown corporation that operates at arm’s length from government, it has broad operational autonomy to make business decisions. The Corporation is ultimately accountable to Parliament for the conduct of its affairs. It would be inappropriate for any government to substitute its judgment for that of the board of directors, which is responsible for approving the Corporation’s overall strategic direction within its legislative mandate.
Q19 - Your mandate letter includes a commitment to provide CBC/Radio-Canada with additional funding to make it less reliant on private advertising. What steps have you taken to address its competitive impacts on other media?
- The Government is committed to ensuring that CBC/Radio-Canada is well positioned to continue creating public value for Canadians, now and in the future. Budget 2022 will provide $21 million to CBC/Radio-Canada in 2022-23 and $21 million in 2023-24 to address the Corporation’s projected structural deficit and avoid programming and job cuts in television and radio.
Support measures for journalism
Q20 - How does the existing suite of support measures for written news media complement C-18?
- The digital disruption of the advertising and subscription markets has been profound, undermining revenue sources that support Canadian journalism. There is no single solution to this disruption, which is why the Government has introduced a number of measures to ensure that Canadians have access to reliable news and information. This includes three fiscal support measures introduced by the Department of Finance and two programs administered by Canadian Heritage.
- Collectively, these measures are designed to support the sustainability of news businesses, incentivize employment, promote the development of new business models and ensure that residents of communities have access to local news and public interest information, regardless of economic circumstances. The measures support various aspects of the news value chain to guaranteed coverage where a market-based solution is not feasible.
Q21 - Have these measures been successful?
- Industry stakeholders have called the Canada Periodical Fund and Local Journalism Initiative “vital” sources of support, especially during the COVID-19 pandemic. Funds have directly contributed to the diversity of voices in the news ecosystem by providing support to hundreds of news organizations and periodical publishers.
- The Canada Periodical Fund (CPF)
- In 2020-21, the Special Measures for Journalism component of the CPF provided $45.4 million to 792 new recipients, including free, digital, and small-circulation periodicals.
- In 2021-22, the Aid to Publishers component of the CPF provided over $71 million to 755 periodicals, including 385 print magazines, 291 print community newspapers, 65 digital magazines and 14 digital community newspapers). This included 15 Indigenous periodicals, 95 ethnocultural periodicals and 22 Official Language Minority periodicals.
- The Local Journalism Initiative (LJI)
- In 2020-21 the LJI provided $10 million to support the hiring of 435 journalists to provide coverage for 1,943 geographic, linguistic, ethnic and cultural communities.
- This included 59 journalists that provided coverage for Indigenous communities, 69 for ethnocultural communities, 122 for Official Language Minority communities and 1 for LGBTQ2+ communities.
Q22 - What support is available to smaller and more diverse publications?
- The CPF supports small and diverse publications, including those that serve Indigenous, ethnocultural, OLM and LGBTQ2+ communities in two ways:
- First, these periodicals have special eligibility criteria that facilitate access to the program.
- Second, these periodicals receive a greater weight in the program’s funding formula, granting them proportionally more funding per copy sold and dollar invested in editorial content.
- The LJI supports the production of content for diverse communities in three ways:
- The program provides a dedicated funding envelope for associations that represent ethnocultural and OLM communities.
- All of the program’s third-party Administrator Organizations are required to have mechanisms in place that promote hiring and coverage reflective of Canada’s diversity.
As of 2021-22, all Administrator Organizations are receiving an envelope of funding that must be allocated to journalists serving underrepresented communities, including Indigenous, ethnocultural, OLM and LGBTQ2+ communities. This envelope will total at least $3 million annually.
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