Backgrounder – Government introduces legislation to ensure fair compensation for news media and the sustainability of local news

GATINEAU – April 5, 2022

On Tuesday, April 5, the Government of Canada introduced Bill C-18, the Online News Act, which would ensure that major digital platforms fairly compensate news publishers for their content and enhance fairness in the Canadian digital news marketplace, including the sustainability of independent local news businesses.

Eligibility criteria

The legislation would target all news businesses that meet the eligibility criteria, regardless of media type, including newspapers and news magazines with a digital presence, online news outlets, private and public broadcasters, which produce and publish original online news content, as well as both television and radio broadcasters. For example, in the case of an eligible news business that owns different news outlets, it can choose to bargain with digital platforms for content produced by any of its individual news outlets, like a digital news source, a daily newspaper or a community newspaper.

Eligible news businesses are defined using criteria similar to the Qualified Canadian Journalism Organization (QCJO) designation in the Income Tax Act. QCJOs would be eligible as well as broadcasters that meet the criteria. An eligible news business would be defined as follows:

• regularly employs two or more journalists in Canada;
• operates in Canada;
• is engaged in the production of targeted news content; and
• is not significantly engaged in producing content that promotes its interests or reports on the activities of an organization.

The list of all eligible news organizations would be made public.

Some features of Bill C-18 would include:

• A new legislative and regulatory framework that would mitigate bargaining imbalances between digital platforms and news outlets over the way digital platforms allow news content to be accessed and shared on their platforms;
• The legislation would, subject to regulation thresholds, apply to digital platforms that:

1. allow news content to be accessed and shared on their platforms; an
2. have a significant bargaining imbalance with news media, which would be determined by:
   1.   the size of the platform;
   2.   whether the platform operates in a market that provides a strategic advantage over news businesses; and
   3.   whether the platform occupies a prominent position within its market.

• Digital platforms would have an opportunity to reach fair commercial deals with a wide range of news businesses outside the scope of the legislative framework before they are required to go to arbitration. If platforms make commercial deals that, as a whole, meet the following criteria, they would be exempt from mandatory arbitration:

1. provide fair compensation to the news businesses for news content that is made available on their platforms;
2. ensure that an appropriate portion of the compensation would be used by the news businesses to support the production of local, regional and national news content;
3. do not allow corporate influence to undermine the freedom of expression and journalistic independence enjoyed by news outlets;
4. appropriately contribute to the sustainability of Canada’s digital news marketplace;
5. appropriately reflect the diversity of the digital news marketplace including with respect to language, racialized groups, Indigenous communities, local news;
6. ensure support for independent local news businesses, and ensure that a significant portion of independent local news businesses benefit from the deals.

• Bill C-18 would include an exemption from sections 45 and 90.1 of the Competition Act, to allow eligible news businesses that are designated by the CRTC to assemble and bargain collectively for the purposes of negotiation with digital platforms.
• News businesses could be sure that negotiations with digital platforms would be fair and transparent through additional measures, such as a code of conduct and undue preference provisions.
• The CRTC would play an administrative role by: assessing whether the platforms meet the six public exemption criteria; administering the negotiation and final-offer arbitration through a public list of suppliers agreed upon by both the platforms and publishers; and ensuring that the public interest is met by preventing digital platforms from misusing their dominance against the news media. The CRTC would contract an independent auditor to publish an annual report on the value of commercial agreements and other key information. This will provide the public with a yearly measure of the impact of the legislation on the Canadian digital news marketplace

Stakeholder engagement

In the spring of 2021, Canadian Heritage began engaging with numerous stakeholders on fair revenue sharing between digital platforms and the news media. The first phase involved targeted engagement with existing contacts. The second phase asked for public and stakeholder input, specifically on a document outlining a sustainable, fair, diverse and independent Canadian news and information ecosystem. The third phase consisted of two roundtable discussions with Indigenous news publishers. Ten individuals representing Indigenous news publishers took part. In total, Canadian Heritage received 46 submissions in the first phase and 22 responses to the discussion document in the second phase. All stakeholder input helped inform the development of Bill C-18.

Canada Periodical Fund

The Canada Periodical Fund (CPF) provides $75 million in financial assistance to Canadian print magazines, non-daily newspapers and digital periodicals, allowing them to overcome market disadvantages and continue providing Canadian readers with content.  Also, a new temporary CPF  component, called Special Measures for Journalism, was created to provide short-term emergency financial assistance to publishers that offer their content for free or those with a low level of paid circulation. In total, $45 million was distributed in 2020-21 and $23.3 million was allocated in 2021-22.

Local Journalism Initiative

With $50 million in funding over five years to support the production of civic journalism for underserved communities, the Local Journalism Initiative (LJI) supports more than 200 journalist positions across the country. Budget 2021 increased this investment by $10 million over two years as part of the Recovery Fund for Arts, Cultural, Heritage and Sport Sectors.