Liberal government tables legislation to force online giants to compensate news outlets

The compensation extracted from these digital giants must be used, in large part, to fund the creation of news content to protect the “sustainability of the Canadian news ecosystem,” according to a government backgrounder distributed to reporters.

The government is pitching the arrangement as a way to prop up an industry that has seen a steady decline since the emergence of the internet.

According to government figures, more than 450 news outlets in Canada have closed since 2008 and at least one third of Canadian journalism jobs have disappeared over that same time period.

News businesses have struggled to make money from their content after losing major revenue streams, such as classified ads and print subscriptions.

In an era of cord-cutting, some private and public broadcasters also have struggled to monetize their airwaves and pay for local, regional and national radio and TV news.

The dominance over advertising once enjoyed by legacy media is over. Google and Facebook have a combined 80 per cent share of all online ad revenue in Canada and rake in an eye-popping $9.7 billion a year, according to government data.

‘News deserts’

The loss of advertising revenue has upended previous media business models. Thousands of Canadian journalists have lost their jobs and some communities have become “news deserts” — without access to newspapers, digital news sites, TV or radio programming.

Heritage Minister Pablo Rodriguez said Canada’s news businesses should be compensated for helping Google and Facebook attract eyeballs.

“The news sector is in crisis,” Rodriguez told a press conference Tuesday. “Traditionally, advertising has been a major source of revenue for the news business. That’s less and less the case. I would say the reality is grim.”

Google and Facebook use news content on their sites “without really having to pay for it. With this bill, we’re seeking to address that market imbalance,” Rodriguez said.

“News outlets and journalists must receive fair compensation for their work. It shouldn’t be free.”

Rodriguez also presented the program as a way to combat the recent wave of disinformation and misinformation coming from questionable sources. He said a faltering fact-based news industry allows for other, less credible outlets to emerge, which could lead to “heightened public mistrust and harmful disinformation in our society.”

WATCH: Heritage Minister Pablo Rodriguez introduces bill to compensate news outlets

Canadian heritage minister outlines bill to make online giants compensate news outlets

Minister of Canadian Heritage Pablo Rodriguez says the Liberal government is introducing legislation to force digital giants to compensate news publishers for the use of their content. 2:29

To preserve access to Canadian news, the federal government has adopted much of the so-called “Australian model,” named after the country that first forced digital companies to pay for the use of news content.

According to the Australian Competition and Consumer Commission, more than $190 million has been paid already to Australian media companies since the model was enacted last year. The big winners have been legacy media and larger media outlets.

The new Canadian scheme would require that Facebook, Google and other digital platforms that have “a bargaining imbalance with news businesses” make “fair commercial deals” with newspapers, news magazines, online news businesses, private and public broadcasters and certain non-Canadian news media that meet specific criteria.

The goal is to have these digital platforms negotiate deals with publishers without the need for government intervention. Rodriguez said the amount of money each news business gets from these digital giants will be decided by those negotiations — there’s no preset formula.

In the absence of some sort of voluntary arrangement, news businesses can initiate a mandatory bargaining process and go to a CRTC arbitration panel for a binding decision.

Google backed down in Australia

Google strenuously opposed Australia’s efforts to make it pay for news — it even threatened to shut down access to the search engine in that country if the bill went ahead as planned. Google ultimately relented and cut deals with a number of news outlets to avoid a binding arbitration process.

Google maintains its current model is fair to publishers because its search engine directs substantial traffic to the sites of news outlets.

 In a statement Tuesday, Google said it is “carefully reviewing the legislation to understand its implications.”

“We fully support ensuring Canadians have access to authoritative news and we look forward to working with the government to strengthen the news industry in Canada,” said Lauren Skelly, a spokesperson for Google Canada.

CBC/Radio-Canada could be a beneficiary of this new federal program because it operates one of the largest news sites in the country and links to its content are regularly shared on third-party platforms.

As it stands, the public broadcaster does not have any business arrangements with Google or Meta involving compensation for the use of its news content, a spokesperson for CBC/Radio-Canada said.

“This legislation is an important step in ensuring fair compensation for news content produced by CBC/Radio-Canada and supported by Canadians,” said Leon Mar, a corporate spokesperson for CBC/Radio-Canada.

CRTC to decide which outlets qualify

A government official said the CRTC — a body that historically has only dealt with broadcasting and telecommunications companies — was picked to administer this new regulatory regime because it has a history of dealing with the media business.

An outlet will be considered an eligible news business if it regularly employs two or more journalists in Canada, operates largely within Canada and produces content that is edited and designed in this country.

Eligible outlets must primarily produce news content. An outlet would not qualify for this scheme if it engages in “producing content that promotes its interests or reports on the activities of an organization.”

The CRTC will make the final decision on whether a particular news outlet is eligible for this program, Rodriguez said.

“I don’t decide who qualifies and who doesn’t,” the minister said. “That would be terrible for our democracy. No, it should not be up to the minister or the government who qualifies.”

This sort of pay-to-post regime has been opposed by some academics and observers who claim it will undermine freedom of the press because outlets may become more reliant on CRTC-brokered deals with digital giants for revenue.

“This represents nothing less than a government-backed shakedown that runs the risk of undermining press independence, increasing reliance on big tech, and hurting competition and investment in Canadian media,” said Michael Geist, a Canada research chair in internet and e-commerce Law at the University of Ottawa, a position partly funded by the federal government’s Social Sciences and Humanities Research Council.

“This bill is terrible policy,” Geist said in a recent blog post on the subject.

In a later interview with CBC News, Geist said he thinks “the bulk of the benefits” will accrue to a “handful of very large media players” that have been lobbying the government for this sort of legislation.

News Media Canada — a lobby group that represents newspapers and print chains like the Globe and Mail, Postmedia, La Presse and the Winnipeg Free Press, among others — has had dozens of meetings with government officials on this issue.

Geist said he calls the legislation a “shakedown” because digital giants essentially would be forced to pay for something that is of little value — links to news articles that refer users back to the original source.

Jamie Irving, the chair of News Media Canada and the vice-president of the New Brunswick-based newspaper chain Brunswick News, said in a media statement that this legislation would “level the playing field and give Canada’s news publishers a fair shot and doesn’t require additional taxpayer funds.”

“Trusted information is needed more today than ever before, and real news reported by real journalists costs real money,” he said.