Who pays the price for the news media's essential political role?
Economics of good government must include news, but someone has to pay for it
Asked why he robbed banks, William "Slick Willie"Sutton was reported to have answered: "Because that's where the money is."
Like so many aptquotes, it may be that the highly successful 1930s bank robbernever actually said those words. But as the government of Canada uses the Online News Act, Bill C-18,to findsomeone to foot the bill for what political theory tells us is theessential roleplayed by Canadian media in democracy, Sutton's reputed logic may apply.
Tech share prices dipped last autumn, but since then Google and Facebookare back in the money. They and their parent companies,Alphabet and Meta,haveprospered by selling carefully targeted online ads to everyone with a computer or mobile phone, whileCanadian news media companies are in a spiral oflost readers, advertisersand revenue.
- This week on Cross Country Checkup, ourAsk Me Anything focuses on Google and Meta's plan to eventually remove links to Canadian journalism in response to the federal government's Online News Act.Fill out the details onthis formto get your questions in early.
Going to war?
This week Ottawa upped the stakes, announcing it would cut its ad spendingwith Facebook and Instagram in retaliation for parent company Meta's decision to remove Canadian stories from its platforms. According tothe BBC, Canada is "going to war"with the tech companies, and even those in the media industry warn they may not win.
On the face of it, the issue is money. In what has been seen in Canada as a profit-driven industry, thepurpose of the act, in concept at least, is to somehow return ad revenuetech companiesswiped from Canadian news businesses.But to many who study the purpose and function of news in Canada, that focus is too narrow.
Some say the role ofmedia as a watchdog is so important that it's the responsibility of governments to find the money in taxesand then spend the resultingcashto boost the private sector media industry.
An illustrative graphic. Facebook first turned a profit in 2012. It was already over. pic.twitter.com/DNmT37XpA8
—@PagmenziesPerhaps most galling for Canadian news outlets, journalists and politicians who make the laws,the algorithmsservingup Canadian news to social mediaplatforms havecontributed to thebig tech cash pilejust as Canadian reporters facemass layoffs and journalism is undergoing a new financial crisis.
As long-time journalist Bill Doskoch said in a recent letter to the editor "the smartest thing platforms did, from a business perspective,was to spend nothing on journalistic content."
NatashaTusikov,who researches internetgovernance at Toronto's York University, is not surprised tech companiesare reluctant to contribute.
"We've seen again and again examples, for a decade or longer, of how these companies do not have the public interest at heart,"said Tusikov in a phoneinterview earlier this year.
Profit motive vs. public welfare
The trouble is that in a media industry run for profit, the rules of economics tell us the unwavering duty of any private company, whether Google, Meta orPostmedia, is not to the public interest, but to maximizethe income of those who own it. Acting for the public welfare only occurs if it adds value to that firstresponsibility. As Tusikov explained, too often the two are in conflict.
Postmediais a case in point. The chain has gobbled up media titles across the country,using complex financing to extractthe value of assets. But as it did so, it shrankthe number of titles and the number of full time reporters.
Margo Goodhand,ousted as editor of the Edmonton Journal in 2016 during a previous Postmedia shakeupthought it was a move in the wrong direction then.
"How bizarre to relive this scenario yet again," Goodhandsaid in an email last week, referring to the latest planned merger between the owner of the Toronto Star and Postmedia.
And just as in previous acquisitions the latest merger "may not fix the companies' financial issues," according to a report by the Globe and Mail's Andrew Willis and JoeCastaldo. But predictions of doom for Postmedia have been wrong in the past.
The media's crucial role
While money may seem to be at the heart of the current news media storm,the real issue may be something else.
In an interview this week, former Calgary Herald publisher Peter Menzies, who also spent a decade onthe Canadian Radio-television and Telecommunications Commission, said that in the chase for big tech cash, governmentsare failing to focus on that more important thing: The crucial political and economic role of providing Canadians with news.
While finding the money to pay for content is important, he said, something else must comefirst.
"You have to have a national news policy," Menzies said. "It should have been done ages ago."
And part of the policy must be the awareness that not all media organizations will survive.
Menzies has outlined his ideas in adetailed report written with a former head of the Competition Bureau,Konrad von Finckenstein,and published by theMacdonald-Laurier Institute.
While the report remains business focused, assuming privately owned companies continueat the heart of how Canadians get the information they need, Menzies has some radical ideas about how to pay for news.
One of these isa "Canadian Journalists Fund" that wouldsubsidize reporter salaries for qualified publications large and small, "agnostic of content," based on a one per cent tax on online advertising revenue of many different kinds, not just Google and Meta.The report says that as a publicly funded broadcaster CBC should be excluded, and should also no longer sell ads.
You've been disintermediated
Menzies is convinced that conventional newspapers are going the way of the dodo, and that all news media from local radio stations, to the public broadcasters like the CBC, to magazines, to traditional mass market daily newspapers are converging into a single online form. He thinks the media industry understands that better than the policy makers.
"People are still trying to save newspapers. Forget it," said the former newspaper editor, who notesit may be difficult to explain to hisgrandchildren what Grandpa once did for a living.
There is also a theory that traditional newsis no longer necessary. Using Twitter or Meta's new competitor,Threads, launched this week, or many other online sources, people scrolling their phones will findthe information they want and need.
"Economists have a word for this kind of change: disintermediation, the removal of intermediaries.Or of media," wrote Canadian journalist PaulWells in a recent blog post.
But Menzies and many others insist that Canadian news at local, regional and national levels and asdefined by a national news policy suggested in his report with vonFinckenstein remains a crucial tool for telling Canadians about themselves and creating community.
"The traditional role has been ensuring that people have a reliable source of balanced information," he said.
He noted that while the media is often seen as a method of holding governments and robber barons to account, it'sperhaps more important to Canada's economy as a reliable source for "a gazillion different things" from local road construction to investment advice.
While the Menzies-vonFinckenstein report conceive of theirtax as a direct transfer from online advertising to Canadian news media, it is really just a hypothecated tax, like the old idea that gasoline taxes went to road building. Only governments have the power to tax, and governments get to decide how the money is spent.
But according toformer editor and publisher of the Winnipeg Free Press Bob Cox, who as chair of the Canadian Newspaper Association, worked to promotewhat eventually became the Online News Act, governments may be on the hook one way or another.
"Everybody's in a bit of a panic. They have so much stock in this legislation," Cox said in a phone conversation this week. "Now it seems to be backfiring."
He said not everyone realizes that Google and Facebook have already been paying "significant amounts of money"to Canadian news organizationsvia licensing dealsand agreements, and notes that money could be lost in the current dispute over the new act that may not result in any new support for Canadian journalism.
Tax and spend on news?
"If you start to lose hundreds of thousands or millions of dollars from your newsroom budget, it makes an immediate impact," Cox said.
He agrees that after taking so much wealth out of news in localcommunities,Google and Meta should be giving back. But like Menzies, he believed governments should simply impose a digital tax and use that money to support journalism. Instead, perhaps to avoid the trigger word "tax," the government set up a system for techcompaniesto pay news companies directly.
Cox notesthat Canadian taxpayersalready supportnews media companieswith the $500 per person subscription tax credit, where eligible news companiesare determined by a Canada Revenue Agency panel. Hepoints out thatinternationally, taxpayer support for news media is the rule rather than the exception.
In Sweden, Coxsaid, it was partly an attempt to make sure news organizations covera variety of views, not just those supported by their business owners. The subsidies in Nordic countries began in 1971 and created a strong news industry that has contributed to widespread readership and high levels of press freedom.
"Paid as direct cash handouts or indirect reduced taxes and fees, they exist in some form in almost every country in the world," said one academic study of press subsidies.
No content, no readers
To Cox, who continuedto make money and keep readers at the Winnipeg Free Press during almost 20 years of turmoil caused by the digital transition, the important thing was content.
"It's an obvious thing to say, but you can't get rid of your content and expect people to continue reading," he said.
Menzies says it's been sad to watch theconsolidation of so many vibrant Canadiannewspapers, including the one he used to publish, into a singlestruggling chain lacking local content.
"It has not been a good thing," he said.
Perhaps a Canadian news policy could have prevented that. We can't go back and do it differently now.
Menziessaidthere are still strong and successfulnews media titles in Canada. Besides Winnipeg, he points to the Victoria Times Colonist and to Moose Jaw, Sask., which hasfour "decent" online news sites.
He says those examples speak to the complexity of the issue.
"It isn't just a simple factor of 'Web giants have money, we don't. Give us some of theirs.'"
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