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Google and Facebook profit from reliable journalism. They should help pay for it

The viability of publishing credible news has become seriously challenging over the last number of years in Canada and around the world.
Fedor Kozyr/Getty

The viability of publishing credible news has become seriously challenging over the last number of years in Canada and around the world.

Newspapers, television and radio have all experienced significant declines in revenue as advertising has migrated online. Google and Facebook have been the largest recipients of this migration. Much focus is being placed on this situation by governments around the world. As it should.

Credible and reliable news is critical to a functioning democracy. We have witnessed the impact “fake” news and misinformation can have on elections. The 2016 U.S. election was a primary case in point and caused the U.S. federal government and others around the world to waken to the issue.

A healthy news media industry keeps people informed daily regarding matters important to their lives, be it issues regarding politics, health care, education, the environment, their local community, business, the economy and much more.

It’s comforting to know that what you’re reading is true, has been researched and thought through in proper context. This is important for society to function properly.

The Canadian federal government has taken note of the crisis facing news media and wants to act. We applaud this. The time to act is now. And we hope to act wisely.

So what lies at the root of the problem? Much has been made of the fact that Google and Facebook take an estimated 80% or more of digital advertising revenues and have too much dominance. Readers can gain access to a wealth of content free online. Digital advertising rates are low. This has made it difficult for news organizations to afford the costs of publishing credible news and generate sufficient revenue to pay for it.

The newspaper industry in particular has been a leader historically in generating daily news coverage that is both comprehensive and credible. Print newspaper advertising revenues have declined significantly and moved online. This has made it challenging for newspaper publishers to continue to deliver the same amount and quality of news.

So we applaud the Canadian government’s interest in acting now to create a stronger and viable news media industry.

As the government moves forward, it needs to recognize that the factors affecting news media are nuanced, as the solution must be.

Today, Canadian news media providers pay for the important journalism and content that the public accesses through their own websites, but also finds and accesses through search and social media. The digital platforms benefit from their ability to include credible news through search in the case of companies like Google, and through sharing in the case of companies like Facebook. Search and social media generate significant traffic for news publishers through this access.

This provides for a better information dissemination ecosystem in general. The ability for more people to have access to news benefits the digital platforms, benefits publishers and benefits our citizens in Canada and around the world who read the news. It is a mutually beneficial reality.

For this reason, it is fair that Google should help support the publishing of high-quality news that their search engine benefits from. It is fair that Facebook support the publishing of high-quality news that their social media environment benefits from.

But the answer goes beyond this. Google and Facebook can’t be expected to save the news industry alone by paying for content. Much of the advertising revenue that was sold in print newspapers has gone elsewhere on the internet. It isn’t just being sold beside digital news content. It is being sold beside all sorts of content online. Google and Facebook should pay a fair share for the benefit and income they receive from news content, but economics and current reality would suggest the answer is broader.

Small community news providers do not generate enough digital traffic today to justify Google and Facebook paying for their content in an amount sufficient to fund their survival. The government will need to support local news providers for a number of years to allow time for a successful digital transition. The federal government has done just that with the expanded Aid to Publishers program announced in September. This program will need to continue, and likely at higher levels of funding. The government is also funding other programs to support local journalism. This makes sense because news is more than a business – it has significant societal value.

Google and Facebook should pay their fair share of corporate income tax in Canada. Every company that generates income in our country should pay tax. Currently many don’t. The digital platforms pay a small amount of tax in Canada, but the lion’s share is paid in the U.S. on revenue generated in Canada. This is not their fault. It is allowed under Canadian law and Canadian/U.S. tax treaty. This needs to be changed. By paying their fair share of income tax, the digital platforms can help the government support the transition of the news media industry and contribute to the Canadian economy.

A new government policy framework needs to be put in place to ensure that the news media industry can properly transition. The government needs to ensure not only that the digital platforms pay for content on an ongoing basis and pay income tax, but also that a code of conduct exists to govern digital platform behavior.

This policy framework must be practical. The last thing needed is for the Canadian Radio-television and Telecommunications Commission to take over and regulate payment. This would be a disaster.

We need to enshrine a practical framework that will allow market economics to work where possible, such as direct payment for content; provide support in small communities for news to be provided and an effective digital transition to occur; ensure the dominance and conduct of the digital platforms is moderated; and ensure that the digital platforms work co-operatively with the news industry.

There are encouraging signs that these changes can be achieved.

Google recently launched Showcase, an initiative that pays publishers to curate and enhance how their stories are presented within Google’s various products. Der Spiegel and others are signing up. Users view the story headlines and are directed to the news provider’s articles. This helps generate audience for the news provider. Google is offering to pay publishers for inclusion of their content on Showcase. It needs to be determined what a fair price is to be paid and that publishers can expect the payment to continue.

Countries such as Australia, France and the United States are acting to develop a framework for market-based content payment models to be set up and for governance of the digital platforms to be put in place.

This has created an opportunity for Canada to learn from these efforts, benefit from the progress made and act in a timely manner to deal with the situation. We would encourage the government to work expeditiously to develop the policy framework, and see that the federal government, the digital platforms and news media work together where possible to develop the appropriate solutions.

Google is supportive of this. It announced that it will spend US$1 billion over three years globally to pay for content, or US$333 million annually. It is supportive of a regulatory code of conduct.

Google has in fact made significant efforts historically to support the survival of news. The Google News Initiative is a $300 million operation that runs a wide variety of programs worldwide supporting local news. It helps publishers with digital news development, audience development and analytics, ad tech development, editorial skills and practices and a variety of other forms of assistance. Google hosts Newsgeist and other events that bring news people together from around the world each year. It has provided funding to help news publishers with editorial expenses during the COVID-19 pandemic. It clearly has a genuine interest in supporting the news industry.

Facebook has also begun to offer publishers assistance over the last several years, but has not yet offered to pay for content. It should. It has indicated a willingness to pay corporate income tax in countries where it generate revenue, along the lines of the changes recommended by the Organization for Economic Co-operation and Development. It is making efforts to deal with fake news, and will need to do more for a safer democracy to exist.

Can we expect a future in Canada where we continue to have access to credible news? The answer is yes, if sufficient change occurs. A number of news media companies are already demonstrating that a future can exist in the publishing of credible news online. It takes time and investment but can work. The challenge is one of scale. For a successful transition to digital news to occur, where communities large and small across the country can gain access to sufficient credible daily news, a better economic model and continued government assistance will be required.

The time is ripe for action. The government has taken notice. Solutions are developing in other countries that can be adapted. Google has demonstrated a desire to find a solution. The best outcome for Canadians is that a healthy news ecosystem be enshrined. This should involve payment for content, payment of income taxes, and a code of conduct for the digital platforms. We should also encourage an environment in which the platforms work co-operatively with the news industry, now and in the future. This will help with continued digital audience development and growth. Google and Facebook generate significant audience for news publishers. The monetization of this audience through sale of advertising and lead generation for subscribers is as important as payment for content.

If these changes can be accomplished, Canadians can expect access to credible news and journalism to continue in the future. This is important for our democracy and its impact on our daily lives.