Canadian Liberals’ first 100 days prioritise level digital playing field

By L. Carol Christopher

INMA

Pleasant Hill, California, USA

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In 100 days, beginning with the swearing in of a new cabinet on October 26, Canada’s newly re-elected Liberal government has committed to introducing legislation that would require digital platforms that generate revenues from the publication of news content — Google and Facebook in particular — to share revenues with Canadian news outlets.

“Google and Facebook’s take of those diminishing online ad revenues keeps on growing and now stands at roughly 90%,” News Media Canada President and CEO Paul Deegan told INMA. “A healthy commercially viable media ecosystem is vital to our democracy,”

The  Liberal Party’s pre-election platform said the bill would “level the playing field between global platforms and Canadian news outlets” and allow news publishers to work together to prepare for collective negotiation.

While Prime Minister Justin Trudeau's party does not have a majority, it hopes to pass media-friendly legislation.
While Prime Minister Justin Trudeau's party does not have a majority, it hopes to pass media-friendly legislation.

Deegan said to The Globe and Mail that the legislation appeared to have cross-party support in the September re-election of Prime Minister Justin Trudeau.

The Canadian election: promises made

The Trudeau government held the September election, at its discretion, in the hopes of gaining a majority in Parliament — 170 seats out of 338. The party fell short at only 159, according to Bloomberg. Here is an excellent explanation from Politico.

The six-party election left Trudeau in the prime minister seat, with a pre-election promise to present 10 key pieces of legislation — including three Internet bills — in 100 days. It also left him with a minority government that will have to form alliances to move its agenda forward. The 100-day mark will occur sometime in February, although publishers have been disappointed before.

A new minister of cultural heritage

The election also brought a major restructuring of Trudeau’s cabinet. It moves Stephen Guilbeault from his slot as minister of cultural heritage to the Ministry of Environment and Climate Change.

“Guilbeault was a good advocate, but he got caught up in the challenges of passing laws in a minority government,” said Bob Cox, publisher of the Winnipeg Free Press and NMC board member. 

Trudeau replaced him with Pablo Rodriguez, who is making his second appearance in the role. Rodriguez has been a vocal proponent of forcing remuneration in the past, saying to the Toronto Star in 2019 that there would be “no more free rides”: 

“Anyone who benefits should contribute, and that includes big Internet players,” Rodriguez said then. “It’s only fair …. We intend to create a level playing field. The structure and foundations of what we are used to has changed so fast that we need to address how we will deal with this so Canadians benefit.”

Some welcome the appointment as a positive step: “Rodriguez is good at piloting legislation and has good experience in this minority government doing so,” Cox said. “This should put him in a better position to get legislation passed.” 

Deegan welcomed the appointment of Rodriguez as well, telling INMA: “I think Minister Rodriguez understands the urgency of the situation and we expect him to move swiftly. He’s smart; he knows the issue; and he knows how to move legislation through Parliament.”

What will it look like, and when will it happen?

In June, INMA wrote that the possibility of transitions in the balance of power in the Canadian government could delay or derail legislation designed to level the playing field between news media publishers and the digital giants. News media publishers and Guilbeault had hoped to have legislation introduced in the House of Commons by that month. However, the Parliamentary session ended without a bill. 

“The Liberal government got into trouble with its legislative agenda and could not get to the Facebook/Google content legislation … . I fully expected this process to take a long time ... getting action requires patience,” Cox said. 

The news media executives INMA spoke with saw a possible path to a February passage, however. Cox saw that possibility if the government incorporates it via budget implementation, which one executive predicts has only a 25% chance of happening, but “would avoid multiple readings, and would happen by the end of the year at best.”

“If it is handled separately, I don’t know if it will get introduced,” Cox said. “The priorities around Facebook and Google are to address issues like hate speech, privacy, and overall regulation of content. The issue of paying for content is not front and centre.” 

“They will want to deal with the big issues first,” he said, adding, “This legislation has not factored in the big Liberal pushes on the environment, climate change, Indigenous reconciliation, childcare, and the final stages of dealing with COVID, including economic recovery.” 

NMC’s Deegan is hopeful: “We hope to have legislation introduced soon and passed in early 2022 via budget implementation to put the industry on an urgently needed sustainable footing. There is all-party agreement, so this is not a partisan issue. The economic realities and existential threat that publishers — both large and small — are facing is getting more dire by the day.”

A tale of two paths

Over the summer and into the fall, the legislation remained elusive as the government released an August discussion paper with its first findings based on 46 written submissions from publishers, broadcasters, digital platforms, and academics. It included Google, Microsoft, as well as oral submissions from others, including Facebook and Twitter.

Industry stakeholders promoted two different models for legislation that would see publishers remunerated for use of their content emerged: the Australian arbitration-based model and a mandatory independent fund

The Australian model

Within the media industry, according to Deegan, the most popular option would be to legislate a model similar to that Australia is implementing — “a mandatory code and arbitration regime,” as described in the Government’s paper, “Stakeholder engagement on fair revenue sharing between digital platforms and news media.” The code would:

  1. Dictate the rules for negotiations between digital platforms and new outlets to ensure fair compensation for work.
  2. Introduce minimum standards for dealings between platforms and news outlets, such as good faith negotiations, transparency regarding algorithm changes, or data sharing provisions.
  3. Provide for final offer arbitration in the event parties are unable to negotiate an agreement.

NMC, which represents hundreds of Canadian news publishers from small to large, participated in the stakeholder engagement leading up to the report and provided a memo entitled “The Australian Solution to the Google/Facebook Problem: How to Make It Work in Canada,” as well as a draft “Digital Platforms Act,” to show what Canadian legislation based on the Australian model might look like. One media executive expects the NMC’s draft to be representative of what the legislation will look like.

An independent fund

But other stakeholders who, while agreeing on the need for urgent legislation, see a different set of needs and prefer “mandatory financial contributions from platforms distributed by an independent fund,” as the discussion paper said. It would:

  1. Require digital platforms “to make financial contributions to the news and information sector, as a percentage of their overall Canadian revenues.”
  2. Be structured to incentivise digital platforms to “look for new ways to support Canadian news and a healthy information ecosystem” in a “regime similar to how TV distributors in Canada are required to contribute to Canadian content within the broadcasting regulatory framework.”

A third way?

Then there is the possibility of a third path — one that would combine features from each model. Although the paper said “the responses received regarding the two revenue sharing models were polarised,” it also noted that “some” stakeholders said government action on either model was preferable to nothing at all.

Moving forward, the government paper said, a number of “key policy considerations have emerged, which will help inform the policy development process:

  1. Freedom of the press.
  2. Fairness in the negotiating process.
  3. Diversity.
  4. Sustainability. 

A third way could look like this, the paper suggested:

“Fair commercial deals could be supported using regulatory tools…  which could be combined with either an arbitration or a mandatory contributions scheme. Commercial deals could be incentivised, either through an arbitration mechanism or a contribution scheme. An approach combining a levy mechanism with other regulatory tools could both support fair commercial deals and use the proceeds of the levy to support other key objectives, such as support for news organisations that represent equity-seeking communities.”

The report concluded with a second call for submissions — this time from the public and closed September 15. It sought, in particular, information on news sector investments and revenues, business models, “or any other data that will help Canadian Heritage better understand the online news and information ecosystem.”

Publishers respond

Neither Cox nor NMC’s Deegan were surprised by the second call for submissions. 

Cox saw the second call “a tactic to buy time … . The government was preparing for an early election and it needed to push off many issues. This one was not central to the government so it got put off. 

“Doing more consultations was a way of saving face. Then the election was called, everything was put on hold, and that created more delay. The August call for public submissions was a much broader consultation than the earlier one, no doubt engaging more members of the public. However, I doubt the government got many different views from what it received in the first round of consultations.”

He is betting on a hybrid model: “There are many small publications that are arguing they will get left out of content deals and need a general fund to help them out. The government will not ignore them.” 

Deegan, however, is confident in the Australian model: “The government has been crystal clear. They will introduce Australian-style legislation, which will allow us to negotiate collectively with Big Tech — backed up with the teeth of baseball-style, final-offer legislation.”

One executive we spoke with predicts the only debate will be which department executes the legislation: Canadian Radio-Television and Telecommunications (CRTC), which is “way behind,” the Ministry of Industry, which is “more overarching,” or the Ministry of Cultural Heritage — which the executive thinks would be most appropriate but is resource-poor.

Big Tech responds

In the meanwhile, both Google and Facebook have been making deals as recently as the day of the cabinet’s swearing in ceremony, reported its Canadian blog, even as it is being investigated by Canada’s Competition Bureau for its advertising practices there. 

Like they have done in other areas of the world, Google and Facebook are trying to make deals with media companies in Canada ahead of the possible legislation.
Like they have done in other areas of the world, Google and Facebook are trying to make deals with media companies in Canada ahead of the possible legislation.

One news executive told INMA that solidarity among publishers has not been fractured by the deals, saying the platforms are making short-term deals that often yield less than what Australians are receiving: “What is needed is longevity and a solution for the whole industry … . legislation is needed,” they said. 

Deegan agreed: “Short term one-offs with large publishers do nothing for smaller titles, who aren’t getting calls from Big Tech. This just reinforces the urgency to pass legislation now that will allow publishers — large and small — to band together and negotiate an agreement that provides fair compensation. With publishers — including all those who have signed deals — and all political parties united on what needs to be done, it’s time to get it done and preserve local news for the long term.”

About L. Carol Christopher

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