Canada’s news industry, including local papers, would get a cash injection of around $329-million a year if the federal government’s online news bill becomes law, according to a report by the Parliamentary Budget Officer.
Bill C-18, which is now being considered by MPs, would make digital news platforms such as Facebook and Google pay for reusing articles produced by Canadian news organizations.
It would force the tech giants to do deals with news outlets if they have not already done so voluntarily.
The federal government says the bill, modelled on a similar law in Australia, is needed to bolster Canada’s struggling news industry, particularly local and regional papers.
“More than 450 news organizations have closed since 2008,” said Laura Scaffidi, spokeswoman for Heritage Minister Pablo Rodriguez. “Google and Meta earn 80 per cent of all digital advertising revenue in Canada. Advertising dollars that used to be spent on Canadian publications.”
The parliamentary report estimating the cost of implementing the bill says compensation from digital platforms would cover almost a third of the costs of producing news.
But Google, which has already done deals with several news groups, questioned whether the bill would lead to such a big investment in journalism. The tech giant has accused the government of trying to rush the bill through the House of Commons without proper scrutiny.
“This estimate appears to be grounded in a set of assumptions and talking points with no basis in the legislation itself, the facts of the news industry, the realities of digital advertising or our current value exchange with news publishers,” said Shay Purdy, spokesperson for Google.
Facebook, Google and Apple have already signed some partnership deals with news organizations in Canada, including The Globe and Mail.
The bill would enable papers to band together to negotiate compensation with the tech giants.
“We heard from our consultation that some large companies have already concluded deals with digital platforms while most of the small businesses have not,” the PBO report published on Thursday said.
The report, which does financial analyses to support the work of MPs, estimated an extra $20.8-million would be required from platforms to cover the costs of negotiating initial deals under the bill.
Paul Deegan, president and CEO of News Media Canada, which represents big and small news organizations, questioned whether the administrative costs of striking deals would be so high.
“$21-million in expenses for publishers to negotiate their first deals sounds high to my ear” he said. “These are relatively straightforward content licensing agreements, and I don’t think the PBO’s analysis is taking into account the large number of publishers that we expect will come together in a collective, which will reduce expenses meaningfully for individual publishers.”
He said getting the tech giants to pay for “roughly a third of newsroom editorial expenses represents fairness to both platforms and publishers.”
But Facebook said the premise of the bill was flawed and news publishers benefit hugely from links to their articles.
Posts with links to news articles account for less than 3 per cent of what people see on Facebook, it said, but are worth hundreds of millions of dollars to news groups.
“We estimate that the Facebook Feed sent Canada News Page Index registered publishers additional traffic worth more than $230-million in value in the twelve months ending April, 2022,” said Lisa Laventure, spokeswoman for Facebook.
“The Online News Act fails to recognize that the value exchange runs in favour of publishers and misrepresents the relationship between our platforms and publishers who choose to post news to reach subscribers and monetize their content,” she said