Government surrenders to Google: Peter Menzies in the Line

This article originally appeared in the Line.

Heritage Minister Pascale St. Onge has surrendered to Google and Canadian media have avoided what would have been a catastrophic exclusion from the web giant’s search engine.

In the short term, this is very good news. The bureaucrats at Heritage must have performed many administrative contortions to find the words needed in the Online News Act’s final regulations to satisfy Google, a beast which isn’t easily soothed.

In doing so, they have managed to avoid what Google was threatening — to de-index news links from its search engine and other platforms in Canada. Given that Meta had already dropped the carriage of news on Facebook and Instagram in response to the same legislation, Google’s departure would have constituted a kill shot to the industry.

Instead, the news business will get $100 million in Google cash. For this, all its members will now fight like so many pigeons swarming an errant crust of bread.

The agreement will also allow the government, while surrounded by an industry whose reputation and economics have been devastated by this policy debacle, to attempt to declare victory. Signs of that are already evident.

That’s the good news.

The bad news is that while 100 million bucks is nothing to sneeze at, in the grand scheme of things it is a drop in the bucket for an industry in need of at least a billion dollars if it is to recover any sense of stability. Indeed, when News Media Canada first began begging the government to go after Google and Meta for cash, some involved were selling the idea that sort of loot was possible.

This did not turn out to be so.

Instead of the $100,000 per journo cashapalooza that was once hoped for, the final tally will be more like $6,666.00 per ink-stained wretch.

That figure is based on two assumptions. The first is that the government has agreed to satisfy Google’s desire to pay a single sum to a single defined industry “collective” that would then divide the loot on a per-FTE (full-time employee) basis to everyone granted membership in the industry’s bargaining group. Google had made it clear it had no interest in conducting multiple negotiations and exposing itself to endless and costly arbitrations. So, as we have a deal and Google held all the cards, it’s fair to assume it got what it wanted — a single collective with a single agreement and a single cheque.

The outcome, in the end, (and the government will deny this endlessly) is essentially what Google was offering from the outset and what Konrad von Finckenstein and I had recommended in our policy paper for the Macdonald-Laurier Institute — a fund.

Now comes the haggling within the collective: who counts as a journalism FTE? Newsroom editors, photogs, camera operators, graphic artists, illustrators, support staff, and so on?

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The second assumption is that this fund will be distributed across about 15,000 media workers nationwide. But whether that number turns out to be 15,000 or 5,000, here’s what really matters:

Such an agreement is likely to bring an end to Google’s existing commercial agreements — at least with those organizations that join the collective. That means the incremental amount of cash coming into the industry once its internal negotiations have been completed could be somewhat less than $100 million. How much less would be pure speculation, but individual agreements certainly exist — with the Star, for example, and also with Postmedia. Or at least they did.

The largest beneficiaries — because they have the most journalists — will almost certainly be the CBC/SRC, Bell Media and Rogers, none of which actually need the money, and that may also convince the Canadian Radio-television and Telecommunications Commission (CRTC) to shake down foreign streamers to subsidize their newsrooms.

Just for reference, Bell Media’s parent company made $10 billion last year.

With 75 per cent of the dollars predicted to go to broadcasters, that leaves those organizations in the most dire financial circumstances — Postmedia and the Toronto Star for example — with about $25 million to fight over. So, the scraps will go to the starving (the Star has suggested it is losing close to a million dollars a week) while the healthy will be even more well fed.

And of course none of this means Meta, which had estimated that on top of the $18 million it provided to Canadian journalism directly via now-cancelled deals, it also once drove more than $200 million in business annually to Canadian news organizations, will get back in the business of carrying news. If we assume that was the case, the final impact of the Online News Act amounts to revenue losses to the nation’s news industry of something north of $100 million, likely closer to $150 million.

It also means that those smaller startup news organizations that may have represented the industry’s best chance to transition to the digital world no longer have access to Facebook or Instagram, which constituted a free platform through which they could launch and market their ventures.

The bottom line is that lobbyists for Canada’s news industry, in concert with the government, launched the Online News Act in the belief it would make the industry better off by as much as $600 million and no less than $230 million. The end result is an industry at least $100 million worse off and with severely reduced access to the eyeballs needed to survive.

Well played, everyone. Well played.

Peter Menzies is a senior fellow with the Macdonald-Laurier Institute, past vice-chair of the CRTC and a former newspaper publisher.

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