Canada May Join Australia In Making Social Media Companies Pay For News

Canada is following in Australia’s footsteps in considering legislation requiring social media platforms to pay Canadian media for use of their content.

The Parliament has before it a government bill, the “Online News Act” (Bill C-18), that would mandate negotiations on the fees companies like Facebook and Google must pay Canada’s national and local media for use of or linking to their content. This bill is in the same vein as Australia’s “Treasury Laws Amendment (News Media and Digital Platforms Mandatory Bargaining Code) Bill 2021” which “establishes a mandatory code of conduct to help support the sustainability of the Australian news media sector by addressing bargaining power imbalances between digital platforms and Australian news businesses” per the first explanatory memorandum on the bill. C-18 would herd social media platforms toward good faith negotiations with traditional Canadian media (but not specialty or industry outlets) upon pain of a government-run, binding arbitration system to set compensation. Ottawa would have a number of means to force multinational social media companies to strike deals with news-oriented media, and these companies do not like the bill just as they disliked Australia’s bill.

The “Online News Act” (Bill C-18) purports “to regulate digital news intermediaries with a view to enhancing fairness in the Canadian digital news marketplace and contributing to its sustainability, including the sustainability of independent local news businesses.” The essence of C-18 is that social media giants must pay traditional Canadian media companies for the use or their content.

What is left unsaid is the reason why media in Canada need help. Throughout the late 20th Century and early 21st Century, traditional media (i.e. newspapers and television) in the United States (U.S.) and elsewhere thrived on advertising revenue until the internet took off. Google and Facebook eventually achieved dominance and reaped the lion’s share of online advertising revenue. One analysis showed revenue for media in the U.S. hitting a high of $49.435 billion in 2005 and falling to $12.864 billion in 2019. And, as advertising revenue has dried up, media companies have been laying off staff and cutting coverage. It has long been a touchstone that democracies depend on a free, active, and vigorous media to hold power to account, but if media that engages in investigation is receding, democracy might be at stake. Hence, legislation of this sort in a number of western democracies.

This decline in media advertising revenue dovetails with the rise in online advertising revenue for Facebook and Google, the two biggest current players in that sector. In 2018, online advertising took in $107.5 billion with Google and Facebook estimated to reap nearly 60% of the proceeds, The 2021 online advertising numbers were even higher. And so, the upward trend in online advertising has come largely at the expense of traditional media.

The U.S. House Judiciary Committee’s recently expanded “Investigation of Competition in the Digital Marketplace: Committee Report and Recommendations”summarized the issue:

Since 2006, newspaper advertising revenue, which is critical for funding high-quality journalism, fell by over 50 percent. Despite significant growth in online traffic among the nation’s leading newspapers, print and digital newsrooms across the country are laying off reporters or folding altogether. As a result, communities throughout the United States are increasingly going without sources for local news. The emergence of platform gatekeepers— and the market power wielded by these firms—has contributed to the decline of trustworthy sources of news.

Under C-18, companies like Facebook, Google, and Twitter would definitely be covered with others possibly being regulated as well like TikTok, Instagram, and a handful of others. A number of the these entities would qualify as “digital news intermediaries” subject to Canadian regulation. This term is defined in C-18 as:

an online communications platform, including a search engine or social media service, that is subject to the legislative authority of Parliament and that makes news content produced by news outlets available to persons in Canada.