As Link Tax (Bill C-18) Gets Closer to Tabling, A Reminder of Why It’s a Bad Bill in Concept

The link tax is close to being tabled. We look at the many reasons why the concept alone is so bad.

Bill C-11, the social media censorship bill, has been soaking up a lot of attention as of late. It is with good reason that it has given just how much is at stake thanks to the potential to completely erode the careers of digital first creators and reduce choice on various platforms for the users. Of course, as we’ve been saying for a long time now, this is only one of three prongs on the Liberal’s war on the open Internet.

The other two prongs is, of course, link taxes and the online harms legislation. The online harms legislation, as seen through the online “consultation”, would threaten to annihilate and censor large swaths of the open Internet thanks in large part to its “one-size-fits-all” approach. For us, that third prong is one we are most worried about.

Still, the other prongs have plenty of good reason to be concerned about. The link tax, now known as Bill C-18, threatens to undermine a lot about the open Internet just based on the concept alone.

Generally speaking, link taxes demand payment for the privilege of referencing material online. From a copyright standpoint, this completely upends what copyright is about and completely transforms it into something very different. In any discipline, other people’s works are referenced through a works cited list. This is standard practice on any given research paper or essay in an academic setting. It is guided by a simple rule: if you use other people’s work to build your case and the credibility of what you are saying, then you must reference it.

Nowhere in that rule says that you must pay a certain amount of money for the privilege of referencing that material. No one is saying, “You cited 4 papers, please pay $80” for instance. Sure, as a researcher, you might pay for the privilege of accessing that sourced material (whether for yourself or via the institution), but the simple act of referencing isn’t cause for people to grab you by the scruff of your neck and say, “OK, pay up!” Yet, this is exactly the sort of thing the link tax does. It’s completely unprecedented in the history of copyright law.

Link Taxes Around the World

Indeed, this was tried before in Spain. It was a complete disaster. Why? The simple fact is that publishers need platforms and aggregators far more than aggregators and platforms need publishers. So, in response, the aggregators and platforms simply said that if they are being required to pay fees for simply linking to content, then they would simply shut down their free services and move on. Publishers, in response, saw their traffic plummet as a result and forced the publishers to beg for the platforms and aggregators to return.

Of course, those who support the link tax don’t like talking about that. Either this chapter of the history of the link tax is ignored, or they completely re-write history and say that publishers were no worse for wear when they were blocked from posting their material to platforms and being referenced on aggregators. These supporters (typically the big multinational publishers) are more quick to reference the story in Australia back in 2020. A lot of details get glossed over, but the supporters try and point to Australia as an overwhelming success story. This seemingly over the simple fact that the law was passed, not the events that led up to it’s passage or the reasons why it went into effect (both of which undercut the support for such a law in the first place).

On the lead up to the passage of the link tax in Australia, the reaction was pretty much identical to what happened in Spain. Facebook threatened to pull their news feed from the country. Google, for their part, threatened to pull their services from the country as well. The reaction was quite understandable. There is no obligation for even large companies to do business in any particular country. So, if a country tries passing a law that is detrimental to their business, they are free to leave. In this case, it would have been a highly effective move as this raised the prospect of history repeating itself.

As many know now, neither of them actually left the country. This despite the passage of the link tax. Why is that? Simply put, the strategy of Facebook and Google changed. It wasn’t some sort of sudden realization that they should go along with these laws because, uh, reasons. Instead, it was a reshaping of how these companies viewed these link taxes in the first place. Indeed, these link taxes are detrimental to the health of the free and open Internet. However, setting this aside, link taxes also blocks new and up and coming news aggregators and platforms from taking form. Rather than launching a website on a hope and a whim and managing to get it right, starting something up in the similar vein of Facebook or Google would now cost millions in licensing fees.

With that new barrier to entry in the search and social media landscape, the only ones that have any hope of surviving are the largest of players in those sectors of the Internet. As a result, it cemented Google and Facebook as the top players in the industry with no fears that an upstart would ever spring up in Australia ever again. With so many supporters of the link tax also supporters of “reigning in” big tech, this caused a rift among supporters. Those that were concerned with the monopolistic tendencies of such sites have had a collective, “what have we done?” moment. Of course, big money talks and it drowned out those who realized, at that moment, just how short sighted this link tax business truly is.

Be February of 2021, Google unveiled their Google new showcase. the initiative basically promised to give everything the large publishers wanted. What’s more is that it could prove to be flexible in response to other countries that would inevitably get lobbied by the large publishers operating in their country to pass the same laws there. Another aspect is that Google would also strive to control what deals were actually worked out in the process – something that publishers are already moaning and complaining about.

While it cemented Google and Facebook as forever dominant players in their respective parts of the Internet, the other side of the coin wasn’t that much better. While supporters of link taxes love to talk up about how news publishers will receive a windfall of cash by simply freeloading off of the success of the larger tech firms, there is considerably less talk about who actually benefits from such a law – namely who gets the cash in the end. Some just blanket presume that everyone gets that cash and leaves the debate happy. That’s not what actually happened in Australia.

In Australia, there were many eyes on where the money ended up going. As it turns out, it was far from evenly distributed. In fact, large portions of that money simply made their way into the hands of the wealthiest of publishers. Famously, large portions of money went straight into the waiting hands of Rupert Murdoch – a man famous in North America for being the man behind Fox News. Meanwhile, other struggling news publishers wound up getting left out in the cold. Many of them wound up feeling betrayed and asking what the heck happened. Some observers who were supportive of the link tax from the very beginning were forced to admit that these details should have been better hammered out.

As a result of this, history shows that the link tax is a critically flawed concept from beginning to end. First, it hamstrings innovation, re-enforces monopolies, benefits only the largest players, and introduces market distortions that favour only the largest of publishers. It’s well and truly a concept with absolutely no upside. Yes, Australia got a link tax, but very few people are happy about it – and it certainly is no law to model anything from in the first place.

Canada’s Approach Is Likely Doomed Before It Starts

Perhaps the biggest sign that things are already off the rails even before the bill was tabled comes in the form of what the debate looked like on the lead up to the tabling of this legislation. So much of the rhetoric involved in pushing for this legislation revolves around how the likes of Google and Facebook do not compensate publishers for the use of their work. On the face of this, the talking point is misleading because it haves viewers believe that platforms and aggregators basically take whole articles and republishes them on their own platforms and take in all of the ad revenue. This is false.

The reality is that aggregators and platforms simply post, at most, the headline, a link to the source, a thumbnail, and a small snippet to the tune of about 40 to 50 words or about 300 characters. This is well within the bounds of Fair Dealing and, as such, is perfectly legal. When the core argument for a law is based on false pretenses, you are off to a very bad start.

What’s more is that various publishers severely undercut their own credibility when their bias was naked enough to push a massive ad campaign masquerading as journalism. Some even went further and published link tax propaganda in their own editorials, blurring the lines between journalism and advertising. In doing so, they significantly hurt their own credibility in the process.

Of course, significantly undercutting this momentum was the announcement that sites like Facebook were inking deals with big publishers. This showcased that a business to business relationship can overcome the differences between the two sides without the need for regulation. Some, however, basically held out and said “no”, hoping for a better deal under government intervention. The result was a split between publishers thinking that they’ll get something better with government intervention and those that actually decided to try and negotiate something on their own.

This alone raised the prospect that the link tax was not needed. If publishers and platforms and aggregators can work out deals on their own, what’s the point of government intervention? Government intervention typically can only happen when all other avenues to resolve a problem have been exhausted, not as an option of first resort.

What’s more is that many of the problems with a link tax was rarely, if ever, discussed. For one, what news outlets would receive the benefit of the money in the first place? What is the criteria? Is it even possible to even strike a balance in this upside down world where linking to something means you have to pay the people you send traffic to in the first place?

For another, where is the case that such a bill is necessary in the first place? One of the long running talking points is that these large (and very profitable) publishing corporations are in dire straights. They blame COVID-19 for a drop in advertising and say that they need government handouts to stay afloat. The problem with that talking point is the fact that the Canadian government did hand out subsidies to news organizations – this over top of wage subsidies brought on by the pandemic in the first place.

In 2021, it was noted that one of these big publishing houses, PostMedia, received a massive $52 million in subsidies. You’d think that they would be happy with the money and that they would bring people back to work and all would become well. The sad truth is that, in response to receiving such a massive windfall of cash, PostMedia got to work slashing jobs anyway. The thing is, it didn’t matter whether they got the money or not, those jobs would have been lost regardless. All PostMedia did was gobble up the money, handed out the wave of pink slips, and told the government “gimme more money”. Hey, at least the shareholders and the CEO’s were happy at least.

We have been hammered quite hard by the pandemic. We experienced financial losses. You know what we did? We innovated. We expanded on the site, increasing the offerings to users. We also expanded our reach to more platforms. We put more time and resources into a YouTube channel. We added more content on our Wiki. You know what we didn’t do? Go screaming to the government, demanding free money. This website is bigger and better thanks to the last few years of hard work. This is the exact reaction a normal and healthy news website would have when faced with adversity.

Suffice to say, the debate that led up to this moment didn’t do a thing to bolster the need for this legislation in the first place. What’s more is that there is very real concerns about the implications of such a law in the first place. There was no justification for a need for this law. There is no precedence in copyright to point to either. What’s more is that there wasn’t a clear vision for who would get subsidized and who would not. Quite frankly, we have little reason to hope that this legislation will be anything other than another total disaster that would significantly and unnecessarily warp the Internet in undesirable ways. It’s a disaster in the making, just like Bill C-11.

Drew Wilson on Twitter: @icecube85 and Facebook.

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