An independent collective has been chosen to distribute Google’s $100 million fund. Lobbyists aren’t happy about that.
When the Canadian government folded to Google, it represented a moment where the Canadian government went from trying to somehow “triumph” over “Big Tech” to a desperate move to prevent the Canadian news sector from collapsing overnight. Meta had already dropped news links, representing a loss of an estimated $230 million in value. That development has since torn a strip off of the media sector, leaving a trail of self inflicted destruction in its wake in the form of bankruptcies and traffic loss. I’ve since dubbed the ensuing bankruptcies as the Bill C-18 death toll and the numbers are only expected to climb as media companies are continuing to burn their their cash reserves to try and hold out for as long as possible under this significant pressure.
The situation that large media companies brought on the entire news sector was bad, but as I pointed out at the time, if people thought the destruction was bad after Meta pulled out, just wait until Google pulls out. As I noted, some might be able to survive in an environment where they have no access to Meta, but losing Google’s services is essentially a death sentence to almost any website. Most websites operating today see a huge portion of their traffic coming from Google. If you run a website or have access to the statistics of a website, look at how much traffic comes from Google. Can the website you work for or run survive without Google? Not likely.
In all likelihood, the Canadian government knew this could happen if they don’t buckle and convince Google to not follow through with very real plans of blocking news links from their services as well. Google, for their part, had long asked to go with a fund model which, up to that point, had largely been ignored by the government. With the Online News Act (formerly Bill C-18) inching closer to coming into force, it seems that, behind the scenes, the Canadian government was forced to drop to their knees and beg Google to stay. Whatever happened behind closed doors, the Canadian government agreed to the originally asked for fund model of $100 million.
Supporters of the Online News Act, desperate to spin anything in this debate as a win, declared the $100 million fund model a “victory” even though the reality was that it was anything but. The $100 million was a salvage operation that wouldn’t even come close to making up the losses that came from Meta’s pullout. Additionally, not all of that is even new funding as it rolls agreements that existed before into that funding. What’s more, if you are trying to hail not getting kicked off of Google as a “victory”, you’d need an excavator to reach that bar you’ve set. Still, it highlights just how desperate supporters of the Online News Act have become in trying to find a victory of any kind throughout the debate. The reality is that the government and it’s supporters have been taking so many losses in this fight, they’ve gone from being annoying to being the butt end of jokes to today where their position is just plain sad and pathetic.
With the media companies now fighting over pity scraps, one question in recent months was how to distribute that funding. What has been known for a while is that a collective would be charged with receiving that funding and distributing it to the various players in what was decided to be a “fair” manner. There was apparently two choices for Google: a group that was run by the largest media players and another that was recently formed by the independent media organizations. Google chose the latter, saying that they are more likely to fairly distribute the funding to all eligible players. From Google’s blog:
After considering proposals and working through the details of an agreement, we are pleased to have signed an agreement with the Canadian Journalism Collective-Collectif Canadien de Journalisme (CJC-CCJ). We are confident that their approach is best aligned with these principles and will support the full diversity of the Canadian news ecosystem.
The Canadian Journalism Collective-Collectif Canadien de Journalisme (CJC-CCJ) will now assume the responsibility of ensuring that our contribution efficiently and equitably reaches all eligible news businesses in accordance with the regulations.
Our agreement stipulates that payment is contingent on Google formally receiving an exemption from the CRTC, which we expect to be made official following a required public consultation on our application.
We hope these next steps will be completed as quickly as possible, so Canadian publishers and journalists can soon begin to receive the proceeds of this new contribution model.
Evidently, the big media lobbying organizations were furious that they can’t run the collective that collects and distributes the funding to news organizations. So, in response, they have called on the CRTC to gut the funding of the collective:
TORONTO, ON –(COMMUNITYWIRE)– Multicultural, community, local, and national news publishers and trade associations, representing hundreds of trusted titles, have come together to call on the CRTC to make regulations with respect to the Online News Act that will ensure consistency and fairness, maximize newsroom investment, enhance transparency and minimize misrepresentation.
Minimize administrative expenses to maximize newsroom investment
- Put a maximum cap on administrative fees the Single Collective can take at 0.5% (i.e., C$500,000).
- Ensure that any interest earned on the C$100 million flows to eligible news businesses – not to the administrator
For observers, the call was quite eyebrow raising as this was never really something that the lobbyists have pushed for up to this point. As Michael Geist points out, it was widely expected that administrative costs were originally expected to be around 5%:
This is wild. Having lost out on running collective to administer Bill C-18 Google $100M, big media lobby now wants CRTC to establish regs it would have never supported had it been selected. Wants to cut admin money for collective to 1/10th most estimated.https://t.co/Dki5OLhFZQ
— Michael Geist (@mgeist) June 11, 2024
This is wild. Having lost out on running collective to administer Bill C-18 Google $100M, big media lobby now wants CRTC to establish regs it would have never supported had it been selected. Wants to cut admin money for collective to 1/10th most estimated.
It’s certainly wild that the large media organizations have any bargaining power in this situation in the first place. After all, if things break down between the news organizations and Google, the only clear alternative Google has is to pull support for news links altogether which would completely wipe out an already gravely injured news sector. This is, after all, Google’s money, not the news organizations money. Anyone who receives any of that money should be eternally grateful.
For comparison, the CPCC collective, which collects royalties from blank media, seemingly has an administrative cost of well above 5% according to their financial highlights. We’re talking about 10% to 40%.
MROC, which is an organization that collects royalties for artists from, among other things, radio play, collects 15% for administrative costs (under membership):
MROC is a not-for-profit organization and there are no fees to sign up. An administrative fee is applied on the royalties we pay out to you. The MROC administration fee is 15% on royalties collected in Canada and 8.5% on royalties collected from other countries.
ASCAP from the United States says that they collect 10% of royalties for administrative costs.
I’m sure there are other collectives out there that you could research, but all three examples show that collectives generally have a much higher administrative cost than 0.5%.
It really suggests that the big media companies aren’t happy that they won’t have full control over the distribution of funding and are pushing to make the selected collective not function properly. The motivation that makes sense as to why they are doing this is because the large media companies want to hoover up as much of that funding for the largest players as humanly possible while ensuring the small players they were pretending to “help” out walks away with as little as possible. I don’t see any other plausible reason for why the large media companies are doing this.
It’s difficult to see how much leverage the large media companies have in the first place, though. If Google isn’t happy about it, they can drop news links and leave what’s left of the negotiations altogether. That would roll back the last several months of Canada’s salvage operation and put them right back to before the government desperately got their get-out-of-jail-free card. In this instance, getting a “deal” of any kind would no longer be an option and the Liberal government will become the government that sank the entire news sector. All the big media companies have left is whining and complaining.
I’d say to the big media companies, “suck it up, buttercup”. They have nothing to work with in these debates at this point and attempting to derail this process is only going to result in a greater chance that even more pain will be felt across the sector. Hopefully, Google can just move ahead with this process, put what is needed in place, a collective is set up that is as fair and as transparent as can be expected in this situation, and we can all move on to the next thing.
I think this choice was Google giving the finger to all the news organizations that lobbied for C18.