Canada’s Online News Act Being Held Up as a Warning of What Not to Do in the US

Supporters of the Online News Act insisted that it is a gold standard for the world to follow. Maybe it’s a standard of what not to do.

Canadian lawmakers were repeatedly warned over and over again that passage of the Online News Act would be a disaster for the news sector. Numerous people all over, from journalists to news organizations to experts to the platforms themselves repeatedly said that news links would be blocked if the bill passed. For some people making these warnings, it was almost a sort of life or death endeavour because their news sites would be the ones at risk.

Yet, despite all the evidence put forward, all the expert analysis, all the data, and even the impassioned pleas, those voices largely fell on deaf ears. The Canadian government simply put on the blinders and only believed the very lobbyists pushing this bill. The government instead opted to believe the lies that platforms were almost exclusively dependent on news links and that the platforms were just making a big fancy bluff. In fact, Facebook, according to lobbyists living in fantasy land, wouldn’t even last a week before the deals are struck. So, the government stupidly passed Canada’s link tax law.

As we’ve off and on said in the past, reality doesn’t care what you believe. This actively played out when Facebook began blocking news links at the beginning of September. It’s a block that has been in place for over a month now, so so much for Facebook not lasting a week with this. As was predicted by numerous people, user engagement for news sites Facebook pages collapsed while Facebook’s own traffic remained unchanged, proving the axiom that publishers need platforms far more than platforms need publishers.

Faced with reality setting in, publishers desperately cast this move as censorship (it is not) and desperately submitted a weak complaint to the Competition Bureau. They also tried to conduct not one, not two, but three failed boycotts of Meta. Even some in the media pushing for this law softly admitted that the boycotts didn’t exactly go according to plan.

Of course, the damaging impacts are already being felt across the news sector. There have been hiring freezes, bankruptcies, and operational slowdowns in the sector. For us, through the way the law was worded, we were among the lucky few to have survived this (not that the experience wasn’t stressful because I personally occasionally saw my career flashing before my eyes at times). What’s more, the damage is only going to get bigger once Google follows through on their announcement to follow suit (something that has yet to happen to date, but will likely happen before the end of the year). Things are going to get worse.

Yet, despite all of this – the stuff of nightmares – other countries are trying to move forward with their own version of the link tax law, repeating this horrible tragedy while refusing to learn from history. Even worse is the fact that Canadian lawmakers are actively encouraging other countries to do so on top of it all. This while fabricating tall tales of the Online News Act being a roaring success, ushering in a new era of independence and prosperity, and that news outlets are holding on nicely despite what Facebook is doing.

It is all complete and utter nonsense. In fact, it is by using this nonsense that another theory is being tested out despite every other theory about this proving to be false. That theory is that if every country implements similar laws, then they would have no choice but to go along with the link tax laws. In fact, Canadian lawmakers are going so far as to even rebrand Canada’s link tax as ‘not a tax on links’, as if messaging and branding was the biggest problem of this sorry affair. A major problem is that it can be tough at times for American’s to really understand what is going on up here in Canada and the fear is that American lawmakers and the public will just take Canadian lawmakers word for what they are saying.

To my absolute relief, there are those who are noticing that things aren’t adding up when Canadian lawmakers tell American’s that the Online News Act is a triumph. Mike Masnick of Techdirt is noting that people are noticing the damaging implications of the Online News Act:

However, today, the Chamber of Progress, a trade group for internet companies, sent a letter to Wicks, highlighting how (contrary to her claims about bills like this helping journalists), the Online News Act in Canada has been a total and complete disaster for everyone, including journalists.

The letter is chock full of quotes from Canadians highlighting just how bad the law is for Canada, first highlighting how, if they help journalism companies at all, they massively distort the market to just the largest news providers, and screw over the smaller ones:

“This whole experience has me shaken. The reality is I made a huge mistake launching an innovative media business *in Canada*. There was massive government risk I didn’t take seriously ”- Chris Dinn, Founder and Publisher of Torontoverse (News Startup)

“Unfortunately, Bill C-18 misunderstands that crisis, misdiagnosing why news advertising revenue has collapsed, and who is at fault for it. As a result, Bill C-18 ‘fixes’ the problem through a convoluted system that makes news producers increasingly dependent on and subservient to both online platforms and government, threatening their critical role in holding these powerful bodies accountable.” – Openmedia, a community-driven organization that works to keep the Internet open, affordable, and surveillance free

There are many, many more quotes from all sorts of experts in that letter, which one hopes that Wicks will actually take seriously. As the letter itself explains, the basic fundamental purpose of a tax is to get less of whatever it is that you are taxing, so it’s bizarre that Wicks would push a bill whose result will be less journalism:

As you know well, typically taxes are reserved for behaviors that policymakers are attempting to discourage, such as alcohol, tobacco, or even sugary beverages. For instance, California’s taxes on sodas have been shown by the Public Health Institute to unequivocally reduce soda consumption.

Similarly, taxing news links – as CJPA does – will undoubtedly lead platforms to shut off news links, as they have in Canada. Journalism at its core is about informing people and broadening the reach of objective truth. Taxing shared links is not only antithetical to this principle, but it discourages the exchange of valuable information.

If passed, CJPA will likely have the same impact in California as Canada’s law has had: Harm to both Californians and small news publishers. Large media organizations who can build their own direct connection to consumers may be fine, but small news publishers will undoubtedly be harmed.

Will Wicks listen to the experts this time? We’ll see. Last year we warned her directly that her AADC bill had serious 1st Amendment problems, and she dismissed our concerns. And yet a court just concluded that her bill infringes on 1st Amendment rights, just as we predicted.

So, maybe, instead of dismissing anyone who criticizes her bills, Wicks should take the time to actually speak to experts who can highlight all the ways that her bill will harm Californians and especially California news organizations like my own?

The idea of lawmakers refusing to listen to the experts is a situation all to familiar with us here in Canada. People like us were repeatedly told that when we warn of the consequences of a link tax law, we were simply spreading disinformation no matter how accurate our forecasts were. In fact, some honestly believe that people like us were just paid shills working for “Big Tech” because we don’t like the idea of the platforms somehow paying their fair share. Everything about the flack we got was completely ridiculous and offensive. It is sad (though not entirely surprising) that the same sort of thing is playing out in the US where lawmakers are dismissing the experts and living in a foolish fantasy about how things work.

The letter itself can be read here (PDF) and it does an excellent job at highlighting everything that is wrong with the Online News Act. The letter not only has a compilation of quotes from people either negatively impacted by the new law directly or people witnessing the damaging effects, but also has a warning in regard to the CJPA (California’s link tax bill):

On behalf of Chamber of Progress, I am writing to thank you for your willingness to make the California Journalism Preservation Act (CJPA) a two-year bill and for holding an informational hearing this fall. I particularly encourage you to take note of the ongoing impacts of Canada’s similar Online News Act (Bill C-18), and to invite witnesses who can speak to that impact. Canada’s experience is the best predictor of the likely impacts of CJPA in California.

If passed, CJPA will likely have the same impact in California as Canada’s law has had: Harm to both Californians and small news publishers. Large media organizations who can build their own direct connection to consumers may be fine, but small news publishers will undoubtedly be harmed.

As you prepare for your informational hearing this fall, we strongly encourage you to heed the voices of Canadians who are experiencing the impact of its link tax law, and voices in California whose views have been ignored during the CJPA debate. In particular we encourage you to invite smaller and independent journalists to your informational
hearing this fall to get a broader perspective. While the intentions behind the CJPA are no doubt admirable, Canada’s experience shows that the unintended consequences are too dire.

If there was actually an opportunity to participate myself in this, I’d probably take that opportunity and detail just how damaging Canada’s law has been. After all, my advice from the outset of any country or jurisdiction considering passing their own link tax is this: don’t. Supporters will continually cite Australia of this law working, but the money largely went to Rupert Murdoch’s media empire. While some say it is working, it only worked because the platforms were never designated in exchange for shovelling money to a handful of players after. Those deals themselves are no shaky grounds as it is with platforms openly saying that those deals may not be renewed in the future. Nothing good ever comes from these laws.

What’s more, thoughts of implementing “must carry” provisions in such laws are very likely going to get struck down in the US courts as unconstitutional (and because we know that right wing activist judges run the Supreme Court, do you really think they are going to make a ruling that favours journalists in the first place? No.)

Nothing good is going to come out of California’s version of the link tax law. This letter does bring hope that there are those in the US that sees what is really going on in Canada. Whether that ultimately impacts the debate and encourages a rethink remains to be seen. If not, for those in California who saw what is going on in Canada with respect to the Online News Act, what’s going on here in Canada may soon be coming to a news organization near them – and it’ll be anything but pleasant.

Drew Wilson on Twitter: @icecube85 and Facebook.

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