Government: Funding Received from Online News Act Won’t All Go to News Production

Would funding received from platforms go to news production under the Online News Act? Not necessarily, according to government.

Meta has already dropped support for news links in Canada. Google has said that it would drop news links. In the face of the extremely likely outcome that not a cent will come out of the Online News Act, the Canadian government has said that the cost of providing news links is going up to a whopping 4%, thereby giving the platforms an even bigger push to drop news links. As a result, the legislation is generally doomed to fail.

However, let’s set aside these facts for a moment and ask an interesting question: Assuming deals are struck and dollars are coming out of the platforms from deals struck because of news links, how do we know that the dollars received from the link tax at news publications is going towards the actual production of news? This is actually a question I had since the senate hearings at least. In fact, even outside of the hearings, I have been asking this. For example, this article back in early May.

My concern (which is one among numerous concerns I’ve had with this legislation), is that even if deals are struck and dollars are flowing out of the platforms towards the news organizations, how do we know that money is going towards the production of news and not, say, hedge fund management, CEO bonus pay, shareholder dividends, etc. One of the numerous calls I had was that we need to expand on the accountability of tracking down where the money went. As of now, the new law says that the only accountability and transparency is an annual report offering totals of how many dollars flowed out of the platforms.

For me, it would have been better to expand on this point and have the report also include where the money went. So, for instance, a receipt of sorts. In a nutshell, an example would be $439,000 total came out of the platforms for the year 2026 (these deals won’t happen before then according to the CRTC). $350,000 went to staff pay, $100,000 when to vehicle maintenance and building fees, $20,000 went to software license fees, $10,000 went to equipment fees, and $9,000 went to a contingency fund. There’s, obviously, worry about giving away too much, but if it’s generalized, then the public knows those dollars actually went to the production of news in the first place.

Is this perfect? Far from it. There’s nothing stopping management from pulling existing funding out and replacing it with platform dollars. Still, it is less of a blank cheque – which is where the new law stands today. Specifically, the news outlets gets money to do whatever they want with it. If a CEO took a portion of that money and bought a new sports car, Rolex watches, and put some of that funding towards an elaborate vacation for later, what’s stopping that CEO? Nothing, really.

Now, we are learning that, according to the government draft regulations about this bill, the concept of a blank cheque is most assuredly a real thing. Here’s Michael Geist talking about this:

How much of the hundreds of millions the government thinks it will generate from the Bill C-18 4% link tax must actually be spent on creating news content? Very little. The government’s regs say as long as “some” is spent on news, that’s good enough.

Here’s a transcript of the screenshot posted:

Interpretation – appropriate portion

7 For the purposes of subparagraph 11(1)(a)(ii) of the Act, if the agreements submitted by the operator with its request for an exemption include a commitment by the news businesses of group of news businesses, as the case may be, that are party to the agreements to use some or all of the compensation provided under the agreements for the production of local, regional and national news content, the Commission must interpret the agreements as providing that an “appropriate portion of the compensation will be used for the production of local, regional and national news content.”

As a result of this, if there is anyone out there that honestly believed that all these dollars would have gone towards the production of news, hiring staff, getting better equipment, etc., this pretty much puts a stake through the heart of that thinking. Even the government admits that the dollars won’t actually go towards the spending of news. As long as “some” money is spent on news, that’s good enough. What’s the sum of that “some”? A dollar? Twelve cents? A nickel? Based on what we see in these regulations envisioned by the government so far, it could be anything, really.

Either way, this whole thing was just a massive cash grab in the name of news only. There was no hope that this whole law was actually going to benefit journalism in any significant way. This recent admission from the government put another nail into that coffin.

Drew Wilson on Twitter: @icecube85 and Facebook.

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