Michael Geist Agrees That a Canadian Link Tax Law is a Bad Idea

Earlier, we posted reasons why a Canadian link tax law would backfire. It seems that Michael Geist is largely agreeing with our analysis.

Earlier this month, we posted an analysis on why a Link Tax law is a bad idea in Canada. This is in response to a renewed effort that largely started clear back in April when Toronto Star journalists started badgering regulators to put in place a link tax law. Among the reasons why it’s a bad idea are that the experience in Spain where Google News simply pulled out of the country altogether, devastating the publishing sector as a result. Additionally, like what we saw in France and Australia, suggesting that this should be the response after publishers saw a dip in ad revenue due to COVID-19 is really not an appropriate rationale.

Still, Canadian publishers pointed to Australia (where regulators expressed interest in putting in place a link tax law) and France (which is the current epicentre where publishers are attempting to try the exact same thing as Spain and expect a different result). Of course, as we pointed out, the reasons why this is a bad idea in those countries are similar to why it’s a bad idea here. Nothing is stopping the likes of Google from pulling out of the respective countries. If publishers thought they had it bad before, just wait until Google pulls out of the country. After all, Google is understandably quite firm that they are not paying a tax to link to publishers content.

Furthermore, other points we raised include the fact that Google does not make money from Google News. Also, if publishers truly feel that Google is stealing their content, there is already a mechanism in place to opt out known as robots.txt. It’s trivial to implement and highly effective. After all, news services actually need to structure their website in such a way as to be acceptable to Google News. After that, the news sites actually need to submit their website to Google News just to be indexed in the first place. So, getting on there actually requires efforts from the publishers in the first place. This is hardly the picture painted by publishers where Google is rummaging through the various news organizations, stealing their material, and using it for their own profit. If anything, the opposite is true.

While we could go on and on about why the link tax law is a bad idea, that would risk simply re-writing our previous articles on the subject. What is noteworthy is that, nearly a week after our last analysis on the subject, Canadian university law professor, Michael Geist, published his own analysis on the subject. In short, Geist pretty much agreed with our analysis that a link tax law is a very bad idea in Canada:

Moreover, the economic value derived from linking to content on Canadian media organization websites is trivial for global Internet companies. Google does not even run advertising against news stories in its Google News product, while Facebook posts are dominated by videos, photos, and personal updates, not links to Canadian news stories.

Notwithstanding these market realities, the Canadian media sector has tried for years to convince the government to intervene, including with tax reforms to remove Internet-based advertising with U.S. companies as a deductible expense for Canadian businesses. Such proposals have always been rejected, given that they would make digital advertising more expensive for Canadian businesses and be unlikely to persuade them to shift their ad dollars to local venues offering smaller audiences and a less targeted approach.

Moreover, news organizations that do not want their stories included within services such as Google News need only ask to be removed. But after Google shut down its Google News service in Spain, studies found publisher website traffic dropped by 10 per cent.

In recent weeks, the discussion has shifted to competition law and arguments that “fairness” dictates that Google and Facebook support local media. Though France and Australia have indicated they intend to implement such a system, neither has released many details. In fact, Australia – where the debate is dominated by a series of Rupert Murdoch-owned entities – merely plans to release a proposal for public comment later this year.

It’s basically our analysis re-written with a few added observations in the end. While the validation that our analysis is correct wasn’t really necessary, it is, nevertheless, welcome.

Geist, however, did add this observation that we weren’t really aware of at the time of our written analysis:

What has been left unsaid in recent lobbying flurry is that Ottawa has already committed hundreds of millions of dollars to the sector. Ottawa’s “Local Journalism Initiative” (LJI) promises to pump $50 million over five years into local media organizations with direct support for new journalists. Last year, the government announced further changes worth hundreds of millions in labour credits to support hiring journalists, at a rate of up to $55,000 in costs per employee.

The problem to date has been that neither program has unfolded as planned. The implementation of the LJI has deliberately excluded some independent news providers in an apparent effort to reduce competition from digital upstarts. Meanwhile, the labour tax credit is still stuck at the starting gate with no reimbursements to date.

Blanketing Canada’s media with in-house lobbying efforts tarnishes a sector that plays an essential role in a democratic society. The current federal government’s support for the media sector is far from perfect but to its credit the government has rejected gimmicky tax reforms, twisted copyright laws, or mandated payments. Rather, its approach is founded on the principled premise that supporting journalism serves the broader public interest and so the public should help fund it.

While we knew the big ask by publishers to put in place a link tax law was greed, the fact that there are initiatives coming forth that subsidizes publisher efforts further underscores how much greed is involved on the part of big publishers. We can only dream of getting millions to run our small operation here. That would easily help us hire journalists, accountants, and several others to help make dreams come true for other budding journalists out there. Meanwhile, these publishers are seeing these programs involving what amounts to free money and demanding more. As Geist says, this easily hurts the credibility of the big publishers who try and sell themselves as the “credible sources”. It raises the question of whether or not publishers are misleading Canadians when they say that they can’t make ends meet because of COVID-19 when government in the background are shovelling money in their direction.

Not only was the big publishers position that a link tax is necessary bad to begin with, it’s even worse under this light now. We can only hope that the Canadian government continues to reject the link tax law proposal in the future, ignoring the ill-advised lobbying campaign by those big publishers.

Drew Wilson on Twitter: @icecube85 and Facebook.

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