Online News Act Has Come Into Force, Media Currently At a Net Loss

The Online News Act has come into force. By almost every account, the new law has been a failure.

December 19th has come and gone. That means that the horror show that is the Online News Act has come into force. While I had half expected that I would be writing about how Google had blocked news links by this point in time, the Canadian government caved to Google, handing the tech giant everything they originally asked for and called it a “deal”.

The practical upshot to this is the fact that my career hasn’t come to an end thanks to government belligerence and stupidity. While Freezenet can theoretically survive without Facebook (and even then, it looks like my site was more or less spared from the massive news link purge for now), Google dropping Freezenet would be an obstacle I would be unlikely to overcome. While this sounds like a critical design oversight on my part, a vast majority of websites out there would be in the same boat as mine. Either way, I am grateful that the Canadian government didn’t murder my writing career overnight.

While Canadian news outlets were spared from a massive purge from Google, that’s about the only thing that is worth celebrating about the Online News Act. Everything else about this sorry state of affairs has been objectively a failure.

For the government, there is no payments for links. As part of their desperate bid to not be known as the government that killed the media sector, the government conceded on this point and, instead, opted for what Google had asked for (and what many critics called for during the debate) all this time: a fund model.

With the death of the link tax in this country, the media was hoping for an infinite ceiling on how much of a payday they would get off the backs of the platform. By some estimates, what they were seeking to get was as much as $1 billion per year. Other estimates pegged the number closer to a $329 million asking price. An even more modest ask was $150 million per year. The actual deal got worked down even further to a meagre $100 million. While that sounds like a lot, this amount of money works out to a mere drop in the bucket at best for an entire sector.

Even worse, contrary to what supporters have sworn up and down, a vast majority of that dollar figure is heading straight for the largest players in the sector. It set up a situation that critics (including myself) have long warned about: it gives most of the money to players who least need it while giving little to nothing to players who need the cash the most. Because of the formula for how it measures how many full time journalists are employed before handing off the ripped off cash, the CBC was destined to get a third of the entire loot to the tune of $33 million. It was only because the government capped the total cash influx to $7 million that the CBC may not be getting that free money after all.

While the most heavily subsidized news corporation won’t be getting quite as much money as expected, this only shifts the problem to the other remaining players where large players like PostMedia, Toronto Star, Global News, Bell Media, and others are likely to hoover up the cash instead. The small players wind up being unlikely to be any further ahead in the grand scheme of things. What’s more, for the largest players, even if this was all new money, it wouldn’t really change the financial landscape for them as, for some, this amounts to a rounding error more than anything else.

The other major problem is that the original $100 million isn’t even new money. All the previously inked deals between Google and the publishers are getting rolled into this fund in the first place. Rumours suggest that the previous deals total somewhere in the ballpark of $30 million to $50 million. If that ballpark figure is accurate, chances are, some of these players could theoretically be money behind after just on this point alone.

Then there is Meta. With news links dropped on Facebook and Instagram, the $230 million value of free referral traffic is just plain gone. As of now, news links are still blocked in Canada and there doesn’t appear to be anything suggesting that this will change any time soon.

Even if you don’t believe these facts, the reaction from the media pretty told the story. Players like the Toronto Star have expressed anger about this situation, saying that they can’t support the deal.

In the end, you would be hard pressed to find any winners out of this whole situation. The most likely candidate is Google who essentially got everything they asked for. The only fly in the ointment is the fact that the money dolled out by Google goes from being voluntary to mandatory. In the grand scheme of things, if that constitutes a loss, it’s a really small one.

Some have argued that this development represents a significant loss for the open internet anyway. This seemingly on the basis that a deal was even reached in the first place while ignoring pretty much all of the details it involved. The thinking is that supporters for similar other laws will point to Canada as an example of why other countries should move forward, essentially lying about the situation in Canada and coming up with their own talking points to move similar link tax laws forward. Lets face it, though, if that’s the fear, then the outcome in Canada would never have mattered in the grand scheme of things. Anyone can lie about anything and if that includes saying that a lack of a deal meant that other countries should move forward with similar laws, then those liars would make that argument too.

Objectively, the media fought the platforms, pushed a constant barrage of lies, selling out their integrity and credibility in the process, and lost. They are currently kicked off of Meta platforms and the dreams of freeloading off of the platforms has gone amiss. It’s why they are currently trying to get the additional loot off of the Online Streaming Act hearings at the CRTC.

The large media companies are now worse off than when they started with this sorry affair. If they weren’t the architect of their own demise in this whole situation, they might have earned some sympathy. The truth, however, is that they lobbied for and managed to get this law passed despite all of the warnings throughout the process. Now, they are suffering from the consequences of their own actions. As a result, it’s really hard to feel sorry for them.

Drew Wilson on Twitter: @icecube85 and Facebook.

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