We are now taking you inside the Bill C-18 Senate hearings. This is the first segment of hearing 1. This could be a long process.
It was December of last year that I finished the Bill C-11 Senate hearings. Even thinking about it today, I can almost feel my ears aching from wearing the headset for so long just thinking about it. Nevertheless, it was an incredible accomplishment to push through all of those hearings. To this day, I think I was the only writer to actually analyze literally every single hearing – especially to that level of depth and detail. It’s probably with good reason no one else had accomplished that because the process of producing these massive analysis is absolutely gruelling. Listening is one thing, but producing written analysis is a whole different beast.
So, as I sit down here and get started on the Bill C-18 hearings, I kind of wonder what it is I am thinking. It just seems like such a bad idea to run myself through such a process a second time. As you can tell, though, I ultimately chose to go ahead and run through this.
When I started the Bill C-11 hearings, I figured it was just better to get the whole two hours into one mega article. As you can tell, I quickly realized what a horrible idea it was and chose to eventually break these hearings into halves. It’s just because of the insane quantity of these hearings. What’s more, it’s probably a whole lot easier for you to read. On a separate note, if you feel like a champion reader, feel free to just try and read through all of these analysis afterwards as I can imagine just reading it all would be a chore. So, we’ll get this started with a more well thought out plan of attack with these things.
Normally, we’d have a list of all the previous hearings here, but since this is the first one, this doesn’t exist. So, in it’s place, here’s a link to the previous marathon analysis with all the hearings indexed nicely for your enjoyment. Further, if you want to read my submission to this hearing, you can read that here as well.
For a little bit of clarity, Bill C-18 is Canada’s link tax bill, so there will probably be a lot of discussion about platforms, linking to news articles, copyright law, and more. What’s more, these hearings do have the context of the previous hearing floating around in the background, so attitudes and what the government has already done could influence what we hear. Also, my own comments will mostly, if not, exclusively, be in brackets in the heat of the video watching. I’ll also leave my own thoughts at the end (obviously, not in brackets). So, that’s generally how this will all work out.
The video we are following can also be found here, so if you want to follow along with the video I watched, that is also an option too. So, without further ado, let’s get this marathon started!
Opening Statements
Thomas Owen Ripley opened with is opening statement. He commented that how Canadians get their news has changed. A small number of platforms are dominant. Ripley says that Bill C-18 creates a legislative framework to deal with the bargaining imbalances between the platforms and the outlets. (Honestly, it’s not really an imbalance if it didn’t exist before, but who’s counting?) Ripley made a reference to Australia and said that the goal is to reach voluntary and fair agreements with news media. (If it’s mandatory that these agreements be made, it’s not really voluntary at that point, is it? It’s basically mandatory voluntary which was a hilarious and stupid term when Australia pushed for ISPs to implement a three strikes law. Kind of funny that something based on an Australian law would also see the importation of such a ridiculous term in the process.)
Ripley noted that where platforms and media does not reach an agreement, the legislative framework would trigger mandatory mediation backed by final offer arbitration. (Like I said, there’s nothing really ‘voluntary’ about any of this.) He commented that platforms that have a market imbalance would be subject to this process. He said that this would be determined by factors and thresholds prescribed in the regulation. (The legislation is actually quite vague on this to the point where some call this bill unconstitutionally vague. Essentially, the legislative framework does not specify what counts as a market imbalance. Ultimately, anyone platform could technically qualify for all we know.)
Ripley noted that the CRTC would be the regulator to supervise these processes. This is about news content that can be shared and accessed on online news platforms. (This has been a long running misleading statement about what has been going on with the platforms. Supporters of the bill have basically completely redefined what “content” actually is. So, when any normal person thinks of “content”, they think whole bodies of work. What the supporters actually mean when they say “content” is links, snippets, and thumbnails – stuff that is already covered by fair dealing. So, a normal person can hear these comments and assume that platforms are posting whole articles which is flatly not the case. That’s how supporters fool people into thinking that something is happening when it plainly isn’t. It’s probably one of the most classic misleading statements that Ripley pulled out here and often repeated by media outlets trying to fool their readers.)
Ripley then says that the bill does not regulate news media, but rather sets eligibility requirements for news media to be able to participate in the mandatory bargaining process. (This is a second way that the bill is flatly unconstitutional. The bill, in short, picks winners and losers and says that you’re not a real media outlet unless you meet threshold A, B, and C. The problem is that the Canadian Charter of Rights and Freedoms doesn’t necessarily have such thresholds, so some media outlets would actually be barred from such a process. However, nothing in the bill says that if you don’t qualify for compensation, then platforms would not be charged for hosting the news links. So, platforms are getting charged for your presence, but you get barred from accessing those funds. It’s a completely unfair process.)
Ripley commented that the CRTC will make determinations on which news businesses can participate in these processes based on criteria set out in the Act. He says that news media outlets can qualify in four ways. One is whether you are a qualified news organization as per the Income Tax Act (to my knowledge, this was always part of Bill C-18. I don’t remember this coming about as an amendment, but that’s kind of splitting hairs here.) The second is as a licensed campus or indigenous broadcaster. The third is as a business focused on general interest provided that they employ two journalists and adhere to a journalist code of ethics. The fourth is an indigenous outlet run by and for indigenous people. (The indigenous way of qualifying for being an eligible outlet is new since my own analysis from a while back. It almost sounds like there’s two ways you can qualify, but in reading the text of the bill, it looks like this is just one section tacked on, not two – that being Section 27 (1) (c). This doesn’t change the status of Freezenet ever being qualified, though.)
Ripley said that newspapers, magazines, online news outlets, and foreign entities are potential beneficiaries. News outlets headquartered in sanctioned countries would not be eligible. (I think the provisions of not being focused on “a particular topic” would make it hard for magazines to qualify given that a number of magazines do focus on specific interests. Online news outlets have that same difficulty from the get go. Foreign entities have a different problem as they have to have to meet those specific provisions about hiring Canadians and being of ‘general interest’ might be a mushy thing that trips up some outlets – ala general interest to a Canadian audience or a global audience? Separately, foreign entities based out of sanctioned countries having the headquarters in a non-sanctioned country would be a trivial way to defeat such a barrier, so I don’t see how that would make much of a difference.)
Ripley added that the bill would allow news organizations to operate as a collective. (this point is actually a very sticky one for a lot of critics of the bill. An example would be that you are creating a cartel at that point and it doesn’t do anything to help foster competition in the news sector.) He said that this would allow smaller outlets who can participate will be able to participate even with limited resources at their disposal. (This sounds all well and good on the surface, however, in Australia, this has proven to be something that hasn’t worked out all that well. Smaller outlets still struggle to receive competition even after years of the Australian News Bargaining Code being in place for some three years now. Like here, Australian outlets were promised that small outlets can easily jump on board with this, but that was never the case. Canada would have to do something dramatically different to make sure such a problem doesn’t happen here, but I’m not sure how Bill C-18 has made the process easier for smaller Canadian outlets.)
Ripley commented that if a platform provides a substantial contribution to journalism, then they can apply for an exemption to final offer arbitration. (This is actually news to me. I suspect that this would ultimately prove difficult to achieve for the platforms as the whole point of this bill is to charge for the linking of material in the first place. I would be curious to know what specifically would allow a platform to be exempt from that – ala how much money does the platform have to doll out for that?) He said that this is an incentive for platforms to move to bargain quickly (worth pointing out that platforms have already signed deals with a number of major Canadian news outlets, so this may be a moot point at this stage).
Ripley said that in order to provide the public with an idea of the impact of this legislation, the CRTC will publish a report on the value of commercial agreements. The report would be prepared by an independent auditor. He said that this is an important transparency feature of the bill. (Conveniently left out here is the fact that there are also provisions in the bill that say that if an outlet does not wish for this information to be made public, they can ask for an exemption to this. So, ultimately, the transparency is actually optional and if the outlets wish to not be transparent about any of this, they can be.)
He then said that, in conclusion, this bill is the result of in-depth consultation with stakeholders (the consultation was anything but productive, let alone in-depth. It was a partisan sh*tshow with nothing of value coming out of it. Heck, news outlets and experts were flatly ignored and even outright attacked during those hearings.) and an attempt to strike a balance (LOL, not even close) with respect to public policy. That is protection of freedom of the press (it’s an outright assault on freedom of the press), correcting the bargaining imbalance between platforms and news outlets (there’s nothing to bargain over, linking should plainly be a free activity), consideration of the diversity and needs of Canada (while slamming the door on both values respectively), and promoting a sustainable news ecosystem (with a bill that can easily be abused and siphon off money to pad CEO bonuses and venture capital firms all the while not even coming close to benefiting that news ecosystem). He then ended his opening remarks.
Questioning the Witnesses
Senator Leo Housakos began the questioning process, noting that Ripley and his department have provided a figure of $250 million of funds flowing from digital platforms to news businesses across the country. He asked how Ripley’s department arrived at that number and where the breakdown of that number would be distributed in the marketplace in Canada.
Ripley acknowledged that figure and said it was based on what they know right now. He said that it was based off of the Australian model as Senator Housakos noted. He said that the Australian model was valued at upwards of $200 million, so his department did a currency exchange calculation, noted that Canada is a slightly larger digital marketplace, make those corrections, and that’s how they got to the $250 million figure (that seems like an… extremely back of the napkin approach to the math here. I guess I can’t blame the department though as the framework isn’t even close to being implemented. Looks like he dodged the split in the marketplace, but general estimates we’ve seen is that 75% goes to the larger outlets while the smaller outlets get the remaining 25% of it.)
Senator Housakos then turned to Isabelle Ranger and noted that the United States can be finicky when they feel that other countries are being unfair to their industries. He noted that we’ve already heard from the Secretary of Trade from the United States concern about Bill C-11. He asked if Global Affairs has done a full analysis of the repercussions if what the US could do if both Bill C-11 and Bill C-18 was seen as discriminatory against digital companies. (This is a very big brewing problem that we’ve seen.)
Ranger replied that CUSMA does maintain a cultural exemption, so this provision is designed so that it doesn’t impair measures Canada can take for our cultural industries including in the online environment (Article 19.4 disagrees with that). This means that news media would be covered under this exemption. In the end, that exemption provides an option for any party to retaliate. It is their view that this bill is consistent with all of Canada’s international trade obligations including commitments under CUSMA. She can’t speculate what the US could do, but they believe that the option to retaliate does not apply. (This appears to be in reference to Article 32.6 of CUSMA. The relevant section for Bill C-18 is as follows:
Article 32.6: Cultural Industries
1. For the purposes of this Article, “cultural industry” means a person engaged in the following activities:
(a) the publication, distribution, or sale of books, magazines, periodicals or newspapers in print or machine readable form but not including the sole activity of printing or typesetting any of the foregoing;
[…]
2. This Agreement does not apply to a measure adopted or maintained by Canada with respect to a cultural industry, except as specifically provided in Article 2.4 (Treatment of Customs Duties) or Annex 15-D (Programming Services).
You have to actually read it a couple of times because, on the surface, this sounds like this applies to Bill C-18. It actually does not. Do news sites and newspapers qualify under that definition? Yes. Do platforms qualify under this provision? No. Facebook is primarily for communicating between individuals. Google is primarily a search engine. Do both happen to have cultural content communicated on their services? Yes. The problem is that if an industry can qualify under this provision because it happens to have culture in there, then anything could qualify. In that event, you could sell lawn furniture and qualify. I mean, you happen to have advertising with art (snipped out, but that’s there) and qualify. Anyone would look at that and say, “Uh, no, you sell lawn furniture.” If it doesn’t work there, then it doesn’t work here.)
Senator Julie Miville-Dechene asked about the enforcement side of things. She asked about whether or not publishers who haven’t gotten a deal yet will have a window of opportunity to bargain with Google and Facebook.
Ripley responded that the window of opportunity exists in the period of time before the legislation comes into force.
Senator Miville-Dechene said that if a media company is not part of a collective, does that company have that window of opportunity to bargain before the regulations are adopted?
Ripley responded that there is an exemption. They would be allowed to pursue bargaining.
Senator Rene Cormier asked if the media would have time to bargain, especially those in minority situations with respect to clause 11.
Ripley responded that the objective with clause 11 is to ensure that the framework includes the diversity of news businesses in Canada including news businesses that publish in French.
Senator Cormier said that when he’s talking about French media organizations, he’s talking about both those in minority situations outside of Quebec as well as those within Quebec. How can minorities be taken into account in these agreements?
Ripley responded by reading out a portion of the bill and saying that he thinks that there was a good attempt to reflect diversity.
Senator Cormier asked about clause 36 which relates to a report being sent to an auditor. He notes that it is about the total amount of value to be reported. He asked if this would include previous agreements that were struck.
Ripley asked for clarity of which clause he was noting.
Senator Cormier referred to a specific paragraph and asked about agreements that were struck beforehand.
Ripley responded that yes, they would be included in the reports.
Senator Andrew Cardozo asked what would happen if we didn’t do this act at all.
Ripley responded that without the bill, there are two things. There is a risk is that there is no guarantee that the deals, the current deals that have been negotiated, would continue (and with this bill, there is also a real risk that those deals won’t continue, so I don’t see the legislation making a difference on that one.) He said that the Australian model hasn’t been triggered, so they are looking to see what happens in the transition period. The second risk, he said, even if they were to continue, there would be no public interest framework guiding those agreements. (Kind of a pointless thing to worry about in my opinion.) So, he hopes that this framework would flow to a wide variety of businesses (it’s based on the Australian model, so that is unlikely from the get go.)
Senator Cardozo asked about what would happen if those agreements didn’t exist either.
Ripley responded by starting to answer, but then he pulled back and said that the goal of this bill is to put obligations on platforms to negotiate and secure deals. He said that platforms act as gateways and news businesses depend on them to distribute their news content and reach Canadian audiences. (Quite the admission to say that news outlets depend on platforms to reach audiences. It’s what we’ve been saying all along that publishers need platforms far more than platforms need publishers. This alone defeats the whole purpose of the bill.) He adds that the core of the bill is to put in place a revenue stream for news businesses in light of that unequal bargaining relationship with platforms. (Classic logical leap. We went from admitting that news publishers get something out of this relationship to suddenly that the publishers need to be compensated for getting free traffic. In a nutshell, the big media outlets want their cake and eat it too.)
Ripley continued by saying that from the governments perspective is that they are continuing to see an erosion of the Canadian news marketplace (not the platforms fault. In fact, they are backstopping the whole sector and slowing the erosion process) He says that staff cuts continue to happen, revenue has been dropping, and that news businesses have been hit hard. Their expectation would continue in the medium to short term. (Again, not the platforms fault here.)
Senator Cardozo then went to his other question about the model of the bill. He asked if other models had been considered. He noted that there has been talk about a fund or the other funds that already fund these journalism businesses. There were multiple funds that were listed. With those experiences, he said, did Ripley consider going that rout instead of this rout.
Ripley responded by saying that the government was quite transparent in considering two models. He said that he had a long engagement with the sector in 2021 (by my recollection, this engagement was largely behind closed doors.) In that questionnaire, stakeholders were asked about the government pursuing a model similar to Australia as well as a model similar to the broadcasting sector where platforms would be asked to pay into a fund to support news businesses. After that, the government said that it was going to pursue the bargaining framework like in Australia.
Ripley also noted that there is a third model which is a copyright based model. It’s the model seen in Europe where you give publishers a neighbouring right which allows them to pursue licensing agreements. The government then determined that the bargaining framework was the best model. The government sees this as complimentary to the other funds. This model may be important to smaller businesses who need that additional support (and I fully expect I’ll be excluded from that anyway.)
Senator Peter Harder commented that in pursuit of this model and possible retribution and potentially being offside various trade agreements, his understanding is that with platform agnosticism that the government is governed by, could Ripley expand on that concept and describe, if any, the conversations he’s had with non-Canadians. He thinks he has to think that this had to be a part of the decision making in choosing the model that he ultimately landed on.
Ripley responded that the framework was crafted in a way that respects all of our international trade obligations (the US disagrees with that). There’s nothing in Section 6 that speaks to the national origins of platforms (doesn’t have to), the criteria at Section 6 are neutral (and totally coincidental that they target American firms! Honest!) The debate today focuses on key platforms, but that can change over time (yeah, especially when Google and Facebook drops news links altogether. You’ll be forced to shop around other platforms who would be incredibly incentivized to just copy what the first two platforms did.) and Section 6 would be triggered regardless of national origin.
Ripley then said that the second point is that the beneficiaries of the bill are also able to be non-Canadian (it’s just harder for them to qualify as eligible as opposed to being based in Canada is all.) He said that for example, if the New York Times has a journalism footprint in Canada, they could be eligible. He said that the bill stands alone and doesn’t have to rely on the cultural industry exemption.
Senator Harder said that with the prohibition on sanctioned government, would he confirm that Russian Television would not be eligible on that basis.
Ripley responded that, indeed, there was an amendment made at the House of Commons, and the basis of that debate was grounded in the current conflict between Russia and Ukraine in concern that there are safeguards in place that even if you had an outlet like Russia Today that had a journalism footprint in Canada and could show that they meet the criteria that with sanctions, they would not be able to benefit. (I took a quick gander at the bill as I didn’t see this the last time I analyzed the bill and brought this up a couple of times as one of my concerns. Looking at the bill, I see Section 27 (3.1) and it actually looks like that this was finally addressed. Until today, I didn’t know this part of the bill was fixed, so I’m actually happy that this was fixed.)
Senator Harder said that we are now about two years into the Australian experience. He asked if there are any lessons learned that he would like to draw attention to both positive and unanticipated.
Ripley responded that one lesson is that the Australian model – the bill doesn’t actually apply unless a Minister designates you as being subject to the Act. With this bill, the Act will apply at all times. There’s no not having the Act apply.
The second piece, he added, is about transparency and there’s a number of places where this is found. In the Australian model, there are very little public interest frameworks that guides these decisions. That’s why they have Article 11. This is to reduce the politicization. This way, civil society and others all have a line of sight to the impact of the bill. This is not an element that exists in the Australian model.
Senator Pamela Wallin noted that there was no problem with the platforms carrying the news content of the organizations small and large in this country and links to them. That system was working. Parallel to that, revenues were down in both businesses and tech models of traditional media were out of date. Those two facts can exist in the same world. Can you force the platforms to keep these unsustainable business models alive in some constructed way even though the world is changing? Is there enough money there under the laws of the land to – and she’s not sure why you’d want to do that. Given what we saw in Australia, and we can get into the details, is that the big platforms can simply walk away and say ‘we’re not carrying it’. It’s such a small portion of their revenue generation. You’re really risking access to information here for all Canadian’s. (This is a big part of my criticisms towards Bill C-18 as well, actually.)
Ripley responded that the spirit of the bill (LOL!) is, in part, a competition response to a situation where, to Senator Wallin’s point, Canadian’s access to news has dramatically changed. The majority of Canadian’s now access their news through the internet. Many rely and navigate through social media and through search engines and others. The challenge has been on the impact of the advertising marketplace (not even close to Senator Wallin’s question), so the challenge is the news businesses are now reliant on the platforms to reach their audience. Many news businesses, not all, rely on advertising as a source of revenue for their business model.
So, the news businesses are competing with the platforms in the advertising market (two completely separate industries, dude.) The very entities they depend on are also competing against them in advertising (yes, this is becoming word salad at this point) and, for some, it gets worse because they own a good portion of the ad stack and the technology in the digital market advertising space (nothing’s stopping the media outlets from making their own. Just saying!) Even when advertising dollars are flowing to these businesses, the platforms are also taking a cut (the news businesses can also not take out advertising from Google Adsense. No bill required for that.) So, it puts news businesses in a very difficult spot (Dude, don’t think for a second that this is exclusively a news website “problem”.) So, the framework is about allowing fair negotiations.
Senator Wallin commented that the platforms tend to say that they don’t generate that much revenue off of news content (this is something I’ve seen as well) because viewers won’t want it. It’s such a small portion of the business that it’s hard to make the case that their advertising has killed the legacy media. The legacy media was in decline before the impact of that was there. She’s thinking about her local newspaper that recently closed. It really doesn’t have much to do with Google or Facebook. It has a lot to do with federal governments not advertising in the newspaper, there are other forms of communication that are online, the roles of the Post Office in local communities- you can’t really hang it all there and, again, it poses a risk as we’ve seen in Australia. The governments were forced to change their thinking about it because the platforms said that if you don’t want news for your local population, then we won’t give them news.
Ripley responded that the stress in the news sector is a combination of things. He said that it began with the advent of the Craig’s Lists of the world where it really took away the revenue source from the classifieds side. He said that he would argue that the impact of the platforms on advertising has also had a significant impact on the revenue model of news businesses (almost an admission that we are trying to solve a business issue with government intervention rather than figuring out how news businesses can be innovative, really) and that’s, in part, because the platforms models is a more effective way of packaging advertising and getting it through the scraping of personal information (not exclusively. There’s also the selling of personal information, creating market places, selling device subscriptions, and other sources of revenue) That is shown as a more effective way of advertising.
Riplet continued that that hasn’t taken away from the fact that this has had an impact on the business models of news businesses. They are seeking new business models that are less reliant on advertising. We are in a huge period of disruption (this has been going on for decades) and in the immediate and medium term, we as a country still face a question of how we are going to make sure that there are news businesses that cover our democratic institutions and processes (there are a multitude of online news sources out there that are innovating and are being successful that are trying to fill that role, actually).
Senator Wallin said that we did have a process for that. We are subsidizing what you deem to be eligible news businesses. It’s odd to her that- once a bill is a bill, the government has decided that it understands that there should be that the legacy approach to the industry is the model that should be supported when, as we see everywhere else in the world, things are changing.
Ripley responded that the governments view is that there are multiple interventions that are needed in this space and, as alluded to, the subsidies mentioned, not withstanding those interventions, we are continuing to see a decline in the news sector and so, this bill, he would characterize, as opposed to direct interventions with the various funding programs or indirect through tax credits, this is about putting in place a marketplace framework law that is to say that it is incumbent on digital platforms, if you occupy that place, then you negotiate.
Senator Donna Dasko noted that there was an effort in the other place (House of Commons I’m presuming) to exclude CBC/Radio Canada from being eligible – to be included in this bill. The CBC, she says, is a vital part of news online and offline and in both official languages. She asked if there is anything in this bill that can be used to exclude CBC/Radio Canada? Also, looking down the road, how might they, or any organization, be excluded in the future? Would that require an amendment to the bill? Would that be a directive to the CRTC? How might that happen in the future for CBC/Radio Canada or any organization?
Ripley responded, saying that CBC/Radio Canada would be eligible to bargain under the framework. There was a change in the ‘other place’ that puts an obligation on the CBC to report on how that money is being spent with respect to an agreement that has been put in place. There is nothing in the bill that could be used in the government or used by the regulator (presuming that’s the CRTC) to exclude CBC/Radio Canada from the framework. So, if that were to happen, it would require a legislative amendment.
Senator Dasko then said that in terms of eligibility, it has been said that some organizations may be eligible who actually don’t have a digital online presence, and she wondered if Ripley could clarify that. It would be hard to imagine how news organizations without a digital presence could be included in the bill because, of course, they would provide no value to the DNI’s if they don’t have an online presence. Would any of them be eligible to be included to be able to be in the process of negotiating with the platforms.
Ripley responded by saying that he would draw the distinction between the eligibility criteria in Section 27 would, theoretically, see an outlet who has no online presence could potentially meet those criteria- so he would make the distinction between being eligible and actually being able to benefit from the framework because the framework is about negotiating value for when news is made available and distributed online. So, if there is no online presence of an outlet even if they are theoretically eligible, there is no benefit that would flow to them from the framework. At the end of the day, if you were to go all the way to final offer arbitration and you look at the criteria, it’s about the value exchange between the platform and the news business and if there is no value exchange with no news on the platform.
(Uh, I looked at Section 27 of Bill C-18 and I see absolutely no reference to a news business having an exchange of value with the platform. Likewise, I also looked at Section 33 and also don’t see any reference to any of that. Section 38 says that an arbiter must take added value into account, but it doesn’t appear to be a requirement for final offer arbitration. So, I don’t believe the bill reflects what he says, here.)
Senator Dasko asked why any of these news organizations would be theoretically eligible in the first place. She says she doesn’t quite get it (she is very much right to not understand this. It’s nonsensical that a news organization with no online presence should be eligible in the first place.) Shouldn’t one of the elements that determines eligibility be defined as having an online news presence? Why would such a news organization be there in the first place? (I’m nodding enthusiastically with this idea.)
Ripley responded that, in practice, it’s a spectrum. (Uh, since when is it a spectrum of you are either online or you’re not?) Certainly, there are news businesses that have very advanced strategies with respect to online news and there are those with less (not what the Senator was asking. She was asking about outlets with zero online presence). So, it is a spectrum from very little presence online to fully digital business models with no more print circulation at all. He thinks that it is fair to say that there are those who are on the end of the spectrum that are very dependent on physical circulation do not stand to benefit, but the present is digital. We’re not arguing there is not going to be a continued role for physical circulation in certain instances and certain business models. Certainly, the trend is towards more digital, so as businesses move in that direction and as long as they meet the eligibility requirements, there’s potentially more value to be negotiated. (I’m struggling to see the logic here. I don’t see how a news business who might someday in the future be online should be demanding payments from platforms today. It makes no sense especially in light of the already bogus thinking that platforms are taking value from news businesses in the first place.)
Senator Dasko noted that the concept of fairness and fair remuneration is a basic principle in the bill. So, what exactly are the factors that go into creating fairness? Are we ever going to see waht those elements are in terms of existing deals? Will the CRTC have to come up with a way to deal with this in a practical sense – the weight given to various factors which are considered to reflect fairness?
Ripley responded that yes, the CRTC will have access to these agreements and, in fact, the CRTC will have to assess those agreements and ensure that they meet the criteria at Section 11. One of those criteria is if they provide for fair compensation for news businesses – content that is made available by the intermediary. Inherent in that is the assessment about when they look at the agreements – the agreements can be different and there will be different value exchange in them – but are there any indications that somebody is way out of the park and somebody is way on the other side of the park – and so they are going to have to do that assessment.
Senator Dasko had a question that ended in “what” but the rest was inaudible.
Ripley responded that, so the value exchange in place. For example, he expects that the committee will hear about concerns, particularly from smaller outlets, that if they get an agreement, they are worried about getting a nominal amount from platforms. ‘Here is your nominal check, now please go away.’ Section 11 is crafted is nicely to avoid the situation where you have certain (time ran out).
Senator Jim Quinn said that in the $215 million (thought it was $250 million for some reason) estimate to the industry, when he was speaking to one of the platform providers, they underscored that news businesses is a very small piece – it’s not a very significant piece. He asked if they had the estimates of exactly what that means in terms of increased advertisements because of providing that news. He’s just wondering with the $215 million, is there more analysis where it was based on because of platforms carrying the news.
Ripley responded that the $215 million is essentially an estimate where if the framework were to play out similarly to what we saw in Australia, then that is the value in the Canadian marketplace. That is what the $215 million represents. He acknowledge that he too has heard the platforms say ‘look, our business model is not dependent on news. We don’t derive value from news’. He would say that there is limited data publicly that they can analyze to understand whether that is the case (and instead, just put forward this bill on a guess and by golly on similarly thin evidence, good job.) We know, based on Comscore data, that a lot of Canadian’s use the platforms to access news and there is a lot of evidence that they are in that prominent type of position of being a gateway of news and information. (This completely ignores the fact that news is not a make or break aspect of platforms for most users. People use platforms for multiple reasons and news is never the top reason. If news is pulled from the platforms, their entire user base is not going to up and leave.) We acknowledge, and we can certainly debate the financial benefits, but the way that Canadian’s use these platforms is to access the news. That is more by the data (Over and over again, this is always the result of data cherry picking.)
Senator Quinn asked that, based on the Australian model, is there any evidence that shows that the introduction of the approach in Australia has had an impact with what the consumers had to pay for those platform services?
Ripley responded with the comment that not that he is aware of.
Senator Housakos went back to the $215 million number. What percentage of that number is coming from Google and Facebook and what happens if the opt out? Then what happens to that projected $215 million? Part of this bill, the intended objective is to disinformation. Can Ripley define how that would work?
Ripley responded that on the percentage of Google and Facebook, it’s based on the Australian model. They haven’t heard formal evidence, but what they heard informally is that approximately two thirds came from Google and a third from Facebook. That’s anecdotally what they heard. Take that as you will on the impact on the $215 million (basically all of it from the sounds of things). If one of those platforms were to exit the news marketplace, the value would decrease if the bill were to no longer apply to them because they are no longer in the business of making news available. Ripley asked what the last question was.
Senator Housakos reiterated the question about disinformation. How would Ripley define that and how that would work.
Ripley responded that it boils down to this bieng about securing sustainable revenue streams for news businesses who are in the business of professional news – of subscribing to codes of journalism and ethics. So, it’s about ensuring that the news market has reliable sources of information for Canadians to turn to. (I have to admit, I’m not familiar with provisions in Bill C-18 that deals with misinformation or disinformation. A simple word search of either turns up no results in the text of the bill itself. I suspect those fears are an accidental spillover from the online harms proposal which is definitely a cause for concern, but I don’t believe this is something found in Bill C-18.)
Senator Cormier went to Section 32 and asked if a news organization has one agreement, then would they still have to file with the CRTC.
Ripley responded that, in practical terms, yes. They have to meet the requirements in Section 11.
Senator Miville-Dechene noted that the House of Commons has broadened the scope of the bill by covering over 700 media companies and there are small media groups such as university businesses that don’t really have a monetary value. So, isn’t there some hypocrisy with that? Yes, we need to fund community media, but you talked about the value in the bill, but there’s no value that is attached to these particular outfits unless she’s mistaken.
Ripley responded that it’s clear that there are digital models for very small media outlets. It’s connected to the distribution of news. So, it’s not just to say that all small businesses don’t have any value. He thinks we have very good examples of small businesses where their entire value is done online.
Senator Mivile-Dechene said that she’s talking more about the legacy community news outlets.
Ripley responded that it’s going to be a challenge for them. Clearly, they are given an important tool in that they are able to bargain collectively, but the decision made by the arbiter is based on value, so it is based on value.
Senator Cardozo said that one of the criticisms of the bill is that it gives the CRTC or government too much power to decide who is in and who is out. Could he get his thoughts on that? (It’s one of the points that makes the bill unconstitutional, actually.) His other question is does the CRTC, in Ripley’s view, have the capacity and the expertise to play the role that they are assigning to it? (No it doesn’t. No regulator does because, like Bill C-11, we are talking about regulating the internet which is a fools errand.)
Ripley responded that on the first question, the CRTC- the criteria of Section 27 for eligibility have been broadened. It includes a very significant chunk of the news sector now between those that have QGCO status, those that meet the criteria of subsection B, license community and indigenous broadcasters, and indigenous outlets. There is a lot of scope for the news businesses to come forward and bargain. The government has always been clear that, at the end of the day, Section 11 requires a significant investment in the marketplace, but it is also not a guarantee that every single news business is going to get an agreement. That’s not the objective of the Act and that’s not what it sets out to do (so, unconstitutional then. Got it.)
Ripley said that, on his second question, the government believes that the CRTC has the capacity and is is the right regulator to do this. This is a very different framework from the Broadcasting Act or the Telecom Act. The CRTC is in the position to be a proactive regulator. This is about, at the end of the day, oversight and overseeing that final offer arbitration framework if it were to come to pass. On that, they actually have some of the best experience given that they do very similar functions of broadcasting.
With that, Housakos ended the hearing.
Concluding Thoughts
There’s a lot of takeaways from this hearing. One point that I think is worth repeating here is the admission that if Google and Facebook were to pull out of offering news links in Canada, then Bill C-18 would no longer apply. This has been a fact that I’ve personally know, and a fact other observers have known, for quite a while. So, this hearing shows that the government also knows this as well. So, everyone knows that the platforms are truly in the drivers seat when it comes to whether or not this bill starts extracting funds or not. They can, and have every reason to, block news links and ultimately cut off the big publishing organizations from all that sweet sweet internet traffic.
Another takeaway here is something I didn’t expect. In the Bill C-11 hearings, they were pretty much useless and constantly just repeating that Bill C-11 is in compliance with all of Canada’s international trade obligations without really explaining how in the face of all of the criticisms. They also downplayed the looming threats of trade retaliation. So, when it came to this hearing on Bill C-18, I didn’t have much in the way of expectations. It seems, however, that they used the last several months trying to dig up a reason as to why Bill C-18 is in compliance with all of Canada’s trade obligation. Specifically, it’s this idea that the culture exemption means they can do anything they like.
So, when I was looking into this, it was actually kind of exciting because we finally see a novel argument in support of the legislation. So, I ended up spending several minutes pouring through CUSMA and critically thinking about the section in question. What I ended up finding, in the end, is that their argument is ultimately flawed because you are trying to twist the cultural exemption to apply to web services that have more to do with the technology sector rather than the distribution of newspapers and magazines. So, Global Affairs is plainly wrong, but the argument did, for once, challenge my thinking on how the legislation works. Something that was kind of interesting at least, so I’ll give props for Global Affairs for the interesting attempt to defend the bill even though it didn’t work out for them.
Now, I couldn’t really say the same thing for Ripley who’s talking points were quite easily debunked. The only exception to that is the issue surrounding sources of sanctioned nations. I didn’t know that this issue was actually fixed in the bill, so I did learn something new that actually calms one of my fears about the bill. At the end of the day, it extinguished a single fire in the midst of a massive forest fire, but at the same time, it’s hard to have any positive expectations for this bill in the first place.
Ultimately, while there was some interesting points in these hearings, not a lot was really done to move the needle on this debate in the end. There’s still that logical leap that the news industry derives a benefit from the platforms for the presence of their links, therefore they should be paid for receiving that benefit – which is completely senseless. Another issue is the threat of international trade retaliation which hasn’t really changed here. What’s more is that there was nothing to really convince anyone that smaller players won’t get completely screwed over in all of this. We ultimately have a system that is meant to benefit the biggest players – and more particularly, pad CEO pay bonuses and revenue at large equity firms. All this while offering very little benefit to journalism as a whole.
We’ll continue on with the next hearing as these debates are generally interesting to follow and a good way to gauge different perspectives on the bill. You never know for sure what you’ll encounter. Even we were surprised with a few things and this was only the first hearing. Stay tuned for more.
Drew Wilson on Twitter: @icecube85 and Facebook.
