US Publishers Are Pushing to Repeat Canada’s Link Tax Mistake

American publishers have apparently decided they want a piece of that link tax failure Canadian publishers have experienced.

There is no question that Canada’s link tax (also known as the Online News Act) has been a complete and total failure. Meta ended an estimated $230 million for publishers by dropping news links in Canada. Media companies both small and large suffered the consequences of the large media companies actions. When Google was heading for the exits, the Canadian government ended up folding, offering their originally asked for $100 million fund model in exchange for killing off the link tax entirely. To pour salt on the wound, the value wasn’t even new money as existing deals already made got rolled into that figure in the first place.

Internationally speaking, other countries should be looking at Canada and realizing that link tax laws are going to backfire. This especially after Meta ended its news tab for both US and Australian readers. The signs have been around a long time that Meta is moving away from news and link taxes will only hasten those moves. Another development is that Australia has said that it would not be renewing their deals with Australian publishers. Even in countries where link taxes were seen as a success are now heading in the direction of total failure. So, what more could you ask for to say that link taxes are only a sure fire way to kick media companies out of the digital revolution?

Well, as it turns out, US publishers are seemingly not taking these massively obvious hints to not move forward with these link taxes and have, instead, been pushing for lawmakers in the US to double down on this. I know, “the stupid, it burns!”

An article on Inside Radio suggests that publishers are simply doubling down on their lies about link taxes. The lies closely mirror the same lies we’ve seen in Canada. case in point, the first two paragraphs:

Chances are “pretty good” that Google’s precedent-setting decision in December to compensate Canadian news sites $100 million for the use of their content could translate into billions of dollars in payouts to local news sites in the U.S. So says Conan Gallaty, Chairman & CEO of the Tampa Bay Times and Times Publishing Co, who predicts that U.S. news organizations could receive an $11 billion windfall a year if the bill passes.

“If you are in the local news business, the chances of a windfall – and a continued windfall because it wouldn’t just be a one-year payment, it would be an ongoing payment – those chances are building by the day. There’s a lot of strong momentum,” he said Tuesday at Borrell Miami.

It should go without saying that this is a lie. If you followed even a tiny fraction of the link tax debate in Canada, you’re reaction should be somewhere along the lines of “I can’t believe that was said with the expectation that people would believe that.” It is well known that in Australia, News Corp received a lions share of the revenue. In Canada, the CBC was poised to get a third of that money ($33 million) until the government capped that value to $7 million after the controversy was raised over why a publicly funded broadcaster was hoovering up such a huge chunk of the pie. Other large entities like Bell and Rogers ended up hoovering up huge portions of that, leaving smaller players with little to nothing afterwards.

The thing with this is that supporters have said throughout the entire Online News Act debate that the bill was about supporting the smaller players. They screamed until they were blue in the face that the larger players were already satisfied with the deals and that this bill was about bringing the smaller players on board. It was already highly suspicious that the larger players were making that argument and, unsurprisingly, the smaller players largely got left out in the end.

Yet, the large publishers in the US are repeating this exact same lie thinking that it would lend them any sort of credibility. This talking point that this is about smaller publishers getting compensated should be dismissed as an outright fabrication altogether given the global precedent. Seriously, large media companies aren’t making these arguments because they are being charitable to their smaller competitors.

What’s more, the math is downright comical:

The projected $11 billion payout to qualifying news organization is based on market value. Research conducted in 2023 by Columbia University pegged the value of the overall aggregate lift a platform like Google receives in additional engagement from search on news-related topics at $22 billion per year. In other words, without quality news content from the entire news ecosystem, Google would have made $22 billion less. A 50-50 revenue split with Google would direct $11 billion to the U.S. news each year.

This is the same laughable argument that was used in Canada. The argument made by Big Publishing in Canada was that platforms like Meta and Google depended entirely on news content for their success. With Meta’s pullout and subsequently not experiencing even a dent in traffic, this talking point was essentially proven to be false. What’s more, if Meta ultimately pulls news links from the US (which is very likely), the value would be completely undercut. In fact, it will likely be the same thing in the US where Meta dropping news links would force publishers to operate at a loss in the end.

NiemanLab was recently asked to write a paper on what would happen if the US link taxes were implemented. They concluded that it would cause far more harm than good:

The California Journalism Preservation Act (CJPA) — like its federal cousin, the Journalism Competition and Preservation Act (JCPA) — is the latest in a century’s attempts by the newspaper industry to diminish fair use and extend copyright for the benefit of publishers against competitors.

Both bills are championed by the News Media Alliance, trade association and lobbyist for the newspaper and now magazine industries. They aim to force large internet platforms — namely Google and Meta — to “negotiate” with news publishers and submit to arbitration for the right to link to and thus quote headlines. JCPA would grant publishers an exemption from antitrust to form a cartel. CJPA would require negotiation and payment based on the number of links to a news site.

These bills are descendants of similar legislation in other countries, starting with Germany’s 2013 ancillary copyright, Spain’s link tax of 2015, the EU’s Copyright Directive of 2019, Australia’s bargaining code of 2020, and most recently Canada’s C-18, which resulted in Meta pulling all news, links to news, and payments to news organizations out of the country. Meta has said that if CJPA passes, it will do the same in California, leaving just one company — Google — held responsible for support of the entire news industry. Google agreed to pay Canadian publishers $73 million but as Jeff Elgie, founder of Village Media, concludes, “Keep your damn money and give us the Facebook traffic back.”

Recently, the California Chamber of Commerce commissioned me to write a paper in which I analyze the legislation and propose alternatives. All these laws are predicated on the publishers’ contention that linking to and quoting news is theft. In the paper I argue the opposite: that links benefit publishers by helping audiences discover news content; it is free promotion. All these laws exclude any consideration of the value of platforms’ links to publishers. This is not negotiation in good faith.

The article and linked to paper are worth the read. It basically picks apart many of the talking points pushed by Big Publishing such as the false talking point about how platforms are solely responsible for the decline of the media in the US. It also notes, among other things, that it is hedge funds that stand to benefit the most from such laws instead of news outlets and how both the CJPA and JCPA violate copyright law. The article also recommends tax incentives that actually support journalism if government wishes to better support journalism. It is controversial that the government is funding journalism in the first place, but it’s a heck of a lot better than a link tax law.

The fact that we’ve witnessed the failure of link taxes in Canada and are witnessing the impending failure of link taxes in Australia and we are seeing US publishers respond by saying “We want a piece of that!” is just insane. It makes you wonder just how intent they are at burying their own businesses. The thing is, in all likelihood, those running these large media companies are just going to watch their business fail. Then, as the ship sinks, they can just grab their golden parachute, jump out the window, and sail on to the next business they intend on running into the ground. The people working on making these news organizations a success are the ones that will end up paying the price for these mistakes.

As the saying in the US goes, those in the top are just going to “fail upward” afterwards. It’s Probably a reason why they are willing to gamble away other people’s careers like this. Those executives won’t experience the consequences of their actions. They’ll just roll the dice in the hopes that third time is the charm with these horrible link tax laws. If they come up short, well, it’s not their problem, now is it?

(NiemanLab link via @Pagmenzies)

Drew Wilson on Mastodon, Twitter and Facebook.

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