The compensation of journalistic sources by intermediaries or digital platforms (Meta, Google and others) has become an object of explicit litigation in Canada since the adoption of the Online News Act. The law seeks fair compensation for news companies and the sustainable viability of the Canadian news market and applies only to dominant intermediaries enjoying unbalanced bargaining power. The law leaves the parties the latitude to negotiate the amount of compensation depending on “the nature of the content and the way in which it is made available by the intermediaries”.
Bill C-18 is misguided.
To fully understand the issues, we need to consider four elements: the notion of information goods, the business model of newspapers and digital platforms, the tax revenues generated by digital platforms, and the potential sources of compensation for sources journalists. In light of these elements, the current conflict is somewhat unrealistic, even unnecessarily amplified.
The concept of information good. Journalistic goods (news, chronicles, op-eds, photos, etc.) are expensive to produce, but can be disseminated at zero cost and consumed by all without the good being affected. In these circumstances, the maximum dissemination of information goods is desirable, therefore at zero cost. It is still necessary that the creators/producers be compensated for their work, and this, at the competitive value of their creation/production.
Considering that eligible journalistic sources are information goods in the economic sense of the term, the Canadian government, as an agent of citizen news consumers, must assume a leading role in compensating for the competitive or commercial value of the journalistic sources in question. .
Business models. The business model of news organizations is essentially to require a contribution (subscription) from their readers and/or to sell their readers to companies wishing to enter into contact with them. This is the dominant business model in the journalistic world and the digital platforms on which journalistic content appears. A major challenge for traditional news outlets is that these digital platforms have developed a much more successful model of selling their readership. A company wishing to reach a public on the South Shore of Montreal interested in buying a car at the beginning of the year can do so much more easily and efficiently by buying advertising on digital platforms than in traditional press. This competition makes life particularly difficult for newspapers.
Tax receipts generated by companies, including digital platforms. We often hear that companies do not pay their fair share of taxes. To some extent, this is a matter of accounting perspective. Consider taxes generated rather than paid.
The digital platforms Alphabet-Google, Meta-Facebook, Apple and Microsoft generate tax inputs paid by their employees (income taxes and consumption taxes), which would have reached some 50 billion US dollars worldwide in 2022, not to mention the taxes and duties paid by their shareholders and lenders.
A preliminary estimate suggests that these digital platforms would have generated in Canada in 2022 tax inflows of around $2 billion. If Canadian governments devoted 10% of this amount to compensating eligible journalistic sources, the amount paid would be in the order of 200 million Canadian dollars. Would this be sufficient to cover the competitive value of the journalistic sources in question? Impossible to answer this question before proceeding to the evaluation of this competitive value. But it would be the beginning of a way out of the crisis.
A solution. Compensation for journalistic sources could more generally be provided through a combination of subscriptions, sale of advertising, contributions paid by various stakeholders, including digital platforms and governments (on behalf of citizen-readers). These various stakeholders could be held jointly responsible for financially compensating journalistic sources beyond subscriptions and advertisements. In the spirit of Online News Actthese latter contributions could be a function of the profits that each party makes.
The government (or all of the governments benefiting from the tax revenues generated) could even act as a major stakeholder in the compensation process. It could compensate the different eligible journalistic sources at their respective competitive value and demand fair reimbursement from other jointly liable stakeholders. This formula already exists in other sectors.
These are not subsidies, but rather contributions to cover the competitive value of journalistic sources whose maximum dissemination (therefore at zero cost to readers) is in accordance with the economic principles of efficient allocation of resources in terms of goods. of information.
Would this be enough to offset the contributions of journalistic sources to their competitive value? It would take more time and resources to adequately answer this question. But that would already be a start.
If Canadian governments assumed their responsibilities in this area, it might be easier to convince other stakeholders to participate and contribute on behalf of their client-readers.