The news community received with great astonishment, if not amazement, the Parliamentary Budget Officer’s (PBO) assessment of the revenue the media should derive from the Online News Act, which is adoption in Ottawa.
This law aims to force web giants that earn revenue by publishing journalistic content to enter into agreements with Canadian news companies to share part of their revenue with them.
In a document titled “Estimated Costs of Bill C-18: Online News Act,” released Thursday, the PBO writes that “we expect news organizations to receive in total from digital platforms a compensation of approximately $329.2 million per year” under the agreements that will be concluded with the web giants.
surprise in the middle
Never had such an amount been mentioned before, underlines Professor Jean-Hugues Roy, of the UQAM School of Media, one of the rare experts to have looked into the income that the giants of the web derive specifically from journalistic content.
“I was surprised, honestly, when I saw that amount. Pleasantly surprised, but still surprised,” he admits.
For a few years, he has been looking at data from Facebook (Meta), which allows this kind of extrapolation. “I tried to estimate how much money Facebook could earn from journalistic content on its platform and I always arrived, year after year, at around $200 million a year for the past few years. »
By 2021, using data from blog posts by Canadian Google executives, he had managed to come to the conclusion that together Google and Facebook were making $280 million from Canadian journalistic content.
Assuming that this data was conservative and adding in revenues from journalistic content from other digital platforms and arriving at the PBO’s $329.2 million, it is when even there of the total, notes Professor Roy.
“We are talking here about the money that these companies make, thanks to journalism. It’s not 100% of that in my mind that needs to be returned. It is a negotiating position. If the web giants return half of it to press companies, for me it’s already big. But that would mean between $100 and $150 million a year and the PBO comes up with double that and even more than double that. I’m a little surprised, ”he repeats, incredulous, on the phone.
Calculation based on expenses
However, the PBO uses a calculation method that is surprising to say the least. Indeed, his document states that “we assume that annual payments to news organizations will be 30% of the cost of content creation” of information by broadcasters, television broadcasters, news organizations, magazines and other producers. information recognized by Ottawa.
Thus, the DPB document takes no account of the income that the web giants derive from journalistic content, but rather of what it costs news companies to produce journalistic content.
Parliamentary Budget Officer Yves Giroux was not available for an interview, but The Canadian Press was still able to obtain informal explanations from his office on this approach.
Thus, the amount of $329.2 million represents this 30% of the cost of production, a total cost therefore of nearly $1.1 billion, the details of which cannot be obtained because, although some of this information concerning the cost of news production are public in nature, as is the case with television, others are confidential.
The Australian model
And this decision to calculate not from the revenues of the web giants, but from the production costs of news companies, comes from the Australian model, the only reference that comes close to the Canadian model. Although the deals between digital platforms and Australian news media are confidential, the PBO concludes, after consultation with Australian experts, that the deals earn Australian news producers over A$200 million, or more than 20% of their production costs, although it is recognized that these are approximations.
In Canada, the PBO’s consultations with industry, Heritage Canada and the Canadian Radio-television and Telecommunications Commission (CRTC), led it to estimate this rate of return at the 30% mentioned above.
It should be mentioned that the main objective of the PBO’s document was not to estimate revenues for the media, but rather, as its title indicates, the costs for the CRTC and Canadian Heritage, which will be responsible for implementation and enforcement of the law. This calculation, which is much less theoretical, mainly involves hiring staff and indicates that it will cost the CRTC $3.2 million in the first year, an amount that will reach $5.8 million in year five, whereas these sums will be $2.1 million and $2.3 million respectively for Canadian Heritage.
Fear for government aid
Jean-Hugues Roy does not hide his fears about the consequences of such an optimistic estimate, recalling that the financial assistance offered by Quebec and Ottawa, in particular payroll tax credits, to help the media get through the crisis of the massive loss of advertising revenue swallowed up by the web giants, will expire in 2024.
“If this mechanism comes into effect, will it replace tax credits? The sum is so significant that I fear that it will give the government an idea to abolish them, if it now sees such a formidable source of revenue. »
Especially, he adds, that such an amount, as impressive as it is, would not compensate for the loss of tax credits.
“Ottawa and Quebec together, that’s more than half the salary of a journalist who is currently paid through tax credits. If we abolish tax credits and web revenues would represent 30% of news production costs, that wouldn’t compensate. It has to be complementary and even then, 30% seems like a lot to me. I have seen figures from certain press companies that have agreements with these web giants. We are far from 30% in these agreements, ”he underlines.
The agreements between the news media and the web giants are currently being negotiated and will, for the most part, be confidential. It will therefore be impossible to know whether the PBO’s assessment was realistic. Only time will tell which new businesses will flourish and which will wither, despite government assistance and Bill C-18.