Ottawa’s plan to force digital giants to pay for news is doomed

image: Search Engine Journal

You might have missed it in the recent Throne Speech but the federal government intends to tax the digital giants Facebook and Google (FG).

The feds are reacting to complaints by newspapers that FG steals their news and profits from it.

That would be a legitimate complaint if newspapers didn’t give their content away in the first place. They do so to attract readers to their sites where readers will be exposed to advertising and hopefully subscribe.

If newspapers didn’t want you to see their product online, they wouldn’t put it there.

The business model for newspapers like the Globe and Mail operates on paid subscriptions and advertising. Obviously, they can’t afford to give away news that subscribers pay for, so they give away content selectively.

That being the case, the owners of the Globe and Mail were being disingenuous when they took out full page ads in May complaining that FG steals their content and makes money from the links.

If the Globe and Mail didn’t want FG to share content, they wouldn’t ask readers to “share this” on Facebook and they wouldn’t optimize their content so as to be found on Google searches.

Newspaper owners can’t promote sharing on FG and then complain when they do.

Globe and Mail columnist Andrew Coyne took issue with the owners of his newspaper:

“Indeed, most of the industry’s traffic these days, millions of readers and billions of page views annually, comes to us from Facebook and Google. Those readers are worth hundreds of millions of dollars to us annually. It would probably cost us a good chunk of that to find and attract them on our own. Facebook and Google send them to us … at no charge (September 19, 2020).”

Not all media are selective in what they share. CFJC Today places columns such as this one (please share it), and news online.

FG’s business model is quite different. They take content that others create and place ads on it. But, again, FG is not stealing content. People happily post pictures of cats and links like to the ludicrous far-right conspiracy theory QAnon which alleges a cabal of Satan-worshiping pedophiles is running a global child sex-trafficking ring and plotting against President Donald Trump.

The speech from the Throne was vague:

“Web giants are taking Canadians’ money while imposing their own priorities. Things must change and will change.”

But Heritage Minister Steven Guilbeault was clear when he said: “the Canadian government stands with our Australian partners and denounces any form of threats.”

Guilbeault was referring to Australia’s proposed law which would force FG to hand money over to media when users click on links to the media source that created the content, a so-called “link tax.”

But Facebook would simply deleting the links to avoid the tax. A Facebook spokesperson said:

 “This is not our first choice – it is our last. But it is the only way to protect against an outcome that defies logic and will hurt, not help, the long-term vibrancy of Australia’s news and media sector.”

Ottawa’s plan to force digital giants to pay for links will backfire. Link taxation will mean that FG will stop sharing the content that legitimate media produce. The news vacuum so created will drive readers to fake news sites.

Is that really what the feds want?

No internet tax for Canadian media

I agree with Conservatives who reject an internet tax to support Canadian media but for different reasons.

    Heritage Minister Melanie Joly. Image: Huffington Post

Conservatives reject taxes do so because they reject government intervention in what they see as a commercial enterprise. If media corporations can’t stand on their own without support from taxpayers, then they should fall.

But media are not only an enterprise; they are reflection of who we are and necessary for an informed citizenry. The goal of all legitimate media is to report unfiltered news and if my taxes go towards achieving that end, then it’s money well spent.

Use of an internet tax to support Canadian media is controversial. Politicians who are normally on opposite sides of the issue agree on this one. Two lobby groups that I support are on opposite sides. The Friends of Canadian Broadcasting supports the internet tax. Open Media rejects it.

A parliamentary committee recently recommended the internet tax, which Prime Minster Trudeau promptly rejected. The recommendations weren’t even unanimously supported among committee members. Predictably, Conservatives rejected the tax and some Liberals supported it. Prime Minister Trudeau sided with the Conservatives (again, for different reasons).

Before decided which side you’re on, it’s useful to know what it is. It’s a tax on streaming content over the internet as opposed to a tax on cable or satellite content, or over-the-air broadcasting.

What it’s called is determined by which side you’re on. Opponents call it a Netflix tax. “Applying the 5-per-cent levy to broadband distribution, that’s a Netflix tax,” said Conservative committee member Peter Van Loan. “Efforts to turn back the clock to an earlier era are doomed to failure.”

Prof. Michael Geist agrees with Van Loan but doesn’t find it necessary to call it a Netflix tax. It’s an internet tax because it applies to all internet content and as such, it’s a bad idea. Geist, a law professor and Canada Research Chair in Internet and E-commerce Law, sees the internet as more than a source Canadian content:

“A taxation system such as the one used for cable and satellite companies is highly inappropriate given the Internet’s importance for communication, electronic commerce, Web banking, education and tele-health. Given its integral role in virtually every aspect of modern life, it is wrong to treat network access as little more than an ATM for the cultural sector.”

Geist points also points out that such a tax is inconsistent with the Broadcasting Act because internet providers are not “broadcast undertakings” under the act.

Trudeau took the line that he was protecting the middle class: “We’re not going to be raising taxes on the middle class through an Internet broadband tax. That is not an idea we are taking on.”

Canadian media deserves support. Open Media suggests that the proceeds from the sale of cell phone wireless spectrum could go to Canadian content. Tax revenue should be used to support public and private broadcasters as suggested by Friends of Canadian Broadcasting. Small market broadcasters like CFJC in Kamloops should continue to receive funding from the CRTC.

Canadians pay one of the highest internet rates in the world. The best way to support Canadian media is to ensure that Canadians have an affordable, high speed internet where innovators can create content.