Publishers and platforms split between rev sharing options, delaying next steps

The Department of Canadian Heritage released the findings of its discussions with the industry on how to level the playing field between digital players and local news media.

Following in the footsteps of nations like Australia and France, the Department of Canadian Heritage is still exploring made-in-Canada revenue sharing models to ensure that digital platforms contribute to a healthy and sustainable local news ecosystem.

This week, after reviewing 46 written submissions from a range of stakeholders on how digital revenues could be shared fairly with Canadian news media, the government released its findings. The discussions revealed important policy considerations, however, it appears the jury is still out on which model it intends to pursue.

While a large majority stressed the importance of addressing declining news revenues and the imbalance in bargaining power, the publishers, broadcasters, platforms, academics, unions, and journalist associations that participated in the survey were split down the middle as to how to move forward.

“No consensus emerged about the preferred way for the Government to address this issue, and the responses received regarding the two revenue sharing models were polarized,” stated Canadian Heritage in the report.

On the one hand, many preferred the “mandatory code and arbitration regime” model – which has been implemented in Australia – in that it would balance “the negotiating power between digital platforms and news outlets, that it would provide greater transparency in data and algorithm changes, and that it could be implemented sooner,” according to the organization. Those respondents also believe arbitration would “force digital platforms to negotiate with news outlets in good faith.”

On the other hand, many opted for the “mandatory financial contributions from platforms distributed by an independent fund” model. It would, presumably, prevent favouring larger, more established news media over smaller outlets – a potential consequence if the first model was to be adopted, the report states. The thinking is that a set independent fund would “treat all organizations fairly based on their size, that the funding may be easier to access for smaller news outlets or underrepresented groups, and that it may improve the funding of news outlets.”

However, according to the report a fund model may not result in addressing the imbalance of power, nor it would provide regulatory tools to improve news media’s negotiating power. That’s one of the reasons Paul Deegan, president and CEO of News Media Canada, is not in favour of the fund, instead recommending the first model whereby publishers would be able to collectively negotiate with platforms.

“Right now, under competition law, we cannot negotiate collectively as publishers with Google and Facebook. So we need a change to the Competition Act. That would facilitate this,” he told Media in Canada. “Publishers will get a better deal and will be stronger if we negotiate collectively rather than a one-off approach, or a government fund where there’s uncertainty as to who’s picking the winners and losers.”

Deegan says that many of the smaller community news organizations that he’s been in talks with haven’t been given enough attention from the platforms. “Some of the larger publications have already signed deals in recent weeks and months with the platforms, but the smaller folks, they’re not getting phone calls from big tech,” he says, adding that he believes that if they are a part of a bigger collective negotiation it would “lift all boats, large and small.”

Sarah Thompson, CSO at Theo (formerly CSO at Mindshare), lauded The Ministry of Heritage for its actions so far and the dialogue it’s sparked to find a solution to “something that holds together our very social fabric of society” – which she believes the media industry should be participating more in.

She says Mindshare and GroupM have attempted to create a sustainable media environment by having these conversations, setting up private marketplaces for local media and, now, working as part of a cross-agency media team for the Canadian Media Director’s Council (CMDC), looking for solutions to invest in local and community news.

Adding to that, Deegan pointed to News Media’s own self-serve Maple Network Exchange (MNE), which was created in 2020 to offer inventory to marketers and governments directly from an alliance of Canadian publishers, such as Black Press Media, Brunswick News, Glacier Media, The Globe and Mail, La Presse, and Metroland Media. “What it does is it basically allows [advertisers] to get more bang for their buck. At the same time it helps Canada’s news publishers. So we see that that is a real win-win,” says Deegan.

“The complete decimation of local news in Canada is a complex one for a few reasons,” adds Thompson. “The research that we used to decide on audience planning for media is very urban-centric and not as diverse of a panel, the infrastructure of most local and communication media outlets was not built for the performance media strategies implemented today, and the media products created did not keep up with the expectations of brands.”

While there may not be a clear-cut solution, Thompson believes it’s important that the industry collectively commits to an understanding of what’s at risk and how to rebuild news in Canada – because local news media is running out of time.

“From a publisher perspective, this is urgent. Advertising has been in a singular decline as it is, and then you compound that with the impact of COVID on all sorts of businesses, and therefore on their advertising dollars,” says Deegan. “There’s been a lot of consultation, there’s been a lot of study, what we need now is legislation.”