Canada’s Approach to Saving the News Industry

It’s tough times for the news industry, with revenues slumping and the number of journalists and newspapers alike shrinking by the day. A report from the Medill School of Journalism last year found that up to 2.5 newspapers were closing each week in 2023, with the US having lost a whopping 2,900 newspapers and 43,000 journalists since 2005. Concerns are growing, meanwhile, over the impact of these losses on the health of democracy in the US and abroad. Looking to shore up its own ailing news industry, lawmakers in Canada passed Bill C-18 in June of last year. Also known as the Online News Act, the bill requires large tech platforms to pay news outlets for the content they carry. Ryan Adam is vice president of Government and Public Affairs at the Toronto Star and helped craft some of the language in the bill. Previously he was a former public policy advisor to Prime Minister Justin Trudeau. He spoke to EMS about the law and similar efforts in California and the US.

How would you compare the Canadian media sector with its counterpart in the US?

Content wise, I would say the coverage topics are about the same but there are some differences in other aspects. Within newsrooms and the journalism profession, to us, a journalist is a journalist, regardless of ethnic background and media platform, be it Spanish or English language media. A South Asian descent reporter could be assigned to cover City Hall or a French speaking Quebecoise could be asked to do a story in Chinatown. Audience wise, I think Canadians are more skeptical readers. They don’t believe in all the published news and information out there. And they’re also less tribalistic and ideological. We have a strong culture of embracing diversity.

Ethnic media in the US continue to fight for a seat at the table, while in Canada the ethnic and indigenous media sectors were at the table right from the start of discussions over this law. How do you explain the difference?

Canada has two official languages: English and French. Although English is more widely spoken, we all recognized the importance of French language and culture, especially to residents in the Quebec region. We also have a sizable indigenous population and immigrants from around the world. So, a person can freely speak French, Chinese, or Hindi at home and in public spaces according to personal preferences. But the key thing is everybody sees themselves as Canadians. For these reasons, diversity and equity are not only baked into Canadian culture but also required by law. So, it actually would have been odd for us to not have ethnic and indigenous media at the table from the beginning when we debated the features of Bill C-18.

Help us unpack the law. What does it do and why?

Bill C-18 is the Online News Act passed in 2023. It’s a media law inspired by Australia’s success with its The Treasury Laws Amendment Act of 2021, dubbed as the News Media and Digital Platforms Mandatory Bargaining Code. This code, the first of its kind, compels digital platforms like Google and Meta to come to the bargaining table with Australian news publishers to work out fair compensation arrangements. To date, a number of deals were struck, through which the online platforms have compensated qualified news outlets an estimated $200 million Australian.

Like the 2021 Australian bargaining code, the primary purpose of Canada’s 2023 C-18 bill is to regulate and require online platforms to negotiate with news publishers for fair compensation. While Meta has decided to not participate by blocking all news content from its Facebook platform in Canada, Google has agreed to provide a flat sum of C$100 million a year and instead of using online traffic metrics, the distribution is based on the headcount of journalists. This works out to about C$20,000 per qualified full-time reporter. 

The Canadian government also provides journalism subsidies and tax credits, right?

Both the government and public realize that journalism is essential for promoting democracy by keeping the public informed, not in the dark. And everyone also recognizes that it costs money to produce news, particularly quality and factual news. So, our parliament has created a number of measures to support the news industry from tax credits to newsrooms as well as to consumers of news.

In summary, the combination of compensation from the online platforms and government tax credits could actually help news publishers offset as much as 50% of C$85,000, the estimated average salary for each full-time reporter in Canada. This calculation is based on the 35% tax refund for news publishers and the 15% tax credits to consumers for digital subscriptions. 

For individual consumers, the tax credit is only applied to digital subscriptions. Why?

We believe digital formats will eventually dominate the means and methods in which the consumers can access news. So, this digital subscription tax credit is a way to help news publishers transitioning from traditional platforms to online with digital subscriptions. 

What are the main sources of revenue for a typical news outlet in Canada?

I believe an average Canadian news outlet’s budget will come from three sources: compensation from the online platforms, government resources in the form of direct assistance and tax credits, and each outlet’s own operating revenues generated from ads and subscriptions. For a number of outlets, their fourth source could be donations and grants from individuals and foundations.

Here in the US, there are concerns that government’s direct involvement in supporting the news sector’s sustainability could erode the media’s independent role as a watchdog. Do you see anything similar in Canada?

First and foremost, I’d like to emphasize that while our media industry welcomes the support provided by the government, our independence in news reporting remains the same, uncompromised. We’re still a watchdog and critical of the government whenever necessary. So, I would say our media industry is pretty united about the government’s support and Bill C-18. 

California’s AB 886, dubbed the California Journalism Protection Act, was also designed to empower news publishers in negotiations with online platforms? How does it compare with Canada’s approach?  

Canada is not Australia or the US so each country’s model should be different. Our methods may not be identical, but our ultimate goal is the same: to provide sustainability to our media sector. I believe a bargaining code is an important tool for news publishers to get their fair compensation in order to survive and continue serving their audiences. 

Government sponsored resources for Canadian news publishers and consumers:

• Canada Periodical Fund: Designed to assist print and online publishers with awards for business innovation and collective initiatives.
• Local Journalism Initiative: A five-year program that incentivizes eligible Canadian media organizations to hire journalists or pay freelance journalists to produce civic journalism for underserved communities.
• Journalism Labour Tax Credit : A 25-per-cent refundable tax credit for journalism organizations on salary or wages paid to eligible newsroom employees.
• Qualified Donee Status: Access to charitable tax incentives for not-for-profit journalism.
• Personal Income Tax Credit for Digital Subscriptions: A temporary, non-refundable 15-per-cent tax credit available to individual subscribers on amounts paid for eligible subscriptions to Canadian digital news providers.