Squeeze cash from Facebook, Google, say Canadian news media leaders

Tax changes, better copyright protection and fees imposed on Facebook and Google are among the solutions being touted to help rescue Canada's ailing news industry, internal reports show.

Those suggestions were prominent in closed-door sessions with news leaders conducted by the Public Policy Forum, a think-tank the federal government has hired to suggest policies in support of Canadian journalism during a period of digital disruption and reporter layoffs.

CBC News obtained summaries of three key sessions last June, as well as an interim report to the Canadian Heritage Department, under the Access to Information Act.

The final report by the Public Policy Forum is expected later this month. Its recommendations remain tightly under wraps.

But the internal documents show top players are pressing for federal policies that would extract money from big digital news carriers that produce little original Canadian content.

"When cable companies began broadcasting, a government levy was established to help support Canadian programming," says the summary of a June 10 meeting in Ottawa.

"Perhaps this could be [a] concept … applied in the digital space, establishing charges on news aggregators and foreign content producers such as Facebook, Google, Netflix and National Newswatch to subsidize made-in-Canada content." (National Newswatch is actually a Canadian website.)

"Canadian policy-makers should consider whether copyright laws that govern file-sharing in the music industry could be applied in the news industry," with some arguing for a 24-hour period of exclusivity.

'Payment system' for the news industry

A Toronto session on June 29 echoed the proposal.

"Perhaps copyright laws need to change to make distributors better attribute content creators.... Perhaps there is a role for a … law that creates a payment system for [the] news industry."

Ed Greenspon, president of the Public Policy Forum and a veteran print journalist, cautioned that the internal reports paint "a very partial picture." He declined to comment on the coming recommendations, tentatively scheduled to be made public Jan. 26.

The Liberal government has been grappling with turmoil in the Canadian news industry, which has seen venerable newspapers close, hundreds of journalists laid off, Sunday editions disappear and advertising dollars migrate from legacy print outlets to digital space.

Hobbled by falling revenues, legacy costs and lumbering cultures...- Public Policy Forum think-tank on the state of established news media companies in Canada

Critics say the disruption undermines democracy by gutting local reporting, removing journalists from legislatures and shifting money to non-Canadian news distributors, such as Google and Facebook. Meanwhile, digital news startups in Canada often lack the resources to fill the growing gap.  

Or as the Public Policy Forum's interim report in July says: "Hobbled by falling revenues, legacy costs and lumbering cultures, and desperately trying to make digital inroads, established media companies have reduced their emphasis on the hunting and gathering of original news in favour of processing of existing news.

"For their part, new entrants generally lack the capital, critical mass or capabilities to produce the sort of professionally based iterative journalism critical to holding public institutions to account."

The sessions' news leaders, the identities of whom are blacked out, repeatedly refer to Section 19 of the Income Tax Act, which since 1965 has prevented Canadian companies from deducting advertising expenses as a business cost unless they advertise in Canadian publications.

The section has never been updated to cover digital ads, which means Canadian companies can deduct digital advertising costs no matter whether they place an ad with Google or with a Canadian news provider.

"Section 19 should apply to new media," says a summary of the June 27 session in Ottawa. "Applying Section 19 to the internet may be possible with the current wording."

Philanthropy, tax incentives proposed

Among the other proposals raised in the sessions:

• Change tax rules to allow philanthropic support of journalism by charitable or non-profit foundations. "Under existing rules, it becomes difficult to establish the type of independent, non-profit news model that has proven so successful in the United States through ProPublica," says the interim report.

• Create tax incentives and exemptions to encourage coverage of local news. Investors, for example, could get special tax credits for putting money into local, non-profit digital news startups. 

• Review the role of the government-financed CBC, which has moved into digital news space and — according to some publishers — has undermined the private sector's abilities to attract ad dollars. (The CBC has since proposed that it abandon all advertising, relying solely on increased public funding.)

The documents also show a broad disdain for direct government subsidies to the news business; a general belief that market forces should prevail; and the hope that any new policies should help all Canadian content producers, regardless of whether they are print, broadcast or digital.

"No company wants a government bailout," says the Toronto summary. "However, tools are needed to provide more balance for news organizations to compete against the large digital companies."

Newspapers Canada spokesman Bob Cox says the status quo is not an option.

"I've emphasized the need for some kind of policy framework in this area, lest the newspaper industry wither away without any heed to what the consequences may be," said Cox, who attended a September roundtable in Regina.

The Public Policy Forum project has cost $270,000, with the departments of Canadian Heritage and Innovation, Science and Economic Development each contributing $100,000. The roundtables have included the big media firms, such as PostMedia, as well as ethnic and Indigenous newspapers, broadcasters such as the CBC, digital firms, academics and others.

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