Front page of the Toronto Sun and Toronto Starr, February 5, 2021 (photo credit: Laura Carney at 680 NEWS)
If you picked up a copy of the Toronto Star – or almost any mainstream paper in Canada today – you would have noticed that their front page was strangely absent of content. This blank space wasn’t a printing error; it was a deliberate act designed to force the federal government to bail them out. Again.
“Imagine if the news wasn’t there” ominously ran under the paper’s empty front page. The Star wasn’t alone in its call for support, the National Post, and hundreds of others also ran their own versions of an empty page.
The problem is, these newspapers aren’t just asking for you to support their businesses as a voluntary customer. They are asking for the government to intervene in a way that can only be classified naked rent-seeking. Specifically, major media companies are asking that the federal government follow Australia’s lead in regulating Facebook and Google.
Regardless of your opinion of these two tech giants, what the newspapers are proposing is dangerous, and unfree.
What has Australia done and should we really follow their lead?
To put it bluntly, Australia has enacted a bizarre and backwards approach for regulating how tech companies deal with news agencies. Australia is attempting to force platforms like Facebook or Google to pay news outlets every time one of their web links is shared. That means that when you or I share an article – let’s say from the Toronto Star – Heritage Minister Guilbeault, and newspaper executives, think that Facebook should be forced to compensate the Star, despite the fact that Facebook is acting as afree lead generator.
For context, 73 per cent of the traffic visiting the Western Standard in January 2021 came through social media platforms. For those not paying attention, the Western Standard uses Facebook and Twitter to get its content in front of eyeballs. It is a symbiotic relationship.
Media outlets make their money in two ways: advertising dollars linked to views, or through dues-paying subscriptions. Being able to freely share a news story on social media drives traffic to these news outlets, which is exactly how they make their advertising money and solicit subscribers.
This genuinely leaves me scratching my head as to why this is a good idea. And if Australia has shown us anything, following through with this type of legislation would be disastrous for consumers, for newspapers, and for society at large. In response to the regulations down under, Facebook threatened to stop allowing users to share news links on their platform. This hurts consumers because it means that the news won’t be available on social media at all, where most of us consume it. This is a net negative for society because poor news availability ultimately means poor media literacy, which certainly isn’t good, especially in the context of a global pandemic where Canadians are reliant on news companies for important updates.
And of course, removing social media as a means to find the news is undoubtedly going to backfire and hurt the newspapers that these regulations are supposed to protect. Social media acts as a lead funnel for newspapers, and removing that funnel will mean fewer views on their articles, less ad revenue, and fewer opportunities to solicit subscriptions.
Media executives also complained that Google pockets most of the revenue from its Adsense platform. Even if this is a legitimate gripe, their solution is not. Just because newspapers don’t like the revenue split doesn’t mean the appropriate solution is more interventionism.
If Google is a bad actor in this relationship, outlets are free to do exactly what the Western Standard does, which is sell their own ads directly. In fact, this is what media companies used to do.
This desire to have the government further protect the media industry becomes even more strange when you consider that the industry is already subsidized by taxpayers at the tune of $600 million dollars, which makes this call for additional regulation a gross and despicable example of rent-seeking.
Rent-seeking is the act of manipulating public policy or economic conditions as a strategy for increasing profits. Rather than focusing on innovating, changing their advertising model, or providing a better product for consumers, these companies have sought to have the government ensure their profitability through bogus regulations.
To their credit, the Financial Post’s Terence Corcoran called this move “Hipster Anti-trustism” while the Globe’s Andrew Coyne called this “self-serving nonsense”. For me, this is crony capitalism 101. Nothing more, nothing less.
David Clement is a columnist for the Western Standard and the North American Affairs Manager with the Consumer Choice Center