Taxing Google and Facebook won’t alone save dying media in Canada
Jim Sheppard is a former executive editor of globeandmail.com. He also held senior newsroom management positions at washingtonpost.com and ABCNEWS.com
For those of us who have at least one daily newspaper delivered to our door every morning, there was a bit of surprise on Thursday.
The front pages of many newspapers were mostly blank, although with this headline at the bottom: “Imagine if the news wasn’t there.”
The text underneath the headline argues that Google and Facebook “use their monopoly power to pocket 80 per cent of online advertising revenues. These corporate giants benefit from news content produced by Canadian journalists and publishers – without paying for it.”
It’s a serious problem, not limited to Canada, where Ottawa is studying the possibility of taxing Google and Facebook. Similar moves are under way in Australia, France and other countries.
There should be no doubt that the digital giants should pay for the content they use to attract advertising.
But even if the legacy media owners get a slice of any such tax, or get Facebook and Google to agree to payments under the tax threat, there are several major problems with the limited nature of this approach.
The biggest issue is that getting the digital giants to pay something for news — presuming that does happen — will be little more than a Band-Aid for the mortal wounds already inflicted on legacy publishers by the overall decline in advertising on legacy media, which has been worsened by the COVID-19 pandemic. It may help them linger another year or two but that’s all.
The only way to avoid their inevitable death is to follow the example of The New York Times, The Washington Post and others who made the leap to digital several years ago, increasing staff, increasing coverage, developing new products. The result has been previously dying newspapers turning into thriving and profitable mostly-digital entities – with greater journalism, not less, and with more journalistic jobs, not fewer.
To wit: On Thursday, The New York Times reported it had achieved several historic firsts as a result of its decision to focus on digital.
“Our work, which was consumed at historic levels, led to a year of strong business results, including a record 2.3 million net new digital-only subscription additions,” noted Meredith Kopit Levien, president and chief executive officer of The New York Times Company.
“In 2020, we reached two key milestones -- both of which we expect to be enduring: digital revenue overtook print for the first time, and digital subscription revenue, long our fastest growing revenue stream, is also now our largest.
“Those two milestones, and our best year on record for subscriptions, mark the end of the first decade of The Times’s transformation into a digital-first, subscription-first company.”
Where’s that kind of thinking Canada? It simply doesn’t exist.
If we’ve learned anything from the past, it’s that any money the publishers get from a tax on Facebook or Google will be poured down the sinkhole of their massive infrastructure and distribution costs. How stupid is that? Does anyone really believe that journalism will be produced with ink on dead trees and driven to our doorsteps in 2025?
No, it won’t. I, for one, will miss newspapers. I still leaf through two per day. But I know their days are numbered.
CBC chief executive Catherine Tait said recently that legacy media in Canada – print and broadcast – are like “dinosaurs on a melting ice cap.” Tait was asking the CRTC to grant the CBC’s request to find new digital solutions to the financial woes facing legacy broadcasters.
Like the dinosaurs, legacy media owners in Canada are simply waiting for an inevitable and painful icy death, afraid to do the one thing that will save them: go digital.
The money from Facebook and Google – presuming they get it – will enable them to build a bigger temporary shelter but the ice cap will keep melting.
As I argued earlier, the publishers should aggressively pursue their Facebook and Google strategy in the hope that they can get some money. It’s only fair for the digital giants to pay.
But the legacy media owners need to realize that the level of advertising they enjoyed a decade or two ago is never coming back. They need to find real alternatives. Where The Times and The Post have made their financial turnaround is by hiring more journalists and by focusing on digital subscriptions. That’s the future.
Some Canadian legacy media are trying to marginally increase digital subscribers but they are not putting their heart and soul into it. I will cut some slack for The Toronto Star’s new owners who are at least talking the talk. Let’s hope they walk the walk.
Advertising has gone to the digital world not because the digital giants are unfairly stealing news feeds but because the digital world offers a better way for advertisers to reach customers. They can target ads to any specific audience -- let’s leave aside the privacy issues here for a moment – reaching whomever they want at lower costs than a legacy product.
Yes, the digital giants are bullies. They threaten to end their news feeds if forced to pay more.
But who does that hurt?
Are you personally going to stop using Google for search or Facebook to keep up with your friends if there’s no news feed from publishers? Some principled Canadians will do that. Most won’t.
In a list of the top 100 searches on Google in the U.S. last year, generic “news” ranks No. 19 with about one-sixth the total searches of any one of the entities in the top tier – YouTube, Facebook and Amazon. (Fox News and CNN both made the top 25 but all three together still get fewer searches than one single digital giant).
In a similar vein, a recent survey found 88 per cent of Facebook users are on the platform to stay in contact with friends and family. By comparison, 23 per cent of FB users come for “news.” Facebook won’t go out of business tomorrow if it gets rid of the publishers’ news feeds.
The people who own, and form the executive class at the legacy media in Canada, grew up in a world where everyone read the newspapers daily, where classified ads brought in tons of money, where everyone watched the 6 p.m. CBC news around the dinner table. In those days, they were the only games in town. Not any more.
Their hearts are still stuck in that world. Their minds may know that the future can only be digital. But they are paralyzed by the idea of abandoning their melting ice cap and building a new future on solid ground.
Further reading:
