O, Canada … what have you done to news platforms?

Dr Eric Crampton
13 February, 2024

The classic Simpsons “Monorail” episode wasn’t just a cautionary tale about local council megaprojects gone wrong.

Monorail salesman Lyle Lanley told the good people of Springfield that he’d “sold monorails to Brockway, Ogdenville, and North Haverbrook. And by gum, it put them on the map!”

It wasn’t until later in the episode that anyone bothered to check how things had gone in those towns. And it really had not gone very well at all.

The episode then is a bit of a warning to check what’s happened in other places.

Leaving Springfield to come back to New Zealand, Select Committee will this week be hearing submissions on the Fair Digital News Bargaining Bill.

In The Herald, Andrew Holden hopes that the Select Committee will propose amendments rather than killing the prior Labour government’s bill. Holden notes that “this type of legislation is not new. There are now live examples in Australia and Canada, and other countries are considering the same.”

It’s well worth having a look over to Canada to see how things have turned out there. It’s helped put Canada on the map in the same way that Lyle Lanley’s monorail helped Brockway, Ogdenville, and North Haverbrook.

New Zealand’s proposed Bill shares critical features with Canada’s regime.

Under the Bill, news platforms like Google and Facebook, but possibly also Twitter and the Microsoft ‘start’ page, can be required to register with the Broadcasting Standards Authority if they facilitate access to news – for example, by linking to news stories or allowing users to link to news.

The worldwide web was built on a principle that websites can freely link to each other. Each site can set a paywall if it likes, requiring that people purchase a subscription if they want to read the content. And a site can block search engines from scraping content.

Under the Bill’s framework, the BSA can determine that a news site has little bargaining power with an internet platform, and then require the platform to register. Since platforms are free to refuse a news site’s request to be paid for links, because that’s how the internet has been structured for decades, the BSA would find it easy to register platforms.

Once a platform is registered by the BSA, news sites can initiate compulsory bargaining that can culminate in an arbitrator deciding which offer “fairly compensates the news media entity party for that party’s news content being made available.”

The whole thing is fraught. It is impossible to know how arbitrators would decide. Simply allowing links to news then becomes very risky for platforms like Facebook.

Canada’s regime similarly opened platforms up to potentially large liabilities if they facilitated Canadians’ access to news.

Michael Geist is Professor of Law and Canada Research Chair in Internet and E-Commerce Law with the University of Ottawa in Canada. He also has been chronicling Canada’s experience with their Bill C-18, which became the Online News Act.

We don’t have to go to North Haverbrook to find out what happened. We only need to read Professor Geist’s substack and columns.

In September, Professor Geist summarised what happened with Canada’s legislation. It has not gone well for anyone involved, most of all news companies who expected pots of free money.

Meta blocked all links to news on Facebook. Google threatened it would follow.

Smaller news sites that had depended on links from Facebook saw huge drops in web traffic.

Lobbyists for news companies then pleaded the government for tax credits equivalent to 35% of their labour costs, up to $85,000 per employee, to avoid layoffs – a substantial increase on previous subsidies to news companies.

In November, the Canadian government agreed to a four-year programme boosting government support, more than doubling the per-employee tax credit for Qualified Canadian Journalism Organisations.

So. Canada’s version of the legislation worked so well that the Canadian government had to bail out the country’s newspapers.

And, in late November, worrying that Google would also block links, the government exempted Google from the riskiest part of the legislation: binding arbitration that could result in high and unpredictable penalties for linking to news. In exchange, Google paid into a fund that supports journalism – though some of that payment replaces what Google had been paying to news outlets through its news Showcase programme.

Much of how this would play out was obvious from the start. The Australian experience taught Facebook that news really isn’t of any value to the platform. If anything, users linking to news results in users clicking away from Facebook. The whole point of Facebook is keeping users on Facebook. If they’re on Facebook, they’re seeing the ads that Facebook serves. If they click over to a newspaper’s site, the newspaper gets the revenue when users see and click on ads.

Meanwhile, New Zealand’s Ministry of Culture and Heritage commissioned work in the leadup to our draft legislation. The report found that “digital platforms provide considerable commercial benefits to news firms” and that platforms’ advantages in delivering ads hardly forms a basis for requiring them to compensate news companies. Making it too risky for platforms to link to news is not great for news companies.

Suppose the Simpsons’ hometown of Springfield had elected a new mayor after Lyle Lanley’s song about monorails. That new mayor would be well advised to have a look over at Brockville before deciding whether to go ahead with the deal.

New Zealand elected a new government. I hope it has a look at the mess Canada’s government got itself into with this kind of legislation and lets the Fair Digital News Bargaining Bill die at Select Committee.

To read the article on the Newsroom website, click here.

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