THE STANDING SENATE COMMITTEE ON TRANSPORT AND COMMUNICATIONS
EVIDENCE
OTTAWA, Wednesday, June 7, 2023
The Standing Senate Committee on Transport and Communications met with videoconference this day at 6:45 p.m. [ET] to study Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada.
Senator Leo Housakos (Chair) in the chair.
[Translation]
The Chair: Good evening.
My name is Leo Housakos. I am a senator from Quebec and the Chair of the Standing Senate Committee on Transport and Communications.
I will now ask my fellow senators to introduce themselves.
[English]
Senator Simons: Paula Simons, Alberta, Treaty 6 territory.
[Translation]
Senator Miville-Dechêne: I am Julie Miville-Dechêne from Quebec.
Senator Clement: I am Bernadette Clement from Ontario.
[English]
Senator Manning: Fabian Manning, Newfoundland and Labrador.
Senator Harder: Peter Harder, Ontario.
Senator Cardozo: Andrew Cardozo, Ontario.
[Translation]
Senator Saint-Germain: I am Raymonde Saint-Germain from Quebec.
[English]
Senator Dasko: Donna Dasko from Ontario.
Senator Wallin: Pamela Wallin from Saskatchewan.
[Translation]
The Chair: Honourable senators, we are meeting to continue our examination of Bill C-18, An Act respecting online communications platforms that make news content available to persons in Canada.
For our first panel, we are pleased to welcome Yves Giroux, Parliamentary Budget Officer, and his analyst, Rolande Kpekou Tossou.
Welcome and thank you for being here. You will each have a minute for your opening statement.
The floor is yours, Mr. Giroux.
Yves Giroux, Parliamentary Budget Officer, Office of the Parliamentary Budget Officer: Thank you.
Honourable senators, thank you for the invitation to appear before you today.
We are pleased to be here to discuss our Cost Estimate for Bill C-18: Online News Act report, which was prepared at the request of a member of Parliament and published on October 6, 2022.
With me today, I have our lead analyst on the report, Rolande Kpekou Tossou.
Bill C-18 regulates digital platforms by establishing a new legislative and regulatory regime to require these platforms that generate revenue from the publication of news content to share a portion of their revenues with Canadian news businesses.
The financial costs of the bill to the federal government arise mainly from legislative development and administration activities.
The Department of Canadian Heritage and the Canadian Radio-television and Telecommunications Commission, or CRTC, are the two federal organizations responsible for the development and implementation of Bill C-18.
The private sector, essentially news businesses, incur transaction and compliance costs under the bill.
[English]
We expect the total cost to the federal government to develop and implement Bill C-18 to be an average of $5.6 million per year over five years for Canadian Heritage and the CRTC. Budget 2022 allocated $8.5 million over two years, starting in 2022-23, to the CRTC to support the implementation of the bill.
In response to PBO inquiries, the CRTC and Canadian Heritage stated that:
. . . the funding in Budget 2022 would not be ongoing, as the CRTC’s administration of the regime would initiate a cost recovery process.
Under Bill C-18, we estimate that news businesses will receive total compensation of approximately $330 million per year from digital platforms and will spend about $21 million in transaction and compliance costs for negotiating their first deals under the bill.
Rolande and I will be pleased to respond to any questions you may have regarding this report or other PBO work. Thank you.
The Chair: Thank you.
Senator Simons: Thank you very much, Mr. Giroux and Ms. Kpekou Tossou.
I was privileged to receive my own briefing on your report when it first came out, and I remain perplexed because I don’t understand where this sum of money comes from, the $330 million. It seems to me more like a thought experiment where you’re working backwards. You’re saying, “Well, it’s going to supply 30% of the costs of newsrooms; therefore, that number is X,” but from whence have you plucked this number?
Mr. Giroux: That’s an appropriate question, as usual, senator.
There are not that many bills or legislation of this type in the world. To arrive at an estimate, we had to look, first, was it was done anywhere else? We found that Australia has implemented something that’s not identical but broadly similar to what is proposed in Bill C-18.
Rolande proceeded to have discussions with those with first‑hand experience in Australia in implementing the legislation and also negotiating some of the agreements that have been established in Australia. It’s based on those discussions that we have arrived at these estimates.
Senator Simons: In Australia, as I understand it, we don’t know exactly how much money is involved because everything is subject to non-disclosure agreements and strict confidentiality.
[Translation]
Rolande Kpekou Tossou, Analyst, Office of the Parliamentary Budget Officer: Thank you for your question. The figures for Australia aren’t available, but the report on the legislation’s first year of operation came out. When the report was being prepared, a general estimate was obtained, but it did not list the exact amount received by each business. However, an accurate estimate was obtained. We also consulted with the businesses — broadcasters and newspapers. We carried out consultations. At the time, businesses had already concluded agreements with Meta and Google. On the basis of the answers we received, the discussions we had with those businesses and the overall revenue estimate we obtained from Australia, we arrived at 30% in relation to the cost of creating news content.
[English]
Senator Simons: Thank you very much. The other question I have is that in the report, it suggests that the very largest broadcasters would get the most money because they have the largest expenditures, but again, that’s an estimate, right? There’s nothing that says necessarily that, when agreements are struck or people enter into arbitration, that will be the metric in the exact ratio, dollar for dollar. That, again, is just a hypothetical, right?
Mr. Giroux: Yes. It’s based on what we have seen in other countries. It’s also based on, as you pointed out, their expenditures. They also tend to have more circulation of their news. Bigger outlet’s news tends to be circulated more. It would be logical, in our opinion, that they would also receive compensation that is commensurate with the interest that their news attracts from those who consult them on platforms.
Senator Simons: Let us say, for example, that Facebook is not bluffing. For the sake of our hypothetical, let us assume that Facebook is being authentic when it says it intends to completely exit the Canadian news market. Did you do any calculation about what the numbers would be if Facebook or Google withdrew?
Mr. Giroux: No. We didn’t do these calculations, because that would be a totally different ballgame. Then the other platform would have more bargaining power and it would be different.
Senator Simons: Thank you.
[Translation]
Senator Miville-Dechêne: I’d like to follow up on some things that were said, because I’m fairly confused by the 30% figure relating to newsroom costs. Every imaginable attempt was made to obtain such a figure from Australia, but in vain. Does that mean you were able to find out the budgets of every newsroom in order to arrive at 30%? Does it refer to the agreements signed by a certain number of players? It’s a pretty exact figure. It’s quite a mystery to me. Either you have some amazing secret, or your assumption is too weak.
Mr. Giroux: That’s a good question, senator. The secret is sitting to my left. Ms. Kpekou Tossou certainly did an excellent job. As she explained, we came up with the 30% figure by holding discussions and looking at Australia’s experience. We obtained the news organizations’ spending by checking with the Canada Revenue Agency and the CRTC, both of which provided a lot of useful aggregate data. We were able to use that information to determine the production costs of various types of organizations by size and media type, for print media and online media. With that 30% ratio, we were able to come up with the cost estimates.
Senator Miville-Dechêne: As you know, the government very much disputes your study, arguing that it’s off base and that 30% is not the figure that will apply in Canada’s case. What do you make of that fairly harsh criticism?
Mr. Giroux: It’s not unusual for my reports to come under such criticism. It’s not the first time that a government has criticized one of my reports — and I don’t think it will be the last. However, we haven’t seen anything from the government to prompt us to take another look at the report or warrant a review. You’re right that the report was criticized, but there isn’t any tangible or substantial evidence demonstrating that we made a mistake by using those data.
Senator Miville-Dechêne: When you prepared your report, the bill applied to 200 or so Canadian news organizations. That number has since grown to 700. Are your figures still valid? The new organizations that have been added are mainly small news outlets as opposed to big ones. Do you need to redo your calculations?
Mr. Giroux: It wouldn’t be a bad idea to redo the calculations, with the number of news businesses having increased. As you mentioned, though, they are smaller organizations. The figures could vary, but since it’s really an estimate, the inherent level of error is probably high. The estimate would change, but would it inform the debate parliamentarians are having in a meaningful way? I’m not sure the additional data would be — Yes, go ahead.
Senator Miville-Dechêne: This may not be within your purview. Nevertheless, you said that the news organizations — the big ones and no doubt some in particular — that have more money will receive more funding. Should Quebec’s Taxation Act or the federal Income Tax Act be used, such that the salaries eligible to obtain funding are capped? I think $55,000 is the maximum salary for a journalist. That would prevent this type of distortion in the funding provided.
Mr. Giroux: That’s definitely one way to redistribute the money from the big players to the smaller ones. My job is not to take a position on the design of public policy or legislation that is not directly related to my mandate. It’s an option worth exploring, but I can’t comment on its merits.
Senator Miville-Dechêne: Thank you.
[English]
Senator Wallin: My concern about these bills, and this one in particular, is usually about free speech and access to information.
This bill is also a massive redistribution of wealth from one set of companies to another. We should just agree that there’s no market value here. There’s no market process. It’s just a legislated activity that has to go on.
If the value is essentially coercive, whatever anybody can extract from the other side in the deal, I’ve got this vision of newspeople sitting around newsrooms posting their stories 24-7 just to get the number of links up.
I know you have to pull numbers out of the air, but have you seen anything in that legislation that would restrict or inhibit this rather bizarre process that might go on?
Mr. Giroux: Not that I recall. However, there will be some regulation-making power devoted to Canadian Heritage and the CRTC. There could be ways around that through the regulation‑making process. But I’m not familiar enough. I haven’t seen regulations, obviously. To my knowledge, the answer is no.
Senator Wallin: That situation could occur?
Mr. Giroux: In theory, I think it could.
Senator Wallin: Right.
Mr. Giroux: The agreements would probably cover that. Now that you’ve revealed that possibility, I’m sure that Meta and Google will be negotiating that.
Senator Wallin: I’ll be worrying about that. To Senator Miville-Dechêne’s point, which is that we’ve seen the number of people who are scoped in or covered by this organization grow up to 700, so there is no constraint on this. Tomorrow the CRTC could decide that this group of university students in Regina and their two-page publication are now qualified.
Mr. Giroux: My understanding is that it’s limited to qualified Canadian journalism organizations. There are some other broadcasters, obviously, and some foreign news outlets that have set up a newsroom in Canada. It’s limited by that, but Rolande can probably specify if I’m inaccurate.
[Translation]
Ms. Kpekou Tossou: At this point, when we were preparing the report, very few details were available on that eligibility requirement. It was pretty general. We looked at journalism organizations that were already qualified. We got the list from the Canada Revenue Agency. We added the public and private broadcasters, but the entire estimate was based on aggregate data. We didn’t count every single organization. We used aggregate data. For the broadcasters, we really focused on ownership on an aggregate level. My understanding of the changes is that they relate more to the Indigenous media organizations being added, but since they are already covered by the CRTC, our estimate captures them.
[English]
Senator Wallin: Yes, it’s just that as far as we can see in the wording, if you come together and say you’re a body that creates news content or information content, and you have your own set of journalistic or code of ethics, that’s it.
Mr. Giroux: Yes, in theory it’s possible to have such a situation. If that were to become the case and be much more expensive, for example, for other platforms, it would mean the media sector in Canada has grown significantly.
Senator Wallin: Or the media sector that calls itself a “media sector” but they have nothing to do with media.
Mr. Giroux: Yes, that too.
Senator Wallin: I wanted a quick question on the CRTC because we heard from the former chair that because there is no expertise in the CRTC at this point on the print media side or even on the internet side — the new kind of information world out there, they are broadcast regulators — you’re thinking that this could all be done at the cost of building up a new wing of the CRTC with all these people and their existing operations for 5.6 a year?
Mr. Giroux: Yes.
Senator Wallin: And that includes hiring at what level?
Mr. Giroux: That would be about 20 or 25 full-time equivalents. It’s not something that’s uncommon. We base that on other CRTC activities that are not identical, obviously, but broadly similar.
Senator Wallin: I don’t know where they would draw this particular staff from, but you’re going to have perpetual education for people because this world is literally changing as we debate legislation. Do you think your assessment is generous or conservative?
Mr. Giroux: It’s probably in the middle of the range between conservative and generous.
Senator Wallin: And then you’ve got other costs of admin in that. What did that include?
Mr. Giroux: Then there’s Canadian Heritage, the cost of drafting the regulations, their part of the deal, the admin on that side. And CRTC admin costs are for their own part. That’s overseeing the agreements, enforcing them, doing audits as required, and there are a couple of other activities.
The Chair: Senator Wallin, I can put you on second round.
[Translation]
Senator Saint-Germain: Good evening and welcome to you both. My first question calls for a very short answer. Under the rules and professional standards you must follow, if you are not sure you can publish a report with maximum certainty and values, I think you have the option of not publishing it. Is that right?
Mr. Giroux: That’s right.
Senator Saint-Germain: Thank you. I have other questions. My first one is on revenue and balance between government investments, meaning costs the government must incur and anticipated revenue, and profits for businesses. Regardless of the approach, speaking hypothetically, supposing you were very generous, it seems to me that we can quickly identify a return on investment, which remains especially important for the government.
Regardless of the hypothesis, even the most conservative one, can you confirm that the government’s return on investment for businesses is at least around 75%?
Mr. Giroux: That is indeed the case, if we consider that businesses receiving those funds must pay taxes, or at least some of them do. Indeed, the government’s return is very high. It’s not unusual when regulations or a bill impose requirements on certain players outside the government sector.
Senator Saint-Germain: Perfect. Thank you for that answer. Earlier, you were asked if you thought your assessment was conservative or generous, and you said it was somewhere between the two. Would you revise your answer if you were to add that, when it comes to government returns on investment, you didn’t evaluate the impact on revenues potentially collected through corporate income tax, and it led to your report being rather conservative or careful?
Mr. Giroux: Thank you for the clarification. It’s possible, but there’s a relatively high degree of uncertainty, given the newness of this bill and the type of negotiation. It’s therefore difficult to consider many things, since the assessment basically rests on a series of hypotheses, and some or many of them may not come to pass.
Senator Saint-Germain: Very well. Thank you for that observation. My last question leads me to talk about the caution in your report, which you highlighted by describing qualitative impacts. Content from Quebec creators, be it journalistic or other, will be broadcast more widely. In your professional field, that’s difficult to evaluate or quantify. Should we perhaps consider that, besides the newness and degree of uncertainty, on a qualitative level, we expect the notoriety and dissemination of Quebec and Canadian content to balance it out?
Mr. Giroux: That is indeed an important aspect. It’s hard to quantify for people like us, who are interested in numbers and measurable things. That’s why the decisions are up to you, the parliamentarians, rather than to us, who are here to help you. You can consider the balance between things we can help you quantify and those that are difficult to quantify, such as the advantages or impacts of bills.
Senator Saint-Germain: Very well. Thank you.
[English]
Senator Manning: Thank you to our witnesses. I just want to go back to your opening remarks and also your report of October 22. You touched on the fact that the estimates that news businesses would spend about $20.8 million in transactions and compliance costs to include their first deals and the online news act will provide $329.2 million per annum to new businesses across the country.
The report also mentioned — and this is what I want to get to — that it will be more expensive for smaller businesses to negotiate and comply with the legislation because most would need to hire external expertise but for large companies, internal capacity like that already exists.
We’ve heard from several stakeholders here who have told us that the bill is not designed for smaller businesses, in their minds. Do you agree with that comment?
Also, do you agree that some small businesses would suffer and choose not to negotiate due to a lack of capital to comply with the legislation?
Mr. Giroux: It’s quite clear that negotiating with established businesses like Meta and Google can be daunting, especially for smaller organizations. It’s not unreasonable to say that it’s not very small-business-friendly to be forced to negotiate and then go to arbitration with well-established companies like that.
I wouldn’t go so far as saying that it’s not designed for small businesses or smaller organizations, but it obviously is not perfectly suited for their own needs. But the fact that there is arbitration probably contributes to alleviating, at least in part, these concerns.
Senator Manning: In your work, do you expect to see any unexpected costs as we go forward with this? We have the suggestions of what the costs may be now regarding compliance. Do you envision any unexpected costs, especially for the smaller operators?
Mr. Giroux: The negotiating and arbitration costs will be the main ones, but I’m sure experience will show that there will be other costs, probably costs of enforcement or, in some cases, when there are disputes, forcing the agreements to be enforced.
There could be additional costs, but those should hopefully be relatively small compared to the transaction and compliance costs for the initial agreements. It’s very difficult to anticipate what we have not foreseen in the beginning.
Senator Manning: We have also heard here that some of the larger businesses in the country have already have deals with the platforms. When you were doing and working on your report, did you take into consideration the fact that some of these businesses already have agreements versus others that don’t? Would that have anything to do with the numbers that have come forward?
[Translation]
Ms. Kpekou Tossou: It’s the estimate of all expected revenue from platforms, but we’ve taken the following into account: Since some large companies already concluded agreements with the platforms, it’s even harder for small companies to keep their journalists. Small companies may therefore offer higher salaries to keep their staff, because large companies tend to attract them. That leads to additional costs for small companies, which we integrated in transaction and compliance costs.
[English]
Senator Manning: Your report was published on October 6, 2022. Yesterday was the June 6, 2023. Have the numbers in your estimates changed in the last eight months? Where would they be even as we move along with this piece of legislation and hearing from the people involved?
Mr. Giroux: It’s difficult to determine whether the numbers have moved without redoing the report, but in the absence of a groundbreaking or earth-shattering change in the landscape of the media, it’s difficult to see what would cause a significant change in our cost estimate.
Senator Manning: The numbers you have published are the numbers you have are pretty well —
Mr. Giroux: I think so. Just after six months, there could be changes, of course, but I think the real tangible changes that could be brought to our estimates will be when the first few agreements are signed and negotiated, if the bill becomes law.
Senator Cardozo: Welcome to you both. Thank you for the explanations you’ve been providing us.
When you were doing your estimate, did you look at the Canadian Heritage figures? They had a different figure as to what the total amount would be.
[Translation]
Ms. Kpekou Tossou: The department shared the numbers with us and shared some details about the resources it will need to implement the bill. We used the number of full-time employees provided to us by the department. We based ourselves on the department’s average expenditures in the past, and used our forecasts to estimate the cost associated with that number of full-time employees. However, our numbers are slightly lower than those of the department.
Senator Cardozo: Why? Was it your estimate?
[English]
Mr. Giroux: It’s difficult to determine why without knowing exactly what per-FTE cost they used. We use the same FTEs, number of full-time employees; they probably used a slightly different mix or level or classification of employees.
Senator Cardozo: You’re in slightly different ballparks but not —
Mr. Giroux: No, not wildly different.
Senator Cardozo: The folks we talked to from Australia suggested there isn’t really a pie to divide up; that pie can grow or change. Is that how you see it?
Mr. Giroux: Yes. It’s difficult to see that there is a fixed pie to share to the extent that the fixed pie would be the overall revenues of the platforms that will be covered, especially their Canadian revenues. So that is the pie, but I don’t think all of that pie is up for sharing, because these revenues from Meta and Google come from just more than media content sharing.
It is difficult to say there is a pie to be shared. The pie is Meta’s and Google’s revenues, and I don’t think that is what is envisioned, to share all of their revenues with media outlets.
Senator Cardozo: One of the concerns that has been mentioned before is that too much of the subsidy or payments would go to the big players and not the small players. Is there a way to turn that around and have more going to the small players?
Mr. Giroux: There certainly is a way to do that.
When I was younger, one of my bosses said, “Parliament can deem Mondays to be Fridays,” so I’m sure there is a way to redesign legislation to ensure there is a different distribution of revenues between the smaller and the bigger players, but it’s not my area of expertise to determine or to provide advice as to how that could or should be done. I’m sure there are ways, though.
Senator Cardozo: Darn. I was going to ask you what your advice would be to do that.
Mr. Giroux: Sorry.
Senator Cardozo: Thank you very much.
Senator Dasko: Thank you for being here. My questions relate to the Australian research that you did, especially with respect to the process of negotiation. When you say 30% of the newsroom costs, I assume that is an outcome but not a basis for negotiation. Is that correct?
Mr. Giroux: Yes. Our understanding is that it was the outcome.
Senator Dasko: So then what is the basis for negotiation?
Also, I’m interested in the differences between Google and Facebook, in terms of what the companies got from the two different platforms. That would give us a sense of the metrics around what is actually being negotiated. You did the research, Ms. Kpekou Tossou, so you can describe your understanding. That’s my question.
Mr. Giroux: I don’t have a sense of what the basis was or what the opening position was for negotiations. Maybe Ms. Kpekou Tossou knows, but I don’t know. I personally was not interested in where negotiations started and where they ended. I was mostly interested in where they ended.
Senator Dasko: Why did they end where they did? That’s what I am asking. Did they just say, “Well, it’s 5 p.m., and, therefore, I get X amount.”
[Translation]
Ms. Kpekou Tossou: There were two bases for negotiation. The details are confidential, but we just read general reports. There were two negotiation options. The first was based on the scope of shared content, meaning the number of clicks it could generate. The second option was cost, what it cost the company to create the content. In the case of the first option, it’s difficult to estimate the number of clicks linked to each news content.
So, our approach is based on production costs. In the report published by Professor Rodney Smith, he said the content of the agreements was confidential, but generally, the total amount collected covered between 20% and 30% of news production costs in Australia. However, there were no details on the basis of negotiation for each media taken individually.
[English]
Senator Dasko: Did the companies get more from Facebook or Google, or did they get the same?
[Translation]
Ms. Kpekou Tossou: In general, around 30%; 20% from Google and 10% from Facebook, so more Google than Facebook.
[English]
Senator Dasko: Why?
[Translation]
Ms. Kpekou Tossou: I don’t know.
[English]
Senator Dasko: So they just kind of fell out of the sky?
You mentioned earlier the number of clicks. A small number of clicks on Facebook; that means that Facebook pays less.
Mr. Giroux: We were told by Facebook that they derive very little value from sharing news content.
Senator Dasko: They said that to us, yes.
Mr. Giroux: I assumed they had said that to you as well, but I have no independent way of verifying that.
Senator Dasko: That’s the way it came out in the Australian situation; the companies got less from Facebook.
Mr. Giroux: Yes.
Senator Dasko: I’m not sure if I can ask you any questions about, for example, section 86 in the bill that has to do with the reporting by an independent auditor. I know you’re not an independent auditor here.
Have you taken a look at the information requirements under the auditor’s report that’s required in the bill? I just wondered if you had seen that and if these data points are ones that are adequate. Are you confident that the Canadian Radio-television and Telecommunications Commission, or CRTC, is going to be able to gather this data from all of the players under this bill and hand it over to the auditor?
Mr. Giroux: Yes, I am confident that it is data that is not overly burdensome for organizations that are already somewhat regulated and have to keep accounting and books.
We haven’t looked at all the details. There are not that many, anyway.
Senator Dasko: Correct.
Mr. Giroux: But we think that it’s fairly doable by an auditor to get that information.
Senator Dasko: Right, and the CRTC can collect that data and has the authority to do that?
Mr. Giroux: Under legislation, yes.
Senator Dasko: Thank you.
Senator Harder: Thank you to our witnesses. I have a couple of questions with respect to the Australian research that you’ve done.
We’ve learned from the Australians that in the deals that were concluded, there was a higher per capita benefit to the smaller companies. I wonder if, in your research, you were able to verify that assertion and whether that was taken into account at all in your determining the total value of the negotiations?
Mr. Giroux: No. Sorry.
Senator Harder: The second question with regard to Australia is that we also learned from hearing from the Australians involved that the smaller outlets negotiated collectively to both strengthen their capacity for bargaining but also to reduce the unit costs of the bargaining process. I wonder if that reflected at all in the work that you did to confirm that the smaller outfits actually benefitted from collective action and negotiation.
[Translation]
Ms. Kpekou Tossou: We assumed a small proportion of small companies will register with the CRTC to go through mandatory negotiation. However, in our estimate, we assumed they would negotiate individually, since it was difficult to know how many businesses, or which ones, would come together to negotiate. Therefore, we assumed in our estimate that they would negotiate individually. However, should they decide to negotiate collectively, it would bring down transaction and compliance costs slightly.
Senator Harder: Thank you.
[English]
In your work before October — and since October, you released your report — have you had any discussions with Canadian companies that have agreements to either comment about your framework as being within the zone of their experience or outrageously small or large? Without revealing who they might be, could you give us a sense of whether you’ve had any feedback from those Canadian companies that enjoy a relationship with the platforms?
[Translation]
Ms. Kpekou Tossou: While preparing the report, we consulted companies. Among those we consulted, some had already concluded agreements. We didn’t get a lot of details on the content of those agreements. However, we were able to deduce our 30% hypothesis based on their discussions and what we read about the Australian experience.
[English]
Senator Harder: Thank you.
My final question is whether or not, since the report was released, you have had any inquiries from other countries who are contemplating a similar kind of legislation? We know, for example, that Britain, India and the European Union are looking, and even in the United States at both the Congress and at the state level there is a more sophisticated conversation going on. Have you had any inquiries from other countries on how you did your work and the estimates that you have brought forward?
Mr. Giroux: There is a good network of PBOs internationally, and it’s not something that has come up in my meetings that I’ve had.
I don’t know if Ms. Kpekou Tossou had inquiries — she’s nodding, so no. We haven’t been approached to inquire about that particular costing or the approach the government is proposing to take.
Senator Harder: Thank you.
Senator Quinn: Thank you for being here this evening. I just want to come back a little bit to the revenue pie that was referred to earlier. Of course, the calculations aren’t based on the grand revenue pie that the platforms have, but they’ve testified before us that roughly 4% of advertising revenue would be attributable to news.
Is that the number that you extrapolated from? Here is the revenue for ads, and 4% of that is attributable to news. Is that the basis of the calculation that you did?
Mr. Giroux: We took a different approach. We looked at the costs. Rather than the revenue — the pie to share — we looked at what the behaviour was in other types of agreements, Australia or the voluntary agreements that have already been entered into, and we assumed that 30% of the cost of producing the news would be covered by these agreements. It’s not the revenues of the platforms that would be shared. It’s just the production costs that would be covered.
Senator Quinn: I have just another question for clarification. If 30% is estimated to be the cost of producing the news, and the platform says that 4% of their revenue is derived from the news, there’s a bit of a delta there. How do you deal with that?
Mr. Giroux: It depends on the accuracy of these affirmations. Also, 4% of a big pot can still be a significant share.
I understand that some senators may be uncomfortable with that approach, but the approach we took to estimate that was the best we could come up with, based on the only other country that has done it so far.
Senator Quinn: My last question is when the bill becomes law — assuming it becomes law — will you be checking in from time to time to provide information as to how all that is working out?
Mr. Giroux: That’s usually left to other entities that have more of an audit function to look after the fact at what has happened. If requested to do so by a committee of the Senate or the House, we can undertake such a study.
Senator Quinn: Thank you.
The Chair: Colleagues, we’ll go to second round. We have a limited amount of time, so approximately three minutes for each.
Senator Simons: I want to come at this from a different angle. You said that the CRTC expects, in your estimation, that there will be cost recovery to cover their additional costs. The additional costs of administering this program would be considerable. This far exceeds the current mandate of the CRTC. How confident are you that the cost recovery model would work? How much money does the CRTC, in your estimation, need to take in from the platforms to make itself whole? Again, if at least one of the platforms doesn’t want to play ball, what does that mean for the CRTC’s ability to cover its costs?
[Translation]
Ms. Kpekou Tossou: While preparing the report, we asked people at the CRTC about their cost recovery approach. However, they didn’t provide details, because they said they don’t yet know how the bill will work.
So, to estimate transaction and compliance costs for news companies, we communicated with the Canada Transportation Agency, which is used to negotiations and arbitration, to see what it costs them to supervise a negotiation agenda. By using the numbers they gave us, we estimated what it would cost for companies.
In fact, in the bill, it says that companies will have to pay for the service the CRTC will give within the framework of the bill. It’s therefore by basing ourselves on information received from the Canada Transportation Agency on their negotiating agenda —
Senator Simons: But it’s not exactly the same thing.
Ms. Kpekou Tossou: It’s not exactly the same thing, but it’s the best information we had available at the time —
Senator Simons: Do you think it will be enough for everything the CRTC will have to pay after the bill passes?
Mr. Giroux: I trust that it’s enough, but it will obviously depend on the nature of the relationships between platforms and the media. If there’s a lot of arbitration and conflict resolution, costs will be higher. Right now, however, it’s hard to determine how much animosity and squabbling there might be.
[English]
Senator Simons: With all respect to your work, I feel more like you’re looking more into a crystal ball or casting a horoscope. You don’t have the information to make an informed assessment because nobody has given you the information.
Mr. Giroux: Well, we have received some information from Canadian Heritage, there’s a country that has already established something that’s similar and there are arbitration processes that already exist in the Government of Canada, so we’re not starting from absolute zero. There are comparators that already exist.
Senator Wallin: I’m trying to get some sense of how much we are charging taxpayers, news organizations and now platforms to support ailing news organizations. It’s $300 million, maybe. We don’t know; we’re looking at that number.
I’m just making a quick list here, Canadian journalism labour tax credit, Canada Periodical Fund, Local Journalism Initiative, digital news subscription tax credit, et cetera, the billion plus we give the CBC, keeping foreigners out of the business — any sense of how much the existing programs are costing us?
Mr. Giroux: We have not looked at the totality of the support for the news or media sector.
Senator Wallin: Okay. That’s it. Thank you.
[Translation]
Senator Miville-Dechêne: In the government’s background papers, there’s the issue of the market value of news content, and the fact that it must be negotiated.
In your opinion, what’s the methodology for estimating that number? Aside from labour costs, which seem to be what you based yourselves on, is there a methodology that can measure the market value of news?
Mr. Giroux: That’s a very sensitive issue, because it’s very difficult to estimate the market value of something without a market.
A lot of people think news should be free and aren’t ready to pay anything at all, whereas others are ready to pay a few hundred dollars a year to have access to certain information.
So, the market value of information is hard to estimate in this context, because people are used to getting things for free or expect them to be free.
Senator Miville-Dechêne: You alluded to the fact that Google would have more negotiating power if Meta withdraws.
Could you tell us a little more about this interesting idea?
Mr. Giroux: If one of the players completely stopped including links to news, obviously, the legislation would then cover the only one left. Having a monopoly grants a lot of power. Therefore, the power to negotiate lower payments to news organizations or media would increase considerably if only one player were left.
Would a monopoly rather than a duopoly make a big difference? Probably not, but it’s the type of social experiment we probably won’t do. We won’t be able to see two different situations and know what’s going to happen in both cases.
Senator Miville-Dechêne: Thank you.
[English]
Senator Cardozo: I have a question on the estimates of the cost for Canadian Heritage and the CRTC, and perhaps more so with Canadian Heritage. Do you anticipate that their costs would be higher at the front end and then go down once they’re up and running?
Mr. Giroux: I would expect the costs to be higher at the beginning because it’s new legislation and it requires the development and acquisition of new expertise, drafting of regulations and so on. The costs should stabilize after a few years and presumably go down a bit.
Senator Cardozo: At the CRTC?
Mr. Giroux: At Canadian Heritage, but the minister and his officials would be in a better position to answer that question. My expectations would be so.
Senator Cardozo: Would the CRTC be the same thing?
Mr. Giroux: At the CRTC, given that they would have an ongoing role in dispute resolution and enforcement, I would expect them to also have an increase in costs at the beginning, but the tapering or stabilization might not be as obvious as in the case of Canadian Heritage.
Senator Cardozo: And once they’ve had the initial set of agreements, will that carry on?
Mr. Giroux: Some of it will probably carry on, but there will be for sure some ongoing monitoring and enforcement of these agreements, so I would expect the annual costs to be relatively stable over time. One of your colleagues who was a deputy minister in the public service is nodding, so that’s reassuring me.
[Translation]
The Chair: Once again, thank you to Mr. Giroux and Ms. Kpekou Tossou for being here today and for your answers; it’s much appreciated.
We will resume our meeting to continue our study of Bill C-18, the online news act.
[English]
For our second panel, we have with us the Honourable Pablo Rodriguez, P.C., M.P., Minister of Canadian Heritage. He is joined by Isabelle Mondou, Deputy Minister and, of course, someone that doesn’t need any introduction to this committee, Thomas Owen Ripley, Associate Assistant Deputy Minister, Cultural Affairs. He’s here almost as often as some of our colleagues. Welcome, Mr. Ripley, Ms. Mondou.
[Translation]
Welcome, Mr. Rodriguez.
[English]
Minister, you have the floor for opening comments before we go to my colleagues for questions.
[Translation]
Hon. Pablo Rodriguez, P.C., M.P., Minister of Canadian Heritage: Mr. Chair, members of the committee, thank you for inviting me here today to talk about Bill C-18, the online news act.
And thank you for all the important work you’re doing on this bill.
I’ve often said it in the past, and I’ll say it again today: Since 2008, nearly 500 news outlets closed their doors in 335 communities across Canada.
We’re talking here about newspapers, local newspapers, television networks, radio stations, news sites, and the list goes on. Behind all that, real people are losing their jobs.
[English]
And this bill is about them. It’s also about the future of the news industry in our country. It’s about upholding democracy, because our democracy — and any democracy — needs a free, independent and thriving press.
We all rely on fact-based and timely news to make rational decisions, to counter disinformation and to participate in our democracy. Today, I would say, senators — and I am sure you agree — it is more important than ever.
The internet has dramatically changed the way we create, search and consume content. This is especially true when it comes to news. More and more Canadians are using digital platforms to stay informed. About 77% of Canadians consume their news online, including 55% of them on social media. Meanwhile, our traditional news sector is in crisis.
We all know there’s a big power imbalance in the news marketplace. That’s obvious. The recent actions of big platforms are a very clear demonstration of this. Right now, there’s no incentive for digital platforms to pay our news businesses or journalists. There’s no incentive to pay them fairly for their content.
All that I’ve just mentioned has a direct impact on our ability, as Canadians, to access reliable news.
[Translation]
So, Bill C-18 proposes concrete action to respond to everything I just said. It proposes an end to the status quo, because in my view, the status quo is unacceptable. The bill provides a clear roadmap for platforms to follow when negotiating with news businesses.
As soon as the online news act passes, we will hold consultations with Canadians. That’s very important. Canadians will have their say within the framework of an open and transparent process.
[English]
As you know, during their study, MPs in the House of Commons introduced key amendments to help make the bill more inclusive for start-ups and small news outlets.
[Translation]
We also mentioned that, through the collective bargaining process you’re familiar with, the bill allows news businesses to negotiate fair contribution. It will significantly increase the negotiating power of small or diverse businesses.
As you know, the bill is based on the Australian model, which led to fair compensation for news media; we analyzed it thoroughly.
We therefore drew inspiration from a project that worked well fundamentally, but we improved it with several features, such as transparency, and with features that are typically Canadian.
Having participated in conferences around the world, I would say that Canada is blazing a trail. Why are we doing it? Because Canadians expect us to act to protect local journalism, and because they also expect us to do it transparently.
For the sake of transparency, an independent auditor will annually assess to what extent the bill achieved its objective, which is a fairer news ecosystem. That means we can make adjustments each year, if necessary.
[English]
As you know, with this bill, we’ve studied it, examined it and made it better. We’ve listened to what everyone had to say. You are doing an amazing job here. We’ve addressed many of the concerns that stakeholders raised during the House of Commons’ study, and the bill is stronger for this and stronger because of your own work.
I’ve said many times that the online news act is not a silver bullet. It’s not going to solve all the problems and challenges facing the sector, but it will give Canadian news media a chance to rebuild and thrive in a more sustainable, fairer news ecosystem.
I’ve said before that the world is watching Canada. I’m having many conversations with ministers from Europe and they’re watching what we’re doing now. All of us in the House of Commons, here in the Senate committee, we’re taking clear leadership on this.
I want to finish by asking a very simple question. Will we collectively have the courage to stand up to the big digital platforms? Looking around the table, I think the answer — I know the answer, actually — will be yes.
[Translation]
The Chair: Thank you, minister. We will now move on to questions.
Senator Saint-Germain: Good evening, minister, and good evening to those accompanying you. In the debate on Bill C-18, there’s a lot of talk about the balance of power, which you referred to in your opening remarks. We’ve heard a lot about the giants — Meta, Google, Facebook and the others — and the difficulties in negotiating with them. We always had the impression they were helping media by disseminating their news content. I’d like to hear you about the other side of the coin. What advantages do you think these web giants are getting from Canadian media? Basically, they appropriated Canadian content. They think these media have value and that it benefits their bottom line. So, what advantages are these web giants getting from Canadian media content?
Mr. Rodriguez: Thank you for the question. I’d say the advantage lies in attracting people and keeping them on their platforms as long as possible. That’s how they make money. They have a certain amount of traffic; their users spend a certain amount of time on their platforms. That has value, so they can sell it to advertisers. As for the content they sell, meaning news, they give no compensation, and yet that content has value.
I recently participated in a television show on the LCN network. I mentioned during an interview that what they do has value: the time they took to prepare the interview, the work done by researchers, the work done by the technical team and the cameraman. Collectively, it’s worth something. They just have to be paid fairly, not more, not less; fairly, because it has value, and that gives the platforms value.
Senator Saint-Germain: You held many consultations with different media and different Canadian businesses. You mentioned that the status quo is not an option. Do businesses consider that the bill responds satisfactorily to all their concerns and, as a result, re-establishes a certain balance of power? You referred to it at the beginning of your presentation as being an objective.
Mr. Rodriguez: I’d say so. We all agree that it’s not the only solution, that it’s not a solution that will solve everything. However, as you’ve just said, it does restore a certain balance and forces the platforms to negotiate, which they don’t necessarily want to do. I’d go further than that: Generally speaking, I’d say that platforms don’t want to be regulated. We’ve seen this with Bill C-11, we’ve seen it with Bill C-18 and we’ve seen it generally. Right now, there’s nothing regulating them or forcing them to do anything, so it’s a bit like the Wild West — and that suits them just fine.
However, that’s not how a society works. There are rules to follow; we all follow rules around the table, Canadian companies follow them too, so as corporate citizens, they have to follow them too. Bill C-18 restores a certain balance and gives our media a certain ability to negotiate, particularly collectively. As you may have heard, too many media outlets are far too small to sit across from Google and Facebook. So they’ll be able to join forces to negotiate around this table. I think this is a good way forward.
Senator Saint-Germain: Currently, across the country, we’re hearing about an imbalance between large media and smaller media that could consolidate. Some consider that too many media would be covered by the agreement, especially the smaller ones. How do you react to this comment?
Mr. Rodriguez: What we want is for the agreements to help maintain and enhance a news ecosystem across Canada that does the work we expect of it. There are currently many regions that are not served. There are MPs who go home and don’t get coverage for their work. Citizens in every region have the right to know what their MP is doing when he or she goes to Ottawa, Queen’s Park or Quebec City — what their local elected official is doing.
So, this bill will strengthen this extremely fundamental element of our democracy. In the absence of independent, neutral and non-partisan journalism, other types of information will fill the space. In my opinion, this is detrimental to our society.
Senator Saint-Germain: Thank you.
Senator Miville-Dechêne: Welcome, minister. I’m going to ask you a question of principle. During our study of Bill C-18, witnesses and your own officials acknowledged that there was an exchange of values between media companies and major platforms. So news content obviously has a value for the platforms, and the platforms’ distribution and referencing has a value for the media companies; it goes both ways. In Australia, in the Bargaining Code that was used as a model, the architect of that code, whose name is Rod Sims, wrote this — and I’m quoting it in English so it’s clearer:
[English]
. . . the draft only allowed the arbitrators to recognise the value the news/businesses provided the platforms, with no reference to the value provided by the platforms to the media businesses. . . . but this position was not defensible.
. . . the Government accepted, that the arbitrator had to consider the value flowing both ways.
[Translation]
So, the Australian code clearly states that agreements between media and platforms must take into account the monetary or other value received by each party. Is this your understanding of how Bill C-18 works?
Mr. Rodriguez: Yes, they have to come to an agreement. In fact, what we want is for there to be a negotiating table in the community and for everything to be done on the basis of free and informed negotiations. In this negotiation, we have the platforms on one side and the news media on the other. The platforms will say that the fact that they carry the news media’s content and that it’s on their networks has value — and it does — and the media will say that they do research work and that it has value. They’ll sit down together and negotiate based on that.
Senator Miville-Dechêne: More specifically, is this the basis of Bill C-18? Or is the basis of Bill C-18 what the media are saying, that they want to go after a subsidy that corresponds to between 20% and 30% of their journalists’ payroll? We hear both, minister. So I’d like to know what exactly you want to do with Bill C-18, because there’s no definition of what these negotiations will be.
Mr. Rodriguez: No, and I don’t want to include any. Also, I don’t want to talk about 20% or 30%; for me, it’s not based on that. In Australia, it’s around 30%, but that’s not because it had to be 30% in the first place; it just happened that way. It could have been 28%, 24% or 32%, but it settled around 30%. What I want is the freest possible negotiations.
Senator Miville-Dechêne: On the respective value of information.
Mr. Rodriguez: For what everyone considers to be value, they negotiate. That’s why, if you ask me what the maximum amount is, I’ll tell you there isn’t one. In fact, what is negotiated individually will form the collective value at the end, i.e., the totality of the sums negotiated on both sides. We don’t tell them that they have to agree on such and such an element or percentage of a newsroom, and especially not on links, because it’s not about the number of clicks; it’s simply that they have to agree on an overall value. So, we’re keeping it all very general on purpose.
Senator Miville-Dechêne: In your statement, don’t you underestimate the value of being broadcast for the media? Just recently, Le Devoir told us that 80% of its traffic depended on Google. So, essentially, it’s not easy. The way you talk about it, it’s as if it were a one-way relationship.
Mr. Rodriguez: No, not at all. I’m saying there are good arguments on both sides. If the platforms tell us that the media use them to broadcast and to reach people, that’s true too.
Senator Miville-Dechêne: How will smaller media outlets manage, since their value to the big platforms is likely to be much less, if not non-existent?
Mr. Rodriguez: Platforms have an obligation to negotiate with small media as well. That’s also why the criteria —
Senator Miville-Dechêne: So, it’s not the value that matters.
Mr. Rodriguez: It’s that it forces them to negotiate with the smaller media too, and initially that’s very important. If there’s no obligation to negotiate, why would they take the time to sit down at the table? As an aside, the platforms currently have agreements with certain media, but all of them, if not almost all, were concluded after the government announced its intention to legislate on the matter. You know that, sometimes, when we feel we’re getting a little push in the back, we move faster.
These platforms need to enter into agreements with media in both official languages, with Indigenous media, with under‑represented groups.
Senator Miville-Dechêne: We’re no longer talking about value at that point, minister —
Mr. Rodriguez: I’m not talking about value. I’m telling you they have to sit with them. Just having access to the table allows you to negotiate on value.
Before, they would never have had access to that table to negotiate anything. The other thing is that these small media today have the capacity to negotiate collectively. If you have 250 small media coming together — In the case of ethnic media, this can mean a lot, because it gives them more weight and more strength to negotiate a more interesting amount.
Senator Miville-Dechêne: Thank you.
[English]
Senator Simons: My friend Senator Miville-Dechêne taught me a new word tonight — charabia.
[Translation]
I’d like to ask a question without jargon.
[English]
Facebook has made it abundantly clear that they intend to block all Canadian news and the sharing of all Canadian news the moment Royal Assent is given to this bill. Google has been more oblique, but they have demonstrated a real threat in their capacity to do this.
What happens if, on July 1, the platforms have disengaged from the Canadian news market and have ceased to share Canadian content?
Mr. Rodriguez: That’s the way Facebook would like us to look at it, right? Because what we’re discussing now is whether we will back down because of the threats.
Senator Simons: No, it’s not a question of backing down. Perhaps this is a question that Mr. Ripley can answer too. If Facebook blocks the sharing of links, will you still compel them to go to arbitration?
Mr. Rodriguez: First, they have to explain why they have to make that decision. It’s a business decision, but they make a lot of money here. There is an impact for them to do that — also a reputational impact. And then, at the end of the day, if that’s the case, we’ll analyze what happens. They have my number. I told them to reach me. I met with them at the beginning. At the beginning, I met with everyone — Facebook, Google. Facebook never called me back after that? Right? No. Not me. I told them; they have my cell phone number.
Senator Simons: Okay, but that is not my question. My question is this. The entire Rube Goldberg device of a subsidy machine is predicated on the idea that Google and Facebook will continue to operate in the Canadian market. Maybe this is a big game of chicken. I have certainly expressed my belief to Google and Facebook that if they pull out, they will cut off their noses to spite their faces. I do not think that their leaving is an economically neutral decision, but that is what they claim that they will do.
I want to understand, and I want it clearly on the record, if Facebook and Google cease to share Canadian content, what happens to Bill C-18? Do you then go to TikTok? Do you go to the next platforms down the list? Or do we just say, well, that was an interesting thought experiment, and now we’re not going to do that?
Mr. Rodriguez: No, this is not an experiment. This is a very important bill. I think that Facebook is still pretty much everywhere. They backed out of Australia a little bit; they went back.
It’s up to them. It’s not up to me to explain it. It’s their decision to make. I’m not going to comment on a hypothesis and then start to explain because — you know what? I’m never going to make any decision based on threats. Never. I never did and I never will.
Senator Simons: That’s not really what I’m asking. Perhaps Mr. Ripley can answer the question. The bill is silent. It does not name platforms. It doesn’t have the words Alphabet or Meta or Google or Instagram in the bill. The bill refers to online intermediaries.
In the event that Facebook and Google cease to be meaningful online intermediaries in the Canadian space, would the bill then contemplate looking at Bing, TikTok, Amazon — whoever are the next major players in terms of Canadian advertising and news links?
Mr. Rodriguez: I will pass to Owen after, but we said clearly in the bill that they have to be in a dominant situation. There will be thresholds. There will be regulations. In the thresholds we are looking at, there are only two. Those are Facebook and Google. The rest are very far away.
I don’t know why we’re discussing threats and being scared about the threats. The government has options, senator. There are other things we can do. All options are on the table, believe me.
Senator Simons: What would they be?
Senator Wallin: That’s what she’s asking.
The Chair: What are those options?
Mr. Rodriguez: The options? All of the options. In terms of advertising, there are different programs. There are all kinds of things that we do or we decide not to do anymore. Maybe we decide to increase. Those options will be explained if we get there, but we’re not there.
Senator Simons: Options would be things like putting government advertising back in local newspapers?
Mr. Rodriguez: We’re playing Facebook’s game at this moment. We’re discussing the threats. I’m not making decisions based on threats, senator, with all due respect.
The Chair: There is no threatening going on here tonight; that’s for sure.
Senator Wallin: You already conceded in your comments that you weren’t afraid to use a little blackmail to threaten, to use the presence of the bill to get the carriers to the table or at least into discussions. I’ve got two or three questions on this. I’ll try the first one in terms of the money that you think is necessary to subsidize the industry.
We’ve got $300 million, supposedly, from the platforms, although as you’ve just said, there’s no maximum number on that. It’s an arbitrary figure, as we heard from the PBO. We could see people sitting in news organizations and posting their stories 24 hours a day just to push that number up. We’ve got $1 billion plus from the CBC and at least half a dozen journalistic subsidy programs, the local journalism initiative, the digital news subscription tax credit.
Do you have any idea what the cost is already on all of that? And do you see any ceiling on what you’re prepared to give the ailing media industry to survive?
Mr. Rodriguez: If you speak in terms of costs, for example, how much it would cost for the CRTC to manage this, that is covered. The money was in the budget.
Senator Wallin: I’m talking about the other programs here that you’re already involved in and the kind of movable $300 million that could be anything — it could be $400 million or $500 million. Is there any limit? Should the government and the taxpayers and the platforms subsidize the ailing news sector? Is there any limit on that?
Mr. Rodriguez: We know the amounts of the program. If you talk about the tax on labour force, that’s $600 million. If you talk about the local journalism, that’s $70 million over five years. If you talk about the periodical fund, we just added $40 million over two years. So we know exactly how much money is invested.
Senator Wallin: Is there any ceiling?
Mr. Rodriguez: Yes, those amounts are in the budget, so I cannot spend more than what the budget gives me.
Senator Wallin: Maybe not this year, but we’ve got the $300 million for this program, which you say might be larger.
Mr. Rodriguez: This will depend on the negotiations, senator. We don’t know. Do you know what? I don’t want to be involved in this because, as a member of the government, I want to be arm’s length from the press.
Senator Wallin: But you are involved in it. You put the legislation forward.
You talk about content having value, and I don’t disagree with that. Content has value. That’s why advertisers pay for it. That’s why consumers subscribe, and they pay for it. But even the Supreme Court of Canada says links don’t have commercial value.
This legislation has now created — I mean, it’s not rooted in the market. You’ve just kind of declared that these links have value and therefore people have to negotiate over it and come up with some arbitrary figure. But there are lots of pressure points in that which aren’t realistic. It’s not like a consumer subscribing and saying that they value this product and so they’re prepared to pay for it. There is a lot of potential coercion in this approach under Bill C-18.
In light of the Supreme Court and the concerns or questions raised by Senator Simons, are you concerned about where this might go? Are you concerned about the impact it might have when there is no market value here? It’s not a real thing; it’s a contrived thing.
Mr. Rodriguez: It’s a real negotiation that takes place between the platforms and the media.
Senator, for me and I guess for all of you too, the only thing we’re doing as the government is putting a table in the middle. On one side, you have big tech and the media are on the other side. What they come up with in terms of an agreement depends upon them.
As for the rest, as I explained, we know exactly how much we’re spending to the cent.
Senator Wallin: But you’re telling the platforms and the media companies that they have to somehow create an arbitrary value for this link process which, in and of itself, has no value. Content has value, but we have other ways of indicating that. Subscribers subscribe or advertisers advertise, but links are not content.
Mr. Rodriguez: But it’s the way you access news. Take out the link, and you don’t access it.
Senator Wallin: But people have been accessing — that’s what the internet is; it is to access information without cost. It was an exchange place.
Mr. Rodriguez: But there will never be a cost for you. There is no cost for the people. There is no cost for the government —
Senator Wallin: There is a cost for the taxpayers.
Mr. Rodriguez: — it’s a market-based solution. I think it’s the right one, because it’s arm’s length from the government. They have to come agreements and conclusion, and that’s it. It’s the simplest bill you can have.
Senator Wallin: But it’s actually not market-based. That’s my question.
Mr. Rodriguez: It is.
Senator Wallin: The market is that if I decide to pay for something that I like, I therefore subscribe to it, or an advertiser puts ads in a newspaper because they like the market that offers their particular product. A link doesn’t have value, and now you’re saying, “It must have a value. Sit down at the table and figure out what it is, even though it’s completely arbitrary.”
Mr. Rodriguez: It’s not per link, senator, and it’s not per click or anything like that. It’s a general value, to answer the question of Senator Miville-Dechêne. They sit down and they negotiate, bringing their own numbers to the table. It is a free, open discussion between business people, but at the end of the day, we have to go back to what we want to do. We want to preserve a free, independent, neutral, non-partisan press. We don’t disagree on that, because that’s one of the pillars of our democracy. If that disappears, then our democracy disappears.
Senator Cardozo: I just want to carry on with that last point you made in terms of defending the traditional media. Your words were that “the traditional news sector is in crisis and we need to help access to reliable news.”
There are some who feel there isn’t a role for government in this; government should stand back. These are dinosaurs; they’re ailing news media. How long are you going to do this for? What if we moved into a world without this? We’ve heard from a number online media, some that like this legislation and some that don’t. Why don’t we just allow that world to develop and forget about the traditional media?
Mr. Rodriguez: It’s an interesting question. We’re not in a neutral situation. Actually, 80% of all the advertising money is going to two companies, Google and Facebook. Let’s say it’s $10 billion, so it’s a bit more than 8 out of that $10 billion.
So they’re getting all the money. They have pretty much all the tools to control the advertising, media placement and all of this. So there is a direct impact. If you create something, something else disappears. It creates an impact on our traditional media.
Those people — and there are a few here — who devoted all their lives, they have studied and made sacrifices. They built a career looking for the truth, asking tough questions. Sometimes I don’t feel like getting those questions. They’re tough, but it is my job to answer them, right? They’re doing that job, but too many of them have disappeared.
So what is happening when those media that are in the centre disappeared? It goes like this, and it gives more room to media or comments on the extremes. It’s bad for our social issues and for our society. It’s bad for disinformation.
We need to not only stabilize but to make it grow again. By doing this, we are reinforcing our democracy, senator.
Senator Cardozo: Certainly, we are headed to a more polarized society when that happens.
The estimates from the PBO suggest that most of the money would go to the large players. Do you see a way in which we can ensure that for the smaller players, many of whom are really interested in this bill — ethnic media, university media, Indigenous media — something can be done through regulation, or do we have to do something in the bill to make sure the smaller players also get some of the share of this?
Mr. Rodriguez: I’m not going to defend the PBO’s calculations, because I’m not necessarily comfortable with the calculations. He took into consideration the information he got from the big media players, not necessarily from the print or the small ones. If we look at the Australian example, proportionally, smaller media got more money than the big ones. The fact that, to get the exemption, the platforms have to negotiation with big and small in every province and territory, with ethnic media, with Indigenous media, et cetera — that will benefit a lot to the small media, even more so because of the fact they’re allowed to negotiate collectively.
I spoke to a lot of them. They’re regularly regrouping, getting ready to negotiate. That gives them more strength around the table.
Senator Cardozo: Finally, I want to ask about the CRTC. This is a bit of a trick question, because I used to be the commissioner there, so there’s a firm answer as to what the right answer is. What is your sense of its ability to play a role in this bill? One of the criticisms has been that it does not understand the newspaper industry. Did you consider any other agency instead of the CRTC?
Mr. Rodriguez: We always look at what’s there, what’s available. The CRTC has the experience that’s closest to this. If you talk about final-offer arbitrary, the CRTC clearly has experience in broadcasting.
Do they have all the expertise? No. We said it clearly from the start. Even if they told me that they know how to do everything, I would have never believed them. That was under discussion; they said they needed X, Y and Z, so we provided them with $8.5 million over two years to put into place everything they needed to do a good job.
But their job is not as labour intensive as Bill C-11. I’m sure you remember that bill. It’s not as labour intensive as that. For that, we provided the necessary money; the rest is cost recovery for the future.
Senator Cardozo: Is it politically neutral enough?
Mr. Rodriguez: It is. I don’t have anything to say to the CRTC. I don’t give orders. They’re arm’s length. They’re independent. Yes.
[Translation]
Senator Cormier: Welcome, minister, Ms. Mondou and Mr. Ripley.
Minister, as you know, under the Official Languages Act, the federal government is committed to enhancing the vitality of English- and French-speaking communities in Canada and supporting their development. It is the responsibility of federal institutions to ensure that positive measures are taken to implement this commitment.
Do you agree that Bill C-18, which we have studied in detail, could be more in line with this commitment and could concretely and more specifically recognize official language minority community — OLMC — media, which are considered essential media for many Canadians in all regions of the country?
Do you also agree that the bill should force Google and Meta to enter into agreements with OLMC media?
Mr. Rodriguez: Absolutely, and in fact this is in the bill — not only in the purpose of the bill, but in the bill itself.
Personally, I believe that bilingualism is a fundamental value that is part of the social fabric, albeit far from perfect.
My first mandate as an MP was to become chair of the Official Languages Committee. I hadn’t even sat a single day as an MP, and they told me I’d be chair of the Official Languages Committee. I already had an interest in the subject. I was chair of that committee for almost two years; I worked and saw how hard communities struggle to survive. I have the greatest respect for the resilience of minority communities; just think of the challenge they have to overcome when they want to send their children to a French-language daycare centre in Western Canada, for example.
That’s why I’m so happy to be part of a government that treats them as a priority. Looking at the big picture, we allocated $1.4 billion in the last action plan. This includes the sums already announced, and represents nearly $368 million in new money; it’s a record. It’s unprecedented. So that’s been done, but at the same time, how do we ensure that the minority news ecosystem survives? That’s also in the bill. It’s part of the criteria.
Platforms will be required to enter into agreements with media from minority communities. These communities have access to other programs, such as the Local Journalism Initiative. In 2021, this five-year, $70-million program supported 435 journalists reporting on 1,943 underserved communities. I’m talking about small communities all over the place, many of them in minority settings that are completely unserved and that were covered through this program, which is not Bill C-18, but something else. We’ve managed to provide this boost, not to mention the Canada Periodical Fund and the $600-million envelope, tax credits and so on. It’s all combined. Is it perfect? Perhaps not. Does it give a real boost to minority communities? We think so.
Senator Cormier: You say it’s in the bill, and I agree. Perhaps the vocabulary isn’t as precise as it could be, in my opinion. I understand that you care about official language minority communities.
Mr. Rodriguez: Absolutely.
Senator Cormier: According to several people from News Media Canada who appeared before this committee, this is a critical time, as you know, for many small media outlets that are close to bankruptcy. Assuming that the bill is passed before the summer recess, do you think that these small media outlets will be able to quickly begin a negotiation process with Meta and Google? In your opinion, will the agreements resulting from these negotiations be sufficient to break the deadlock? You mentioned other programs. It’s a question of balancing the ways in which they are supported. In some ways, they’re supported through this bill, but otherwise, how do we make sure they’re well equipped with resources to do the job?
Mr. Rodriguez: Yes. This bill adds to the whole and is part of that balance. It reinforces the balance or creates it, because it may not exist. We’d like to see the bill passed as quickly as possible. Obviously, that depends on your work. I know how meticulously you do your work, but time is running out, because nearly 500 newsrooms have closed. How many more will there be in the next few weeks or months?
The status quo is wrong; it’s not working. If someone here says we have to maintain the status quo, it won’t work for local media in minority communities, for Indigenous media and for the regions, and it won’t work at all for traditional media. I’m talking about those who hold our democracy at arm’s length for the most part, and who ask the tough questions in a neutral, autonomous, independent and non-partisan way.
I hope that the bill will be passed as quickly as possible and that the platforms, faced with the existence of the bill and the fact that it has been passed, will start negotiating now with the various media.
Senator Cormier: This appetite the platforms have to negotiate, have you measured it?
Mr. Rodriguez: Once the bill passes, they’ll be a lot hungrier.
Senator Cormier: Thank you.
[English]
The Chair: I have a question as well, minister. With all due respect, I am skeptical when the government says their preoccupation is to support local and diversified media, given the fact that your government spends zero money when it comes to government media buy on local press or ethnic media, and under your government’s leadership, the media buy of the government has been completely concentrated on the large traditional media outlets.
The second issue that is very disturbing to me is that the government currently is before the court of law with Blacklock’s, a successful digital print platform that uses paywalls. They’re before the courts right now fighting because the Government of Canada — your government — pirated their content and spread it around without respecting their paywall. It calls into question the integrity of the commitment of the government when it says it wants to protect journalistic content.
Mr. Rodriguez: Senator, we have exactly the same commitment that your party had during the last election. If I may, I’m going to read the Conservative platform. It said:
Introduce a digital media royalty framework to ensure that Canadian media outlets are fairly compensated for the sharing of their content by platforms like Google and Facebook. It will:
Adopt a made in Canada approach that incorporates the best practices of jurisdictions like Australia and France.
Include a robust arbitration process and the creation of an intellectual property right for article extracts shared on a social media platform.
Ensure that smaller media outlets are included, and that the government won’t be able to pick and choose who has access to the royalty framework.
That’s exactly what we’re doing. We don’t disagree with you — unless you have changed your mind — on the fact that we need a program that is based on what existed in Australia, to reinforce it, to make it Canadian and to make that the small media benefit from it.
The Chair: Minister, the Conservative Party platform was and is consistent, but that’s not my question. I can assure you that a Conservative government would not be pirating the content of Blacklock’s and distributing without respecting their paywall.
If I can go a step further, when I was Chair of the Internal Economy Committee of the Senate of Canada, we made it clear at the time that, as an organization and institution, we need to respect the paywall content of Blacklock’s and any other journalist. I think that would only be appropriate and proper.
Your government, not the Conservative Party — I’m not being partisan with the question — but the Government of Canada, the whole government, is before the courts of law defending themselves against Blacklock’s and the fact that their content has been pirated.
Mr. Rodriguez: Mr. Ripley has something more precise on this.
Thomas Owen Ripley, Associate Assistant Deputy Minister, Cultural Affairs, Canadian Heritage: Thank you for the question. Obviously, I can’t comment on the specific case in question, which is before the courts. That said, there is a copyright clearance program administered by Treasury Board to ensure that news articles that are shared respect copyright and that there are licensing fees paid for those. I can assure you that the government and the department takes those efforts seriously.
The Chair: Thank you for those answers, but again, it does raise a lot of question marks. I’m not going to dwell on the issue.
Senator Dasko: Thank you for being here. It’s great to see you all again. Some of us have been concerned — or maybe we shouldn’t be concerned — about the vast increase in the number of news organizations that are now eligible to be part of the negotiations. I think it went from around 250 or 300 to over 650. Do you have any concerns about the expanding number of eligible news organizations and should we have any concerns? We might want to make amendments, or we may want to add 100 to the list. What would you be concerned about there?
Mr. Rodriguez: We’re not adding anything, senator. That’s one of the things that I really like about the bill. When I said it is different from Australia, a lot of it is because we’re very transparent and even more arm’s length. We’re not deciding who is in or out in terms of platforms, and we’re not deciding who is in or out in terms of media outlets. They are independent criteria. If they meet the criteria, they’re able to negotiate, if not, they’re out. That determines who is able to negotiate. At the end of the day, we don’t know how many of them want to negotiate and we don’t know how many will reach a deal. The platforms will have to reach a deal 100%, we’re okay with that, but it’s a different number in every province and this and that.
Senator Dasko: I was going to ask you whether you expect everyone on the eligible list to make a deal. You’re saying, no, it’s not going to happen.
Mr. Rodriguez: No, not 100%. Maybe some with one, some with Google, some with Facebook, some with both. It depends.
Senator Dasko: No concerns about 650, 700 — it doesn’t matter.
Mr. Rodriguez: No. if they qualify, they qualify. It’s not up to me to say what is and is not media. I would be in a very uncomfortable position to decide who is allowed to negotiate. There are independent rules.
Senator Dasko: That assumes an expanding pie at the other end.
Mr. Rodriguez: Or not. Senator, if we keep on this trend, it will be a very small pie because they’re all disappearing.
Senator Dasko: Okay. If there are more organizations that are eligible and enter deals, then the pie is bigger. The expectation is that the value is going to be higher, right? That’s logical. You have more companies, more negotiations and more money at the end. One plus one equals two, sort of thing.
Mr. Rodriguez: Again, there could be more and maybe the platforms decide it’s good for them to have a deal with all of them, but probably that won’t be their decision. They will negotiate with some of them. As long as there’s enough, and I’m not the one deciding if there’s enough or not. Again, this is a bill we can create. We’re not there. We put it on the table and that’s it.
Senator Dasko: I know, it’s just that in the other place, it expanded vastly. That’s all.
Mr. Rodriguez: Again, senator, at the end of the day, if a platform decides to have a deal with this amount or more or less, it’s up to them. Then they have to qualify or not for the exemption. As long as, as we said, it includes Indigenous media, from different communities’ media — English, French, Indigenous.
Senator Dasko: Right. You mentioned earlier that there’s going to be an auditor’s report at the end of each year that’s going to tally up the total value and it’s going to look at the distribution of the money and whether it fulfills various categories.
You also mentioned that because the bill is out there as part of the context that other media organizations making deals already outside of the framework of this bill. Will these auditor reports be able to capture this data as well in the framework so that it can be — I would think that would be a good thing. I just wonder if that is envisioned in the bill. The way I read the section, it’s not clear that that will actually happen.
Mr. Rodriguez: Yes, it is.
Senator Dasko: Oh, it is.
Mr. Rodriguez: It’s going to be included, the same way that bills negotiated before this enters into force, the deals, they can be included for the presentation of the exemption.
Senator Dasko: So this is captured in the data somewhere?
Mr. Rodriguez: Yes.
Senator Dasko: They’ll have to report on the deals they’ve made, whether or not they were deals made within the actual framework of the bill.
Mr. Rodriguez: I think so, yes.
Mr. Ripley: Yes. Senator, there’s a transitional provision provided for that acknowledges that deals signed before the coming into force of the bill could be included as part of a platform’s request to have an exemption and therefore would be caught by the transparency report.
Senator Dasko: That’s important because if companies are making deals outside of the framework, but yet because of the framework — the framework is there in the background — that would be important to know.
I am a little concerned about the fact that the platforms are the ones that have to determine that an appropriate amount of money goes towards newsrooms. Do you have any concerns about that?
Mr. Rodriguez: The fact that money goes to newsrooms?
Senator Dasko: The platforms themselves are required to assess and determine that an appropriate amount of money is going to the newsrooms.
Mr. Rodriguez: No, we had that originally.
Senator Dasko: You have no concerns?
Mr. Rodriguez: We wanted the money to go to newsrooms.
Senator Dasko: Yes, I know. I’m asking about the platforms being responsible for determining this.
Mr. Rodriguez: It’s the CRTC. It’s not the platforms that decide that. The media has to demonstrate that the money is going in majority to the newsrooms. It’s not the platforms because they don’t know. It’s not the platforms that know. It’s the media and the CRTC.
Senator Manning: Welcome, minister and officials. Good to see you again. I apologize, I understand you’re missing a great speech over in the House of Commons tonight. We’ll get to that afterwards.
Richard Gingras, Google’s Vice President of News, testified before our committee on May 3. He said:
Regrettably, Bill C-18 could see existing support to Canadian news publishers slow down or stop while Google and others seek the clarity we need to ensure a reasonable outcome.
I just want to know what’s your response to Google’s statement that existing deals with news publishers may be threatened with the passage of Bill C-18.
Mr. Rodriguez: If they threaten their own business? They would break their businesses if they want to do that; I don’t know why they’d want to do that.
Senator Manning: That’s what he stated to us. If they try to do that, can the government respond in any way? How do you deal with that?
Mr. Rodriguez: If they break the deals, I’m sure the other ones will bring them to court. If they sign the deal, it’s a commercial activity that took place. They agree on something, one of them breaks the deal, they’re responsible for that. I guess there’s a price to pay. It depends on what’s in the deal.
Senator Manning: Notwithstanding the fact that news outlets themselves post content on their platforms and benefit greatly from increased traffic to their websites as a result, I want to give you the opportunity to explain how, on one hand, I’ve heard government say that the platforms are stealing content, and basically we want to stop that. On the other side, they say, “Okay, fine, we will not carry the content anymore,” and then the government comes back and says, big boys or big girls in a room being bullies because you’re not carrying it anymore.
How do you say on one hand they’re doing something by allowing the news links to be carried and, on the other hand, they’re doing something wrong by not allowing them to be carried? Where’s the middle ground here?
Mr. Rodriguez: I never said they were stealing the content before because there were no regulations, nothing. Having the content on the platforms and paying nothing was not a problem because there was nothing in the law. That’s why I call it the Wild West. That’s the problem we have now where societies are transitioning. We’re going from a society where these platforms didn’t exist, not even the internet existed, to a society where the internet exists and it’s not regulated. Now to a society where the internet not only exists but will join the club and be regulated like anyone else.
Once that happens, then having that content without paying anything for it becomes a problem because there is regulation, which is natural and normal for a government and a society to do.
Senator Manning: I know we’re different in Newfoundland and Labrador than right across the country. I’ve witnessed over the past number of years — and as you’ve alluded to this evening — many news outlets have closed up and gone out of business. Some concern has been raised at our meetings in the past in relation to the small operators, I’ll call them. Not the giants, not The Globe and Mail or those people. There seems to be, especially if you get into a case where arbitration becomes part of the conversation, concern as to how these small outlets will be able to finance the arbitration process against the larger platforms, like Google. I’m just wondering about the protection.
I know the intent of the bill is to protect the smaller people in the game, but I’m just wondering how that can happen when Google is up against a small operator.
Mr. Rodriguez: That’s a very good question, actually. One of the ways we’re trying to help them is by allowing them to regroup. One small outlet, I don’t know, from a region in Newfoundland sitting in front of Google at the same table, is not that fair. The fact that they’re negotiating, that allows them to get a better deal. Do you want add something to this?
Mr. Ripley: Thank you, senator.
I would highlight, indeed, in the case of small players, collective bargaining is being provided as an opportunity to share those costs, and then there are provisions in the bill that specifically deal with cost-sharing between platforms and news businesses for costs that may be incurred throughout the mediation or final offer arbitration processes to ensure that those costs are spread between news businesses and the platforms involved.
Senator Manning: I know with some of my colleagues you touched on the fact of Google or Meta deciding that they’re not going to carry news content anymore. That’s a concern that has been raised by especially some of the smaller operators that. In a lot of cases, that’s their only outlet to spread their news.
I know you touched on it already but I didn’t get a clear feeling from you. What avenue does the government have if Google and Meta decide that they’re not going to carry news content anymore? That would be detrimental in a lot of cases to a lot of the smaller players in the field.
Mr. Rodriguez: That would be detrimental to them, absolutely. That would also be detrimental to the platforms, because there’s a loss of revenue. In terms of reputation, I also don’t think it’s the best move. It’s important to act as a good corporate citizen, and they’re making a lot of money here.
Again, then it’s up to the government to look at all the options in terms of advertising, in terms of putting new programs in place and increasing the funding of other programs.
I’m not necessarily comfortable answering questions like that at this moment, because, for me, for now, it’s just a threat. Are they going to do it or not? It’s a threat, and I can’t make decisions based on threats. I never have, and I never will.
Senator Harder: Thank you very much, minister. Senator Clement, I will not use my full time to make sure that you get time.
Minister, when the Australians were here, they described what they felt were improvements on their program, one of which was transparency. I think it’s worth reminding this table of the way in which transparency is enhanced through this process while protecting the contractual privacy of negotiation, and that it is not a transparency that the government owns; it’s the transparency that the government establishes.
I wonder if you could comment on transparency.
Mr. Rodriguez: Absolutely. First, thank you so much, senator, for all the work on this bill.
Senator Harder: We’ll see what you say next week.
Mr. Rodriguez: Thank you very much as of now. Whatever happens, a huge thank you.
Transparency is probably the biggest difference between our version — the Canadian version — and the Australian version, and this is something super important for the Prime Minister. I can’t go into details of secret conversations, but I can tell you that I was not getting out of that room if there was not a transparent mechanism in place. For him, you have to have that. And it’s there in many ways.
For example, in Australia, you can have a minister that decides which platform is involved in the process. Here, no. Based on a certain set of criteria, they are included or not included.
Again, I mentioned about which media would be allowed to negotiate. I’m not deciding this. The government is not deciding it. The criteria is in place, and if those media fit in those criteria, then they’re included, and they’re allowed to negotiate. If not, they can’t negotiate. It is as simple as that.
Again, I’m out of there. I want to be out of there. Trust me; the freedom of the press is so important to me that in every step in this process, at every second we’re working on this bill, it was the number one consideration. How can we be as arm’s length as possible?
The only thing we are doing in this bill is putting a table in the middle. Well, you sit the tech giants on one side and the media on the other side, and the Canadian Radio-television and Telecommunications Commission, or CRTC, which is independent, plays a minor role in it. And that’s it. The government has no role.
That’s why it’s so transparent, and at the end of the process, senators — well, ongoing. There’s monitoring to make sure that, obviously, the bill and also the agreements are respected. At the end of the day, there is an auditor who has to submit a report on everything that happened and that is happening.
When you look at it, it’s hard to be more transparent, to be honest, and that’s exactly what we wanted.
Senator Harder: Thank you. I concede to Senator Clement.
The Chair: I will impose on the minister an extra two or three minutes.
[Translation]
Senator Clement: I’m very glad to see you here. Mr. Ripley, it’s been a long time since I’ve seen you. Ms. Mondou, I saw you at the Official Languages Committee on Monday evening. Minister, my question concerns Indigenous media and the fact that this bill includes Indigenous stories as news content. As a senator, an ally and a Canadian, I am very interested in the issue of reconciliation and would like to know what process led you to include Indigenous stories as news content.
Mr. Rodriguez: The desire for reconciliation, the consultations we held with Indigenous leaders... You know, this is the second time I’ve been Minister of Heritage, and the first time, the thing I was most proud of was my Indigenous languages bill. In the process, I discovered a whole world for which I have the greatest respect: the will and resilience of Indigenous peoples, not only to survive, but to develop and flourish in their own language. For that, they need media in their own language.
At the beginning, I always said we would introduce a bill on Indigenous languages. I don’t just want people to give courses. I want more Indigenous music, film, television, radio and journalistic content. Then we’ll have achieved our goal — if we can achieve it. That’s why there’s a leading role for Indigenous media to play.
Senator Clement: Thank you.
[English]
The Chair: Thank you, colleagues.
In closing, I just wanted to make a comment in terms of the brief comment I asked the minister in terms of total advertising of the government of $140 million last year. Traditional print advertising was just $6.5 million and ethnic print got $1.6 million, while the government spent $11 million on Facebook and Instagram alone.
I think we all share, minister, the objective of the bill. We want to see diversified local media and print media supported, and we want to support our democracy. I have my reservations on the bill, but I do hope the bill achieves its objectives.
Mr. Rodriguez: Thank you. So do I.
The Chair: Let’s cross our fingers. However, the government also has to be consistent, sometimes, on some of these things.
Mr. Rodriguez: We’ll do it together, senator. We’ll work together.
The Chair: Absolutely.
[Translation]
Thank you very much for being here, minister. Ms. Mondou, Mr. Ripley, you are always welcome.
(The committee adjourned.)