Federal support will be controversial, but must help media to evolve towards viable business models.
(This article has been translated from French.)
The measures to help the Canadian news media announced on November 21 in the federal government’s Fall 2018 Economic Statement have been controversial for both their purpose and the options for their implementation. We propose here some ideas guided by the objective of supporting a service that’s essential to democracy.
Is such help needed?
Advertising revenues, which have long supported the production of journalistic content, have migrated to foreign-owned platforms in the digital space. These platforms do not produce information themselves but rather recycle content produced by news media to capture audiences through providing a conversation space for users. Some form of tax on the revenues generated in Canada by content shared in this way could be used to partially fund support for the original creators of that content.
So far, traditional news media and new players have failed to develop a viable business model on the Internet, with the result that journalism as a professional practice, so vital for democracy, is now in crisis. Beyond the fate of the news businesses, what’s most at risk is the fundamental need for citizens and communities to have reliable information.
Journalistic independence in peril?
Since the announcement of media assistance, the Official Opposition and some journalists have expressed concern that the media and journalists will be influenced by support received from the Liberal government. These criticisms are not to be taken lightly, because they could heighten public mistrust of the media.
Yet, government help for print media has been provided in several countries for decades without compromising editorial independence. Types of help could include reduced postal rates, partial or total exemptions from taxes on products and services, and also – particularly in France and now also in Québec – support for modernization and technological development. Similar precedents exist in Canada, including the Canada Periodical Fund, which has distributed more than $1 billion over 20 years.
Nor do questions about independence arise only when the media is supported by public funds. Relationships between advertisers and news organizations are not without risk, and even today, advertising still accounts for most revenue earned by daily and weekly publications. There have always been attempts by some advertisers, big and small, to influence editorial choices by asking for favourable coverage for their activities. The new federal assistance program could help to make the media less dependent on advertising resources, which, in any case, will continue to decline.
Regarding the fear of losing media independence, it is reassuring that Finance Minister Bill Morneau wants to distance political power from the process of awarding the announced support measures. That challenge, too, has long-established solutions in the arm’s-length federal support measures that are available for the arts and scientific research.
The arrangements for awarding this new aid should not only be as simple as possible but also transparent and fair. We must avoid unduly favouring the most affluent organizations or the “pre-digital” media. The measures will also have to be flexible and not become obstacles to innovation. On the other hand, eligibility choices will be needed for assigning the payroll tax credit – undoubtedly the most expensive measure of the package.
Refundable tax credit for labour costs
This measure, aimed at reimbursing part of journalists’ salaries, is the one that will raise the most questions and debates about implementation. Minister Morneau expressed a need for rules that:
- ensure the viability of business models;
- respond to the needs of communities deprived of local media; and
- foster the diversity and quality of journalism.
These eligibility rules will be decided by a panel of peers that is meant to:
- establish and promote basic journalistic standards;
- define what professional journalism is; and
- determine the eligibility of the applicants.
This mandate is very broad and the debate is likely to cover a lot of ground. One question concerns how widely the program will be available. Today, there are 88 daily newspapers in Canada, compared with 139 more than 10 years ago, and more than 1,000 weekly newspapers (according to data compiled by News Media Canada), not to mention new digital media. Weekly and monthly magazines already have access to the Canada Periodical Fund. Another program, worth $50 million, is targeted at media in particularly underserved communities, including minority-language communities and First Nations.
Labour organizations have estimated the cost of aid measures at more than $200 million a year, and the announced amount of approximately $600 million over five years will therefore be insufficient to meet all requests. No media organization will want to miss this windfall, including those that have opposed state aid in the past. But spreading the wealth through capping individual grants would have the effect of penalizing the country’s most important newsrooms.
Minister Morneau’s terms of reference for the peer committee suggest eligibility criteria based on the type of media outlet (minimum years in business? “general” or “specialized”?) or the definition of a journalist (a salaried employee of a media company? since when?), or the nature of an organization’s routines and procedures. The minister mentioned “production of original information content,” which suggests to some that columnists and commentators should be excluded.
Criteria such as these will help to achieve the support plan’s objectives, such as ensuring the diversity and quality of journalism. Priority could go to media that devote a larger share of their budgets to information production rather than on other operating costs. Further options could include encouraging media that have a code of ethics and abide by it. Could a media outlet be required to join a press council or set up its own mechanism for responding to public complaints? This is a slippery slope. Overly restrictive or overly complex rules could not only provoke challenges from the excluded, but also entail real risks. The state should not interfere with the application of journalistic standards.
Nor should the media support program become a closed club only for those who already exist. How might the creators of new “professional” media projects on the Web be included? The idea of an investment fund to support start-ups, proposed by David Skok, publisher of the new subscriber-only site The Logic, is interesting.
Tax incentives for donations
This measure seems to us the most likely to contribute to the independence of the media in the short and long term. It will ensure that those who choose to become non-profit organizations diversify their sources of income, and, above all, draw strong support from their readers. This new community-oriented business model introduces a new paradigm in which the core journalistic mission of a quest for facts takes priority over the quest for return on shareholders’ investment.
Subscription tax credit for digital publications
Less than 10 percent of Canadians pay for news online. A subscription incentive could cause a number of them either to start doing so or to increase their number of subscriptions. This tax credit, like all the measures in the support plan, should be granted only for publications published by Canadian companies.
The Department of Finance also plans to give attention to the government’s own purchase of advertising space in news media, a type of indirect support that has recently shifted to major US digital platforms. In addition, many municipalities now prefer to broadcast public notices on their own websites rather than in the local media. By committing to buying advertising space, the government could reverse these trends. In both cases, these are simple, neutral and inexpensive practices that, we think, warrant urgent restoration.
Finally, it would be helpful to develop tools to evaluate the effectiveness of measures in achieving the objective of supporting a diversity of strong and independent media. Government assistance will not be a panacea, and there is no guaranteed end-date for the crisis. Nevertheless, the plan should give time and space for the essential next step – adapting and evolving into viable business models.
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