Canadian journalism outlets are struggling to survive. Ottawa should require Google and Facebook to compensate for the use of news content.
It is one of the pandemic’s greatest ironies. At a time when more people than ever are relying on local newspapers, the economic fallout from COVID-19 is destroying the industry resulting in wage cuts, layoff and closures. The latest economic casualty of COVID-19 came late last month, with the announcement from Postmedia that 15 community papers were going to be closed permanently in Southern Ontario and Manitoba. According to the Canadian Association of Journalists, COVID-19 is responsible for the closure of 50 outlets, 48 of them community newspapers. Some of these closures are permanent. In total, 2053 editorial and non-editorial staff have lost their jobs. The closures have occurred across the country. To borrow from News Media Canada’s Bob Cox: “Newspapers have never been so loved – and never been so neglected.”
For newspapers, COVID-19 has acted like a nail in the coffin for an industry that has been struggling for some time as a result of falling advertising revenue. Advertising has long been the “foundation on which the news industry” sits. But even before the pandemic, ad revenue was dropping. Daily and community newspapers recorded $1.6 billion in advertising revenue for 2018 almost half of the revenue from 2009.
As newspapers struggled to compete with online search engines and social media platforms, internet advertising revenue climbed from $1.8 billion in 2009 to almost $7.6 billion by 2018. In response to declining revenue, many in the newspaper industry introduced subscriptions for online content. This is not a long-term sustainable solution when news aggregators are providing the news content for free.
Two media behemoths creating a large dent in Canadian media advertising revenues are American-owned corporations Google and Facebook. Both companies have accumulated “unprecedented power” over news distribution and benefit from the work of Canadian journalists by circulating news content online for free while reaping advertising revenue without having to pay tax. In 2018, the two tech companies’ shares of internet advertising market rose to 78.3 per cent. Accounting for over three-quarters of online advertising, the two companies have created a “stranglehold” on advertising.
Cox points out: “The big search and social platforms sell billions of dollars of advertising but don’t share it with news publishers who generate content that attracts of lot of eyeballs to those platforms. It’s a bit like a TV network broadcasting a concert by Céline Dion, but not paying for her songs.”
The impact of reduced digital revenue affects print media as most newspapers today are online with a website to distribute the news. They are increasingly reliant on digital advertising.
The economic fallout has been difficult to watch as publishers across Canada deal with this issue. Postmedia’s recent announcement means that 80 journalists are out of work at publications that include, in Manitoba, the Altona Red River Valley Echo, Carman Valley Leader, Gimli Interlake Spectator, Morden Times, Selkirk Journal, Stonewall Argus & Teulon Times, Winkler Times and The Prairie Farmer. In Ontario, the Kingsville Reporter, Lakeshore News (Windsor-Essex), LaSalle Post, Napanee Guide, Paris Star, Tecumseh Shoreline Week, and Tilbury Times shut their doors on May 4.
This follows a loss earlier this month at Canada’s most read newspaper, the Toronto Star, which eliminated 85 positions totaling around three per cent of its workforce and representing a continuation of a series of cuts which have been ongoing at the newspaper since 2000.
SaltWire Media, Atlantic Canada’s largest newspaper chain announced it would temporarily lay off 40 per cent of their workforce for at least 12 weeks and shut down all its weekly newspapers at the end of March. Manitoba’s oldest news publisher, the Winnipeg Free Press, opted to reduce wages up to 50 per cent in order to keep workers employed until the situation improves.
Facing an unprecedented challenge, newspaper publishers have requested government intervention. Heritage Canada has responded with the Local Journalism Initiative. Established in 2018, it provides $50 million over five years to support original news content covering “the diverse needs of underserved communities across Canada”. The five-year program aims to address “news deserts:” defined as communities with limited or no access to journalistic information due to the loss of daily and community newspapers. Organizations that qualify can receive up to a maximum of $60,000 per year, per reporter.
As well, the 2019 budget laid out plans to provide tax credits and incentives valued at $595 million over five years for newspapers. The most significant measure is a tax credit whereby qualified news organizations can claim up to 25 per cent of the salaries of journalists up to a maximum of $55,000 annually per employee.
However, these initiatives don’t address the central problem and that continues to be finding a fair way for Google and Facebook to pay their fair share of compensation. Australia has already done so, saying the companies would be forced to share advertising revenue. Canada needs to jump on board with this type of approach.
The newspaper industry continues to account for most of the news generation for other media outlets. Newspapers are even more important during a pandemic. During a public health crisis, Ryerson University’s April Lindgren suggests Canada cannot allow local news poverty to amplify “the underreporting of complex political issues, the proliferation of superficial journalism, and a citizenry deprived of credible information.” Most of the important guidance provided to Canadians across the nation is highly localized. Where can citizens get tested? Where is it acceptable to visit? What are the latest recommendations? These questions, and more, require local journalism to spread trustworthy and accurate information.
The decline of the newspaper raises concerns about the decline of citizen engagement and the manner and degree to which this shift in media consumption and production is “deflating democratic life.” In a healthy media environment, journalists from a wide variety of news outlets will press political candidates for their views on key local and national issues, provide analysis on campaign performances, and scrutinize incumbents’ records.
Stories will explore the effects of party decisions within the region and journalists will question party leaders on concerns and policy responses. The lack of newsroom staff means an inability to deeply interrogate the government on policy choices. Access to quality political coverage is critical in a democracy to enable citizens to hold their governments at all levels accountable for their policy decisions particularly during a time of crisis.
In the 2019 mandate letters to cabinet ministers, Prime Minister Justin Trudeau emphasized the importance of journalists writing that they “ask necessary questions and contribute in an important way to the democratic process.” However, local and print journalism cannot survive in the current environment with a declining revenue. It is time for government to enact laws that help traditional Canadian media rather than creating dependence on government handouts. Our democracy is at stake.