OTTAWA – The Parliamentary Budget Officer (PBO) is expecting Canadian news businesses will receive around $329.2 million per year in total compensation from digital platforms if Bill C-18, the Online News Act, is implemented, according to a cost estimate report for the bill released yesterday.
For context, the heritage committee was told last month the Australian news media bargaining code is currently generating over $200 million for news businesses from digital platforms.
In Canada, the PBO estimates the revenue generated from digital platforms will equal around 30% of the costs of content creation for news organizations. “For broadcasters, the cost of content creation is approximated by Canadian Programing Expenditure (CPE) in news, and for QCJOs (Qualified Canadian Journalism Organizations), it is estimated based on our consultation with news businesses,” the report explains.
As for transaction and compliance costs for news organizations to conclude their first deals, the PMO estimates they will spend around $20.8 million. “It would be more expensive for smaller businesses to negotiate and comply with the legislation because most would need to hire external expertise, while for large companies, internal capacity likely already exists,” the report says.
Additionally, the PBO assumes medium and large businesses will enter into voluntary commercial agreements with the platforms outside of the legislative framework, while “a small proportion of small businesses will initiate a mandatory bargaining process.”
It is also assumed the proportion of the compensation generated that goes towards transaction and compliance costs will differ between small, medium and large news organizations.
For the bill to be implemented, the PBO estimates the cost to Canadian Heritage will be an average of $2.2 million per year for five years. This accounts for the number of additional full-time employees the department will need.
For the CRTC, the PBO estimates an average of $3.4 million per year for five years will be needed. This includes costs for additional full-time employees and for an external auditor to produce an annual report. It does not include costs of recovery by the CRTC.
The estimation is based on information provided by the Commission, however, the report notes “The CRTC provided limited detail regarding the specific tasks it plans to undertake and its anticipated resource requirements for those tasks.”
The government’s Budget 2022 provided $8.5 million for the CRTC over two years, starting in 2022-23, to help implement C-18 if it becomes law.
While the revenue the PMO estimates C-18 will generate would be welcomed by many news organizations, digital platforms have been critical of the bill.
Meta, parent company of Facebook, has estimated the Facebook Feed is sending news publishers traffic worth over $230 million already.
“Publishers voluntarily choose to share content on Facebook to grow their audiences and advertising revenue,” said Lisa Laventure, head of communications – Canada at Meta, in a statement emailed to Cartt.ca.
“We estimate that the Facebook Feed sent Canada News Page Index registered publishers additional traffic worth more than $230 million in value in the twelve months ending April 2022. The Online News Act fails to recognize that the value exchange runs in favour of publishers and misrepresents the relationship between our platforms and publishers who choose to post news to reach subscribers and monetize their content.”
(Cartt.ca also reached out to Google but have not heard back yet. We will update this story if we do.)
For the full PBO report, please click here.
