Platforms have 180 days to notify CRTC if they are subject to law
By Ahmad Hathout
Canadian Heritage on Friday provided its final rules for the Online News Act ahead of its enforcement next week, including capping compensation for broadcasters and CBC/Radio-Canada on single agreements.
The legislation, which comes into force on December 19, will require web giants to compensate publishers for hosting news content on their platforms. Deals will be done on the basis of single group agreements or multiple agreements.
Under the single agreement, Heritage announced Friday that news products owned by broadcasting undertakings will have their compensation capped at 30 per cent while CBC/Radio-Canada, which obtains revenue from both private and public sources, will have a ceiling of 7 per cent. A Heritage official said the caps were determined by a variety of factors, including weighing the number of employees and the fact that there are other news businesses that rely on that type of money for survival.
The Canadian Association of Broadcasters (CAB), which is in the process of forming a collective to represent Canada’s private broadcasters in Online News Act negotiations, said it’s disappointed that the regulations “do not reflect the significant role private broadcasters of all sizes play in the Canadian news marketplace.”
“The Online News Act is one piece of the puzzle when it comes to the critical mission of supporting news in this country,” said CAB President Kevin Desjardins in a statement. “There needs to be more urgent action taken to support broadcast news if we are to have a healthy journalism ecosystem that can continue to adequately keep Canadians informed.”
The CAB says commercial radio and TV stations, while being Canadians’ largest source for news, continue to be overlooked for critical supports for the news sector, including the Canadian Journalism Labour Tax Credit. The association went further to state that Canadian Heritage’s division of funds “do not align with each sector’s respective investment in news, nor with Canadians’ patterns of consumption,” citing Communications Management Inc. data indicating that private TV broadcasters are the largest financial contributors to news.
“All news organizations, regardless of their origin, now exist in an online, multimedia universe,” said Desjardins. “Canada’s private broadcasters need equitable supports to continue to provide important, fact-based reporting that is trusted by the communities they serve.”
CBC/Radio-Canada released a statement of its own saying it’s important that the regulations recognize that news provided by the public broadcaster should also receive compensation.
“We know that one law or set of regulations won’t solve all of the challenges facing the news business in Canada. But it will help,” the public broadcaster stated.
Platforms will need to notify the CRTC – which still must hold consultations on its implementation – within 180 calendar days from the law’s enactment that they are subject to the rules. Subjects will be those that have a baseline total global revenues of $1 billion in a calendar year, operate in a search engine or social media market and have 20 million or more Canadian average monthly unique visitors or average monthly active users to compensate news publishers if they intend to host their content on their sites.
News businesses will have 60 days to respond to platforms’ open call to be included in a list to either negotiation with or seek an exemption — the latter can be negotiated on the basis that the platform feels a collective or collectives capture enough diverse news businesses to satisfy the objective. The news organizations that want a piece will then need to find a collective representative to hammer out a deal with the platforms.
Compensation must be comparable for news businesses that are similar and the agreements must benefit a swath of businesses, including independent and indigenous and official language minority communities. News organizations must have at least two full-time employees and freelancers are not eligible.
As such, the agreements must include a “commitment to use a majority of monetary compensation to support the production of local, regional, and national news content,” according to a Heritage slide deck, adding platforms must not take action against a publisher because of a news decision to ensure journalistic independence.
The rules, however, include a stipulation that the CRTC will not be precluded from requiring non-monetary contributions from the platforms on top of the existing financial contribution.
The final rules come a couple of weeks after Google and Heritage struck a deal for the tech giant to commit $100 million annually to a news fund, which will be indexed to inflation. Meta, Facebook’s parent company, by then had already said it is backing out of the market over objections to the law, including a claim that there would be uncapped financial liability.
A Heritage official said Friday that the Google deal and the final rules show that uncapped financial lability is not a concern, but that Facebook has so far continued to not want to engage. Facebook’s position, the official said, “is clear,” citing its similar moves globally.
If that changes, Facebook has 180 days from next Tuesday to notify the CRTC about a change of heart. If a platform hosts news links but has not notified the CRTC about their eligibility under the rules or abides by the rules, the CRTC can levy administrative monetary penalties in the amount of $10 million for a first offence and $50 million for second and subsequent violations.
Annual compensation from other platforms will be determined by the CRTC, taking into account the platform’s Canadian internet advertising revenues, according to Heritage.
Both Facebook and Google control roughly 80 per cent of the digital advertising spend, which has upended the traditional news revenue model.
Over the course of a three-week hearing on implementation the first phase of the Online Streaming Act that ended last week, the CRTC heard from large broadcasters that local news requires support because it is very expensive to produce. The hearing heard the need for base contributions from online platforms to make their way to local news.
The 2023 Fall Economic Statement increased the cap on the Canadian Journalism Labour Tax Credit from $55,000 to $85,000 per eligible newsroom employee and increased the credit rate from 25 per cent to 35 per cent.
Other mechanisms for news support include the Local Journalism Initiative, which provides $70 million over five years for news organizations to hire journalists or pay freelance journalists.
The Canadian Periodical Fund, which provides an annual $75 million on an ongoing basis to Canadian print and digital magazines, community newspapers and industry associations.
With files from Connie Thiessen. Screenshot of Heritage Minister Pascale St. Onge.
