Media Needs to Stop Hoping for Subsidies
On June 22nd, the Canadian Government announced that Bill C-18, otherwise known as the Online News Act, had received Royal Assent. In other words, it’s now law. In the announcement:
The Online News Act levels the playing field between news businesses and large digital platforms to create greater fairness to ensure sustainability of the news industry. Through a market-based approach, it encourages voluntary commercial agreements between platforms and news businesses with minimal government intervention, as well as crucial safeguards to preserve the independence of the press.
In other words, Canada has now made it a law that Facebook and Google must pay Canadian publishers for the right to link to those publishers. One of the quick facts in Canada’s announcement stands out to me:
Digital platforms benefit from sharing news content on their platforms, both directly (advertising near news) and indirectly (user engagement, data refinement, subsequent targeted advertising). This legislation requires dominant platforms to compensate Canadian news businesses fairly for their content by addressing the bargaining imbalance between the two parties.
Naturally, Facebook and Google are uninterested in paying this. And so, rather than pay, they have alerted the Canadian government that they are backing out of including content from Canadian publishers on their platforms.
According to Meta:
Today, we are confirming that news availability will be ended on Facebook and Instagram for all users in Canada prior to the Online News Act (Bill C-18) taking effect.
We have repeatedly shared that in order to comply with Bill C-18, passed today in Parliament, content from news outlets, including news publishers and broadcasters, will no longer be available to people accessing our platforms in Canada.
And according to Google:
The Government of Canada has enacted a new law called Bill C-18 (the Online News Act), requiring two companies to pay for simply showing links to news, something that everyone else does for free. The unprecedented decision to put a price on links (a so-called “link tax”) creates uncertainty for our products and exposes us to uncapped financial liability simply for facilitating Canadians’ access to news from Canadian publishers. We have been saying for over a year that this is the wrong approach to supporting journalism in Canada and may result in significant changes to our products.
We have now informed the Government that when the law takes effect, we unfortunately will have to remove links to Canadian news from our Search, News and Discover products in Canada, and that C-18 will also make it untenable for us to continue offering our Google News Showcase product in Canada.
This is the most obvious outcome. We’re not talking about showing full articles on Facebook or Google. We’re talking about including links. We’re talking about publishers getting free traffic from platforms and then demanding those platforms pay the publishers to send free traffic.
That sentence sound asinine to you? Yeah, that’s because it is. It makes zero sense. There is a perfectly fine ecosystem that exists between platform and publisher. The platform has aggregated a massive audience; the publisher has content that the audience wants. And so, the platform willingly sends people to the publisher to consume said content. And when that person hits the publication, the media company can do whatever it wants to try and monetize them—charge subscriptions, sell product, run ads, etc.
You can argue that Google has a monopoly because of its ownership over AdX and Google Ad Manager and all of that. And I agree. But this isn’t about that part of the business. This is about the core user experience for tens of millions of people in Canada alone.
I’ve seen people argue that “this is necessary because we’re losing journalism.” And while I hate that media companies that do important journalism are dying, this bill does not help them. It makes no guarantees whatsoever. According to the Office of the Parliamentary Budget Officer:
It is unclear to what extent these additional revenues to the industry will impact federal tax revenues. While there will be an increase in costs for communications platforms and revenues for news businesses, PBO is unable to project the behavioural response of these firms. For example, the increased revenues for news businesses may result in a commensurate increase in content creation spending, resulting in no net overall change in corporate profits. Alternatively, the owners of news businesses may simply take the additional profits.
“Alternatively, the owners of news businesses may simply take the additional profits.” Wow. Let’s just be honest here. Media owners don’t like that they’re making less money than they used to and want to recoup some of that money. Media operators need to do better.
Here’s where I come down on this.
If you want access to my content on my site, you need to pay for it. If you want to take my content and put it on your site, you need to pay more for it. If you want to link to me, thank you very much.
Media companies have certainly been failing over the past 10-15 years. What media needs to do is stop trying to chase the latest subsidy and focus on its internal operations. And those subsidies are not just this extortion attempt with Facebook and Google.
The past 10-15 years have been full of attempts by media companies to get subsidies from platforms. When I reviewed Ben Smith’s Traffic, I wrote:
Second, Jonah Peretti, in particular, always viewed digital media and the platforms as having a symbiotic relationship similar to content companies and cable companies.
For example, before we all cut the cord, Viacom would make content and then work out a deal with all of the cable companies to distribute the content through their pipes. This was a symbiotic relationship.
And so, here comes the internet and Peretti thinks the same thing will happen. Facebook, Google, Twitter, etc. would need big content companies to ensure they had content to put their ads around. And this was the cardinal mistake.
Except the platforms didn’t need publishers. And so, an entire business built on this assumption that they’d get subsidies died in the water. That didn’t stop publishers from chasing platforms with whatever their latest fad was.
You cannot build your business on receiving big checks from the platforms. It’s not sustainable. Those checks disappear one day.
And so, if publishers want to thrive in the coming years, they need to do the following four things:
- Stop chasing the easy money and hoping to get free money from platforms.
- Create unbelievable content that readers or consumers cannot get anywhere else.
- Use that unbelievable content to build a highly sought after audience.
- Sell the hell out of that audience, either directly with subscriptions or indirectly with advertising.
And when you finish #4, pass go and collect $200, and then repeat. If someone wants to license your content, that’s great. But don’t build your business with the assumption that this easy money is out there. Let it be a complement to what you’re doing versus what you exist for.
What’s ironic is that a platform’s willingness to pay for content is directly connected to the above steps. If your content is great and an audience is obsessed with it, you’ll get paid. Arbitrarily receiving money, though, is just stupid.
It’s time to stop thinking about how to get free money and, instead, think about building an incredible media property. Do that and you’ll find an audience starts showing up again.
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