It has been five years since the temporary, one-time federal bailout of the newspaper industry was supposed to have put us on track to recovery. It has been a year since the Online News Act was supposed to have dragooned Facebook and Google into assuring our survival in the longer term. How is that working out?
Well, it isn’t, of course. Industry revenues continue to plummet – at roughly $2-billion annually and falling, they are less than half what they were a decade ago. Paid circulation is likewise in freefall. As late as 2008, daily paid (print) circulation at the country’s 10 largest newspapers averaged more than 200,000. By 2015, it had fallen to a little over 120,000. And today?
Recent figures are harder to come by, but the experience of the Calgary Herald may be suggestive. Inquiries by a former Herald reporter to News Media Canada, the publishers’ lobby, found the newspaper’s average daily paid circulation – roughly 120,000 in 2008; 60,000 in 2015 – has lately fallen to less than 20,000. Digital subscriptions will have offset this decline somewhat; that the industry is so stingy about releasing these numbers suggests not entirely.
So no, the newspaper bailout has done nothing to reverse our long-term decline. What it has done is increase our dependence on government. As originally envisaged, the Canadian Journalism Labour Tax Credit covered 25 per cent of the annual salary of each eligible newsroom employee up to $55,000. That has since been bumped up to 35 per cent, on salaries up to $85,000.
But of course that was not the only subsidy to come our way. Add in the $100-million annually Google has promised to get out from having to pay the Online News Act’s ludicrous link tax, and journalists at some news organizations could have as much as half their salaries paid, directly or indirectly, by government.
As it happens, the Google money will not be controlled by the major newspapers who had been conspicuously lobbying the government for the link tax, on their pages and off. Mischievously, Google instead agreed to distribute the cash via the Canadian Journalism Collective, a group of independent publishers and broadcasters.
Facebook, meanwhile, took a different route. Told it had been “stealing” newspapers’ content – that is, by linking to it – and would have to pay, in effect, a fine each time it did, the platform agreed to stop. With links to news pages banned, the millions of readers Facebook had been sending the industry’s way every day – for free – vanished. The government had calculated that Facebook was bluffing. It wasn’t.
It would be hard to think of a more comprehensive policy failure. At a minimum, interventions of this kind are supposed to originate with some kind of market failure. But the problems of the news industry are not a failure of the market. There is nothing stopping readers from paying to subscribe to us if they choose, just as there is nothing stopping advertisers from buying space in our pages, print or digital, if it makes business sense to them.
What happened to our business, rather, is what has happened to a lot of industries before us: competition. Thanks to the internet, news and information that was previously only available from your local newspaper – plus a few radio and TV stations – could now be gathered from any number of other sources. More devastating still, advertisers found that Google, Facebook and other social-media sites offered a more targeted way of reaching potential customers.
To which the industry responded by … sitting on its hands. Then we gave away our content online, thinking that was the key to build readership and sell ads. When that failed, we loaded up our pages with clickbait, making them all but unreadable. And when that failed, we came whining to government.
There is a long history, of course, of industries in this country lining up at the government trough. But until recently the newspaper business was not among them. When the Kent Commission, in its 1981 report, recommended subsidizing the press – to encourage it to spend more on newsgathering – the nation’s publishers rose up as one in opposition, on the wholly reasonable grounds that this would compromise their independence, real or perceived.
Newspapers, everyone understood then, could not take handouts from the governments they were covering and expect to maintain the trust of their readers. But then, newspapers were profitable then. When the profits disappeared, so, apparently, did the publishers’ self-respect.
The issue is not that working journalists will automatically identify with the party in power, merely because it is paying half their salaries – though an election fought between a party promising to keep the gravy flowing and another promising to end it will surely test that thesis. The concern is rather that, over time, it will change the industry’s relationship with government generally.
It is not, surely, coincidental that public broadcasters the world over are known to lean to the left, beyond the natural reformist bias of most journalists. Spend your working life inhaling the fumes of government subsidy, and not only will you tend to believe in its natural advantages and inherent necessity when it comes to your own industry, but you are likely to grow more sympathetic to the claims of other industries for similar treatment.
But where that phenomenon is today confined largely to the CBC – and to the Canadian magazine industry, no less a ward of the state – in the future the whole news business will be of the same mindset: an industry of CBCs. Perhaps some will continue to be disposed not to take the subsidy. But they will be at a competitive disadvantage relative to those who do.
But why speculate? We do not need to peer into the future to see the effect of subsidy. We can see it even today. For the first effect of subsidy is sedation. Even if you accept the industry’s account of the internet’s impact, as a sort of inescapable natural disaster – and not as something that affected many industries in the same way, none of whom reacted with quite the same mixture of arrogance and incomprehension – it would still be necessary to consider whether, 30-odd years later, it might be time we did things a little differently. Maybe a lot differently.
What, instead, does subsidy tell us? Go back to sleep. Whatever mistakes you might have made, whatever mistakes you make in future, Daddy will be there to catch you. No large, unpleasant changes are required. Just go on doing the same thing, with the same people, in the same way as you have been.
Hence the current media landscape, dominated as it is by the same cluster of zombie publishers who got us into this mess – Torstar and Postmedia, foremost among them – but who have, by the very magnitude of their failure, immunized themselves from any consequences. For the industry, the government has made clear, cannot be allowed to die, and if the industry cannot be allowed to die, then the cheques write themselves – the worse we perform, the more subsidy we will be supplied.
But what is the alternative? The alternative, in the view of subsidy proponents, is the void, a vast nothingness – the “total collapse of the news sector in Canada” as the Minister of Canadian Heritage recently put it. The thesis is not just that, without subsidy, this or that legacy publisher would go out of business, or that all of them would, but that nothing would take their place. Without the current incumbents, there would simply be no news industry, or none to speak of.
At the risk of being accused of “toxic optimism,” this is preposterous. Whatever else may have changed in the business, two things have not. One, people – some people, at least – want to be informed: if they do not, there is no point to any of this. And two, they are presumably willing to pay for it. I can’t swear to that, but the evidence is rapidly accumulating: Consumers have gotten used to paying for news again. To be sure, they will have to get used to paying much more than they did in the days when advertising covered 80 per cent of our costs.
But, again, there is nothing stopping them. If they want to pay for news, they can. And if they don’t, then what is the point of making them pay, through their taxes? Perhaps you will say: to make them more educated people, better-informed voters, and the like. But such paternalism runs into an insuperable practical objection, which is that you can make people pay for news, but you can’t make them read it.
I don’t actually think consumers are as blinkered as all that. But the way people consume news has changed, even more radically than news production. The question is: who is best placed to give it to them? The same old gang, in the same old way, staggering around on an intravenous feed of subsidy? Or newer, nimbler players, with less debt, lower costs and smarter managers?
At this subsidy advocates throw up their hands. Where, they demand to know, are all these new entrants going to come from? It is the same objection that is always offered, whenever it is proposed to change any policy on which a particular interest has grown to depend. We heard it during the free-trade debate: where are all the jobs going to come from, to replace those lost to foreign competition? You hear it now in debates over the (latest in a series) auto industry bailout.
The future, of course, is unknowable – but then so, once upon a time, was the present. A majority of the companies in the S&P 500 did not exist 60 years ago. Most of them had not even been imagined. Had anyone demanded, in advance, to know what they were, no one could have answered. Yet they are no less real for that.
The proposition that people could be standing around with fists full of cash looking for news to purchase and no one would supply them with it does not strike me as plausible. Indeed, there are dozens of media startups at various stages of incubation already, and more on the way. They might not resemble the full-service, general interest, print-based, unionized incumbents, but why should they?
Why aren’t there more? Why aren’t they larger? Why isn’t the future already here? Perhaps because all of the air is currently being sucked out of the system by those subsidized zombies. The startup must compete – for investors, for advertisers, for readers, for attention – with incumbents that are not only more established and better known, but subsidized by the state.
Most important, perhaps, they must compete with them for labour. The working journalist at a big city paper has a choice: stay with his existing, subsidized employer, with the wages, benefits and job security that implies, or take a flyer on an untested, probably unsubsidized newcomer. Which would you choose?
It can’t go on. If the Canadian news industry is to live, some of its existing players will have to die. End the subsidy, and let the industry breathe on its own again.