OTTAWA — When the federal Liberals promised in the last election campaign to follow Australia’s lead in making big digital platforms share revenue with Canadian news organizations, they had in hand the results of a government consultation saying that’s the model most of the legacy news companies liked best.

On the other side of the table, Twitter and Reddit had told the government any such system risks protecting established media at the expense of smaller, newer, more innovative players.

When Justin Trudeau called the election, public input was still being invited.

The Logic obtained many of the companies’ comments and submissions through an access-to-information filing. (The National Post has also reported on them.) Heritage Canada withheld some, including those from Facebook and Google, at the companies’ request. Canada’s Access to Information Act allows third parties’ confidential financial or commercial information to be kept out of document releases.

The documents the government did release make clear that the news organizations that participated are desperate: “For the last several broadcast years, over three-quarters of our local TV stations have not been profitable,” wrote Bell’s vice-president for regulatory law, Jonathan Daniels, adding that local news coverage has suffered. “We are no longer able to keep full-time journalists at city halls and courts across our country, for example. We are missing stories on a daily basis and as a result, our role in holding governments, big business and others accountable has diminished.”

The Liberals promised to present the House of Commons with a law creating the payments system within 100 days of Trudeau’s naming a new cabinet, which gives Heritage Minister Pablo Rodriguez until early February.

In spring 2021, under Rodriguez’s predecessor Steven Guilbeault, the department asked news organizations and platforms to weigh in on two ways to get digital platforms that have hoovered up the bulk of online advertising to support journalism in Canada.

Under the Australian model, online companies that link to news content have to negotiate with the journalism providers under a legal code that spells out eligibility, how bargaining works, and an arbitration system that applies if they can’t agree. (Sometimes this is called the “licensing model.”)

An alternative idea, made public in the consultation process, was to set up a fund that the platforms would pay into and news companies could tap, the way cable companies support the Canadian Media Fund and it, in turn, backs Canadian TV programming.

According to the documents, the CBC’s executive vice-president of corporate development, Claude Galipeau, told the government it “would prefer an Australian-style framework that focuses on the facilitation of negotiation, mediation and final-offer arbitration.”

So did News Media Canada, which represents the bulk of Canadian newspapers, from the Globe and Mail to Yorkton This Week.

Its then-president and CEO John Hinds wrote that support funds do have their place. “But creating an additional Fund is not the approach that is required for this current crisis,” he went on, with the bolding and underlining.

News Media Canada doesn’t want a government-administered program deciding what’s worthy of support, Hinds wrote, but a market-based program based on negotiations between the platforms and news companies (likely with News Media Canada representing publishers).

He included a detailed memo on how to make “the Australian solution to the Google/Facebook problem” work in Canada.

The Canadian Association of Broadcasters, a TV-industry umbrella group, liked both models: “While the CAB could envision a scenario where both a funding model and a licensing model co-exist within a new regime, it would be vital for any legislative and regulatory regime in this area to provide news organizations the ability to negotiate for fair value for their content,” the association’s submission said, before suggesting a slight tilt toward the Australian licensing system. “Transparency and open communications are among the policy objectives underlying the Australian approach and they should be central to the Canadian approach as well.”

(Daniels, the Bell vice-president, also wasn’t choosy: “We see merits in both models and thus do not offer a preference between the two,” he wrote.)

Of the media representatives whose submissions the government released, only Magazines Canada preferred the fund model, because it “does not skew heavily in favour of the largest companies in the ecosystem and does not require the burdensome bureaucracy that the arbitration model does.”

Though the released submissions do not include material from Facebook or Google, both have struck direct deals with Canadian publishers in the past year, which is in keeping with the Australian licensing model.

A submission from Microsoft, which presents news content on its MSN.com website and through its Bing search engine, said it prefers the Australian model overall, as an addition to other programs that support news companies already. 

(It doesn’t see itself as a “gatekeeper” for news content with structural power in the market—unlike Facebook and Google—and already pays licence fees for much of the material on MSN.com, its submission says)

Twitter’s submission, meanwhile, makes it clear the company fiercely hates both proposed systems: ”Any legislative regime in Canada that forces Twitter to make payments to news organizations is based on the premise that news organizations have been treated unfairly by Twitter and that Twitter profits from news organizations. Both assumptions are false,” wrote its head of government and public policy in Canada, Michele Austin.

Journalism organizations break news on Twitter and use it to publicize links to their online stories, her submission said, but it makes little money off advertising related to news content.

But, Heritage Canada’s consultation questions asked, if you had to pick one?

“Neither. Twitter prefers a free market approach,” its submission said, before grudgingly conceding Twitter loathes the Australian system less: “If pressed, Twitter would prefer an arbitration model.”

Reddit, finally, participated in the consultation through a meeting, and its views were represented in just over a page of point-form notes made by an unidentified Heritage official.

“Can’t understate how bad they think the Aus model is,” the notes say. “From a smaller company that needs to compete with larger companies, the aus model just sets up a fight between two large, powerful industries. They’ll duke it out amongst each other but the smaller players on either sides won’t come out on top. The model just privileges the larger players more.”

In the notes, Reddit comes across as somewhat baffled to be included in the consultation at all, because its limited revenue and business model based on posts from anonymous users is so different from Facebook’s and Google’s.

“But there’s a large and well-funded news lobby that will try and sweep everyone in for advertising dollars not spent in news otherwise,” the notes show Reddit’s people saying. “Fights over who gets swept in and it gets to be very difficult. They don’t have the resources for those fights. The policy team is 2 people and they just don’t have the money and people to handle it.”

In the submissions from the platforms, the risk of shoring up existing news organizations at the expense of innovation comes through in several spots.

Government-mandated payments to government-approved news organizations “could have a profoundly negative impact on both the quality of news and the health of Canada’s economy,” Twitter’s submission said.

The fund model seemed preferable to Reddit, “since it’s more proportional and flexible” and more “future-proof,” according to the notes on its meeting. Above all, the notes said, “the top priority is business innovation” and avoiding locking in “current incumbents.”

Even Microsoft, whose submission was friendliest to the government’s plans, warned that “a funding scheme, if broadly implemented, would put the government squarely in the centre of picking and choosing which news organizations flourish and which voices are heard.”

One section of the government questionnaire asked participants to score out of 10 the importance of factors such as encouraging business innovation, independence of the press, supporting English and French as minority languages in different parts of the country, and “sufficient financial support for news content” in devising the final payment system.

Many participants disregarded the question. The Canadian Association of Broadcasters said they’re “all very important.”

Bell gave “business innovation” a 7, the lowest importance it gave any of the factors. The CBC and News Media Canada gave all the factors scores of 9, 9.5 or 10, and each gave business innovation a 9.