Month: December 2023

Used with permission

Around this time of year, I typically write a blog post looking back at the big content issues over the past year and peek forward at the coming 12 months, in Canada, the US and elsewhere.  There is no doubt that the biggest issue can be summarized in just two letters—AI (Artificial Intelligence)–its role in society, it potential misuse, and the challenges and, yes, opportunities that it presents to creators. But there are a number of other key issues as well, particularly if we direct our focus to Canada. These include payment for use of news content by dominant online platforms (i.e. the Online News Act, Bill C-18), the extent and nature of the contribution expected of foreign streamers to funding Canadian content production (i.e. the Online Streaming Act, Bill C-11)–along with a likely revised definition of what constitutes Canadian Content (CanCon)–plus online safety, and the future of digital media. Happily all of these topics, along with AI and Cultural Expression, will be explored in depth at the 10^th annual DM (Digital Media)@X (the Crossroads) conference, to be held January 19-20, 2024 at the Faculty of Music (Walter Hall in the Edward Johnson Building), on the University of Toronto campus.

DM@X began back in 2015 as a one-day event, largely focussed on digital challenges in the music industry but also including such now-dated topics as “the rise of Netflix” (and Spotify).  Since then, it has grown in strength and reach, including during the COVID hiatus where the proceedings were online, reaching a wider audience. But this year, real-life networking will once again take place. 

The conference will lead off with a report from the strategic communications research firm Nordicity,  reviewing revenues, employment and future trends in the digital media universe in Canada. This will be followed by what promises to be an interesting discussion on how CanCon should be defined, featuring Doug Barrett, Adjunct Professor of Media and Entertainment Management at York’s Schulich School of Business and a prominent entertainment lawyer for more than two decades at McMillan LLP, Valerie Creighton, CEO, Canada Media Fund, and Richard Stursberg,  former President of the Canadian Cable Television Association, Telefilm Canada and head of English services at the CBC, as well as being the author of The Tangled Garden, a Canadian Cultural Manifesto for the Digital Age. Day 1 closes with a panel on how streamers should fund Canadian content, referring to C-11, the Online Streaming Act, featuring former CRTC commissioner and communications lawyer Monique Lafontaine, MediaPolicy.ca blogger Howard Law, and Michael MacMillan, CEO of Blue Ant Media.

Day 2, Saturday, opens with a discussion of the online harms legislation, which is having some difficulty getting out the gate, followed by a panel on C-18, the Online News Act. Then the conference looks at interactive advertising, new developments in digital journalism and the role of social media in online streaming. The keynote luncheon address, explaining where the CRTC stands with its full agenda, will be delivered by CRTC Commissioner for Ontario Bram Abramson. After lunch there will be a panel on AI featuring Stephen Stohn, producer of the Degrassi series and Neal McDougall, Assistant Executive Director of the Writers’ Guild of Canada, moderated by none other than yours truly. The final two panels will be on how broadcasters can support Indigenous, black and other racialized creators, and on the future of personalized audio streaming featuring Xavier “X” Jernigan, Spotify’s AI DJ and Head of Cultural Partnerships. While I haven’t listed every speaker and moderator (and with apologies to those I missed), the full program is available here.

You can register here for $515.  However, the student rate is only $75.  And registrants who are affiliated with one of the educational or creative institution sponsors (of which there are many), can register for just $185.    

While DM@X will present a great opportunity to examine many of the topics that captured the attention of the content community this year, not everyone will be in Toronto in January so let me offer a quick recap of the issues from my perspective. As mentioned earlier, the big issue—globally—was AI and the impact that it will have on creators and creative industries. Generative AI burst on to the creative scene in 2022, through creation of both images and texts that resembled to a greater or lesser extent original works that had been used to train the AI algorithm. Inevitably this unauthorized ingestion of copyrighted content was going to be challenged in the courts, and 2023 saw a spate of such cases. First out the gate was a suit by Getty Images against Stability AI in the UK, while another was brought by a group of artists in the US against Stable Diffusion, as I wrote about here. These were followed by lawsuits launched by a number of writers against text copying by AI firms. The Hollywood writers’ strike, where screenwriters and actors fought to control the impact of AI on their profession, was another example of creatives trying to come to grips with the AI challenge. In the US, after rejecting several attempts to obtain copyright registration for AI-generated works, the US Copyright Office (USCO) organized a series of public consultations and at the end of August formally announced a study on copyright law and policy issues related to AI. Canada was a bit slower off the mark but announced its own consultation on AI and copyright in October, with submissions requested by January 15, 2024.

Canada and the US have followed very different paths when it comes to recognizing copyright in AI-generated works. The USCO  has been firm that it will not register works where the content has been generated, rather than just assisted, by AI. In Canada, by contrast, the Canadian Intellectual Property Office will issue a copyright certificate to just about any work, computer generated or not, as long as no- one else has registered a similar work, as I proved when I applied and received a copyright certificate for my 100% computer-generated work earlier this year. Meanwhile efforts are taking place to reach some sort of international consensus on the rules for use of AI, ranging from input and output copyright issues to its potential misuse in a number of areas, where AI when improperly used can lead to invasion of privacy, race or income biases, fake news, manipulated images, appropriation of the right of personality and many other possible harms.

Other key issues very much in the news in Canada were, as mentioned earlier, online news (Bill C-18), online streaming (C-11) and Canadian content (CanCon). This latter issue will be addressed by the CRTC as it develops regulations to implement the Online Streaming Act. Both C-18 and C-11 became law in 2023 after a fairly lengthy legislative process. Much work, however, remains to be done regarding the implementing regulations. In the case of C-18, after Meta’s refusal to comply with the intent of the bill by blocking Canadian news on its platform, a deal was cut with Google to bring them onboard with the legislation although it is fair to say that the final outcome was likely not what many in the news media had expected when the bill began its journey through Parliament.

All these topics, and more, will be thoroughly examined at DM@X. If you are interested in digital content issues in Canada, this conference is not to be missed.

© Hugh Stephens 2023. All Rights Reserved.

Image: http://www.shutterstock.com

I am sure you are all familiar with the books by the British writer A.A. Milne about Winnie the Pooh-bear and his friends, Eyeore, Piglet, Kanga, Roo, Rabbit, Owl, Tigger, and their adventures with Christopher Robin, who was Milne’s son. You have probably read the stories to your own children or had them read to you when you were young or, if not, you have likely watched a Disney film on Winnie the Pooh at some time. Books about Winnie and his friends are likely to be in Christmas stockings again this year.

Milne wrote Winnie-the-Pooh in 1926 followed by two sequels, Now We are Six, a year later, and The House at Pooh Corner in 1928. The books have enjoyed enormous popularity over the years and have been translated into over 50 languages. The Latin translation of Winnie the Pooh by Alexander Lenard (“Winnie Ille Pu”) is the first foreign language book to have been on the NYT Best Seller list and, perhaps needless to say, the only one in Latin. Given the interest in Milne’s works, early in 2024 we are going to be treated to breathless announcements by advocates of the public domain, such as the Center for the Study of the Public Domain at Duke Law School celebrating the fact that the third of Milne’s Pooh books, The House at Pooh Corner, where the character Tigger was first introduced, will be entering the public domain in the US. (It has already been in the public domain in Canada since 2007 but will remain under copyright in the UK until 2026). As I wrote when the original Pooh work entered the US public domain almost two years ago (Winnie the Pooh, the Public Domain, and Winnie’s Canadian Connection), this predictable but essentially meaningless crowing over books or works entering the public domain feeds the false narrative that a book falling under copyright protection is somehow “locked up” and unavailable to the public.

Another recent example of this fabricated frenzy are reports now appearing about the expiry in the US of the copyright on Disney’s first Mickey Mouse film, Steamboat Willie, which first appeared in 1928. (Even though this film has probably been in the public domain in Canada for a number of years, although with limited circulation lest it be inadvertently distributed in the US, the CBC could not stop itself from tooting Willie’s imminent release from copyright purgatory by running the film’s steamwhistle soundtrack on the evening news last week). With the expiry of the US copyright on Willie, that particular film will be free to use and broadcast without licence, although its value is limited as all more recent Disney versions of Mickey remain under copyright, the Steamboat Willie character is trademarked so knock-offs would still be an intellectual property infringement and, moreover, Disney made the Steamboat Willie film freely available on Youtube years ago.

But back to Winnie—and Disney. While all of Milne’s Pooh books will be in the public domain in both the US and UK quite soon, none of the Disney adaptations will lose their copyright protection for quite some time. Disney made its first Pooh film in 1966 (Winnie the Pooh and the Honey Tree) and has produced numerous sequels since, turning the characters into a major Disney franchise that, according to some estimates, generates up the $6 billion annually for the company.

But how did Disney acquire the rights to Pooh? That is a story in itself and, as often happens when intellectual property is worth a lot of money, it led to no small amount of legal wrangling. Milne held the literary copyright on the Pooh works until his death in 1956, but in 1930 the North American merchandising and recording rights to Pooh were acquired from Milne by Stephen Slesinger for $1000 (worth considerably more then than now), plus royalties on sales. Slesinger was a US radio, TV, film, and comic book producer who licensed a number of popular literary characters, including Tarzan, Buck Rogers and others. Slesinger created various Pooh-branded products–a doll, a record, a board game (marketed by Parker Brothers, in colour, which is when Pooh’s red shirt appeared for the first time)–as well as broadcasts and animation. Slesinger died in 1953 and in 1961 his widow assigned all the rights in the 1930 agreement to the Walt Disney Company.

Meanwhile, Milne died in 1956, leaving his rights to Pooh to his widow (through the Pooh Properties Trust) and three organizations: Westminster School, the Royal Literary Fund and the Garrick Club, in London. When Disney acquired the rights that Slesinger’s widow controlled in 1961, it also struck a deal with the holders of Milne’s copyrights, paying them all royalties on a semi-annual basis. The merchandising of Pooh characters was immensely profitable. In 2001 Disney bought out the rights owned by the four British entities for $350 million. Some of the proceeds went to establish a trust for Milne’s handicapped granddaughter Clare, (although Clare died in 2012, the Clare Milne Trust still exists to provide support for people with disabilities in Devon and Cornwall), while the Royal Literary Fund, which got £90 million, established a Fellowship Fund for writers.

In the meantime, things were getting hot between Slesinger’s widow (but not Milne’s family) and the Disney Corporation, influenced by changes in US law that extended the term of copyright protection in the United States. Originally, under the 1909 US Copyright Act, the US copyright in Milne’s works would have expired between 1980 and 1984 (56 years after date of publication). However, in 1976 there was a major revision to US copyright law whereby the term of protection was extended from a maximum of 56 years after publication, to the life of the author plus 50 years. Works owned by corporations (aka “works for hire”) such as the works licensed to Disney would have a protection period of 75 years from the date of publication, as a rough equivalency. Thus, in the US, Milne’s works would fall into the public domain between 1999 and 2003. However, in 1998 the Sonny Bono Copyright Term Extension Act was passed extending copyright protection for an additional twenty years, e.g. life of the author plus 70 years, or 95 years from date of publication for corporately owned works, in large part to bring the US term of  protection into line with that of the EU, as I explained here (“The Mickey Mouse Copyright Extension Myth: A Convenient “Straw Man” to Attack”). This explains why the 1926 Winnie-the-Pooh book did not enter the public domain in the US until January 1, 2022.

This is where it all starts to get really complicated. As part of the 1976 extension, some existing copyrights such as the one for the Pooh stories would become much more valuable. Therefore, the new law gave authors specified windows during which they could reclaim copyrights that had been assigned to others, so the extension period could be brought back under their control if they wished, and then presumably relicensed for an additional amount. This could be done at any time up to 1989. Thus Milne’s estate could, in theory, terminate Milne’s 1930 agreement with Slesinger–which had subsequently been assigned to Disney– and reclaim it. Given the investment Disney had put into the Pooh franchise, this constituted a serious risk for the company. Disney met with both the widow Slesinger and Milne’s son in 1983 to sort things out. As a result, the 1930 and 1961 agreements were rescinded and a new licence was issued by the Milne estate to the Slesinger Corporation, which in turn granted the rights to Disney. Presumably more money changed hands. The 1998 extension of the copyright term opened up a process of potential copyright reclamation similar to that which had occurred with the 1976 amendment, that is to say that it allowed authors to terminate pre-1978 assignments and licences where this had not already been done.

Now let’s turn to the dispute that had broken out between Slesinger’s widow and Disney subsequent to the 1983 agreement between the parties. In 1991 the Slesinger Corporation sued Disney in a California state court claiming that Disney was under-calculating royalties under the 1983 agreement. The action was dismissed, in part on the basis of malfeasance by investigators hired by the Slesinger Corporation. Slesinger then changed tactics and sued in federal court alleging trademark and copyright violation. To counter this, Disney then made an agreement with Clare Milne whereby she would try to reclaim the rights that had been assigned to Slesinger in 1930 under the 1998 extension that allowed authors to reclaim copyright in pre-1978 works. If successful, this would nullify her agreement with Slesinger and by extension, Slesinger’s subsequent deal with Disney, effectively ending Slesinger’s suit. Having reclaimed her copyright, Clare Milne would then assign her rights to Disney. But it didn’t work out that way.

Slesinger’s lawyers argued that the 1983 agreement trumped the rights of reclamation for Clare, and the courts agreed. She was unable to invalidate the 1983 agreement that had assigned her rights to Slesinger, a setback for Disney. The original case continued, with Slesinger pursuing its claims of trademark, trade dress and copyright infringement, claiming $700 million in denied royalties. In the end, after almost two decades of litigation, in 2009 Disney emerged triumphant. Among the grounds for dismissal of Slesinger’s claims was the fact that in earlier court proceedings, it had argued Disney was undercalculating the revenues for the rights Slesinger had assigned to it. Later, in contradiction of its earlier position, Slesinger claimed it had not assigned these rights to Disney and was seeking to assert them. Under the doctrine of estoppel, you can’t have it both ways. Nevertheless, while it did not win on its claim of underpaid royalties, Schlesinger continued and continues to earn royalties from Disney. And the Disney machine rolls on.

That is a lot of bother over a “bear with little brain”, but when there are hundreds of millions of dollars at stake, who gets their paws into the honey pot is important. Disney has been very meticulous in protecting its hard-won rights to Pooh, which explains its unhappiness with the Town of White River when it wanted to erect its Pooh statue back in 1989. White River is the town in northern Ontario where Winnie (short for Winnipeg) was first discovered by Canadian Army veterinarian Lt. Harry Colebourn, who bought him off a trapper in August 1914 when Colebourn’s troop train that was heading for the east coast, and eventually Britain, stopped at the small town. Winnie went on to Britain to serve as the mascot of Colebourn’s regiment and was eventually donated to the London Zoo, where a decade later he became the object of affection for one of the many children visiting the zoo, Milne’s son Christopher Robin. The rest is history—and White River in the 1980s was eager to cash in on this history. It’s other claim to fame that it was the coldest town in Canada wasn’t attracting many visitors.

At first, Disney suggested the town erect a statue to a small black bear, (a bear that looked like a real bear) similar to the one Harry Colebourn had acquired in 1914. Eventually they relented, no doubt realizing the promotional value of a Winnie statue in the town where the original Winnie had been found. That is the kind of win/win partnership demonstrated when Disney and Canada Post collaborated in 1996 to produce the Winnie the Pooh postage stamps featured at the top of this blog post.

As you can see, Winnie has gone through several wars; a series of copyright wars, the Great War and more recently the “war” for trade and technology leadership between the US and China. China famously banned Winnie from the Chinese internet after memes appeared comparing a rotund Xi Jinping walking beside a lanky Barack Obama, with both of them looking quite a bit like Pooh and Tigger going for a stroll. With all these wars under his belt, what will Pooh get up to next?

© Hugh Stephens 2023. All Rights Reserved.

Photo: Author

The CBC—which, by the way, has just announced it will be cutting 10% of its workforce owing to reductions  in the funding it receives from Parliament, cuts that unfortunately will probably curb its investigative programming—has “revealed” that works by a number of prominent Canadian authors such as Margaret Atwood, Alice Munro, Robertson Davies, Farley Mowat, Leonard Cohen and many more (1200 in total) are included in a massive database that has been used for artificial intelligence (AI) training and research. It was the Atlantic that first reported on the extent of the unauthorized ingestion of copyrighted works by Books 3. Over 190,000 works were copied, so the 2500 works by Canadian authors represent just 2% of the dataset. Nonetheless, the Writers’ Union of Canada reports that 15% of its membership has had their works included. This should come as no surprise given the “move fast and break things” approach of the hi-tech sector, a strategy that has been demonstrated in spades during the ongoing development of generative AI.

If prominent Canadian authors are included, I can guarantee the same situation will apply to writers from any country with a strong literary tradition in addition to the US; Britain of course, Ireland, Australia, and New Zealand not to mention European literatures. As outlined by Wired, the Books 3 dataset was developed by private researchers seeking to come up with a database to compete with the one developed by OpenAI. CBC did an extensive analysis to identify the Canadian works using ISBN codes, writer’s names, and book titles.

Whether or not the use of copyrighted works to train AI programs–which in turn produce “new” works–is a violation of copyright law is still up in the air. The US Authors Guild and a number of individual authors have sued OpenAI and others for copyright infringement, although the case has not gone smoothly to date. While conceptually it is easy to understand the wrath of authors when learning that their works have been used without authorization or compensation to create “new” works that may end up competing in the market with the original, proving infringement in a court of law is still a challenge.

Lawyer and copyright blogger Neil Turkewitz has reminded us that national legislation is required to comply with international treaty commitments. Of particular relevance in considering whether copyright infringement occurs in the process of training AI on content without authorization is the “three step test” incorporated into the Berne Convention and subsequent copyright treaties such as the TRIPS commitments of the World Trade Organization (WTO). Turkewitz points out that to be compatible with international law, exceptions to copyright protection must (1) apply only in certain special cases; (2) not conflict with a normal exploitation of a work; and (3) not unreasonably prejudice the legitimate interests of the author. He argues that it is difficult to accept that machine learning is a “special case”, that it does not conflict with the author’s normal exploitation of the work, i.e. generating economic returns, and therefore the unauthorized copying that occurs in fact unreasonably prejudices (i.e. damages) the author’s legitimate interests. Although current controversies are being litigated in national courts, it is vital to keep the requirements of international law in mind.

The tech companies have taken several different positions to defend their willy-nilly scraping of copyrighted content. Many of these are outlined in submissions to the US Copyright Office as part of its current study of AI and copyright. Among the arguments advanced are;

(1) the act of reproduction falls under fair use because the output is transformative

(2) the outputs are not derivative works based on the original content

(3) requiring licensing of copyrighted content to train AI models would be impractical and too expensive

(4) some other countries are allowing unauthorized ingestion of copyrighted data so not to do so would hold back US innovation

(5) investors have already spent billions on developing AI models and to upset the model now would be economically harmful.

By the way, while the tech companies are quick to dismiss the claims of rights-holders to protect their content from unlicensed use when creating AI generated content, they are equally quick to assert that the output of AI should merit copyright protection.

Canada, although slow off the mark, is now also examining the question of how copyright and AI intersect. The CBC investigation quoted Osgoode Hall law professor Carys Craig as stating that “it’s not clear that the inclusion of works in a dataset used to train a generative AI model does constitute copyright infringement…” True, but by extension this also means it is not clear that it does not. It is for that reason that Craig and others have called for a revision to Canadian copyright law to specifically allow for text and data mining (TDM). There is currently no such explicit provision in the Copyright Act and existing elements of the Act are unlikely to lend themselves to this purpose, as pointed out by Dalhousie University law professor Lucie Guibault. Worth noting is Prof. Guibault’s argument that there should be a TDM exception to enable research where the output does not compete with the original content. She uses the example of a professor of English surveying/sampling a range of writing on a particular topic in order to prepare an analysis of that genre of writing. That work would not in any way compete with the original works.

While I am not a lawyer (as I hasten to say each time that I step into the minefield of venturing an opinion), it seems to me that there are a couple of key issues that need to be resolved by the courts. One is whether reproduction of an original work for training AI is itself an infringement, and a second is whether that reproduction results in a derivative work based on the original, particularly one that competes with or substitutes for the original.  The second point could be case specific. For example, the unauthorized reproduction of an author’s work that is incorporated into a massive database containing tens of thousands of similar inputs, and which in turn produces a computer-generated work based on that extensive database, is less likely (it seems to me) to be infringing than the copying of a dozen works of an artist to produce a computer-generated image in the style of that artist. Put another way, to what extent can the output be tied back to the unauthorized input?  The Getty Images case in the UK, where Getty is suing AI image generator StabilityAI, may produce some answers given the strong correlation between Getty’s original images and Stable Diffusion’s output images. In some instances, the latter even reproduced Getty’s watermark.

While no-one has a crystal ball in determining where all this is going to end up as a result of the current court cases in the US and Britain, I will venture one more opinion. There will be no bright line emerging from the litigation. The results will be mixed, even possibly contradictory as sometimes happens between different circuits of the US justice system. With no clear carte blanche for the tech industry, there will be a degree of financial and legal hazard hanging over the development of various applications. Equally, authors probably won’t get a definitive and unqualified ruling that will permit them to stop unauthorized and unlicensed use in its tracks. What will be the result?

The outcome will likely be a thriving marketplace for licensing content, as we are already beginning to see. Companies with proprietorial databases, like Getty Images, the New York Times, Reuters, Bloomberg and so on, will not only strengthen their ability to block webcrawlers, but will expand their licensing activities. Already the Associated Press has a deal with OpenAI, and other creators of content, including Twitter (X), are moving to the licensing model. It provides a revenue stream for creators and is a way to avoid litigation by developers. The certainty of a licence will far outweigh the risk, uncertainty, and potential cost of not having one.

However, it is one thing for large organizations like the Associated Press, with established databases, to enter into negotiations with AI developers to license content, but what about all those disparate books and authors out there whose work is being used without permission? AI developers will say that it is impossible to contact, let alone negotiate with, all those rights-holders, thus creating an unsurmountable barrier to innovation. However, we already have structures to draw on that might help solve the problem.

Copyright collectives perform similar tasks when dealing with educational users, by issuing licenses and compensating rights-holders. Could organizations like the Copyright Clearance Center in the US, Access Copyright in Canada, the Copyright Licensing Agency in the UK and similar organizations elsewhere help solve the problem? Admittedly the inclusion of one or two works among a very large training set might not yield much revenue, but a start has to be made somewhere. If over 40 of Margaret Atwood’s works are included in the Books 3 database, or 75% of the books included in the popular CBC show, Canada Reads, are included, there is a problem that needs to be fixed. Of course, it would be up to rights-holders to decide whether to empower collectives to manage their rights, and the collectives will need to decide whether they have the capacity, or it is worth their effort, to do so.

Meanwhile, the consultation process in the US, Canada and elsewhere grinds on. As the interests of various stakeholders are weighed, there is unlikely to be a silver bullet the resolves the issue to the satisfaction of all. In the end, some form of compromise position will likely emerge from the process. It will, I hope, continue to respect the basic principles of copyright while adapting it to the age of AI.

© Hugh Stephens, 2023. All Rights Reserved.

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The news that Google and the Government of Canada managed to strike a deal prior to the coming into force later this month of Bill C-18, the Online News Act, was not really a surprise, at least not to me. Both sides had every incentive to find enough common ground to reach an agreement. Google could ill afford to undermine its presence in the Canadian market by blocking access to Canadian news, with its chief competitor Microsoft in the wings ready to swoop in to take up the slack. And then there is reputational damage, although I doubt that Google cared much about this. It has acted as a bully willing to throw its weight around in various markets in the past and has demonstrated that if it can afford to, it will pick up its ball and leave. But with an eager, recently “rejuvenated-by-AI” player like Microsoft’s Bing standing on the sidelines, Google executives decided that getting to “yes” with the Canadian government was something they could live with, although, as always, they played hardball.

The Canadian government, in the person of the new Minister for Canadian Heritage, Pascale Ste. Onge, for its part needed a solution. Bill C-18 did not roll out as anticipated. Initially it was to be an “improvement” on the Australian solution, whereby the Australian government had muscled both Google and Facebook into reaching funding arrangements with Australian media to the tune of (although no one is sure because the details have been kept confidential by both parties) of around AUD200 million, about CAD 180 million. In the end, Australia did not designate the two platforms under its News Media Bargaining Code since, under the threat of compulsory arbitration embedded in the legislation, both Google and Meta (Facebook’s parent company) found it expedient to cut a deal with most of the Australian media players. Some were left out in the cold.

Canada decided that instead of allowing the platforms to strike deals under threat of legislation, it would pass legislation requiring them to self-designate (with consequences if they didn’t), and then allow an exemption if they were able to come up with suitable agreements with media partners. Various amounts of funding were tossed around, from a high of almost $330 million from the Parliamentary Budget Officer (PBO) to $234 million when Meta was part of the calculations, of which $172 million would be from Google. This number came from calculating 4% of Google’s annual Canadian search revenue. The PBO estimate was contained in a report that was focussed on the implementation costs for the government departments involved and the $330 million estimate of revenues to the media sector was almost a throwaway line, not substantiated in the report. To date, Meta has not come onside nor does it look likely that it will do so since it has already complied with the legislation (in legal terms if not in spirit) by blocking any links to Canadian news on Facebook and Instagram. Meta appears to have made a corporate decision that it can live without providing access to news for its users, and not just in Canada. It is retiring its “news tab” in the UK, France and Germany, and will likely not renew the deals it made earlier in Australia, perhaps a case of buyer’s remorse. Unfortunately, the timing of the Canadian legislation gave it the perfect opportunity to walk away from some voluntary content deals it had signed in Canada.

The sum that Google will pay has now shrunk considerably, to $100 million annually, not chump change to be sure but a considerable discount from the numbers that were being bandied about just a few months ago. This money will go into a central fund that one or more media collectives will allocate, through negotiations with Google, all under the watchful eye of the CRTC. The allocation will presumably be done on the basis of costs of maintaining journalists and on the number of journalists employed by media outlets. If the allocation is based exclusively on numbers of journalists, the broadcasters and especially the CBC will reap the lion’s share. The Minister is already musing about a need for “clarification” of guidelines so that the national public broadcaster, which already receives an annual allocation from Parliament of $1.27 billion does not walk off with most of the funding. There are many needs from the national newspapers, which are struggling mightily, to weeklies and bi-weeklies in small towns that are falling by the wayside, to new digital startups that are trying to fill the gap. A couple of small victories are that the funding will be indexed to inflation and the government has the right to re-open the deal if Google reaches a more favourable arrangement in another country. (This almost guarantees that they won’t).

Is anyone really happy with this state of affairs? It appears not. There is some new money for media outlets but not the bonanza that they were led to believe they were going to get. Google’s existing financial support programs for journalism already reached with some media outlets will be folded into the $100 million. One key goal of C-18 was to level the playing field between a giant global corporation like Google and Canada’s relatively small media players by including the threat of compulsory arbitration if Google was not willing to reach fair deals, but now the only negotiation will be how the $100 million pot is to be divided. Google is probably not entirely happy because it will be paying for linking to content, even though it claims its payments are for helping publishers. It is distinction without a difference but is part of Google’s theology that links on the internet are somehow sacrosanct and can’t be touched, removed or blocked (except when Google decides to do it, that is) lest this somehow “break the internet”.  

On the other hand, a lot of media outlets that Google probably wouldn’t have bothered to deal with, including equity-seeking outlets, will have a chance to seek some funding. And the funding is assured, protected by this agreement and backstopped by the legislation. Google can’t just walk away or pull funding from certain outlets. Reaction among various media seemed to be one more of relief than delight, although the Toronto Star has called the $100 million cap “disappointing”.  As for the opposition Conservative Party, they have criticized the Trudeau government for caving in to big tech, which is a bit rich since the Conservatives spared no opportunity to oppose and obstruct C-18 when it was going through Parliament, and indeed voted against it.

Google will undoubtedly be facing demands in other countries for contributions to news media. While Google News Showcase has been around for a while, it is controlled by Google; they decide who they will deal with how much they will pay. In the US, the Journalism Competition and Preservation Act (JCPA) almost made it through Congress last year, allowing US media to negotiate collectively with Google without running afoul of anti-trust laws. The JCPA, while supported by the US News Media Alliance, is not everyone’s favoured solution. It has notably been opposed by some smaller, local news outlets in the US. Google will now likely try to adopt the Canadian “central fund” model. The rest will be up to arm-twisting and seeing who blinks first.

Canada was too big to ignore but perhaps not big enough to corral Google effectively. The lesson here may be that you don’t want to get too far out in front of market and political developments, or you set yourself up for a fall. The Online News Act was an ambitious piece of legislation designed to try to come to grips with a real problem, the domination of online advertising by monopolistic tech giants to the obvious detriment of a healthy Fourth Estate. What has been salvaged is not nothing, but it is less than hoped for. Was the ultimate goal attainable? We will never know. Neither the Canadian government nor journalism sector wanted to run the risk of seriously calling Google’s bluff. Its hubris knows no bounds, and the game of Russian roulette was not worth the candle. Still half a glass is better than a broken glass. Let’s hope Canadian journalism uses this cash infusion wisely.

© Hugh Stephens, 2023. All Rights Reserved.