This week, Meta began to follow through on its threat to block Canadian news on Facebook and Instagram in response to the passage of Bill C-18, which will require the digital platforms to compensate publishers for the use of their content on their platforms.

If some experts’ worst fears are realized, it will result in its properties, and Facebook in particular, becoming a “news desert” for Canadians.

Regardless of your attitude towards Mark Zuckerberg’s company, there’s no disputing the significant role Meta plays in directing traffic to publisher sites, with some estimates saying it’s responsible for as much as 30% of their total audience. Meta itself claims that it sent more than 1.9 billion clicks worth more than $230 million to Canadian publishers in the past year.

While publishers contacted by The Message after Meta’s Aug. 1 announcement said they have already seen a negative impact on their traffic, estimates vary by individual publisher and property.

Torstar spokesman Bob Hepburn said the ban has so far had only a “small impact” on its flagship property the Toronto Star, for example, yet has had a “meaningful impact” on its community news properties.

“As champions of access to informed and trusted news, we are disappointed that Meta has taken the action it has, particularly given the impact to our community news readers,” he said.

Postmedia hasn’t determined the effect for individual titles or websites, but president and CEO Andrew MacLeod said the impact on its properties so far has been “fairly negligible.” He said the traffic isn’t permanently lost, and predicted that it will eventually “re-route” itself.

It’s imperative for the federal government to hold firm on C-18 to ensure the future health of the Canadian news industry, said MacLeod. Maintaining the status quo—with the Google / Meta duopoly currently hoovering up eight of every 10 digital ad dollars in Canada—isn’t an option, he said.

Holding firm, he said, presents an opportunity for the industry to rebuild itself free of the long shadow cast by the duopoly. “I don’t want to come off as arrogant or cavalier… but I welcome this ecosystem redefining itself, because the current state of  the dominance of the foreign platforms—both commercially and as a mechanism to aggregate and disseminate news—is fundamentally untenable,” he said.

He acknowledged the “short-term pain” and instability that will inevitably result from Meta’s—and possibly Google’s—decision to block news in response to Bill C-18, but described it as a necessary step towards rebuilding the media ecosystem for a more sustainable future, specifically one built around a “more direct” relationship with its audience.

“It’s the same in the U.S., it’s the same in Europe, and around the world,” he said. “To the extent that we need to absorb short-term pain with perfectly clear outcomes, to [build] a different future, I will take that trade all day long.”

Phillip Crawley, whose long career as publisher and CEO of The Globe and Mail ends this month, said that Meta accounted for between 8-10% of the Globe‘s web traffic prior to the ban, with this week’s decision to block Canadian news resulting in an immediate drop of roughly 4-5%.

Google has also threatened to block news from its search results, which could be particularly devastating for publishers. “I think it’s causing a lot of anxiety around the industry, because if Google were to follow through on their threat to pull the plug on Canadian news, that would be a huge problem for a lot of people who are really dependent on them for their audience numbers,” said Crawley.

The revenue picture

Traditional publishers have lost billions in advertising dollars to Google and Facebook over the past decade, and it’s likely not coming back. Crawley said that the Globe has adjusted to this “different world,” with two thirds of its revenue now coming from subscriptions.

But there are some questions about how much longer subscription revenue can reliably sustain publishers. The Reuters Institute/University of Oxford’s recent “Digital News Report 2023” found that in Canada, only 11% of the 2,000 respondents surveyed pay for online content, well below the 17% average of the 20 markets measured, and far below market leaders Norway (39%), Sweden (33%), and half that of Australia (22%). The data, said the report, raises the question of  “whether we may have, for now, reached the peak of the subscription trend, at least for current subscription offers.”

Crawley said that the Globe‘s print advertising revenue remains “pretty strong” thanks to a strong base of national advertising and advocacy clients. “This is a national platform on which people want to announce things or make a point to government,” said Crawley. “We’re not like a local paper, which is very dependent on what’s happening in the local retail market or the local auto market.”

The Globe will finish the fiscal year 2% ahead of its target revenues and has done “quite well” in programmatic advertising, but Crawley cautioned that any potential disturbance caused by the fallout from Bill C-18 could negatively impact its revenue models.

The C-18 detractors

While Canadian publishers may support the new law and the prospect of being paid by the digital platforms, Bill C-18 has its detractors. Well-known media and legal expert Michael Geist said this week that “it is difficult to overstate the harm [it] will create for the media sector in Canada,” with “enormous losses” perhaps running into the hundreds of millions of dollars.

“The move virtually guarantees that Bill C-18 will represent a setback for the sector and a cautionary tale for a government that blithely ignored the warning signs, seemed to welcome a fight with the tech companies, and had no Plan B,” he wrote.

While Crawley has said that he agrees with the principle of Bill C-18, he has also expressed concerns about potential “overreach” by the CRTC, which is being given what the government has characterized as an administrative role in overseeing the regulation. In an open letter published in the Globe late last year, he said that the industry has never been subject to the CRTC’s remit.

That’s a definite cause for concern for the Thomson family, which controls the Globe through its private holding company The Woodbridge Company.

“Anybody who knows anything about the Thomsons knows that they’re pretty private people, and not high profile in terms of their personal behaviour or their business position,” said Crawley. “From our point of view, that would be a potential infringement of what we would regard as [0ur] status as a privately held business with a strong tradition of editorial independence which goes back to the days of Roy Thomson.”

MacLeod, meanwhile, said it’s almost inevitable that any piece of legislation distilling the multiple requirements of government and the various constituents it serves is going to have detractors.

“You’re going to create an outcome that almost by definition is going to be imperfect,” he said. “Of course I think there could be improvements to the bill, and of course there are aspects that could be modified and amended, but I think that’s true of any piece of legislation.”

Not a black and white issue

Somewhat ironically for an issue that inordinately impacts many traditional newspaper publishers, there’s no black and white when it comes to Bill C-18. While many in the industry have painted Meta and Google as the twin forces killing traditional media, the two constituencies are also deeply intertwined.

The Globe, for example, spends what Crawley described “hundreds of thousands of dollars a month” on Google and Facebook in order to attract audiences. “They’re very much part of the advertising ecosystem,” he said. “You can’t just turn back the clock.”

It also has content licensing deals in place with both Google and Facebook, (as well as with Apple through its Apple News+ service). It also previously worked with Google to rebuild its Android app.

“With all of these platforms it’s usually not a one-dimensional relationship,” said Crawley. “We spend money with them, they spend money with us. We collaborate, we discuss technology developments, and we get the benefit of some of their insights into data and technology. That’s also at stake—it isn’t just a payment for content.”

MacLeod, though, suggested that Google and Facebook are simply acting in their own best interest in providing assistance to publishers. “To the extent that they can provide aid and support, whether it’s financial or technological, to extend the hegemony of the current internet landscape… they will continue to do that.”