A little more than 20 years ago, Conrad Black and David Radler saw the future. It was the Internet, and it was going to eat the newspaper business’ lunch. So they sold their extensive chain of Canadian newspapers to Canwest - a broadcasting company owned by the legendary Izzy Asper - for $3.2 billion.
By the summer of 2003, Asper had died and a little more than six years and a lot of bodies on the beach later, Canwest was a shattered company forced to file for bankruptcy protection. The Shaw cable empire salvaged the broadcasting assets. The newspapers, their revenue plummeting as various forms of advertising moved online (Kijiji for instance), became the property of Postmedia, a newly formed “Canadian” company owned by GoldenTree Asset Management, a Manhattan-based hedge fund, along with IJNR Investment Trust, Nyppex and other investors. The price was $1.1 billion.
Almost immediately, the axe came out. Investors looked to get their money - and more - back ASAP. Newsrooms, which in years previous had been inelegantly and mistakenly defined by smart young men and women with MBAs as mere “cost centres,” were further gutted. Over the next decade, thousands of reporters, editors, photographers, cartoonists, graphic artists and others were thrown overboard. Others that could, headed for the lifeboats. Decision-making was further centralized.
The product was increasingly homogenized. Grand titles of record were humiliated, and their brands subordinated and diminished. City hall bureaus died, school board coverage, too. Legislative and parliamentary press galleries, once robust and competitive, became skeletal and cooperative. Attempts at creating engaging web platforms were hesitant. Efforts to build online subscriptions in many cases came up against the cold, hard truth that people won’t pay for content that too often was trimmed down to stenographic rewrites of press releases. Eyeballs moved on.
This opened the door for others in the industry - oddly without a peep of protest about the threat this posed to democracy - to similarly decimate their “cost centres.” Postmedia then absorbed Sun Media when Pierre Karl Péladeau got tired of shouting at publishers to cut more costs. More homogeneity and centralizing occurred. A similar tale, although along a more genteel path, unfolded at Torstar. It sold this past year for a mere $60 million, a little more than what 20 years ago the Calgary Herald turned in annual profit. Postmedia has been selling its buildings. Perhaps the furniture will be next.
Which is why I have been surprised to read lately, particularly via the pens of journalists dedicated to keeping the public fairly and accurately informed in a balanced manner, that the current impoverishment of newspapers is entirely the fault of Google and Facebook. This is particularly bewildering given that the latter’s IPO was issued three years after the harvesters at Golden Tree began spitting on their whetstones and sharpening their blades.
And yet, writes Heather Bakken of Ipolitics, not only the craft of journalism for which we are all so grateful, but democracy itself, is on the ropes in Canada because Facebook and Google dominate the advertising market.
There is little question market dominance is always a matter for concern, just as it was when the Competition Bureau raised its eyebrows before begrudgingly approved Postmedia’s purchase of Sun Media because of the decrepit state of the industry. Of course again, just this year, the competition watchdog gave pre-approval of the Torstar sale even though it was financed by Canso Investment Counsel Ltd., one of Postmedia’s debtholders (gosh, I can’t imagine what comes next). But Bakken is dead right that there are numerous other issues surrounding tech giants’ market dominance, privacy protection, data collection and taxation that are being addressed - and should be. Internationally, organizations such as the OECD have taken up the file. Most recently, in the United States, the Federal Trade Commission launched an anti-trust suit against Facebook seeking to break it up.
But let’s deal with some of the folklore involved in this Canadian argument. There’s a lot of it. It is often mentioned, and it is most certainly an accepted verity among journalists, that their presence is required to ensure the survival of democracy. This is contentious to say the least, even if unquestioned by those with a very clear financial interest in it being true. Like most effective propaganda, there is some truth to it, but….
Cleisthenes did not depend upon his ability to deliver a good sound bite in a scrum in order to establish Athenian democracy more than 2500 years ago. Nor did the mainstream media of France reveal the corruption within the institutions of the day that led to the 1789 Revolution, which in turn led to an alternative tyranny before eventually settling on democracy. Saying so does not mean many journalists haven’t famously executed their craft in a fashion that defended freedom and courageously fought dictatorship and corruption. A great many have paid with their lives for doing so. They and their work should be honoured and glorified. Others, such as John Reed and Louise Bryant, who fought tyranny through their activist coverage of the Russian Revolution, got disappointing outcomes that diminished their virtuous but ultimately naive intentions.
The truth is that discussions on the elements required to sustain democracy generally focus not on journalism but on issues such as equality before the law, the rule of law, the independence of the judiciary, upward control of power, and the freedom of speech that permits political freedom. Journalism appears to be a feature only when journalists are having the discussion. It is also forgotten within the often inward-looking journalistic collective that profitable and well-read news organizations can function as efficiently in non-democratic States as they do in democracies. The People’s Daily and Pravda come to mind.
As we have seen lately - whether through newsroom revolts at the New York Times and the National Post or in frequently biased and sometimes bullying comments on social media - modern journalists are quite prepared to suppress the very free speech upon which democracy depends. Which rather makes the point. I’m confident they believe it’s all in a good cause. But so do the good old boys at the Pyongyang Times.
The further argument that Facebook should be paying money to news producers because it is somehow pilfering and profiting from their fabulously popular product is most remarkable for the fact-free fashion in which it is often presented. Facebook and other informed observers remain bemused by this and make the point - uncontested - that news organizations are profoundly overestimating their value: less than four percent of Facebook traffic involves news.
In other words, they could quite easily live without it. When the Australian government moved to force Mark Zuckerberg’s company to pay Rupert Murdoch and others for their posts, Facebook indicated it was more than comfortable banning news organization’s posts.
The argument put forward by Heather Bakken also displays a shocking misunderstanding of how social media works, which might illustrate why newspapers find themselves in their current dilemma. To use the example, she quotes from Public Policy Forum:
“One publication told us that when it posts something to its Facebook page, the item goes to only seven percent of its friends; beyond that, Facebook charges a fee.”
Oh my. When you, I or any business or publication posts something on Facebook, it is not automatically delivered to one’s “friends” or “likes.” It is not a courier service or a paper boy. The frequency with which they engage with the content dictates the priority with which it will appear on their feed. The more you post boring stuff, the less of a delivery priority it becomes. The more frequently you post content your readers want to see, the greater the speed with which it is delivered to them. If only seven per cent of your readers are engaging, it’s worth taking a look in the mirror.
To be certain, I double checked with Facebook, which confirmed they do not charge an unsolicited fee as was implied. What Bakken and the publication appear to be referencing is the practice of people paying Facebook to “boost” posts to reach new audiences - an entirely voluntary practice.
Publishers also argue, with considerable hubris, that Facebook should be paying them for the value they add to their platform. This contention has been examined, cooked, carved and diced by University of Ottawa law professor Dr. Michael Geist, Canada Research Chair in Internet and E-Commerce law. In addition, Facebook argues it offers free access to billions of potential readers and estimated this had a value of $200 million Australian dollars annually to the publishers. In Canada, while they still haven’t released the number, it is expected to be in sync with those from Down Under. In other words, in the billions.
But it’s not just punks like me and Geist who see the world this way. Jeff Elgie of Village Media, an online startup in Canada, calls the notion that Facebook or Google should pay for his content “laughable” because in reality they provide “massive free distribution.”
“I take a very different view than this newspaper lobby group,” Elgie said recently.
“We always looked, on the distribution side, at Google and Facebook as friends in the sense that if you look at our market today, probably on average 40 per cent to 50 per cent of our traffic comes from those two companies alone.
“What if we had to pay for this distribution? The costs to me . . . would be astronomical. The industry attacking these companies and saying ‘you’re stealing our content’ is the most frustrating thing to me ever. The reality is that if I don’t want Google to crawl on my site, I can put one line of code that will prevent it.”
Not surprisingly, that’s not a point of view you are likely to read in a lot of newspapers these days. Because, you know, democracy.
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