Sat. Feb 24th, 2024

The progress obtained in the agreement with Google is a first step, but the media crisis remains.

Analysis | Ottawa and Google: the frog that wants to be as big as the ox | Arm iron battle between the web giants and Ottawa

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Ottawa and Google agreed at the start of the week on the final regulatory framework that will establish a contribution regime to assist Canadian media.

  • Louis Blouin (View profile)Louis Blouin

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The Trudeau government must have watered its wine in the agreement with the technology company Google. Faced with a growing media crisis, Ottawa simply did not have the means to give up the money put on the table by the American giant.

From the start, the Trudeau government portrayed its battle as that of David against Goliath. A medium-sized country that is trying to bend American giants in order to fairly compensate Canadian media for the loss of their advertising revenue.

They won't come and tell us how to write our bills, just like I don't tell them how to run their businesses, the Minister of Canadian Heritage at the time, Pablo Rodriguez, confidently proclaimed last June.

Six months later, the outcome is more reminiscent of the frog who wanted to become as big as the ox, in La Fontaine's fable.

The federal government had no choice in responding to Google's requests and lowering its criteria.

Tug of war between web giants and Ottawa

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Tug of war between web giants and Ottawa

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American society will no longer have to come to an individual agreement with press companies. It will be able to negotiate with a single entity. Google thus avoids potentially having multiple arbitration processes imposed on it, the results of which would have escaped its control. It will be up to the government and eligible media to ensure that the amount is shared.

Pascale St-Onge also agreed to back down on the amount of $172 million that she estimated she could get from Google.

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The Minister of Heritage, Pascale St-Onge

In fact, the government has more or less returned to the initial formula proposed by the company. A little over a year ago, the giant put $100 million on the table, a sum that it proposed to put into a fund for Canadian media. In practice, Google's obligations today are very similar to what it initially desired.

Ottawa had no other options. Faced with a bill that it considered poorly put together, Google threatened to leave the negotiating table, taking with it the valuable Canadian news content that would have disappeared from its search engine.

Obviously, the Trudeau government seems to have taken the threat seriously.

Faced with the ox, by inflating itself, the frog risked bursting. The deal, and the $100 million that came with it, threatened to disappear. While Meta categorically refuses to negotiate with Ottawa, Google represented the last hope for the government. Without an agreement, the failure of C-18 would have been total. It is the media and Canadians who, ultimately, would have suffered the burden.

Politically, Pascale St-Onge could hardly let Google slam the door.

Just listen to the CRTC hearings on contribution to Canadian and Indigenous content these days to understand the speed at which the media environment becomes precarious.

Radio is suffocating, declared Caroline Paquet, the president of Cogeco media this week. News is very expensive and unfortunately, if we have cuts to make, that's where we'll look, she explained.

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Without the creation of a new fund reserved for commercial radio, the Cogeco Media network fears it will have to put an end to news production.

Faced with falling advertising revenues, siphoned off by digital giants, the media are demanding regulatory relief to be able to hold on.

Private radio stations have seen their advertising revenues drop by 20% over the past five years due to competition from players like Spotify.

Wednesday, the president of RNC Media said his company had nothing more to cut. Our revenues have been declining since 2018. Our administrative reorganization and technological changes have come to an end.

More than 2,600 positions have disappeared in Canadian media, whether through layoffs or retirements, since the start of 2023, including the layoffs of 547 employees of the TVA Group on November 2.

The agreement with Google allows Pascale St-Onge to offer relief to press companies, but a stronger remedy is likely to be called for sooner rather than later.

Already, the government of Quebec, whose help is also requested, affirms that Ottawa will have to do its fair share to help players in the radio and television, which are under federal jurisdiction.

If Ottawa does not take care of the media which traditionally came under their control, we will do it, but that requires an agreement […] It obviously has to come with government funds. Ottawa, declared Quebec Minister of Culture Mathieu Lacombe on Wednesday, before the announcement of the agreement with Google. The Quebec minister is also due to meet Pascale St-Onge in mid-December.

As the next federal budget approaches, pressure will increase on the Minister of Heritage for additional aid to the media. Will Pascale St-Onge be able to convince Chrystia Freeland to spend other precious dollars for the cause, in such a tight budgetary context?

There are also partisan complications. The Conservative leader constantly accuses the Liberals of wanting to buy the media with tax credits and subsidies, for political purposes.

He It's not just the media industry that is facing a headwind, the minister and her government too.

  • Louis Blouin (View profile)Louis BlouinFollow

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