How long will Google's $100 million news payout survive?
Days before the search giant is required to hand over $100 million to fund journalism, Canadian regulators are demanding billions more in damages...
Welcome back to Canada, the epicentre of an emerging news tech business model which has the potential to spread worldwide.
This is a multi-part series exploring how publishers large and small, have collaborated with government, regulators and Big Tech to secure tens of billions in funding.
I’ve already reported on:
Those negotiations led Google to commit to pay CAN$100 million (US$74 million) to Canadian publishers small, medium and large, across broadcast and print.
In 18 days, Google is required under Canadian law to voluntarily hand the $100 million (US$74 million) over.
Google settled on the handout to avoid Canadia’s The Online News Act, known as C18, which was loosely based on Australia’s news media bargaining code.
The payout is backed by regulators and meant to last in perpetuity, but it’s already facing headwinds as Canada’s political landscape veers to the Right.
In the deal terms, Google got to choose who would distribute the money, and it chose entrepreneur Erin Millar, the CEO of Canadian publishing start-up Indiegraf.
She and a team created the Canadian Journalism Collective (CJC) to do the job. It was controversial. It was selected ahead of a broader industry collective.
I met Erin in Canada while I was on a speaking tour there. The future of local publishers is in her hands. Google’s money is a lifeline. This is what she had to say.
First of all, welcome to new subs from the Columbia Journalism Review, thought-leaders Rebuild Local News, from Apple News, Poland’s most-influential business publication Forsal.pl and leading sports platform Better Collective, global media comms agency OMD working in 120 countries, global streamer dailymotion.com which has 400 million global users in 183 languages, Aussie radio and music streaming giant NOVA bought by Lachlan Murdoch from the Daily Mail in 2012, global customer data platform Tealium, global entertainment and ticketing giant TEG, transformation coaches Blue Engine, among others.
Now back to Erin…
Ricky: Hey there, you’re the biggest story in the world right now. When I speak to global publishers, they want to know what’s happening in Canada.
Please share the detail. I’ll ask tough questions. You know what I stand for, and I won’t hold back.
I’ve seen your Government announce the deal, and your regulator ratify it, but you have a change of Government likely next year. Is Google ever going to pay?
Erin: Yes. We have our regulatory approvals. That gives Google a deadline of December 27 to fork over the first $100 million.
They have to do that. They’re doing that. The invoice has been sent and approved.
Did you create a $100 million invoice?
Not me personally, but the first $100 million will be here by the end of the year.
It’s going to take us a little bit longer to distribute it to media outlets, but we’re on track to get it into their bank accounts in early 2025.
So, to answer your question, I think the likelihood of that first $100 million going out is extremely high at this point. And we’ve got a five-year regulatory approval.
There’s nothing standing in the way of the deal continuing past that five years, unless there’s a change to the legislation.
And that’s where the risk comes in with a new Government.
I worry, because the industry’s been here before with Australia, and it’s more complicated since Google lost its antitrust suits.
In the days before Google has to pay you, it’ll have a better idea how the US Government plans to break it up for being an illegal monopolist.
That could be cataclysmically bad for Google. I worry that Google just won’t pay. Why are you confident they will? What Sword of Damocles hangs over them?
I think if Google was intending to take that path, it would have indicated that through its actions up to now.
I’ve been involved in some way in each step of this process, ever since the Government negotiated the $100 million deal this time last year.
It’s gone through every step in good faith. I’ve seen Google dedicate a lot of resources to comply, whereas Facebook just gave Canada the middle finger.
I don’t know what I don’t know, but Google’s actions over the past six months indicate to me that it will follow through.
There’s been no change in tone or in the relationship since the antitrust rulings? They’re still taking your calls.
Nothing, and yes.
OK, good. You have a lot to do now. What’s your primary focus? What does your next 90 days look like?
We’re hustling to get the accountants, banking systems and processes in order to pay $100 million to Canadian publishers as soon as possible.
It’s a sprint. We felt really good when the regulator made it official, and Google signed the contract.
You’ve seen the paperwork yourself?
Yeah, I was part of negotiating it.
Can you send me a copy?
Yes. ??
Thanks. How did Canada get here?
After the Government deal was announced, Google went through an RFP to figure out who would distribute the money.
Two bids progressed. One from a newspaper and broadcast lobby, and another from us, a group of independent media and broadcasters.
Google said what mattered was efficient administration, representative governance, and transparency, and it selected us. The decision surprised some.
I don’t believe Google had an ulterior motive. Google had the right under the law to select the organisation it wanted to distribute the money.
The next step was for the Canadian Radio-television and Telecommunications Commission to review the agreement and our plans for administering it.
That was a public consultation. All the material was released publicly.
OK.
We didn’t want to do something similar to the story you told me about Australia. There could be no secret deals, or handshakes. We wanted transparency.
We wanted even the smallest players to know the deal, not just take the word of the bigger media that everyone was getting the same. It was a matter of principle.
Yes, that remains a source of anger and division in Australia years later.
Every other Government policy implemented in Canada over the years has been manipulated to favour large organisations over small publishers.
This is why transparency and representative governance were important.
And it’s important for the larger media too. They need to know that the CJC will administer the funds fairly.
But if we’re going to come together around a model that’s equitably distributed across the media ecosystem, transparency is the only way.
The bigger elephant. When did the Government close the $100 million Google deal?
A year ago.
I remember two things clearly that were unusual. First, it was negotiated by the Government not by publishers. The other was that it was in perpetuity. That really stood out. How could that be possible? Laws change. Governments change?
What we actually got was a five-year deal, and if the legislation doesn’t end, it can be renewed.
That means the real question is whether the law gets changed if our Government changes. That’s what everybody is watching.
OK. Let’s talk about that, because a change of Government is likely in just a few months. The live poll tracker shows Prime Minister Justin Trudeau is running miles behind Conservative opposition leader Peirre Poilievre.
Why would Poilievre want to remove the Google deal?
He’s saying that Trudeau has created a State where the Government directly funds the media, and media’s no longer independent in his view.
News media is now Trudeau’s censorship state. He’s playing politically off distrust in institutions and the media. The US’ fake news narrative is spilling over here.
But I don’t think this law is the highest thing on Poilievre’s list. It’s complicated to unravel, a commercial agreement, under a regulatory framework.
It’s more likely he’ll defund our public broadcaster, the CBC, as it’s seen as left wing. That’s the politically popular thing to do amongst the public, which is shifting Right.
Then there’s the Local Journalism Initiative (a $10 million project for journalism in under-served communities). You heard a lot about that when you were here.
That’s direct funding to journalists on the ground in Canadian communities, and that definitely rubs against the Right Wing agenda. I think the Google deal is safer than that.
But it does get lumped into the narrative around Trudeau creating a subsidised media - and there’s some truth to it too.
Canadian media does exist in a corporate welfare state, and that focuses us on the question of whether the media wants that?
Do we want to rely for our future on a structure where the Government can change? I’m not sure we do.
That’s a good point. Over the past 18 months talking to and meeting publishers across the world, there’s a consistent demand for handouts and bailouts.
I’ve heard too little from publishers about how they intend to build a sustainable future themselves. Bailouts put foundations on shifting sand.
Google’s deals won’t be there forever, because of the antitrust rulings. Look at Meta. It pulled out of its Australian publisher deals at the first opportunity.
Governments change, policies shift, so media needs a rock to build on. That means building its own distribution and revenue, as it did before Google and Meta.
AI and antitrust are triggers for that. Sometime soon, the coin has to drop with the leaders of media companies, or it will be too late.
That’s right.
Why haven’t Canadian publishers figured that out yet?
The reality in Canada is that the policy environment was created by large corporate media in its own interests.
You’re talking about C18, The Online News Act the Canadian Government passed to force Google and Meta to pay publishers?
Yes, C18 and other policy interventions including the Local Journalism Initiative and the Journalism Labour Tax Credit (a tax rebate for employing journalists).
I had reservations about C-18 partly because of what happened in Australia where it distorted the playing field towards large publishers over small ones, making it more difficult for new startups to enter.
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Canada has a history of policies to protect Canadian content from being overrun by the US. We subsidise arts, film, language and many other cultural products.
When it comes to news media, it may have been defensible to take the same approach a decade ago when we had a robust media ecosystem to protect.
But now we’ve lost too much journalistic capacity, especially in local markets, to justify protecting the incumbents at the expense of innovation, or startups.
There will always be a place for the big media, but there’s a growing movement of small players creating businesses that are right sized for communities.
We need to put new entrants and what’s growing at the centre of our policy interventions. Small community media builds sustainable independent businesses.
Big corporate media will survive, but the middle is in big trouble. That’s how I see the market.
I’m dedicated to building these small publishers and supporting them, and I can only do that if the competitive environment is fair.
If we’re going to have a robust independent ecosystem of community media, then we must build a sustainable model through a true value exchange with consumers.
That’s going to be really hard, and the transition is going to be extremely painful. I worry big handouts create a subsidy regime that delays innovation.
There’s a lot of dead wood right now in this ecosystem. That’s not a popular thing to say, but we need to shake it off if we’re going to evolve.
My view is similar. Many leaders of major media I meet worldwide are the wrong people for the fight ahead. We need to stop fighting yesterday’s wars, or arguing with a rival publisher down the road. That’s not the fight we’re in.
The entire media ecosystem is suffering collectively and has the most to win by fighting together. Individually we’re angry ants. Together we’re the bigger elephant.
On stage, I sometimes ask the audience: When you look at your boss, is he looking to the future, or looking to retirement?
Everyone stares at their shoes, but afterwards over coffee they sidle up and say: Good on you Ricky. Thanks for saying that. I thought it was just me. What do we do?
I have a lot of respect for the position the leaders of our big media institutions are in.
It’s an impossible position, and they too want to see a robust future for journalism, or they wouldn’t be in the job they are. That doesn’t make it any easier, though.
Fair. So, your mission is to drive for a better future by trying to get $100 million a year, for five years, half a billion dollars, to publishers.
Do you think $100 million-a-year was enough?
I don’t know. Would it ever be enough? What even is enough? I wasn’t in that negotiation.
I do know that the Government stood pretty strong. I mean, they were strong enough that Meta told them to go f*** themselves.
That was a pretty high stakes game of chicken the Government played.
Meta quitting was big. Here in Australia, the Government is deciding whether it will designate Meta, knowing it will instantly ban news, like it did with you.
When I sit with publishers here and ask them what Meta leaving Australia means, they can’t really say. You’re living with it. What does it really mean?
If you put a news link into a post, it’s automatically deleted by Meta. It means you can’t share a news article.
Some people screengrab news articles and post an image, but Meta pulls that down too if its AI moderator spots it.
The block has disproportionately hurt startups, who rely more on social media for audiences, and publishers that serve Indigenous and new immigrant communities.
What’s not known is how Meta determines what’s news and what’s not. That’s a black box. There’s some registry list of URLs on a blacklist somewhere.
Since that happened, accounts that look like new publications have popped up. Many are aggregators ripping off stories from other publishers.
They’ve popped up into the gap so they are not blocked. Many Canadians don’t even fully understand that news has been blocked.
A recent survey showed most Canadians didn’t even know they had lost news in their feeds, because they’re getting ghost publishers designed to serve ads.
Some have more than two million followers.
Wow.
Another thing that’s notable is that a few publishers have approached us who originally supported C18 and now want their name taken off the list.
Please explain.
When the Google deal was done, there was an open call for media outlets that wanted to be considered to get the money.
Some have since asked to be removed from that list and gone directly to Meta saying they’ve opted out from supporting the legislation.
And Meta has restored them to Facebook.
One is Narcity. Its CEO signed up for C18, then changed his mind, and was then let back in by Meta.
Some of its content is more on the entertainment side, but it does do original reporting and employs journalists.
That sounds dodgy. It’s basically Meta saying, don’t ask for a law and we will let you earn money again. That feels like intimidation. I don’t like that.
At the end of the day, your question about whether $100 million was enough is the right one.
I hesitated to answer because it has nuance. Enough for what? Is it enough to subsidise the industry for now? Maybe…
But is it a long-term revenue strategy? It’s not. I think of it as some money that the industry should invest to develop sustainable long-term revenue strategies.
Any money we get from the Government or tech companies should be seen as an investment in building the future. It’s seed funding, not a revenue stream.
Through that lens, nothing will ever be enough, but there’s another way to look at it.
Has the news industry in Canada lost more money than it has gained from C18? That’s the real question.
When you factor in the revenue impact of Meta pulling Canadian news content plus lost licensing revenue from Google and Meta, will we come out on top?
I’m not so sure.
But we’ll likely never know because the licensing deals that Meta and Google struck were only with some publishers and covered by NDAs. That was a big part of the problem that C-18 solved.
If we want funding to flow from Big Tech to news media in a way that benefits all media fairly, we need to include all media and we need transparency. C-18 has accomplished that.
The lack of transparency is a problem in Australia too.
When Google and Meta paid some publishers here in Australia to kill the news media bargaining code, the deal terms were secret, and the term was three years.
Publishers who got money assumed the deals would renew. I was being told by Meta for months up to the expiry it would not renew. I warned the publishers.
When Meta then pulled out, the publishers were agog, and demanding the Government designate them under the code.
I told them: This was never about money. It was about time. The money was a window for them to build a sustainable model.
This is what I wrote in March…
Yes. As a publisher, that’s how I am thinking about the Google funds. It’s time, and f*** we need that time. The industry is in bad shape.
We continue to see the erosion, and the layoffs, and we have a lot of publishers who barely exist.
But evolution requires some death, and we haven’t been so good at the death part in our ecosystem yet.
There’s going to be a painful period, and today’s politics won’t help, but I appreciated your talk when you were on stage in Canada.
We need to take a longer view. We need to believe there is something after this.
We might not know when it’s going to happen exactly, but changes like AI and Google antitrust mean we need to be planning for 10 years from now.
We need to stop time, take a moment, and take a look at our community. There will be a lot of bruises, and it isn’t going to be pretty. It’ll be fatal for some. It must be.
I feel uncomfortable saying this because I don’t relish any media outlet closing, or journalists getting laid off, but without acceptance, we can’t birth what’s next.
OK. So, the money buys time. You’re confident the deal will last for one year, but we don’t know about two. Is that where we’re at?
Yes, we are working hard to get the first year of money out as soon as possible. There is an election before we will get the second year out.
Are there rules about how the money is spent? The doomed California Bill (which Google killed in the cradle) insisted some was spent on hiring reporters for example.
The money is distributed pro-rata to the number of full-time journalists the publisher has. We argued it should include freelancers too, but we lost on that.
The legislation ties the spend to the actual labour going towards journalism. That’s as good a solution as any other.
It doesn’t insist you spend the money on hiring new staff, or unique journalism, but it must be spent on journalism generally.
What do you think publishers will spend it on? Do you think they’ll be tempted to sell up and ship out?
There have been multiple other cheques that could have tempted folks to leave the industry before, and it hasn’t happened.
My bet? A lot of folks will spend this on the right things and try to innovate.
Part of the reason I want to see as much of this money go to smaller independents is because they’ll spend it on journalists and growth.
A far larger percentage per dollar goes towards actual reporting in smaller publishers than larger ones, who spend a lot on infrastructure. Independents are way more efficient.
As for the big players? I don’t know. Some are public companies. I guess we’ll look at their books one day to see how much paid down debt to US private equity and executive bonuses.
You’ve founded a startup Ricky. You know how this works. Your investors put money in, and you agreed how to spend it, and off you go.
The metric everyone wants is winning.
Wouldn’t that be a good outcome?!
Next time, the publisher who persuaded Meta to let him back on Facebook, and made $6 million…
See you then.