PUBLIC POLICY FORUM JANUARY 2017 THE MIRROR NEWS, DEMO CRACY AND TRUST IN THE DIGITAL AGE THE SHATTERED MIRROR News, Democracy and Trust in the Digital Age About the Public Policy Forum The Public Policy Forum works with all levels of government and the public service, the private sector, labour, post-secondary institutions, NGOs and Indigenous groups to improve policy outcomes for Canadians. As a non-partisan, member-based organization, we work from “inclusion to conclusion,” by convening discussions on fundamental policy issues and by identifying new options and paths forward. For 30 years, the Public Policy Forum has broken down barriers among sectors, contributing to meaningful change that builds a better Canada. © 2017, Public Policy Forum Public Policy Forum 1400 - 130, Albert Street Ottawa, ON, Canada, K1P 5G4 Tel/Tél: 613.238.7160 www.ppforum.ca @ppforumca ISBN 978-1-927009-86-4 Table of Contents 2 Introduction 12 Section 1: Diagnostics 36 Section 2: News and Democracy 70 Section 3: What We Heard 80 Section 4: Conclusions and Recommendations 95 Some Final Thoughts Moving Forward 100 Afterword by Edward Greenspon 102 Acknowledgements In a land of bubblegum forests and lollipop trees, every man would have his own newspaper or broadcasting station, devoted exclusively to programming that man’s opinions and perceptions. The Uncertain Mirror, 1970 The Shattered Mirror: News, Democracy and Trust in the Digital Age When he made this fanciful remark in his landmark The Internet, whose fresh and diverse tributaries of report on the state of the mass media in this country, information made it a historic force for openness, now Senator Keith Davey was being facetious, not has been polluted by the runoff of lies, hate and the prophetic. He and his special Senate committee manipulations of foreign powers. The ‘truth neutrality’ were agitated by what they considered the ill-effects of the dominant digital platforms is incompatible of concentrated media ownership on Canadian with democracy. society. Proprietors of newspaper chains, they argued, were making fat profits, but the mirror they held up to the communities in which they operated was inadequate. Their report lamented–as did that Meanwhile, much of the traditional media is hurtling toward an unhappy date with destiny, and digital-only competitors remain journalistically under-developed. of the Kent commission in 1981 and a second Senate Today, we deal with a reality almost unimaginable inquiry in 2006–that, because the media rested back in 1970. The far-fetched bubblegum and lollipops in fewer and fewer hands, the quality of Canadian notion has come to pass: Every man–and woman–can journalism and the health of our democracy were now literally communicate his or her “opinions and being compromised. perceptions.” Blogs, social media feeds, podcasts and In the decades since Senator Davey declared the media mirror “uncertain,” it has cracked and now appears shattered. The odd blend of content fragmentation, revenue consolidation and indifference to truth has overtaken simple concentration of ownership as the main threat to holding public smartphones give citizens unprecedented voice, and sometimes place them at the scene of breaking news that, in an earlier time, would have gone unreported. To lean in and engage publicly or lean back and consume passively is a choice that now rests with individual citizens, not just media companies. officials to account and reflecting Canadian society The digital revolution has made for a more open and back to its citizens. diverse news ecosystem–and a meaner and less trustworthy one. It has also upended the model of 3 journalistic “boots on the ground” backed up by a The disruption of news media has been taking place second platoon in the office upholding such hallowed for a long time. But it has risen to an entirely new standards as verification and balance. plane with the shockingly sudden consolidation in Established news organizations have been left gasping, while native digital alternatives have failed to develop journalistic mass, especially in local news. The financial degradation has been insidiously incremental, but one whose accumulation and now acceleration has brought to the fore the issue of sustainability of newsgathering in our democracy. unseen hands of both Internet ad revenues and control of who sees what among the thousands of competing political and social narratives. The loser is not just the incumbent news media, whose models and management have struggled to adapt. The question now before Canadian policy-makers is whether democracy itself is being put at risk. As the authors of the FCC study observed, “Information Do the media, and particularly the civic function goods are public goods. The failure to provide them of journalism–the coverage of public institutions, is, in part, a market failure. But carefully crafted public public affairs and community–need a lifeline? If so, policy can address [the] gaps.” Similarly, a 2014 report how can we ensure that it does not lock in privilege, commissioned by a concerned Dutch government stifle innovation and weaken democracy itself? And found that the new media order looked incapable can accountability and commonweal continue to under most scenarios of “providing broad layers exist without compromising the media’s essential within society with reliable and completely factual and independence? relevant information”–what it termed the public role of “What happens to the catsup or roofing tile or widget journalism. “If we are increasingly beginning to doubt industry affects us as consumers,” Davey commented in his report. “What happens to the publishing this, and we believe that quality journalism is a vital part of a properly working democracy, then it is time business affects us as citizens.” to do something.” Imagine for a moment a community without news: When the Public Policy Forum (PPF) began thinking how atomized and dysfunctional it would be. about a study on the state of the news media in In 2009, the Knight Commission on the Information Within a fortnight in January 2016 alone, Rogers Needs of Communities in a Democracy–a blueribbon panel of U.S. media, policy and civic leaders– concluded that news is as vital to democracy as “clean air, safe streets, good schools and public health.” Three years later, a study for the U.S. Federal Communications Commission (FCC) cited eight “critical information needs” the media help to provide, ranging from emergencies and other public risks to health, education, the environment and economic opportunities to civic and political knowledge of policy initiatives and the conduct of public officials and candidates for office. 4 Canada, in early 2016, the headlines were all bad. Media and Postmedia announced new rounds of staff reductions, Torstar revealed plans to close its printing plant, and Confederation-era newspaper titles in Guelph, Ont., and Nanaimo, B.C., were shuttered, the first of six daily papers to close, merge or reduce their publishing schedules before year’s end. The situation wasn’t much better on the broadcast news side, where revenues, especially in local television, followed the downward track of the newspaper industry, inducing the Canadian Radio-television and Telecommunications Commission (CRTC) to step in. A parliamentary committee was formed. News We reviewed the available literature, organized six companies and industry associations queued up roundtables across Canada, co-hosted a symposium with complaints of inequities in the marketplace. on digital-news innovation, sought out industry Some made requests for public assistance. leaders and experts domestically and abroad, The Government of Canada contracted with the PPF, a non-partisan and independent think-tank, to assess the situation and make recommendations on what, if anything, should be done. The object was not to defend any mode of news delivery, but to evaluate the risk to democracy. PPF has devoted the past 30 years to working with partners on consequential issues. We brought publicly spirited backers into the tent–the McConnell, Atkinson and Max Bell foundations and CN, TD Bank Group, Ivanhoé Cambridge and Clairvest Group. We are grateful to all for their assistance. We also recruited a team of academics (Colette Brin of Université Laval, Christopher Dornan of Carleton University, Elizabeth Dubois of University of Ottawa, Taylor Owen of University of British Columbia), along with pollster Allan Gregg of Earnscliffe Strategy Group, and a loose band of other advisers. 6 commissioned our own research, and conducted four focus groups in English and two in French as well as an online survey with a random sample of 1,500 respondents. To begin, we drafted three questions: i. Does the deteriorating state of traditional media, particularly but not exclusively newspapers, put at risk the civic function of journalism and media and therefore the health of our democracy? ii. If so, are new forms of digitally based media and communications filling the gap, or can they reasonably be expected to do so after a transition period? iii. If no, what is the role for public policy in ensuring the healthy flow of news and information deemed vital to our democracy, and what are the least intrusive and most efficacious ways of designing and delivering these policies? 7 In the summer, a fourth question became apparent funds were established after negotiations with in our conversations: Were algorithms that were Google. Germany is considering legislation to hold intended to tailor online information to individual Facebook to account for fake news that appears in its preferences instead segregating people in social feeds and then goes uncorrected. “filter bubbles” and thereby eroding a sense of commonweal? By the time of the U.S. election in November, filter bubbles and fake news had moved from the sidelines to centre stage as a democratic concern. Those who fear the state will take up residence in the newsrooms of the nation should realize it has been well ensconced there for a long time–although generally at a safe distance from the journalists. Still, we are also seized by concern over editorial As will be apparent in reading the report, we independence, as were respondents in our public encountered resistance to the very notion that public opinion research. Indeed, Canadians believe so policy be applied to the news. While any case for strongly in journalism and its role in “keeping the doing so must be utterly compelling and delicately powerful honest” that many find the mere notion designed to safeguard press freedom, it is important of government support to be at odds with the to remember that Canada has always pursued public very purpose of the news media. When we asked policy to ensure there is journalism by Canadians for participants in focus groups to reconcile these Canadians. The Canadian Broadcasting Corporation misgivings with the mounting loss of journalists, they is an instrument of public policy. So is the CRTC. As is often fell silent. Section 19 of the Income Tax Act, introduced in 1965 to assist Canadian-owned media in the competition for advertising revenue. Supports for periodicals and minority-language publications also flow from public policy. The first And so our job grew tougher. But before deciding what can and should be done, it is crucial to determine whether and to what extent a crisis truly exists. postal subsidy predates Confederation. Foreign- There is much talk that the demand for news ownership restrictions are a policy. The Ontario Media has disappeared, but our inquiries suggest that Development Corporation’s tax credit for digital Canadians still seek to be informed–although at the media innovation, radically altered for fiscal reasons time of their choosing and with little or no cost to in 2015, is a policy. Several provinces have chosen to themselves. New technologies have not only made exempt newspaper subscriptions from their provincial this possible, but increased the supply of news sales tax. and opinion dramatically. They have also allowed Much of this policy was created for a pre-digital age. In places, it is perversely unfair. There is no excuse for the fact that Canadian companies producing journalism are saddled with tax disadvantages in selling advertising or subscriptions. for the bifurcation of production and distribution, with financial returns heavily skewed to the latter. Moreover, the Internet, once an extraordinary manifestation of a freewheeling information market, has quickly come to be dominated by a pair of global giants from Silicon Valley–Google and Facebook–that Governments in some other countries have are not only lacking in passion for news, but actively responded more quickly with initiatives to level the tax avoiding the responsibilities of a publisher. and copyright playing fields. First in France and then in the European Union as a whole, digital-innovation 8 To some extent, the increased supply may be an We, however, came at this assumption with what illusion created by the same news being replicated in we hope was an open mind, poking and prodding many locations. If so, such repetition constitutes a net it before concluding that professional journalism good in that it creates more opportunities for citizens has been enriched, but not replaced, by an to encounter information of civic importance. But the infusion of non-professional participants in the critical issue for policy purposes is where it originates, new media ecosystem. not how and where it is accessed. The vaunted media ecosystem ceases to deliver on its democratic role without this wellspring of original news, especially the variety we call civic-function news: the coverage of elected officials and public institutions such as legislatures, judicial and quasi-judicial bodies, city halls, school boards and supporting public services; issues and debates related to these officials and bodies; and the ability of communities to know about themselves for civic purposes. Public policy should hold no interest in who produces this news–whether a mighty television network, a newspaper born in the 19th-century, an independent journalist or a digital startup–only that it exists. As stated, the focus of this report is unremittingly on the role news plays within a democracy and the critical question of whether the transition from one model of journalism to another (should the journey prove so Canadians still seek to be informed– although at the time of their choosing and with little or no cost to themselves. Late in our research phase, the spigot of bad news linear) poses an acceptable risk. for the industry opened even wider. As the diagnosis For many in and around the media, it is a given that to the precipice appears to be picking up speed. This journalism resides at the heart of civic-function news. In his mandate letters to cabinet, Prime Minister Justin Trudeau instructed ministers to be respectful of journalists, as they are “professionals who, by asking necessary questions, contribute in an important way to the democratic process.” In launching the second phase of consultations on Canadian content in a digital age, the Department of Canadian Heritage said one of its goals was to ensure that Canadians have an opportunity “to actively participate in our democracy by having access to high-quality news information and local content that reflects a diversity of voices and perspectives.” that opens this report shows, the news media’s march slide may not produce the kind of crisis point that stops policy-makers in their tracks, as the implosion of the auto industry in 2008-09 did, but the pace is unrelenting and the downward slope ever steeper. In September, Rogers Media announced it would dial back the publication schedule of its consumer magazines, including Maclean’s. An iconic news brand for more than a century, Maclean’s had gone from monthly to weekly publication in 1978 in part thanks to Canadian policy favouring domestic periodicals. Then in November, Rogers announced the loss of another 87 jobs, 60 of them in Quebec, including the editorin-chief of Maclean’s. The Globe and Mail offered 9 yet another in what appears to be a never-ending chain represented by a parliamentary bureau of six round of industry buyouts, reducing its journalistic journalists–three reporters and three columnists– complement by a further two dozen to about 250, compared with double that at the beginning of 2016 which is about 100 fewer than it employed in 2010. and more than 35 at the dawn of the millennium, Staffing at the much-heralded Star Touch tablet app including, at one point, dedicated reporters for was scaled back as third-quarter revenues dropped Montreal, Edmonton, Calgary, Vancouver and Windsor. 20 percent for Torstar’s Star Media Group. All told, the All this occurred against the backdrop of $2.3 million Star newsroom has shrunk to 170 from 470 a decade in bonuses paid to Postmedia executives so they ago. And revenues at its Metroland community would remain with the company. papers, once seemingly immune to the industry’s ravages, were down 10 percent. In Quebec, a coalition of 146 newspapers called for significant government intervention so its members It was the U.S. presidential race that served as the final punctuation mark on an annus horribilis for the news industry... could continue to “serve democracy while adjusting to Despite aggressive cost-cutting and a summertime print advertising dropped another 19 percent. Chains restructuring of its debt, Postmedia reported a loss on the year of $352 million, based on declines of 21.3 percent in print advertising and 8 percent in print circulation. Digital revenues grew by a meagre 0.8 percent. The company quickly began to institute a further 20-percent reduction in payroll in a year that had already seen it combine the newsgathering operations of the tabloid Sun chain and its broadsheet newspapers. This latest journalistic carnage left the 10 the new digital world.” The group includes Montreal’s historic Le Devoir, a non-profit, as well as for-profits owned by TC Transcontinental and Groupe Capitales Médias Inc. They want the federal government to abolish the sales tax on newspapers and the Quebec government to provide a five-year financial assistance program that would include refundable tax credits covering 40 percent of production costs, including journalists’ salaries, and 50 percent of what the papers invest in their digital platforms. These measures would be reserved for print only. Of course, Canadian media are hardly alone. In the United Kingdom, revenues fell by 14 percent in the first eight months of 2016, despite a brief summertime uptick generated by political advertising in the Brexit referendum. And, in the United States, the New York Times Co. recorded a sharp fall in third-quarter earnings, and a trimming of editorial positions, as such as McClatchy, Gannett and Tronc saw declines between 11 and 17 percent, which sparked yet more newsroom cost-cutting. Even coming off a decent quarter, The Wall Street Journal said it would reduce its head count by “a substantial number” in light of “challenging times” in print advertising. Meanwhile, Vice News co-founder Shane Smith was forecasting “a bloodbath” in digital news in 2017 that would wipe out 30 percent of digital sites. To be sure, there were some bright spots. Perhaps not yet. Despite all the talk of a loss of faith in news the most positive outlier was the Washington Post, media, our research and that of others suggests that which announced at year end that it had achieved Canadians still trust journalists and journalism. profitability three years after being purchased by Amazon founder Jeff Bezos. Boosted by the extraordinary U.S. election campaign, it was contemplating hiring several dozen additional journalists. Notwithstanding its Watergate fame, the Post was one of the most successful local papers in the United States. But for it to grow in the digital age, Bezos determined it had to boost its national and global reach. At a Canadian Journalism Foundation event at the end of 2015, Washington Post executive editor Martin Baron called for greater patience in allowing new initiatives to flower while acknowledging that, thanks to Bezos, he enjoyed greater financial latitude than others to experiment on multiple platforms simultaneously. (We will examine a few Canadian outliers in Section 2 of this report.) It was the U.S. presidential race that served as the final punctuation mark on an annus horribilis for the news industry, as the dangers of filter bubbles and fake news manifested themselves on the giant platform sites, particularly Facebook, but also Google. The debate over the responsibility of such companies to control falsehood and hatred in the content they present and promote brought into sharp relief how the norms and practices of established newsgathering organizations differ from those of the entities that In her 2016 report for the Public Policy Forum, Does Serious Journalism Have a Future in Canada?, The Economist’s Canadian correspondent, Madelaine Drohan, underlined the consequences of deteriorating conditions. “The financial constraints on media organizations have had a negative impact on working conditions for journalists, quite apart from the heavier demands for increased speed and output.” With fewer resources, news companies have had to reduce the number of journalists in the field, and struggle even to test digital innovation that could help them reach new audiences. “The inevitable result,” Drohan wrote, “is poorer journalism, fewer voices contributing to the public debate and a loss of loyal readers, viewers and listeners.” Journalists, media executives, academics and policy analysts are all wrestling with what the waning status of traditional journalism truly portends. Are we merely passing through a turbulent transition to a more open and diverse future, or witnessing something that could inflict lasting damage on democracy? What interventions are warranted if the new information marketplace proves to be a poor guardian of the public good–if not, in fact, antithetical to it? Can we afford to wait and find out? have risen to challenge them. Nearly two-thirds of Like it or not, the forests are now made of bubblegum, respondents to a poll of U.S. adults, conducted by there are lollipops on the trees, and the media’s the Pew Research Center, felt that fabricated news mirror is no longer uncertain, or even merely cracked. stories sowed a great deal of confusion about the It is within this context that we release The Shattered true nature of facts and events. Forty-five percent Mirror: News, Democracy and Trust in the Digital Age. looked to government to do something about it. Even in the U.S., where the First Amendment is holy writ, respondents felt that a system prepared to throttle the facts does not serve democracy adequately. What should not be lost is that, when it comes to journalism, Canada is not the United States, at least 11 Section 1 mamas Once indispensable agencies of information, the 20th-century news media are less and less prominent, except to provide grist for a public conversation they no longer control. 13 Civic-function Journalism: A Quick March to the Precipice A signature feature of the opening decades of the the rest. The 20th-century news media are less and 21st century is the convulsion, abrupt and irreversible, less prominent, except to provide grist for a public that has been visited on the practice of journalism, conversation they no longer control. and therefore on the once-dominant regimes by which entire societies informed themselves. Although the ascendance of social communication is exhilarating–mobile, instantaneous, incessant; a world What citizens know of unfolding events, and what of honeycombed interconnectedness–the eclipse of they are encouraged to consider important, was the 20th-century news media has prompted legitimate until recently the province of a small number of large concern throughout the democratic world. As news media corporations. These companies–newspaper recedes on the social stage, overtaken by more chains and broadcast networks–were the portals seductive forms of content, what are the implications through which the public perceived the world. for civic engagement, government accountability and Dispensing the facts and arguments of everyday a collective consciousness? What happens if and life, from the local to the global, and with almost when there are no news media? Or, at least, no news total command over public attention, they were media as they once existed–prominent, centralized, powerful political actors as well as essential and authoritative sources of civic information; the arbiters richly profitable advertising vehicles. of a common public agenda. Today, these indispensable agencies of information FOR PRINT, THE END MAY BE IN SIGHT are rapidly being reduced to mere content providers, Journalism extends far beyond the newspaper feeding updates on breaking developments into companies, but the newspaper as a package the torrent of chatter, rumour, dispute, advocacy, or bundle of information pieces established the assertion, entreaties, misinformation, memes, GIFs commercial foundation for the news industry and and viral videos churning through the new portals of served as the spine of daily journalism even after public consciousness: Facebook, Google, YouTube, the arrival of television. In the early 1950s, there Snapchat, WhatsApp, Instagram, Tumblr, Twitter and were more papers sold every day than the country 14 THE VANISHING NEWSPAPER Newspapers sold per 100 households in Canada, 1950-2015, projected to 2025 1950: 102 newspapers per 100 households 79 in 1975 49 in 1995 18 in 2015 2* 1950 1960 1970 1980 1990 2000 2010 2020 Projected * Projection for 2025 is based on trend from 2000-2015 Source: Compiled by Communications Management Inc. from: CARD; CNA; Newspapers Canada; ABC; AAM; CCAB; Statistics Canada 15 had households. But by 1995, just as Internet access or another, and “advertisers”–commercial sheets began to become commercially available, household announcing goods for sale, services on offer and penetration had dropped below 50 percent. investment opportunities. Today, fewer than one in five households pays for The genius of the newspaper as a cultural form was newspapers. This inexorable decline presages a to combine all three–news, editorial opinion, and time when printing will no longer make economic advertising–into one omnibus, indispensable agency sense, something Winnipeg-based media economist of public address, a device for seizing public attention Ken Goldstein estimates may occur within the next that sold itself anew every day. As the newspaper six years. evolved, it proved adept at creating editorial content There was a time, though, when newspapers were the perfect Canadian medium: domestically owned, hugely profitable, a major source of employment for well-educated knowledge workers, and essential not only to daily life but to the nation’s sense of itself. More people read Canadian newspapers and news magazines–and watched or listened to broadcast news, documentaries and current-affairs programs– than saw Canadian movies, patronized the Canadian that simultaneously lured readers and catered to advertisers: service journalism. Sections for travel, automobiles, real estate, fashion and food all supplied material of interest and value to readers, along with a means for advertisers to reach those readers. So much of their revenue–75 to 80 percent–derived from advertising that newspapers were sold at a deep discount (and sometimes given away) specifically to maximize their readership for advertisers. arts, purchased Canadian recordings, or enjoyed One form of advertising–the classifieds–was the Canadian TV drama and comedy. special preserve of the newspaper: the small change As a fact of this country’s cultural life, news and journalism were rivalled in prominence only by domestic sport. Canadians consumed American news, but they did so in addition to their own, not instead of it. Journalism was intrinsic to the national project. So, what has gone wrong? It is not simply that new forms of information access, circulation and retrieval have been added to the media ecosystem. Journalism’s economic model has collapsed, profoundly and structurally. The newspaper became the dominant information medium because of the way in which its different strains of content complemented one another, commanded attention and captured revenue. Four hundred years ago, long before newspapers, there were “relations”–printed accounts of events of political or economic consequence (or salacious interest). There were also political pamphlets, which agitated heatedly for one cause 16 of commercial transactions vital to the life of any community, but extremely lucrative in sum. Well into the late 1990s, anyone looking to rent an apartment, sell a sofa or post a death notice had almost no option but the local daily. Broadcasters and magazines simply could not accommodate either the volume of classified listings or the daily turnover. And yet as early as 1964, Marshall McLuhan observed, “The classified ads (and stock market quotations) are the bedrock of the press. Should an alternative source of easy access to such diverse daily information be found, the press will fold.” That alternative arrived in 1995, the very year that Canadian newspaper household penetration dropped below 50 percent. San Jose software developer Pierre Omidyar created a digital bazaar for the sale and purchase of precisely the sort of merchandise previously found only at flea markets, garage sales– and in the classifieds. That same year, Craig Newmark, another California software engineer, began to advertising; the union of content and classifieds had circulate an email list of upcoming social events and been severed. Three-quarters of a billion dollars a job openings to friends and fellow programmers. year in reliable revenue vaporized in a decade. Today, Omidyar’s eBay, Newmark’s Craigslist, and a Meanwhile, the service journalism that the industry multitude of more specialized merchandising forums, developed to keep profitability aloft has also been as well as job markets and networking venues such superseded. Why would the car enthusiast turn to as LinkedIn, have stripped the incumbent media of the local daily’s automotive section when there are what was once their bread and butter. countless specialty websites with richer content? In doing so, they have demolished the foundation on What is the appeal of a paper’s entertainment section which the news industry was built. Between 2000 in a world of Rotten Tomatoes, Flixster and IMDb, and and 2008, classified advertising earned Canada’s an online industry of celebrity gossip sites? How well daily newspaper industry more than $800 million a can the food section compete with Epicurious, year, reaching a historic high of $875 million in 2005– Yummly and myriad other digital culinary resources? the year Kijiji started in Canada. A decade later, by In 2006, display advertising, wrapped around the 2015, that figure had dropped to $119 million, and the news and service sections, accounted for almost inevitable trend is toward zero. $1.8 billion in revenue for the daily newspaper Newspaper companies attempted to launch digital industry. By 2015, that figure had dropped to classified sites of their own, such as Workopolis, a $907 million, very nearly cut in half within a decade joint venture of The Globe and Mail, Toronto Star and still going down by double-digit percentages and La Presse that made its debut in 2000. But the every year. news industry no longer had a special claim on such THE COLLAPSE OF NEWSPAPER CLASSIFIEDS Total print classified advertising revenue, Canadian daily newspapers, 1995-2015 ($millions) 758 783 799 849 823 826 832 859 875 867 846 819 645 2005 Kijiji launches in Canada 650 532 462 335 289 249 175 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 119 2015 Source: ThinkTV (TVB Canada) 17 Community newspapers, perhaps closer to their advertisers, earned more than $1.2 billion a year in total advertising revenue well into the 21st century. Since 2012, though, local ads have begun to decay along with national advertising, cutting this revenue by about 10 percent a year, down to $881 million in 2015. THE DESCENT OF NEWSPAPER ADS Total advertising revenue in Canadian newspapers ($millions) Daily newspapers $2.75 billion $1.42 billion Community newspapers $881 million $1.1 billion 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Source: Newspapers Canada Perhaps even this reduced revenue is vulnerable. In the 2016 iteration of her annual account of media trends, Silicon Valley analyst Mary Meeker pointed to the gap between the amount of their time people spend reading print journalism (four percent) and print’s slice of the advertising market (16 percent), suggesting that newspapers earn more ad revenue than they garner attention. These patterns, as the following chart shows, are not particular to Canada, or even to North America. They are also true across Europe. NEWSPAPER AD DECLINES ARE WIDESPREAD Newspaper advertising revenues as a percentage of 2003 values (2003 = 100%) 110 Projected 100 90 80 France: 70% Germany: 68% 70 60 50 40 2003 2006 Source: Reuters Digital News Report, 2016 18 2009 2012 2015 Canada: 43% U.K.: 40% 2017U.S.: 36% Initially, the Canadian newspaper industry managed to had grown to $4.6 billion, but the daily papers’ share slow its march to the precipice by raising subscription had fallen to $233 million and the community press’s prices after years of undercharging readers for to $40 million. Mobile, though a sensation for users its product. But that has not proved to be a long- and Google and Facebook, represented less than one term solution: Five straight years of shrinkage have percent of newspapers’ total ad revenue. eliminated $150 million in total circulation revenue. All told, from 2006 to 2015, Canadian daily newspapers lost 40 percent of their revenues. The pace has accelerated over the past three years, and their total NEWSPAPER AND TV SITES MISS DIGITAL AD BOOM Digital advertising revenues in Canada: Daily newspapers television and total ($millions) $5,000 income was on track to fall below $2 billion in 2016, down from $3.3 billion a decade earlier. 4,000 At first, the digital market was too small to be profitable 3,000 All digital ads: $4.6B for traditional news media. It has grown exponentially since, but not in a way that has done the incumbent Daily newspaper sites: 2,000 media much good. Adding digital to their print readership has furnished most newspaper companies $243M 1,000 TV sites: $150M with greater reach than ever. Three-quarters of Internet 0 users in Canada visited newspaper websites in the first half of 2016, according to comScore Inc. Unfortunately, many did so infrequently or didn’t go past the home ’06 ’07 ’08 ’09 ’10 ‘11 ’12 ’13 ’14 ’15 Community newspaper sites: Source: Newspapers Canada $40M page, so converting the traffic into revenue has been frustrating. “Paywalls” designed to elicit more of a contribution from the online audience have proved INTERNET ADVERTISING SOARS PAST... immaterial for almost all. Market share of all advertising revenue in Canada, by medium Growth in overall digital advertising has been Internet 40 37% exponential. In 2005, Canadian advertisers spent $562 million online compared with $2.7 billion on newspapers. By 2016, the tables had turned. Digital 30 their salvation, but its promise proved short-lived, with revenues flat lined for the last 10 years. In fact, their take is now dropping, both as a percentage and in 27% pape r 13% 12% Radio 10 Community newspaper than five percent of the overall digital market. The digital market was once seen by newspapers as news 20 year, while advertising in 1,000 weekly and 100 daily newspapers had dropped to $1.4 billion, including less on Daily had grown almost tenfold to $5.6 billion ($1 billion in French) and was increasing by about 20 percent a Televisi 0 ‘06 ‘07 ‘08 7% ‘09 ‘10 ‘11 ‘12 ‘13 ‘14 ‘15 *Percentages do not equal 100% because smaller categories not shown. Source: Newspapers Canada real terms. In 2011, the dailies captured $246 million (and community papers $44 million), or 9.1 percent of the $2.67 billion spent overall. In 2015, the digital pool 19 THE BOTTOM LINE Despite attempts to keep spending in line with For newspapers, it has been a multi-decade ride revenues, these companies are also feeling the pinch down. The descent seems to be picking up pace. in their operating profits, which are counted before We asked newspaper companies, particularly those debt servicing. In 2014, the newspaper industry had privately owned or with mixed holdings, to work with an operating profit margin of 9.5 percent, according to us to index their revenue trends over the past five Statistics Canada. It was a sharp fall from 12.5 percent years. Assuming they brought in $100 in 2011, what four years earlier, but still a positive return. Statistics would that sales number look like five years on? Canada collects this data only every two years and You can see the results on the accompanying chart. won’t have a 2016 figure available until 2018. In order Of the large players, The Globe and Mail looks best, to gain some insight into the latest trend line, the PPF despite multiple years of double-digit ad losses. looked at financial returns for four publicly traded Postmedia looks worst, and this has little to do, at newspaper companies and found their operating least directly, with its high debt level. (Indirectly, its margins had fallen by about half since 2014. deep cuts to people and product may have driven away advertisers and readers more thoroughly than for others.) THE TUBE VERSUS YOUTUBE Broadcasting has also been disrupted by the Internet and what it has made possible, from YouTube to NEWSPAPER COMPANY REVENUES FALLING AT DIFFERENT RATES Netflix to online streaming. Television viewership for Total revenue in 2016 as percentage of revenue in 2011, according to the companies: therefore of diminishing interest to advertisers. The Le Devoir supplement their basic reporting with an abundance 92% Globe & Mail 78% Brunswick News 75% Winnipeg Free Press 73% La Presse 71% Metroland 71% Glacier 70% Transcontinental Toronto Star Postmedia Source: Company representatives news remains strong, but the audience is older and 64% all-news channels rely on in-studio panels of guests to of opinion and argument. Smaller and fewer TV news crews are expected to fill more and more air time (plus feed digital platforms), meaning they have less and less real time to devote to research and the cultivating of sources. The same, of course, is true for print reporters, who have multiple mouths to feed: the website, video, social media, the app, the paper. “Because feature writing, beat reporting and investigations are now rarer, the news agenda today is more highly skewed to crime, natural disasters and institutional stories driven by press releases 62% 58% and press conferences,” says John Cruickshank, former head of CBC News and former publisher of the Toronto Star. “The daily picture of our local and national life provided by Canada’s news media is already less complete, less nuanced, less authentic, more sensational, more staged and more negative. As the business crisis worsens, the news media’s representation of Canada becomes less reflective of our collective reality.” 20 NEWSPAPERS STILL MAKE PROFITS, BUT THEY’RE SHRINKING RAPIDLY Percentage operating profit margins (profit before interest, taxes and extraordinary items) 15.1 14.8 14.2 13.2 13.1 13.3 13.2 12.6 11.5 12.5 12.3 11.1 10.9 9.5 N/A 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 N/A 2012 2013 PPF analysis shows a sharp decrease from 2014-2016* N/A 2014 2015 2016 *Statistics Canada will not report 2016 figures until 2018 Source: Statistics Canada 21 Chris Lane: Winning the battle, losing the war Until two months before we held a roundtable in But as more social media co-ordinators were hired Regina, Chris Lane was CBC’s senior producer for and the clicks increased, producers and reporters news in Saskatchewan. At 36, he had also spent time were laid off and beat coverage decreased, Lane as a producer in Calgary, Charlottetown, Fredericton had a change of heart. and Toronto. To what end, Lane began to ask, pointing out that Lane calls himself a CBC lifer — “the one in the online ads generate little real income for the CBC. assignment meetings beating the drums about “It’s not a business case that’s working, in my view. making ourselves more relevant with more clickable Our ‘presence’ and ‘reach’ may be wider, but it’s content … Are we getting a new Costco? Is the dollar not funding, expanding or even retrenching our changing your plans for a winter holiday? The SPCA journalistic obligations.” is overrun with cats so they made this meme… isn’t it cute?” ” Something indispensable” has been turned into the equivalent of “a paper coffee cup.” PLAY VIDEO 22 After noticing he had replaced the word “story” with “content” — and the two “are not interchangeable” — he decided to leave journalism altogether. “In the quest to make declining traditional media more relevant, I think we made it more disposable.” That, Lane told the PPF, is now the mainstream media’s great dilemma –”something indispensable” has been turned into the equivalent of “a paper coffee cup.” After he left the CBC, Chris Lane became CEO of the Canadian Western Agribition in Regina. Credit: The Canadian Press Images/Michael Bell 23 At the local level, the CRTC reports that television Bell Media’s November 2015 layoff of 350, and news revenues are falling about 10 percent a CHCH-TV’s reduction of its all-news daytime schedule year, and “an alarming number” of stations have from 80 hours a week to just 17.5. In response, the shortened their newscasts. “They have reduced staff CRTC announced a regulatory change to take effect and centralized news operations, shrinking their in September 2017 that will inject up to $90 million a local presence,” said CRTC chair Jean-Pierre Blais. year into local TV news across the country. Examples include CBC’s December 2014 decision TV, like newspapers, has captured almost none of to trim supper-hour newscasts; OMNI Television’s the explosive growth in online advertising. Digital May 2015 dropping of its third-language newscast sales account for little more than four percent of its in Toronto, Calgary, Edmonton and Vancouver; total revenue. AS TV REVENUES ALSO START TO DROP... Net television advertising revenue ($millions) 4,000 Total 3,000 Conventional 2,000 Specialty 1,000 Online Online ads made up 2015 only 4.5% of TV ad revenue in 2015 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 Source: Statistics Canada, CRTC, ThinkTV via Newspapers Canada ...PROFITS DISAPPEAR AT PRIVATE STATIONS ...MOST OF WHICH SERVE SMALL AND MEDIUM MARKETS Profit before interest and tax (%) Breakdown of private, local TV broadcasters in Canada 2015 8 7.3% 6 4 Medium markets 2 23 Large markets 0 34 -2 -4 -6 -8 2011 Small markets -8% 2012 2013 2014 33 2015 Source: CRTC data Source: Nordicity 24 Among traditional news and advertising vehicles, only For example, the venerable Scientific American  radio, with its hyper-local orientation (crime news, — founded in 1845, it’s the oldest continuously traffic, weather, hometown sports) and no revenue published magazine in the United States — has a competition from CBC, has managed to hold its website that receives 5.5 million unique visitors a revenue position. And then there’s the CBC itself, the month and a Facebook page that has 2.7 million main alternative to daily newspapers as a producer “likes.” However, in 2010, Elise Andrew, then a of civic-function news across the country. Despite the 23-year-old biology undergrad at the University of budget cuts it experienced (a hole plugged in Budget Sheffield, created the cheeky Facebook page called 2016 by the Liberal government), in relative terms, the I Fucking Love Science to share interesting items CBC has fared well over the past decade. In the first from scientific journals with “a few dozen of my six months of the current fiscal year, CBC’s revenue is friends.” As of November 2016, IFLS boasted more up 14.5 percent over last year, including a $45-million than 25 million “likes,” and since 2013, Andrew — now (40 percent) leap in ad revenue. a resident of Midland, Ont. — has run IFLScience.com, which draws 45 million monthly visitors, leapfrogging AS NEWSPAPERS DECLINE, CBC HOLDS STEADY well past the august Scientific American. ($millions) One is not a replacement for the other, nor does it attempt to be — IFLS shares others’ content while 4,000 Daily newspapers: Ad and circulation revenue 3,000 Scientific American produces its own. But like so many nimble online initiatives, IFLS can be produced at a cost that, given the size and engagement of its audience, makes it profitable. As for Scientific American, its revenue from social media exposure is 2,000 CBC: Government appropriation and revenue 1,000 paltry compared with its overall expenditures. Canada’s traditional news organizations have an additional problem: They have lost control over the distribution of their products. More and more, their 0 2006-07 2009-10 2011-12 2013-14 2015-16 Source: Nordicity stories are accessed not from their own websites but through aggregators such as Google News and National Newswatch, or via Facebook, Twitter or other A LOSS OF IDENTITY AS WELL AS AUDIENCE social media venues. The source of news content The news industry’s failing financial fortunes are an becomes opaque: Just as television viewers barely index of both the erosion of its relevance and the notice the names of the production companies that fraying of bonds of loyalty that turned its companies produce programming, Facebook and Google users into brands. Consumers inundated with choice tend pay scant attention to where their news content to become promiscuous. Local and regional news originates. A 2016 report by the Reuters Institute for organizations are finding themselves overrun by the Study of Journalism found that news brands are global and specialty sites, while social media eats into “clearly noticed” by readers less than half the time on the time once devoted to traditional media. Social social media. media also provides the means for startup initiatives to compete with established outlets for attention, particularly on Facebook. 25 News companies worry their identities are eroding as their journalistic output is channeled through other platforms, and feel incapable of resistance. As a leading Canadian media executive said at one of our roundtables, there is no choice but to post on Facebook: “That’s where the audience is.” The CBC’s French and English news sites, Canada’s most visited, attract 15 million people in a typical month. Facebook says it has 17 million active users in Canada every day. Yet even as audiences shift and brand identity and allegiance erode, public opinion research conducted for this report found that, at important decision-making junctures, citizens invest their trust in established news brands, look to them and count on them. They just don’t want to pay for them. DIGITAL STARTUPS ARE TINY PLAYERS IN ONLINE NEWS Total unique visitors, July 2016 (000s) CBC-Radio Canada 15,943 12,686 Postmedia Torstar Digital 10,387 CTV 9,151 Globe & Mail 5,720 Journal de Montreal 3,063 Transcontinental 2,906 iPolitics 141 The Tyee 116 Source: comScore The vast majority of civic (versus service) journalism still comes from the newsrooms of the incumbent media companies. As the web has annihilated the old barriers to entry in the information market, the digital sphere has produced scores of new content initiatives, some national in scope (iPolitics, the National Observer), some local (Torontoist, AllNovaScotia and paNOW), some explicit in their political orientation (The Tyee, rabble.ca, TheRebel. media, Ricochet), some branch plants of American digital publications (Huffington Post, BuzzFeed), and at least one domestic in origin but now based in New York (Vice). Other than the global brands with Canadian branch plants, none shows up in the top 60 online news sources in Canada. Combined, they account for only a tiny portion of Internet news traffic COMPETING WITH ‘CLICKBAIT’ It would be a mistake to romanticize the traditional news industry. It has consistently been the object of pointed, often infuriated, criticism. For all that they claim to fulfill an essential democratic function, there has been a persistent worry that the pressures of the market — and the tastes of the public — subvert the social responsibilities of the news media and their commitment to the public good. What democracy requires is sober attention to political authority. What the public prefers on normal days is clickbait: sensationalism, scandal, sentimentality and novelty. What media proprietors prioritize are profit margins and returns on investment. and, as yet, their staffs are a fraction the size of those Critics on the right therefore see the news media as in traditional print or broadcast newsrooms. biased, irresponsible and hysterical, either inflaming and cheapening public discourse or treating certain viewpoints with utter disregard. Critics on the left see them as agents of the very power structure they are supposed to be monitoring — the “ideological state apparatus.” Centrists worry that the media’s civic mission is too often sacrificed to satisfy corporate ledgers. 26 When the news media dominated public discourse, Along with magazines, community press, ethnic that dominance was cause for concern. Fear of and minority-language publications and Indigenous “concentration of ownership” led to the 1970 Special media, the daily news industry has served a crucial Committee of the Senate on Mass Media (the Davey civic function, providing regular coverage of the Committee), the 1981 Kent Commission and the 2006 forums that affect citizens’ lives, from the courts to Senate Report on the Canadian News Media, all city councils, from cabinet rooms to school boards. of which bemoaned the fact that corporate control Contingents of beat reporters, approaching matters restricted journalism’s diversity of perspective and of public interest from different angles, provided the expression, limited the agenda of concern and scrutiny necessary to hold authority accountable, reduced investment in newsgathering in order to as well as a means to galvanize wider attention, maximize profits. if warranted. They were as essential to exposing Nonetheless, the newsrooms of the traditional media were guided by standards and protocols of inquiry and reportage. The contract with their audiences was that the coverage they provided was, to the best of their abilities, accurate and reliable: conscientiously researched, subject to verification and responsibly reported. Certainly, in comparison with the media elsewhere in the world — the British tabloid press, for example — Canadian journalism served the public relatively well, mapping a spectrum of political preference, taste, cultures and journalistic style. In English Canada, the Sun newspapers championed a right-wing, blue-collar populism. The Toronto Star was proud of its liberalism, as set out in its Atkinson Principles. Broadsheets such as the Edmonton Journal and Montreal Gazette targeted the middleclass household. The Globe and Mail catered to an up-market, business-minded clientele and the politically invested. The National Post appeared in 1998 as the standard-bearer of a certain stripe of conservatism. The publicly owned CBC provided malfeasance as they were to simply chronicling public affairs. The failing fortunes of the traditional news media are not just the result of an older medium faring poorly against a new competitor. The advent of computer- mediated networks of social communication amounts to a profound structural change. news and documentary content to complement the more market-oriented programming offered by CTV, Global and private-sector talk radio. In the French press, the same patterns could be seen in La Presse, Le Journal de Montréal, Le Devoir, Radio Canada and TVA — with the additional complexity of each organization’s leanings on Quebec’s place in Canada. 27 Even before the Internet, maintaining profit margins have the expertise or the resources,” Katrina Marsh, and servicing debt from corporate acquisitions led the art and culture site’s founding editor, told our to downsizing, and consequent concern that the Ottawa roundtable. civic function of journalism was being compromised. But spending cuts in the 1990s were made against annuity-like revenue streams that are now drying up. The news media’s ability to finance the legions of reporters and editors necessary to produce regular, routine and robust coverage of civic institutions is being severely undercut. It is true that interested citizens now have the means to circulate their own accounts of civic affairs. For example, blogger Steve Munro, a retired information technology manager in Toronto, has established himself as a leading transit advocate. His audience has posted more than 40,000 comments to his work over the years, and, in 2005, he was awarded the Exactly how many jobs have been lost in Jane Jacobs Prize, which recognizes individuals who journalism — and how much frustrated talent has contribute to the fabric of Toronto life. Alone, however, fled — is not easy to calculate. We asked the three he lacks the reach to command wider metropolitan major unions representing news workers in Canada attention. As he observes: “I may have the luxury of to tally the number of journalists in their bargaining writing long, detailed articles about whatever attracts units at different junctures. Their records are far from me, but I tip my hat to the working press...Traditional perfect, but provide directional data. media are under threat with the changing landscape The Canadian Media Guild has tracked layoffs and buyouts for the past few decades. When non-news companies are excluded, the total is in the order of 12,000 positions lost, more than 1,000 of them in the last year alone. Unifor’s 46 media bargaining units of how people get ‘news’. Fewer voices, less time for research, more concern for advertising lineage (itself an anachronistic term in the age of clicks and popups) than solid journalism. Not a happy situation, and the blogs cannot possibly make up the slack.” had 1,583 members in 2010 but only 1,125 by early FROM COMMUNICATION TO SOCIAL INTERACTION 2016. The CWA estimates it had about 400 editorial The failing fortunes of the traditional news media are members in 2016, a decline of about one-third from not just the result of an older medium faring poorly 2010 and more than two-thirds since the early 1990s. against a new competitor. The arrival of radio and What has been the impact? Consider that onetime staple of local news: municipal affairs. Daily newspapers once maintained entire bureaus at city hall. After their newsrooms were merged in 2016, the Ottawa Citizen and Sun had only three reporters assigned to cover the apparatus of their city’s government. More cutbacks have occurred recently and the human toll grows. Boutique digital operations, television altered the media ecosystem and changed advertising practices, but they were, like newspapers, media of mass communication, in which centralized sources of communication content addressed vast, dispersed and otherwise atomized audiences. The advent of computer-mediated networks of social communication is of a different order entirely. It amounts to a profound structural change. such as apt613.ca in the capital, have risen up, but Under the old regime, the media were agencies of say that even they rely on mainstream reporting public address. They spoke to audiences whose as a foundation for their unpaid work. “We don’t members had little opportunity to speak back, and 28 even less to speak among themselves. Hence the pockets, and therefore difficult, if not impossible, to dominance and profitability of the 20th-century media “scale” in order to sell to wider and larger markets. companies. They were not only the sources of Even when the media companies were at their most content, they were the advertising platforms. Under profitable, the news, particularly that devoted to the new regime, the incumbent media companies civics, was a loss leader, rarely generating sufficient still contribute disproportionately to the corpus of revenue on its own to cover the cost of production. content, but they are no longer its only sources. Most Now it is not simply that the “business model” of the of the content that churns through the social media news industry is broken — as though, if they could platforms is generated by their users. From Twitter to only find new ways of re-engaging their audiences, YouTube, Instagram to Wattpad, the 21st century is a the incumbent media companies might return to cauldron of self-expression. The web has conferred 20th- century levels of profitability. What is broken powers of public address on anyone with an interest beyond repair is a centuries-old arrangement that in political, social, cultural and commercial affairs, wed a certain type of editorial content to a certain or who simply takes pleasure in documenting the type of commercial messaging. incremental moments of everyday life. Constituencies of interest now coalesce and mobilize in ways that were once impossible. Tellingly, a candidate for the U.S. presidency was able to circumvent the news media and speak directly to his followers. (In 2014, Donald Trump famously described having a Twitter account as “like owning The New York Times, without the losses.”) Its replacement is an ecosystem of social communication. The new digital concourses not only allow people to converse, collaborate and clash with one another, they profit from these activities. Online actions and interactions enable the harvesting of data on individual and group preferences, behaviour and purchasing patterns — information that can then be used to market everything from Once the perfect amalgam of news, service content to retail goods to lattice works of connected journalism, opinion and advertising, in the space individuals. People are revealed through their of a decade the news industry’s distinctive cultural digital activity — they have all but come to constitute attributes and market advantages have been taken themselves by it — and the knowledge of those from it. No longer necessary or even relevant as a transactions is the commercial basis for the new vehicle for service journalism, a forum for debate, communication empires. or an advertising vehicle, what are the news media left with? What do they offer that is not available elsewhere? They are left with the news — the dutiful record of unfolding events. A perishable commodity, out of date as soon as it is published, news must be produced continuously. And while some is of national and international significance, most is inherently parochial, of interest only to circumscribed geographical 29 Neither traditional news media nor a bevy of city- The pattern is the same here. They pocket two of based or national digital upstarts have the capacities every three digital ad dollars spent in Canada and, in to interact with audiences in the way of search recent months, have generated 82.4 percent of the engines and social media networks, and thereby ads served up with digital news. In 2016, Canadian collect motherlodes of data of deep interest to publishers accounted for just 11.5 percent of the digital marketers. Google and Facebook, the innovative display ad market in their home country, according and libertarian-minded colossi of online interactivity, to comScore. have used their technical prowess to accumulate unprecedented power over distribution of the web’s content fragments, including news. Digital ad revenues in the United States grew by $2.7 billion in CANADIAN SITES GET SMALL SLICE OF DIGITAL AD IMPRESSIONS Percentage share of display ad impressions, Jan. 1 – March 31, 2016 the first quarter of 2016 alone, compared with a year earlier. Of that, $1.4 billion went to Google, $1 billion to Facebook — and just $300 million to everybody else. Canadian publishers At this point, the pair account for about 70 percent 11.5 of the total U.S. market and command 90 percent of incremental growth. US publishers GOOGLE AND FACEBOOK GET 90% OF U.S. AD GROWTH 54.2 Ad revenues ($US billions) Google +52% 8 7 6 All other +10% 5 82.4% of ad impressions Source: comScore 4 Facebook +38% 3 2 1 0 2015 Q1 2016 Q1 2015 Q1 Source: IAB, DigitalContext.org 30 Google & Facebook 2016 Q1 2015 Q1 2016 Q1 Programmatic 34.3 This stranglehold on digital advertising has sparked 13 OF TOP 20 NEWS SITES ARE FOREIGN a mass migration of dollars to global entities with no Monthly unique visitors to news websites in Canada, 2015 (000’s) commitment to civic-function journalism, Canadian or otherwise. In fact, they have been resolutely CBC-Radio Canada agnostic about most anything that flows through Huffington Post their channels. They see themselves as technology Postmedia companies, not publishers, no more responsible Yahoo-ABC News for what people communicate than the phone Torstar companies are accountable for the conversations they make possible. 13,888 11,015 10,998 10,142 9,071 8,844 Quebecor/Canoe CTV 8,179 When Facebook adjusted its algorithm last June to Buzzfeed 7,944 downgrade established media, Adam Mosseri, the CNN 7,046 company’s News Feed vice-president, blogged that Daily Mail 6,746 “we are not in the business of picking which issues Globe and Mail the world should read about. We are in the business of connecting people and ideas–and matching people with the stories they find most meaningful.” Gannett 6,216 5,900 Global TV 5,262 BBC 5,262 Suppliers of content receive a share of the revenue USA Today 4,909 from advertising coursing through the new ecosystem, Vice Media 4,600 but it is orders of magnitude insufficient to finance The Guardian 4,371 the production of news according to professional standards. In a form of vampire economics, the new portals channel and exploit the content of traditional news organizations, through newsfeeds and ranked search results, even as they siphon away the revenue these outlets require to generate the content in the first place. It’s a sweet deal: leverage the news others finance and grab the advertising that used to finance that news. For the content producers, the equation is distressingly the opposite. MSN News 4,287 NBC 4,088 New York Times 3,964 Source: comScore The second chart, from the Canadian Media Concentration Research Project at Carleton University, attaches digital revenues to different players in the system. Google’s share of the Canadian digital market is almost 10 times that of the daily newspaper industry The problem is clearly illustrated by two charts. The and 60 times that of community newspapers. first shows just how many players there are in Internet A comparison of digital revenues for all newspapers news, many of them outside Canada or operating and TV programs shows they bring in about one- bare bones branch-plant newsrooms. In almost seventh of the total of the two U.S. platform giants. every case, their contribution to civic-function news is negligible. 31 GOOGLE AND FACEBOOK GET MOST OF THE MONEY Estimated online advertising revenue in Canada, 2015 ($millions) $2,302 Google Facebook Torstar Postmedia Quebecor $125.9 $757.5 $97.7 $88.7 Globe and Mail $19.9 Rogers $16.7 Power Corp. $16.2 Groupe Capitales $12.7 Source: Canadian Media Concentration Project THE TRUTH AND ANYTHING BUT THE TRUTH of The Attention Merchants (2016) and The Master The agnosticism Facebook and Google exhibit toward Switch (2011), ascribed these developments to the the content they carry represents a new challenge, business models that set the initial conditions of the both for the news industry and for society at large. Internet, models that both consolidated revenue The new ecosystem still prizes attention above and created no incentive for truthfulness. It is not all — that is the metric by which advertising revenue that Facebook and Google cannot control what is apportioned. But under the old regime, news appears on their platforms, he said. They already do companies invested in the reliability of their coverage so, for example, with pornography. But the business and worked to prevent false, hateful and deliberately model would have to be adjusted so that responsible manipulative content from entering circulation. content is rewarded and fabrication for the sake of The new regime, which has traded a mass market profit or political gain is not. for hundreds of millions of tiny ones, has no such compunction. It is cheap, easy and profitable for clickbait factories to fabricate content that will arrest attention purely for commercial gain. And it is just as cheap and easy for political provocateurs to manufacture disinformation designed to discredit their ideological opponents. Therefore, genuine journalism must now compete with content that mimics it and dresses deceit in a cloak of credibility, while society must adapt to a world in which fact and falsehood are increasingly difficult to tell apart. An information market polluted this way puts the very notion of credibility at risk. In the earliest days of U.S. television, Wu points out, there were vaunted hopes for how the medium might develop as an instrument of enlightenment, but the imperative of advertising-driven broadcasting provided impetus toward mass audiences and the lowest common denominator. The viewing schedules became dominated by westerns, game shows and soap operas. More recently, the advent of narrowcasting and specialty channels inaugurated a different business model, one users finance directly, making them, not the advertisers, the content arbiters. This switch has ushered in an era of variety in programming, and that has given us a range of quite In an interview for this report, Canadian-born remarkable, high-quality content preferred by some, Columbia University law professor Tim Wu, author along with home renovation programs, talent contests 32 and the Kardashians for others. The arrival of Netflix readers at the right time, and by the deep pockets of and other streaming services is again changing both its owners, the legendarily patient Thomson family. television’s business model and its programming. Still, it is a hard slog. Numbers it provided to the PPF Even as the battle over credibility takes shape, show The Globe estimates 50 percent of its revenues the authority of traditional news organizations is could come from digital by 2019, when it expects the dissipating. Much of that authority derived from their decline of print advertising and the slower growth capacity to dictate a news agenda — they established of reader revenues to finally converge. It remains what were commonly accepted as matters of public unclear what would happen if the print version concern. Weakened, they create greater space for ever disappeared. fake news to gain a foothold. And the economic bias of the Internet against the local and toward the global, the opposite of the newspaper world, is having an impact: Five of the 10 newspaper sites — that is half — now visited most often by Canadians are not, in fact, Canadian themselves. In total, only nine percent of Canadians pay anything for online news, according to the Reuters Institute for the Study of Journalism. WHO PAYS FOR ONLINE NEWS... AND HOW MUCH Repsonses to 2016 Reuters international survey: All this means that commonweal, a shared sense of % of polled who pay community and purpose among citizens, is challenged Norway as global and libertarian values gain ground. In a 41 Poland 20 world of limitless expression and Facebook filters, Sweden there is no longer a common chronicle of current 20 Italy 16 Denmark 15 Finland 15 events. Mysterious automated algorithms informed by people’s own information-consumption habits and those of their concentric circles of “friends” mean that 9 43 28 32 40 Japan 12 Netherlands 12 articulations of particular interests: 1.8 billion Belgium 12 unique feeds. France 11 Switzerland 10 Australia 10 Spain 10 everyone’s news agenda is personalized. Perceptions of the unfolding present are individual constructs, With digital advertising revenue eluding its grasp, the news industry, like specialty television, has experimented with user-pay models to cover the What they pay (median, $CAD) 27 26 47 39 33 71 53 40 costs of generating news. Only in select instances, USA 9 such as business and investment journalism, do Ireland 9 consumers have either the inclination or wherewithal Portugal 9 21 to pay for their news in the amounts necessary to CANADA 9 23 cover the costs of generating it. The Globe and Mail Germany 8 Hungary 8 13 Czech 7 12 Austria 7 Greece 7 UK 7 is one of the few traditional news media companies confident it can grow its revenue from digital subscriptions­—a conviction fortified by its strength in business and political news—by its investment in data and analytics that allow it to serve up stories to 62 28 Source: Reuters Digital News Report 2016 36 47 32 82 OF BILLIONAIRES AND BAILOUTS Another model — or supposed model — trotted out regularly is salvation via a wealthy white knight. Several have appeared south of the border: Mexican oil magnate Carlos Slim has helped bankroll The New York Times, Boston Red Sox owner John Henry, who made his fortune as a hedge-fund investor, now owns the Boston Globe, and Amazon founder Jeff Bezos has been working his digital marketing magic with the Washington Post, which says it made money in 2016. Of course, not all billionaires are benevolent. Gambling magnate Sheldon Adelson bought Nevada’s largest newspaper, the Las Vegas Review-Journal, and used it to hound his enemies. Warren Buffett, who just four years ago predicted a big comeback for the local press, told Politico in 2016, “Local newspapers continue to decline at a very significant rate. And even with the economy improving, circulation goes down, advertising goes down, and it goes down in prosperous cities, it goes INNOVATION IN THE PUBLIC INTEREST down in areas that are having urban troubles, it goes What Canada does have is a history of public down in small towns — that’s what amazes me. A town intervention to compensate for being a small market of 10 or 20,000, where there’s no local TV station contiguous with the United States. Today, the country obviously, and really there’s nothing on the Internet is enriched by cultural production in music, publishing, that tells you what’s going on in a town like that, but independent film and television — spheres of creativity, the circulation just goes down every month.” investment opportunity and employment — that would Even if there were enough such saviours and they strived not to act in their own interest, a society in which reporting the news depended on the whims of the super-rich would be a precarious place. In any case, Canada is less than replete with billionaires, and three of the wealthiest families — Thomson, Desmarais and Irving — have been in the business for decades. Toronto investor Prem Watsa, who has lost money on past forays into Canwest and Torstar, is once again on the prowl, increasing his stake in Torstar to 27 percent in 2016. After that, billionaire participation falls off. Moreover, restrictive charity laws discourage even philanthropic investment. not exist except for policy measures employed to bring them about. Then there is public broadcasting, the CBC and Radio-Canada along with TVOntario and TFO, Télé-Québec and British Columbia’s Knowledge Network. They are not arms of the government answerable to the dictates of politicians, rather Crown corporations created to compensate for a media market otherwise shaped by, and indebted to, advertising. They exist to provide programming the private sector either cannot, or will not, provide because there is no profit in it–although the private sector will argue that this principle has repeatedly been abrogated by a CBC shaped by commercial considerations (the most recent offence being cbc.ca’s new opinion vertical, which competes 34 in a historical sweet spot of the newspaper and to come of age in Canada are more comfortable in in an information mode hardly in short supply on the looser clothing of communications preferred by the Internet). millennials, but have yet to acquire the critical mass to Canada, like other nations, is facing a series of shape shared knowledge and move public opinion. paradoxes. The sheer volume of information now It will not be enough to preserve the old forms of available, the variety of sources and the range of civic-function journalism in the face of the media’s perspectives they express far outstrip what traditional market failings. News journalism will have to evolve. news media could ever put into circulation. And yet what were once routine subjects for coverage begin to disappear from the information diet simply because to report on them diligently is no longer profitable. The promise of democracy — that the people should have the means to voice their opinions on political affairs — has been fulfilled with a vengeance, just at The fact that as yet we can hardly conceive of what responsible civic journalism would look like if truly attuned to, and part of, a socially mediated regime is precisely the point. It is a genre still to be invented. Part of the effort must be to encourage initiative and innovation in the public interest. a moment when conscientious media attention to We stand at a juncture where the traditional economic government — the vigilance necessary to inform those base of the news media has crumbled and the opinions — has been compromised. technologically ascendant cannot be allowed to Citizens have never been better equipped to mobilize, to act in concert, to cohere into constituencies of interest. In 2008, New York University professor Clay Shirky published his recede into clickbait and falsehood, or fail to muster the resources to speak to at least most of the people a good portion the time. As we will see in the next chapter, democracy can tolerate no less. perceptive study Here Comes Everybody, which anticipated the trouble that socially networked individuals would cause for hierarchical organizations. But the very factors that loosen the hold of institutions also threaten to fragment the public into insular pockets of self-absorption. A society composed of archipelagos of interest without agreed-upon commonalities is one that may no longer see mutual benefit — the public good — as its binding principle. If a shared mindfulness gives way to the balkanization of social attention, instead of “here comes,” it’s “there goes” the notion of everybody. The shattering of the economic model of news also carries the ironic risk of shattering our sense of common purpose into atomized shards. The incumbent news media are weighed down by both their cost structures and cultures of speaking at the public, which is instead expecting cybernetic engines of interconnection. The new media trying 35 Section 2 mi. The way to prevent these irregular interpositions of the people is to give them full information of their affairs through the channel of the public papers, and to contrive that those papers should penetrate the whole mass of the people. Thomas Jefferson 37 News and Democracy i. ‘Contrivances’ to foster civic-function journalism Jefferson speaks to the importance of common Arguably the most famous words about the informed consent. And so, he importunes us to relationship between a free press and a democratic government come from Thomas Jefferson. While in Paris during the French Revolution, the future U.S. pools of information in governing a democracy with contrive that news related to public affairs — what we call journalism with a civic function — should penetrate the whole mass of the people, and so reduce the president wrote to an associate back home that if likelihood that they will make poor political choices. he had to choose between government without Reading his words today, it is almost as though the newspapers, or newspapers without government, principal author of the U.S. Constitution has travelled “I should not hesitate a moment to prefer the latter.” through time to warn us of the dangers posed by the But it is what he wrote just before this oft-cited remark echo chambers and filter bubbles that have riven the that resonates in the wake of the 2016 U.S. election great democracy he helped to create. campaign. Jefferson was grappling with what to do Canada has been contriving for generations to when those being governed make a bad choice. provide its citizens with common pools of information Rather than suppress the right to make such a choice, through public-policy initiatives — from the creation of he wrote: the CBC to the addition of Section 19 to the Income “ The way to prevent these irregular interpositions of Tax Act to the Canada Periodical Fund — that are the people is to give them full information of their affairs through the channel of the public papers, and to contrive that those papers should penetrate the whole mass of the people.” 38 designed to counter an economic logic that has favoured the importation of information from large media entities to the south. With the diminution of established media, an explosion of new entrants and the rise of social media comes an abundance OR of paradoxes. There is more choice, and yet less and participatory, it either lacks investment capital or information, about civic affairs, from city halls and has yet to prove that it can deliver a reliable flow of school boards to courts and legislatures. Audiences civic-function news. are fragmented while digital revenues have become concentrated in a pair of Silicon Valley-based global giants for whom news is an add-on. Once strong and free, Canada’s news industry finds it ever harder to finance the creation of original news, an affliction of both the so-called legacy media as well as the sprinkling of Canadian digital news startups. We are certainly witnessing a crisis for the traditional news industry, but is it a crisis for democracy? There are now entirely new concourses of communication, new genres of information and entertainment, new avenues of social interaction, and new ways to marshal scrutiny of public affairs. How societies inform themselves is undergoing a seismic shift. To be free, the press must be financially viable. Like the printing press 500 years ago — the only true Someone needs to finance the news, whether comparison — the Internet creates unprecedented consumers directly, advertisers trying to reach opportunity for those outside the elites to elbow audiences, benevolent (or otherwise) billionaires, their way into civic discourse. Today, anyone can financial-data companies looking to round out contribute; participation is no longer limited to their offerings, philanthropists, venture capitalists, those who find employment with newspapers and governments — someone. The extraordinary financial broadcasters. Just as the printing press served as the strain on the journalistic system Canadians have handmaiden to democracy, the Internet has accorded known for a century has led to successive waves freedom another great leap forward. of newsroom buyouts and layoffs. As the mirror the media holds up to society shatters, a disruptive new system is rising in its place. Although more diverse To the extent public policy has a role to play, it should be focused on maintaining the flow of information essential to a healthy society and ensuring the 39 development of the digital arteries of the new Sometimes this conversation will become banal, information system — not preserving the press as irrelevant or sensational. Periodically, it will be way off we know it. The digital revolution is real, but with it the mark. On other occasions, it will hit the bull’s-eye. challenges have arisen: fragmentation, distortion and Certainly, the irritant of an overblown story is nothing adjusting to new business and storytelling models. in a democracy compared with the tragedy of stories Sociologist and Columbia School of Journalism professor Michael Schudson explained what’s at risk in his 2008 article, Six or Seven Things News Can Do for Democracy. He described the civic function of the about abuses of power that go untold. “A free press can, of course, be good or bad, but, most certainly without freedom, the press will never be anything but bad,” French writer Albert Camus once remarked. news media as: Every year there are dozens of examples of 1. Information—so citizens can make sound political choices; hitting the bull’s-eye. Radio-Canada’s acclaimed 2. Investigation—of concentrated power, particularly that of government; 3. Analysis—to help citizens comprehend a complex world; 4. S ocial empathy—informing people about others in the world so they can appreciate differing viewpoints, especially of those less advantaged; 5. Dialogue—acting as a forum for different groups in society to air their views; and investigative program, Enquête, won the prestigious Michener Award for public service journalism in 2015 for its coverage of sexual and physical abuse of Indigenous women in Val d’Or, Que. The previous year, The Globe and Mail won for work on the neglect of thalidomide survivors. Other recent Michener winners covered such matters of public interest as the Rob Ford and Robocalls scandals, reductions in support for people with developmental disabilities, abuse of Taser guns, mistreatment of Afghan detainees, negligence in breast-cancer treatments 6. Mobilization—serving as advocates for particular political programs and perspectives and marshalling support for them. and the federal sponsorship scandal. Such stories “These different functions are sometimes at cross something amiss and keep on it. To be vigilant, the purposes,” Schudson wrote. “In particular, the media require boots on the ground. mobilization or advocacy function may undermine the reliability of the informational and investigative functions. Still, it is not unusual for a single news organ, particularly a newspaper, to serve democracy in all these ways at once.” emerge from months or years of painstaking iterative journalism, often by beat reporters who see a small The steady erosion of resources in recent years not only reduces the number of reporting boots, it leaves the media vulnerable when push comes to shove, and the powerful push back against unwelcome intrusions. News organizations require the financial wherewithal Democracy does not consist purely of a franchise to resist, as Washington Post proprietor Katharine exercised periodically at the ballot box. More Graham did when the top law-enforcement official broadly, it exists in the honest documentation of civic in the United States, Attorney General John Mitchell, affairs and the unbridled welter of public opinion. warned that she would “get her tits in a wringer” if she Democracy is one great, ceaseless, fractious didn’t call off the reporters investigating Watergate. argument about where a society’s priorities should lie. Anti-democratic behaviour occurs when people or groups of people are excluded from this conversation. 40 Independence of the news media has long been accepted as a fixture of a healthy democracy. Such a view was strongly embraced in public-opinion research commissioned for this study. Eight out of According to our poll, Canadians place much more 10 respondents said they actively follow the news importance on politics, current affairs and their (with education, not age, being the main determinant). communities when it comes to what constitutes news, Seventy percent said the news plays a major role in a than on such categories as sports, entertainment democracy and another 17 percent said a minor role, and celebrity. They see news as fundamental, even versus just five percent who think it has no role and foundational, to democracy. In our focus groups, eight percent without a view. More than three-quarters people described the news in almost parental terms, said they believe democracy would be threatened if as being not necessarily what you want to know at established news organizations were no longer able a given moment, but what you need to know. “News to fulfill their civic news function. is what’s good for you,” one participant said. Others WOULD DEMOCRACY BE THREATENED IF THERE WERE NO NEWS? If there was no news from the sources below, do you think democracy would be seriously threatened, somewhat threatened or not threatened at all? Seriously threatened Somewhat threatened Not threatened at all DK/NR 38% 40% 13% 9% From television, newspaper or magazine websites 34% informed, whether about what is happening far afield or close to home. (As one participant put it: “News is necessary so you can know if there’s a rat infestation in your neighbourhood.”) 44% 33% 13% 9% On the radio 46% 16% 9% serious matters are at hand. They prefer a trusted 42% 27% news brand or a particular journalist, such as a television anchor. Indeed, there is a complex trust gap among Canadians in their attitudes toward traditional-style media organizations and social media. On the one From digital news sites like Reddit, Huffington Post, iPolitics 18% get much of their news from Facebook. It’s simply source at these moments, often citing an established 45% 16% with news organizations every day. Most said they that they don’t want to rely on their friends when 13% 9% In newspapers and magazines 11% hand, a significant majority of Canadians believe that the news available on different platforms is similar in quality. “The reason for this,” according to On social media 33% 42% 11% Received via email 8% able to develop an opinion on public issues or stay It’s not that they want to be engaged in the news or On television 13% observed that without the news they wouldn’t be 26% 54% 12% pollster Allan Gregg of Earnscliffe Strategy Group, who conducted the PPF public-opinion research, “is perhaps both surprising and obvious — seven out of 10 users of online media are getting their news from traditional media websites.” In other words, they see Source: Earnscliffe Strategy Group. More than 1,500 adult Canadians responded to an online survey between Sept. 22 and Oct. 2, 2016. little difference because they are receiving much of their news not from digital-only publications but digital versions of newspaper, television or radio brands with which they’re familiar. “The pattern here suggests that it is the source and not the platform or channel that 41 confers trust and authority,” Gregg said. “The fact that TRUST IN NEWS traditional sources of news draw the largest digital Would you say you completely trust, partially trust, or do not trust the news that is...? audiences therefore is a major contributor to the trust and authority to online media.” On the other hand, one can see differences emerging when the public assesses professionalism and objectivity. While 44 percent again view the quality of digital and non-digital as the same, 38 percent think these attributes are in greater supply from traditional media versus only eight percent who think otherwise. The major point of departure comes when they are asked about trust directly. The PPF polling was in the field long before the U.S. election and the subsequent attention to the fake news issue. Still, respondents were very aware that “a lot of bogus and untrue news and information appears online” (83 percent) and Completely trust 14% 12% 12% social media. 55% 24% 4% 2% 58% 25% 2% 3% 53% 29% 3% 3% 29% 3% 2% In newspapers and magazines 11% 55% From digital news sites like Reddit, Huffington Post, iPolitics Received via email the figure drops to 15 percent for news acquired via DK/NR From a television, newspaper or magazine's website media is alright, but sometimes I want news from mostly trust their newspapers, radio and television, Do not trust On the radio 4% Whereas seven out of 10 respondents completely or Partially trust On television that “getting news from friends and through social organizations and journalists that I know” (80 percent). Mostly trust 30% 2% 15% 44% 11% 10% 47% 27% 9% 50% 28% 7% 27% 7% On social media 2% 13% Sent to you by a friend on social media Our poll and focus groups exhibited an almost reverential respect for the role journalism plays in a democracy. 42 2% 11% 53% Source: Earnscliffe Strategy Group CANADIANS’ TRUST SKEWS TO TRADITIONAL NEWS SOURCES the Charter of Rights and Freedoms subjects rights Percentage of survey respondents who say they trust the following sources for general news and information Canada Global 0 10 to “reasonable limits … that can be demonstrably justified,” and has been applied to both hate speech and obscenity. Anti-defamation and anti-bullying laws are other checks on free expression doing 20 30 40 50 60 70 Traditional media social harm. WHY NOT ALL NEWS IS ALIKE While Canadians like and live social media, they don’t always hold it in high regard: when the chips Search engines Online-only media are down, they look to news media outlets and journalists who have “been around a long time” for substantiation of what they encounter online. They view them akin to first responders in an emergency — they’re in reserve for when you need Owned media them, and prepared to check things out on your behalf at the scene of the action. In contrast, one participant said, “social media will have an opinion Social media right away, which makes me go: ‘Wait a minute.’ ” Another said: “Facebook won’t give you the insider perspective.” Source: 2016 Edelman Trust Barometer Beyond their utilitarian function, both our poll and The propagation of untruths and spreading of hate online is expanding rapidly. It has always been axiomatic that the defence of free speech requires rallying around forms of speech that are unpopular. But the rise of a parallel media ecosystem that does not just tolerate hate, but privileges it, is an altogether different proposition in a democracy. Is there a point at which the defence of freedom erodes the cohesiveness of society? As new digital focus groups exhibited an almost reverential respect for the role news and journalism play in a democracy. The evidence, Gregg said, suggests that consumers relate to this function at both the individual — “news arms me with the information I need to protect my rights” — and at the societal level — “news holds the powerful accountable.” The public largely associates these functions with established news providers. Any threat to democracy is seen to be all the more information initiatives emerge, as government and dire if news from traditional media sources dries up. civic institutions adapt, and as democracy itself The public’s vista of what may constitute a threat– evolves, the question increasingly becomes: what is or democratic deficit–extends well beyond elections. the essential place of public communication in the Attention to the workings of public institutions and democratic weal? the state of democratic rights, including a free press Fake news is troubling, but this country is not without and independent judiciary, is also vital. This view countervailing tools. However oxymoronic it may sound, in Canada free speech is not an absolute. Hate, for instance, does not get a pass. Section 1 of is consistent with the charter, which sets out an extensive series of rights beyond the Section 3 guarantee of voting for members of the House of Commons and legislative assemblies. Among these 43 1 NWT 41 British Columbia 1 Newfoundland 17 3 Alberta 6 Manitoba Saskatchewan 60 Ontario 31 Quebec 1 New Brunswick 8 Nova Scotia 169 news outlets either closed outright (orange) or were merged into other outlets (grey) between 2008 and late 2016, according to the crowdsourced Local News Research Project map. See more data at localnewsmap.geolive.ca rights are freedom of conscience and religion; freedom of thought, belief, opinion and expression; • less accountability on the part of politicians and other powerful interests freedom of peaceful assembly; freedom of These concerns are not misplaced. Philip Napoli, association; mobility, legal, equality, official language, a professor of public policy at Duke University, is minority education and Aboriginal rights. currently probing such questions as he examines Journalism’s job is to be vigilant on all fronts. news ecosystems in 100 U.S. communities. Our polling shows Canadians worry about the In an interview, Napoli told the PPF of his previous following consequences from the decline of news work in New Jersey, where he found growing organizations: evidence of what he calls “news deserts”–areas • a loss of investigative reporting (often lower-income) where news is dying out. • a loss of information with which to protect their rights Whereas newspaper economics favoured the local, • a loss of local reporting farther afield is inconsequential. So, when online, • a lessening of professionalism media tend to go regional or national, if not global, 44 he noted, the cost of transporting digital content in search of a bigger audience. The deterioration of local news can be seen in Despite the clear trend portrayed by the media map, Canada, too. Ryerson University journalism professor perhaps the most counterintuitive of our poll findings April Lindgren briefed one of our roundtables on her shows that only half of Canadians seem to appreciate investigation into what she calls news poverty. She that newspapers are truly in trouble, and even fewer (in partnership with fellow professors Jaigris Hodson feel that way about television news. The fact that of Royal Roads University and Jon Corbett of UBC- they are currently inundated with news runs counter Okanagan) has created a crowd-sourced national to the notion that the media industry is in peril. map on which members of the public can report They consider any loss of news a serious societal changes in news service provided by local broadcast, problem, but generally think the situation can be online and print media. resolved simply by shifting from print to digital. They neither understand the “dollars for dimes” economics PLAY VIDEO at play — the fact that a digital ad generally yields far less revenue than one in print or on TV — nor its impact on newsrooms. There is advertising online just In November 2016, the map had 304 entries dating from 2008, more than half of them (169) documenting like in papers, we heard, so if papers just switched the loss of local news outlets in 131 communities, over, they could afford the same number of journalists. versus 53 new ones, surprisingly few of which are Our research also found some consumer guilt about digital-only, Prof. Lindgren said. The remaining map not paying to support the news, yet little appetite entries mostly document downgrades in service. to start doing so. And, in part because the public So, the story is not one of the new replacing the old. erroneously believes that the dot-com version of MORE CLOSURES, LESS LOCAL NEWS the local newspaper will support the same retinue of journalists, only 25 percent of our poll respondents Most changes to local media outlets since 2008 were closures or loss of service (Data as of Nov. 7, 2016) Service increases think government should help out, while more than 4 Daily becomes community paper Shifted to online 5 17 remaining 21 percent are undecided. A participant in one of our focus groups said it’s do or die, telling publishers that, if Google and Facebook are eating their lunch, “it is your responsibility to figure Closures* 169 twice as many — 54 percent — oppose the idea and the New outlets** 53 Service reductions 56 out how to get people to come in your front door. Car dealers, taxis — if they can’t figure it out, then they go away.” The groups were both resistant to and conflicted over the idea of government support. “I would be concerned about government influence,” commented one. Then that veneration for the place of journalism *Includes closures due to mergers **Includes new outlets created from mergers Source: Local News Research Project in society kicked in: “Having said that, I do believe government can do something.” After all, “they subsidize the film industry.” 45 The upshot is that pluralities are prepared, but They have not shut the door, but remain skeptical. only begrudgingly, to consider policy measures Contriving to square this circle will require delicacy that would aid news organizations. A fund of some and creativity. kind and extending Section 19 tax preferences for ii. Canadian media were among the most acceptable solutions (very good or good for 49 percent of ownership restrictions (22 percent). The greater the The importance of where news originates understanding of the depth of the news media’s Canadians have greater access to news than ever, financial problems, the more receptive respondents thanks to the co-existence of incumbent media are to a policy response. But nobody is enthusiastic. organizations, digital native news operators and “Perversely,” Allan Gregg said, “it is the very things the distributive power of search, social media and that the public values most about news–providing aggregation. Many feel inundated . Indeed,  93 percent objective information that arms citizens and holds of respondents to our poll said, “We get more news the powerful to account–that forms the basis for their today, more quickly and frequently than we ever have resistance to government support for the sector.” in the past.” Eight in 10 said they follow the news, respondents). The least popular was lifting foreign- Ultimately, the public is trapped between concerns about a quarter very closely. about a world without reliable and ready news Where people access news is relatively easy to and concerns that actions to right the situation research and of considerable importance. But the would corrupt the very purpose of journalism. Fully truly critical matter is where this news originates. 75 percent say they worry that if money went to The “being informed” supply chain needs to start journalists it would affect their impartiality, and somewhere, and it isn’t Google and Facebook, the 68 percent say the same for news organizations. two largest digital newsstands. Both have been Asked how they would reconcile a choice between no news and news with government support, our focus groups tended to fall silent. Ultimately, they hope the situation will fix itself. As a participant in Regina said: “Somehow, somewhere, someone will figure it out.” To repeat: Canadians are extremely leery of any measure, however well intentioned, that gives the state a place in the newsrooms of the nation. Policies that might influence coverage are out of the question. News organizations and journalists are held in high esteem as guardians of democracy, so much so that there is little appetite for using taxpayers’ dollars to prop up failing news corporations as they attempt to “transition” to a new environment. 46 adamant they are not publishers, just distributors. They don’t want the complex set of risks and responsibilities associated with being a producer of news–not to mention the poor economics. But if no news is produced, there is nothing to distribute, and the supply chain breaks down. So, it is more pressing to understand where news begins than where it ends up. VIEWS ON NEWS Oddly, there is very little research in this area. What People have offered many views about news that appears online compared to news that appears in non-digital media like television and newspapers. For each of the following statements, please indicate whether you strongly agree, agree, disagree, or strongly disagree. we have found suggests that digital-only operations, Strongly agree Agree Disagree Strongly disagree DK/NR 36% 3%1%3% 50% 9%1% 7% 13% 2% 5% 48% 15% 3% 6% 53% Online news tends to be less rooted in and covers less news about the local community 17% 49% 22% 3% In the first, Pew researchers delved deeply into the news media ecosystem during a week in the life of those we are asking: “If newspapers were to die, what would that imply for what citizens would know and The main advantage of online news is that it tends to be free 23% HOW NEWS HAPPENS: A STUDY OF THE NEWS ECOSYSTEM OF ONE AMERICAN CITY (2010) news sites — 53 in all. They asked questions similar to 11% 3% 7% 54% and another five years later. Baltimore, including new media, blogs and specialty Getting news from friends or through social media is alright but sometimes I want to get news from organizations and journalists that I know 26% We rely here on studies conducted by the Pew Research Center: Journalism and Media, one in 2010 You can get news much more quickly online than you can by reading the newspaper or watching television 32% in newsgathering to fill the civic-function gap. The where the lion’s share of original news still starts out. A lot of bogus and untrue news and information appears online 33% States, are not yet at the point of investing adequately incumbent media are rapidly deteriorating, but that is We get more news, more quickly and frequently today than we ever have in the past 57% even in the more robust media climate of the United not know about where they live? With the traditional model under enormous pressure, the number of people gathering news in traditional television, print 9% and radio organizations is shrinking markedly. So what, if anything, is taking up that slack?” A day will come when we will get ALL of our news online 17% 41% 27% 7% 7% Nothing would change for me if online news and social media replaced newspapers and local television 11% 32% 34% 18% 5% Most of the news that is available online comes from stories that were originally generated by newspapers and television 10% 49% 25% 4% 11% If more people are getting their news online today, traditional media like newspapers and television have no one to blame but themselves 10% 28% Source: Earnscliffe Strategy Group 43% 10% 9% Much has changed since 2009, when the researchers were in the field, but they found that the vast majority of the news available to Baltimore residents contained no original reporting. Fully eight stories in 10 simply repeated or repackaged information that had been reported previously. This is not entirely bad; greater circulation of stories raises the probability that more citizens will encounter them. But it also raises a red flag: What happens if those originating the news are forced out of business? Of the very few stories (one in five) that did contain new information, 95 percent came from traditional media, mostly print. By 2009, the main paper in Baltimore, the Sun, was already in decline, as vividly depicted in the final season of the HBO drama, The Wire. In 2009, the Sun produced 32 percent fewer stories (of any kind) than it had 10 years earlier, 47 We face a situation in which sources of opinion are proliferating, but sources of facts on which those opinions are based are shrinking. 48 and a remarkable 73 percent fewer than in 1991. It is If papers anchor the news ecosystem, what function difficult to identify the dog that doesn’t bark — news do the surrounding constellation of blogs, ethnic of civic importance no longer covered by the city’s media, specialty publications, non-profit websites and weakened media. But Baltimore provided a warning. social media serve? First, they push a broader range Pew found that the universe of blogs, local websites of subjects onto the public agenda, the researchers and other new media served mainly as an alert said. This, in turn, contributes to what they call a system and delivery vehicle. “second layer of vibrancy.” In March 2015, Pew and the Knight Foundation took a In the final analysis: broader look at the local news scene. • Although it remained the dominant source of news, television tended to be highly reactive to known events, with fewer reported stories and more anchor voiceovers. (We heard of the same during our roundtables across Canada.) LOCAL NEWS IN A DIGITAL AGE (2015) This study examined three communities that differed in size and socio-economic makeup: Denver, Colorado (population 2.9 million); Macon, Georgia (231,000) and Sioux City, Iowa (168,000). In Denver, researchers identified 143 news providers, although just 52 of them updated their coverage at least weekly. In Macon, that number was 24, and in Sioux City, 31. They included minority, trade and lifestyle publications (including one devoted entirely to marijuana). Original news continued to rely on long-established providers, especially the supply of civic-function news. But the degree of dependence varied from about two-thirds in Denver and Sioux City to nearly 90 percent in Macon. Digital-only news outlets accounted for less than 10 percent of stories in Denver, whereas there were no such operations in Macon or Sioux City active enough to meet the criteria of the study. In all three cities, television remained people’s main source of local news, with the Internet growing in importance and newspapers in retreat. Fewer than one-quarter of Denver respondents said they often get local news from their main daily paper, and fewer than half in Macon and Sioux City. But when it came to the mix of news, the Denver Post was three times more likely than television to produce stories focused on government, politics, economics or education — essentially civic-function news. • Daily newspapers continued to be the most important, albeit diminished, news source, the place to go to learn about state primary elections, controversy over gun laws, a ballot initiative on oilindustry fracking and debate over the legalization of marijuana. • Local radio remained relatively important as a source of breaking news. • Even online, traditional media were more important news sources than digital-only platforms. (This again is very consistent with our polling, which showed that seven out of 10 respondents get their online news from traditional media websites.) • Social media may be growing in importance as a source of access to news, but in all three cities the stories trending on Facebook were first reported by other news media. • Specialty publications and sites tended to contribute to greater news diversity and to produce fewer but longer and better-researched enterprise stories. • Only two to four percent of residents in the three centres turned to digital-only outlets for news– less than government sites and neighbourhood associations, and about one-tenth the number who relied on friends. • Citizen journalism remained a minute factor. Local stories not written by professional journalists accounted for no more than one percent of all those produced. (Nor have we seen, with a few notable exceptions, much evidence of citizen journalism in Canada.) 49 As the traditional news industry — still the trusted under-developed in digital, which accounts for less source for so much vital information — fights for than five percent of total proceeds. survival, the question becomes: to what extent should public policy support the traditional system where news overwhelmingly originates or encourage the development of new entrants with less journalistic muscle. Or should it try to do both? Small-city dailies and weekly newspapers, radio and, in some cases, television serve an important civic function. Weeklies alone publish 20 million copies a week, some in large markets, and 90 percent are distributed for free. They provide a mix of news, Either way, the highly regarded U.S. investigative community information and local advertising that site ProPublica sums up the origination-distribution connects residents with where they live and one dichotomy in language with which we agree: another. They help people know everything from “The number and variety of publishing platforms are exploding in the Internet age. But very few of these entities are engaged in original reporting. In short, what’s on sale to who has died to how the junior hockey team is doing. They are part of the fabric and provide social glue across the nation. we face a situation in which sources of opinion are They can also be crucial players at pivotal moments, proliferating, but sources of facts on which those such as when it’s time to go to the polls. Research by opinions are based are shrinking. Prof. April Lindgren of Ryerson University in Toronto “The former phenomenon is almost certainly, on balance, a societal good; the latter is surely a problem.” iii. The importance of local news Friday, Jan. 29, 2016, produced a shock wave in Canadian journalism. On the same day, Torstar Corp. and Prof. Jaigris Hodson of Royal Roads University in Victoria has shown how critical the local press was to coverage of the 2015 federal election. They dug into campaign coverage in eight communities: Thunder Bay, Peterborough, City of Kawartha Lakes, Oakville and Brampton in Ontario, plus Kamloops and Nanaimo in British Columbia and Brandon in Manitoba, finding significant differences in the amount of information made available to citizens. printed the last edition of the Guelph Mercury, a paper They found that more isolated locales with multiple that had gone daily the year that Canada was born, news outlets tend to provide significantly more and Black Press closed the Nanaimo Daily News, coverage. Proximity to a larger centre tends to which had come into being just seven years later. bring down the numbers of stories and the diversity In total, six daily newspapers either closed, merged or reduced their publication schedules in 2016, bringing to 36 the number to have done so since 2009. Community weekly papers, which held fast when the dailies began to slide, have since joined the wreckage, with at least nine closing or merging in the past year. Between 2012 and 2015, the 1,060 community papers in the country lost about one-third of their revenue — roughly $400 million. And they are of sources. In Brampton, just outside Toronto, a single organization dominated the coverage of three key suburban ridings but published only 43 stories (roughly one every second day over the course of a 78-day campaign). Thunder Bay and Kamloops, by comparison, enjoyed relative “local news affluence” — four to five times the number of stories, from a variety of sources. A sign of the times: As well as the Nanaimo Daily News, civic-minded Newskamloops.com has also ceased operating since the vote. 50 AN ENDANGERED PRAIRIE SPECIES in Saskatchewan dropped dramatically. According to To help get a clearer picture of the role and nature audited data, both the StarPhoenix and Leader-Post of local journalism outside metropolitan centres, the lost more than half their subscribers. The former fell PPF decided to take a deeper dive into the situation from an average of 61,064 in 2000 to 29,952 in 2015, in Regina, a provincial capital but also a mid-sized city and the latter from 58,611 to 25,781. Both are owned of about 220,000 with a daily newspaper and both by Postmedia and have cut newsroom staff (in half public and private broadcasting. We were assisted by some reports). Their websites are active and were by former Saskatchewan journalist and federal cited in our focus groups, but they do not compensate public servant Dale Eisler, now a senior fellow at the for the loss of readers or revenue. University of Regina’s Johnson Shoyama School of Public Policy. We also conducted two of our six focus groups in Saskatchewan, along with one of our six roundtable discussions. As in bigger centres, participants in our focus groups generally said they feel better informed in the digital age about the world at large and less so about what is happening in their own backyards. A focus-group participant from a smaller community remarked that, when he was younger, his local paper contained little real news, but the “big city paper” would come from Regina every day and fill the void. “Now the LeaderPost is like our local paper back then,” he said. We were told there was little digital-only news media of impact in Saskatchewan (although we later identified an interesting exception tucked away in the province’s third-largest city). We also were exposed to a litany of complaints–disappointments, really–about what was widely described as CBC’s diminished role. The public broadcaster was criticized for removing its one full-time reporter from the provincial legislature and assigning her to general news when the assembly was not in session. At the time, the tandem of the Leader-Post in Regina and StarPhoenix in The Moose Jaw Times Herald and Prince Albert Daily Herald, the province’s only other dailies, witnessed similar reductions to 4,042 subscribers and 5,197 respectively. The once-thriving Saskatchewan Press Gallery is a symbol of the decline. In the 1980s, its roster included several reporters from each of the LeaderPost, StarPhoenix, CBC television and radio, RadioCanada TV and radio, as well as The Canadian Press, Broadcast News and private broadcasters. Now reporters cover the legislature only when it’s deemed necessary. The iterative process of journalism, with all its serendipitous discoveries, has given way to a breaking-news approach. Marc Spooner, the University of Regina education professor who first flagged the absence of a full-time CBC reporter, has argued that “doing away with beats comes at a great cost. You need in-depth coverage with some sense of longevity. You need to hold governments to account by having historical memory of previous actions and statements.” During our roundtable in Regina, the Leader-Post told us it has reassigned a dedicated reporter to the legislature. Saskatoon was without a regular legislative reporter– it did have a resident columnist at the legislature– which became a national focal point for the weakened commitment to civic-function journalism. In the period between 2000 and 2015, as the Internet really took off, paid circulation of daily newspapers 51 Google, when asked for “final election results,” placed atop its results a story wrongly stating that Donald Trump had won the popular vote. Saskatchewan reflects a national trend. J-Source, which covers the news media, surveyed press galleries across the country in 2016 and found numbers down in all provincial capitals, and reporters on site frequently being assigned to other stories. The part of the job that reports on what the government wants the public to know is crowding out the part of the job that involves enterprise and digging, veteran Alberta political reporter Darcy Henton said. “It gets harder to do the latter when The government may be missing the credible bridge to the public that traditional media provide. And yet, despite appearances, the story of local journalism in Saskatchewan and elsewhere does show some signs of hope. Roger Holmes, publisher of the Wainwright StarEdge in Alberta and other community papers, made a splash in the summer of 2016 by purchasing the dailies in Moose Jaw and Prince Albert as well as a clutch of Saskatchewan weeklies from Quebecbased TC Transcontinental Inc. He attended a PPF roundtable in September and told us he is committed to, and hopeful for, local journalism, saying that news reporters and ad-sales people both “need to be close” to the communities they serve. Holmes expected a rough ride and low returns, but was optimistic. When we checked back with him in early December, he was more subdued. “In short, we are struggling. We think we can survive and we will be cutting several editorial and several administrative positions in the new year. Some of our smaller weekly papers will have to be combined into regional papers.” He faces unusual and intriguing competition in Prince Albert, a city of 36,000 about 140 kilometres northeast of Saskatoon. As a direct result of the cutbacks at the Herald under Transcontinental, the online news portal you’re chasing to do the former.” paNOW.com was created five years ago. “Like many Saskatchewan’s government isn’t sitting around many months, something was taken away,” said its waiting for a reportorial renaissance. It has placed a great deal of emphasis on developing a social media capacity to serve Premier Brad Wall and his cabinet. Rather than rely on journalists to cover a speech, the government delivers key clips directly to voters via Facebook and Twitter. But the results aren’t especially satisfying. “It’s kind of a paradox,” says Reg Downs, a senior adviser to the premier. “There is far more ability for people to engage, but there … aren’t necessarily more actually taking advantage of that fact.” 52 big companies, they opted to cost-cut and, every so general manager, Karl Johnston. “Advertisers and readers saw the pullback, and they pulled back, too.” The site was launched off the base of three local radio stations (the maximum one company can own in any single market), each with its own ad team and a combined editorial contingent of five. With the weakening of the paper, the local radio managers saw an opening for online news, Johnston said, and secured support from their owner at the time, Rawlco Radio Ltd., to “do it right” and “spend what about digital news. “You won’t find anything like that in was necessary.” the country.” He has expanded to Timmins, North Bay, The key decision, he adds, was to go beyond the typical model of repurposing radio content online by launching a full-blown digital news site with its Barrie and most recently Guelph, where Village Media set up shop on eight days’ notice after the Mercury announced it was closing. own editorial and sales team. Several of the five As with paNOW, he must contend with Google and new journalists were hired away from the paper. A Facebook, but claims the advantage of being able 10-person newsroom (radio and portal) in a community to place ads by local retailers somewhere the big the size of Prince Albert is a rare thing these days. platforms can’t, such as funeral homes on the obituary “With more people, we now have the time, resources page. The Village Media sites run their fair share of and skills to do access-for-information requests unaltered press releases, but they also cover city hall. versus just keeping up with news releases pumped out by local authorities.” Elgie says that isolation, a lack of competitors and a sense of community are important ingredients of Within six months, the portal was breaking even, success, as is having a high comfort level in digital Johnston said, with sales that now represent and an absence of the legacy costs and compromises 15 percent of total revenues in Prince Albert. It attracts that bedevil print operations with digital add-ons. 35,000 to 40,000 visits a day. In 2015, the Vancouver- The Soo works because it is isolated and Guelph based Jim Pattison Broadcast Group purchased is growing quickly because it has a strong sense of Rawlco, and the portal model is being expanded community. Nobody wants to miss an obit. In contrast, in Saskatchewan, to North Battleford and Meadow Barrie, which increasingly serves as a bedroom Lake. Pattison Group believes the model can work community for Toronto, is proving tougher. only in relatively isolated communities, with limited competition and the head start from other assets. Google and Facebook still attract big dollars in the communities, Johnston says, but “there’s lots of digital dimes floating around.” Although instances of growing new media businesses are few and far between in Canada, Ontario has one in digital-only Village Media, run by Jeff Elgie. Its anchor property, SooToday.com, is in Sault Ste. Marie and draws, according to Elgie — who also operates a digital marketing agency in northern Ontario — 14.5 million monthly page views. With revenues now running at $146,000 a month, SooToday.com employs 12 journalists to cover Sault Ste. Marie and provides a regional desk for reporters in four other centres. Although he’s expanding, Elgie says the Soo operation enjoys a unique sweet spot because it entered the business more than a decade ago, before anyone else in the region was serious PLAY VIDEO Village Media owner Jeff Elgie of Sault Ste. Marie, Ont., says isolation, a lack of competitors and a sense of community are important ingredients of success, as is having a high comfort level in the digital world. Credit: The Canadian Press Images/Kenneth Armstrong 53 As for public policy, Elgie would prefer there be established news organizations, Facebook added a none because he fears it may be designed to favour feature called Trending Topics, recruiting a team of entrenched interests. He suggests programs to editors to select the “best” stories on offer and giving support the creation of quality journalism across the them prime real estate at the top of the page. board. “I beg for a level playing field.” But by 2016, news on Facebook was attracting Mayor Cam Guthrie says Guelph misses the Mercury, controversy. Conservative critics complained that but was fortunate both that Elgie’s Guelph Today the editors of Trending Topics were biased in favour stepped into the breach and that the city also had of liberal stories and causes. Facebook’s response the twice-weekly Tribune, another Metroland paper, coincided with a spike in what has come to be known now renamed the Guelph Mercury-Tribune. As well, as fake news. a blog called Guelph Politico has also been active since 2008. The issue wasn’t new to Facebook. But as it always made clear, it was a platform, not a publisher. It saw More typical of the state of local journalism are the itself more akin to an interactive cable-TV company, deterioration in Regina and the tough slog Roger a common carrier of other people’s information, than Holmes is experiencing. But paNOW and Village a newspaper or broadcaster with a responsibility Media show that the right operator in the right for what it presented. As Mike Ananny, a specialist circumstances can still build a media business in in online journalism at University of Southern this country. Neither sees itself as saving journalism, California Annenberg, put it: “By continually claiming and both feel they are products of particular that it is a technology company — not a media circumstances. They just don’t want well-intentioned company — Facebook can claim that any perceived governments putting them at a disadvantage. errors in Trending Topics or News Feed products iv. Democracy and the fake news challenge are the result of algorithms that need tweaking, artificial intelligence that needs more training data, or reflections of users. It claims that it is not taking any editorial position.” Facebook’s core mission is to connect friends with In June 2016, Facebook unsettled publishers around one another through information. But with so many the world by announcing it was peremptorily changing users generating so much information, its algorithm its top-secret algorithm to promote news stories makes more and more choices on their behalf. shared by friends and family over those posted by And it prefers subjects with which they’re already professional news organization. familiar, or which prompt reactions that can be This was a noteworthy departure from the social discerned. So when Twitter, directly controlled by media company’s strategy over the previous two its users, lit up in the summer of 2014 over events in and a half years. Seeing that its 1.8 billion monthly Ferguson, Missouri, Facebook was slow to respond, users worldwide were interested in news and according to measurements by techno-sociologist wanted to be informed, it had courted publishers Zeynep Tufekci at the University of North Carolina at to post to Facebook, and created Instant Articles to Chapel Hill. help speed load times. In addition to populating its Just as editors do, algorithms make choices — in wildly successful News Feed with more content from Facebook’s case, computer programmers fill the 54 shoes of editors, customizing feeds not for what is had sold weapons to Islamic State and the Clinton considered significant or newsworthy, but what will Foundation had secretly paid millions to the director generate “likes” and leave users happy. In May 2016, of the FBI. All four were read by millions on Facebook. with changes in the works, Will Cathcart, Facebook’s End the Fed didn’t make public the identity of either product manager for News Feed, described in an its editor or its owner, and had a journalistic pedigree interview how the company sees its role: “We care that went back only as far as March 2016. about creating the product that people want. We’re not interested in adding our point of view — we actually don’t think that works for a billion people.” Google was having problems, too. Its search engine also yielded stories with no basis in fact. Even in the wake of the presidential race, Google’s search What happens, he was asked, when someone posts engine, when asked for “final election results,” placed that Barack Obama was born in Kenya?  Would atop its results a story wrongly stating that Donald Facebook point out he was actually born in the Trump had, in fact, won the popular vote. United States? “It doesn’t have anything to do with us — people post a lot of this stuff and talk about it, and other people post different points of view,” Cathcart replied. “And the nitty-gritty of the details of how we should be involved I actually think is less important than building a platform where, if people want to talk about that, it’s really easy to talk about that and find different points of view.” He elaborated on this outlook during a visit to the PPF in the course of this project, saying “a slight change” had been made in the algorithm in response to the preferences of users, which would make stories from established news organizations appear “slightly lower” in the News Feed. The important thing, he said, was that civic engagement and encouraging voting were part of Facebook’s mission. Hyper-partisans have been spreading false news for centuries and the supermarket tabloids have long spewed nonsense on the margins of civic discourse. Even the giants of traditional news companies have struggled with the truth — from The Washington Post’s Janet Cooke to Jayson Blair of The New York Times and The New Republic’s Stephen Glass. But they were isolated cases, and each bore consequences, including superiors who lost their jobs. The stakes today are higher. Platforms, with daily audiences 10 times larger than those of major newspapers or TV broadcasters, are not just the new intermediaries of the public square but control the commanding heights of the marketplace of ideas. Their models are based on truth neutrality. Moreover, they only give the appearance of being a In August, responding to the pressure about Trending common space. Rather, they calculate and reinforce Topics, Facebook fired the editors, replacing them, the prejudices of the like-minded, who either assign too, with an algorithm that two days later posted themselves to echo chambers or find themselves this story: Fox News Exposes Traitor Megyn Kelly, invisibly assigned by algorithms into filter bubbles. Kicks Her Out for Backing Hillary. The avalanche of Both run counter to the concept of the media as an “fake news” from sites motivated by politics and/or agent of common understanding. profit had begun. Over the following weeks, diehard ideologues (and opportunistic Macedonians) would pollute the Internet with made-up stuff. One prolific site, End the Fed, responsible for the nonsense story about Fox’s Megyn Kelly, also originated reports that the Pope had endorsed Donald Trump, Hillary Clinton 55 Sue Gardner began to worry she was “living inside a filter bubble of lefty feminist types,” and so created Caitlin in a bid to engage with and understand Trump supporters. 56 Credit: Victoria Will (www.victoriawill.com) for the Wikimedia Foundation. i. diagnostics Caitlin from Alabama: Out of the bubble, into the fire Little more than a month before the U.S. presidential recommended to me afterwards.” She found the election, when the media were still casting Donald stories were uniformly simple, easily memorized, Trump supporters as economically disadvantaged required no understanding of the political process and alienated from power, a newcomer appeared on and invariably implied a conspiracy was under way. In Facebook: 19-year-old Caitlin from Hoover, Alabama. all, she says, roughly 20 percent of what appeared in Other than working in customer service at T-Mobile, the phone carrier, she shared next to no information about herself, had no Facebook friends, followed her news feed was unsubstantiated opinion (including pictures of Clinton labelled “share if you hate Hillary”), while the remaining 80 percent was false. no one and commented on nothing. Then she Caitlin, however, is 100 percent false, the creation of “liked” a page called Alabama for Trump, prompting Canadian journalist Sue Gardner, former executive Facebook’s algorithms to recommend she also check director of the Wikimedia Foundation. out Patriots for Trump, Americans Against Hillary Clinton and I Hate Hillary. Gardner began to worry in mid-campaign that she was “living inside a filter bubble of lefty feminist types,” Immediately after Caitlin “liked” them all, her news and so created Caitlin in a bid to engage with and feed started to fill with stories and videos and memes understand Trump supporters. Her own political news members of those groups were sharing, such as: comes from sites like those of The New York Times • Hillary Clinton uses a body double for public appearances and Washington Post, so “I guess I naively expected • She suffers from strokes, high-functioning autism, syphilis and a personality disorder fact-filled news and analysis and charts and graphs, • Her sunglasses are medical devices intended to prevent seizures “What I got was totally junk. Not just uninformative but • She is a lesbian in a sexual relationship with her campaign chair world around them.” to stumble into a parallel universe to that: with long just created from a right-wing perspective... actively undermining of people’s understanding of the • Fox News commentators Bill O’Reilly and Megyn Kelly are secret Clinton operatives As a result, Gardner told the PPF, she felt “super • She and husband Bill have killed 44 people since the 1970s picture it painted bore practically zero resemblance to alienated and destabilized reading it, because the the world I live in. Yikes.” • Thousands of ballots found in an Ohio warehouse were already marked for Clinton and other Democratic candidates Caitlin didn’t set out in search of fake news. “I just liked one site, and then liked whatever Facebook 57 As chronicled by Craig Silverman, media editor of dedicated to fraudulence and partisanship was BuzzFeed, false news stories began to spike in feeding into, and off it (there is money in all those August after the firing of the Facebook editors, on top clicks, after all), and other mega-distributors of digital of the downgrading of material posted by established news: Google, Twitter and YouTube. news organizations. (There is merely a correlation here; causality cannot be determined, and the bitterness of the campaign and beginning of voting could have been factors as well.) As Adam Mosseri, vice-president of product management for the News Feed, also explained in a June post when Facebook announced its shift in the weighting of news, “We don’t favor specific Silverman compared “engagement” (shares, reactions kinds of sources–or ideas. Our aim is to deliver and comments) with Facebook’s top 20 monthly the types of stories we’ve gotten feedback that an stories from established news sites to stories that individual person most wants to see. We do this turned out to be fabricated. From February to May, not only because we believe it’s the right thing real news outpaced fake 4-to-1, and from May to but also because it’s good for our business. When July, the ratio was 3-to-1. But between August and people see content they are interested in, they are election day in November, stories from hyper-partisan more likely to spend time on News Feed and enjoy and hoax sources actually pulled ahead, registering their experience.” 8.7 million acts of engagement versus 7.4 million, and sparking a controversy that shook confidence in the Internet and its largest purveyors of information. TOTAL FACEBOOK ENGAGEMENTS FOR TOP 20 U.S. ELECTION STORIES Shares, reactions and comments 3 0 generating ad networks. Facebook went a step further, saying it would retain news organizations problematic, they would be tagged as being disputed. 8.7million 7.3million 6 that counterfeit the news access to their revenue- truthfulness. If the stories were found to be Mainstream news 9 and Google announced measures to deny sites to evaluate articles that elicited complaints about 15 12 Then, amid the post-election furor, both Facebook Fake news Still resisting being drawn into the responsibilities of judgment, Facebook was outsourcing the task and then issuing a yellow flag. (It was unclear how this remedy would not lead to a flood of complaints by partisans about articles favouring the views of Feb.- April May-July Aug.- Election Day Source: BuzzFeed opponents.) Still, it does provide some kind of response to the post-election plea of Joshua Benton, director of the ‘GOOD FOR OUR BUSINESS’ Nieman Journalism Lab. Democracy, he wrote, has Flagging news that is badly reported or completely many problems, “but there are few things that could falsified wasn’t part of Facebook’s plans. In fact, its impact it for the better more than Facebook starting to determination not to exercise any discretion, coupled care–really care–about the truthfulness of the news with its enormous business success has led to this that its users share and take in.” juncture. Seeing itself as outside the fray, it remained unconcerned that an entire secretive ecosystem 58 FAKE HEADLINE PERCEPTIONS OF ACCURACY AMONG CLINTON/TRUMP VOTERS PERCENTAGE OF RESPONDENTS WHO THOUGHT THE HEADLINE WAS ACCURATE 0 Pope Francis Shocks World, Endorses Donald Trump for President, Releases Statement 127 respondents Donald Trump Sent His Own Plane to Transport 200 Stranded Marines 132 respondents FBI Agent Suspected in Hillary Email Leaks Found Dead in Apparent Murder-Suicide 165 respondents Donald Trump Protester Speaks Out: “I was Paid $3500 to Protest Trump’s Rally” 167 respondents FBI Director Comey Just Put a Trump Sign on His Front Lawn 43 respondents 100 respondents 50 100 75% 46% 96% 68% 56 respondents 106 respondents 92 respondents 80 respondents Trump voters Clinton voters 85% 52% 89% 62% 76% 73% Source: BuzzFeed Of course, the issue is even bigger than Facebook Given the unprecedented reach of social media, or Google. It speaks both to extreme political some fundamental public policy considerations arise: polarization and low levels of critical thinking among • Platforms are private, commercially driven enterprises that possess more data about the behaviour and predilections of their vast legions of users than any government does. many voters. In post-election research, BuzzFeed and Ipsos found that large majorities had believed such stories as Pope Francis endorsing Donald Trump. The new intermediaries of the public square have made it both more diverse and accessible than ever, yet also a less trustworthy place. Even before the uproar in the U.S., polling for this report showed that 65 to 70 percent of respondents trusted news from • In their creation of filter bubbles and echo chambers, they run counter to liberal philosophies of truth and falsehood grappling openly, and thereby further the fragmentation of our collective conversation and political commonweal. appears online. This should be of huge concern • They are governed by unaccountable and unknowable algorithms that determine who is exposed to what information, and what information doesn’t make the cut. And nobody is privy to the parameters except a private company. (This is a global problem beyond Canada’s capacity to remedy alone but it could lead to an international conversation.) not only to the social media companies, but also to The spread of fake news is a far cry from the defenders of democracy, given the expanding role of admonition of U.S. Founding Father Thomas digital news and growing distrust in public institutions. Jefferson to “contrive” to produce a common pool of television, radio, newspaper and magazines, online or otherwise. In contrast, news on social media (or sent by a friend via social media) was trusted by no more than 15 percent of respondents. And 83 percent agreed that a lot of bogus news and information 59 information for all to share, something he considered cost of expansion in digital form is practically nil. a requisite for making sound democratic choices. And, of course, they compete with their legacy of But possible solutions are not without traps of success, too. Their costs, despite all the cutbacks, their own, as we will discuss in the final section of remain high relative to new entrants, a situation this report. that has been further aggravated by longstanding v. The role of innovation Digital news innovators who can survive, let alone prosper, tend to be the exception in Canada. Saskatchewan’s paNOW and Village Media in Ontario are encouraging outliers but, so far the record shows very few, very small, under-capitalized domestic digital operations. Even in the larger U.S. market, the dominance of Facebook and Google squeezes out others that depend on advertising. During a speech he made in the U.K., Vice Media co-founder Shane Smith predicted that a fiscal bloodbath in 2017 will pension obligations made all the more onerous by persistently low interest rates. On the revenue side, with print advertising both falling precipitously yet still the largest slice of the pie, it is unbearably difficult for traditional producers to go all-in on digital. On audiences, the baby boomers remain the most loyal readers; they tend to be less attractive to advertisers but more likely to pay for subscriptions, the opposite of millennials. Ten years into the newspaper crisis, many publishers remain caught in the classic Innovator’s Dilemma, as the father of disruption theory, Harvard Business School guru Clayton Christensen, titled his landmark book. wipe out 30 percent of digital media companies. For all the talk of moving to a digital-first journalism The lucky ones, he said, are those that have already model, no established news brand in Canada, attracted investors–often from traditional media with the notable exception of La Presse, has come companies–a group that would include Business close to having digital revenue overtake non-digital Insider, BuzzFeed, Fusion, the remnants of Gawker, revenue. Digital ads account for just about 10 percent and of Vice itself. of revenue for most newspapers, which is actually Canada, as always, presents additional challenges in an industry increasingly based on huge scale. News innovators face the familiar situation of a relatively small domestic market cheek-by-jowl with the U.S. juggernaut. They must compete not just with incumbents, including a publicly financed colossus in the CBC, but with branch-plant operations that need only fill out their product mix with incremental more than for television or radio. This revenue mix serves as a substantial disincentive toward the type of organizational and cultural shifts a digital-first approach might entail. As a result, most enterprises have tiptoed rather than stampeded toward the future, the risk of losing what they have usually outweighing the unknown upside of significant institutional experimentation. amounts of Canada-specific content. Moreover, the Guy Crevier, who stepped down at the end of 2016 very nature of civic-function news, highly perishable after masterminding La Presse’s tablet transition, said and generally localized, means it doesn’t travel easily. the biggest crisis in the news industry is one of timid As for the incumbent omnibus news operations themselves, they increasingly are competing not just with digital news startups and specialty verticals, but also with global producers such as The New York Times, The Guardian and BBC, for whom the marginal 60 management and tentative innovation. Publishers, for the most part, have failed to respond boldly to a new technological era, he said, comparing them to taxi drivers holding dear to their old ways in the face of Uber. “The only crisis is sticking with the old business models.” Innovation requires imagination and will, to be sure, access to a limited number of articles each month but also patience and capital. Other than three news before payment is demanded. Just nine percent of operations headed by Canadian billionaire families Canadians, according to the Reuters Institute for the with long ties to the industry, capital of the Jeff Bezos Study of Journalism, pay for digital subscriptions of variety that blends imagination and patience is hard to any kind. come by. The biggest outlier among established news On a positive note, desperate times are making companies is La Presse, whose bold experiment in for differentiated responses. The Globe and Mail, moving its newspaper to a tablet app was enabled with its strong positions in business and politics, in part by the deep pockets of its owners, Montreal’s is aggressively pursuing a reader-pay strategy. Desmarais family, who bankrolled a $40-million It hopes to make more from readership than investment in the app. Just as striking, though, has advertising, including print, around 2019, six years been the resolute nature of management, which after The New York Times reached this milestone. set out on its particular strategy in 2011 and never Reader- revenue models place a premium on content blinked. La Presse believed the tablet version, called quality over audience size. Although its newsroom La Presse+, could deliver a superior experience is down almost a third from its peak, The Globe has to readers and that, by making it free and ceasing been slower than most to cut journalists. Still, if the weekday print publication, as it did on Jan. 1, 2016, it point of 50-50 convergence is approaching, it’s could hold its audience and shift over its advertisers. mostly because print advertising revenue is falling, rather than a rise in digital revenue. The data that La Presse+ compiles for its advertisers is impressive, showing average daily downloads of AllNovaScotia.com, founded on a shoestring in 260,000 and the time spent by the average reader 2003, relies almost exclusively on reader revenue. with the app at 40 minutes on weekdays and about It has won a broad following within the province’s 50 minutes on Saturday and Sunday. Those would business community. With each bump in subscribers, be good numbers for a newspaper, let alone a digital it has doubled down on reporters. It is famous for product. La Presse also operates a news website, not allowing a speck of its news to escape into the but the app creates a more immersive environment, wider ecosystem–and for rescinding the subscription although one not accessible through Google search of anyone who shares its news, as had happened to results. La Presse says that advertising on the app is CBC last year. actually attracting higher CPMs (industry jargon for The Telegraph-Journal in New Brunswick also maintains a hard paywall, meaning no articles are free. Essentially, it has traded what it considers the more the cost charged per thousand readers or viewers) than the newspaper, as well as a significantly younger audience. ephemeral digital ad revenue that would come with Most media companies struggle to get the digital higher traffic volumes for a more reliable return from portion of their revenue to 20 percent, but La Presse digital subscriptions, even if the strategy is penalized says that 82 percent of its revenue comes from the with low rankings in Google searches. tablet, desktop and smartphone platforms. These Success has been elusive in the industry in substituting reader revenue for vanishing ad sales. A number of Canadian newspapers erected and then tore down so-called metered paywalls, which allow numbers reflect the virtual withdrawal from print, but are right on strategy. Although La Presse’s 2016 revenues were about 71 percent of its earnings in 2011, eliminating five days of printing and delivery 61 has reduced costs to 68 percent of 2011 levels. But it is difficult to ignore the experience of the Crevier says revenues in the third quarter of 2016 Toronto Star, which adopted the La Presse+ app and were ahead of the same quarter a year earlier for the launched it in September 2015 as Star Touch after first time in seven years. Perhaps most impressively an initial investment of $25 million. It had hoped to for the purposes of this report, La Presse says it has achieve daily downloads of 200,000 by the end of maintained journalistic employment, despite some 2016, but reported in the summer that the number shifts in skill sets, at about 265, about the same level had reached a plateau between 55,000 and 60,000. as when it launched its tablet strategy (at which point, Why? Perhaps it was language, or a matter of timing– competitor Le Devoir says it experienced an instant La Presse+ hit the market while tablet sales were circulation jump of 18 percent, most of which it says it in more of an upswing — or the fact the Star did not has kept). try to force readers to the tablet by ceasing print Many in the industry attribute La Presse’s success publication. so far to the protection it is afforded by its French- Still, La Presse must cope with the rapid turnover language status in North America’s sea of English. of technology in the digital world. Companies such It is true that consumers in non-English-speaking as Google and Facebook employ thousands of jurisdictions are almost twice as likely to pay for a engineers and programmers, and the cost of keeping digital subscription, but La Presse managers dispute pace with them will be a challenge. That is why the thesis, observing that they operate in a city with La Presse is so intent on selling its platform to other four daily newspapers, two free commuter papers publishers. More important than bringing in revenue is and a strong SRC/CBC, as well as competition from sharing the burden of further development. the French-language versions of the online social media titans. Canada does not yet have “a digital ecosystem in waiting” to fill the gap caused by the deepening crisis of the traditional news companies. CAN DIGITAL TAKE UP THE SLACK? With rare exceptions, digital-only news operations in Canada have been slow to grow. Early ventures, such as The Mark News, OpenFile and NowPublic, could not overcome competition from the cross-subsidized sites of traditional news players or U.S. branch-plant operations, such as the Huffington Post, BuzzFeed and (the originally Canadian) Vice News. These all maintain small Canadian operations, with the platform and much of the content produced elsewhere for global audiences. It proved nearly impossible for this first generation to generate sufficient scale, which is why Vice Media chose to scale right out of Canada (returning in force after media giant Rogers agreed to jointly launch a Vice specialty-TV channel). After nearly 15 years of digital news development, the result, says University of British Columbia journalism professor Taylor Owen, a PPF research principal on this study, “is that we simply do not have a digital ecosystem in waiting that will be able to replace, 62 at scale, the reckoning that is clearly coming in the and public-policy decision-makers. More recently, it traditional media space.” has added events. According to comScore, it attracts It’s not that Canada is without some attractive digital 141,000 unique visitors in a month. organizations (such as iPolitics, National Newswatch, Owen, who co-organized the November symposium, The Tyee, National Observer, Canadaland, blogTO, says the U.S. has seen three waves of digital news Discourse Media, OpenCanada.org, Rabble.ca, The development that have largely bypassed Canada. Rebel, Apt613), but they tend to appeal to niche First came the early news producers and aggregators audiences and so struggle, both financially and with who pursued a scale-based digital advertising model their journalism. and learned the only way to make it pay was to attract Whether due to Canada’s small market, a lack of investment capital or a lack of attention to the business side, few have grown appreciably. What’s more, they do not appear to be consolidating, the normal response when media have trouble in the marketplace. At a November symposium in Vancouver tens of millions of monthly page views. A few, such as Huffington Post and The Drudge Report, were able to do this in the early going, followed later by BuzzFeed and Vice, which used entertainment and lifestyle content to build traffic and subsidize their publicinterest journalism. co-sponsored by the PPF, digital news operators A second generation of sites — such as Vox Media, spoke about the need to forge partnerships and Fusion, 538, Politico and Vice again — targeted collaborations. “Maybe we cannot ‘go big’ without niche and/or millennial audiences of high value to working together,” said one. advertisers, and made money as studios producing The Tyee is an award-winning digital pioneer with nearly 14 years under its belt, but has never turned a profit, something co-founder David Beers played down at the symposium. Its revenue is only about the advertising material themselves. Some also supported their journalism by developing content management systems and other software to attract investment from venture capitalists. $1 million a year, one half from trade union investment Within the first and second generation are those that and a private donor and the other half from a variety Vice’s Shane Smith considers the fortunate: They of earned-revenue sources, while its full-time raised money by selling pieces of the business, journalistic contingent numbers three, the PPF was usually to traditional media companies looking to get told. According to comScore, The Tyee’s website in on the next big thing. drew 116,000 unique visitors in July (obviously not a busy month), compared with six million unique visitors for The Globe and Mail and 5.3 million from Canada for Vice. Tyee editor-in-chief Robyn Smith told the Commons Heritage committee that no one in Canada The third wave comprises non-profit news organizations such as ProPublica and The Marshall Project, which have secured backing from charitable foundations and philanthropists. “has yet figured out a digital-only online business For now, there is only limited evidence here of any model that easily supports a large number of full-time, of these three phases. Canada lacks the scale for paid professional journalists.” advertising, venture capital has been uninterested, iPolitics, founded in 2011, has built a following among political pros and junkies, generating its revenue from and philanthropists are frustrated by laws and regulations they say constrain their involvement. subscriptions and advertising targeted at political 63 Some Canadian news sites have turned to hierarchy (giving prominence to the ones editors feel crowdfunding, which, although time-consuming, matter most). has helped to provide startup and limited operating funds. Among those that have enjoyed some success is Canadaland, through a mix of crowdfunding (65 percent) and advertising (35 percent). Best known for its media, arts and politics coverage, Canadaland produces a signature podcast on media issues that garners 30,000 downloads per episode, and is also aired by 29 campus and community radio stations. Founder Jesse Brown says that, despite To generate the necessary content, System A employs relatively large numbers of journalists who are trained at formal institutions and/or by virtue of an acculturating career path through the newsroom itself. It sets standards they are expected to meet and surrounds them with professional support, from style books and codes of conduct to editorial oversight and legal expertise. the need to overcome a constant churn of credit Many of its journalists are specialists–or at least were cards, crowdfunding generates a steady revenue until newsrooms contracted–focused on general stream and keeps the operation connected to its areas of coverage (politics, business, arts or sports) 3,158 supporters, who donate an average of $5 (USD) or more specific beats ( justice, health, education, a month. science, investment, theatre or basketball). This There are some promising signs, but as Owen says, Canada does “not yet have a digital ecosystem in waiting” to fill the gap caused by the deepening crisis of the traditional news companies. vi. System A and System B: Understanding the new media For two decades, the transformation of the news industry has largely been viewed in terms of technology — digital versus print and broadcast. But now such thinking is beside the point; everyone is digital, or had better be. Where differentiation now occurs is in the approach to the gathering and dissemination of news. Let’s break today’s media into two different systems, understanding, of course, they are more ends of a continuum than opposite poles. SYSTEM A: CURATED, CODIFIED, PROFESSIONALIZED System A organizations, most of them well established, seek to help people navigate the clutter and complexity of news with a product that has the added value of classic editorial functions such as selection (choosing the stories that matter) and 64 is because the best stories–the ones where the intelligence of the journalist meets the world at large–rarely appear fully formed. They usually begin as a tiny spark that may have gone unnoticed, had a reporter, like the cop on the beat, not invested the time and energy to gather the knowledge required to make sense of a situation or built a reputation and earned the trust of someone with something special to share. Having journalists with the institutional backing to grind away, day after day, at a promising lead is what lies at the heart of System A’s historic contribution to civic-function journalism. From the Washington Post and Watergate to the Boston Globe’s Spotlight exposé south of the border, to the Toronto Star and maverick mayor Rob Ford, to The Globe and Mail’s sponsorship-scandal revelations to the public affairs show Enquête on predatory policing in smalltown Quebec, stories of great public interest often come to light only because of System A’s capacity to investigate. System A’s strengths lie in its standards, training, professionalism and support system. Its weaknesses are mostly macro. It is elite-led, the domain of a handful of news organizations controlled by wealthy strength is sapped and participation by reporters on owners and managed by a generally self-made social media platforms such as Twitter lowers their journalistic aristocracy–the so-called gatekeepers classic hesitancy — perhaps an affectation in the first who decide what is significant and what is not, and place — about expressing views on matters they cover. often resist dissent and the unfamiliar. Not only has System A’s pretense to objectivity long been suspect, its vaunted capacity to influence has been on the wane for years. In the 2016 U.S. presidential election, a reported 229 daily and 131 weekly newspapers endorsed Hillary Clinton versus just nine dailies and four weeklies for Donald Trump. And remember how the media pegged the 2015 Canadian federal election as a contest between the Conservatives and New Democrats? SYSTEM B: INSTANT, PARTICIPATORY, OPINIONATED System B, on the other hand, has a more ambivalent relationship to the role of information hunter-gatherer. From niche producers to specialty aggregators and ubiquitous platforms, journalists either are in short supply or don’t exist at all. Rather than the question of where a story is going, the issue tends to be more how is it being received. System A editors will cut slack for a story they believe will grow. System B is more responsive to instant data and analytics as to whether it’s being read, shared, “favourited” etc. It can Simply put, System B doesn’t have enough reporters. This may be because small organizations in its orbit haven’t mustered the revenues to afford the critical mass necessary for a newsroom with material impacts, or it may be that other organizations adhere to a lowlabour, high-algorithmic model. For those in the former category, their newness and low journalistic intensity can promote taking short cuts. That is not to say System B is without social impact. In fact, on that count it is truly revolutionary. Its technology and sociology provide unprecedented tools for citizen participation and amplification. It’s diverse. It’s accessible. On its best days, it is meritocratic. We have heard this described in our focus groups as a purer form of democracy. “Democracy is about having a voice,” one participant stated succinctly. We’ve also heard regret that this phase in the life of the Web may have already passed, as power consolidates around the dominant searchengine and social media companies. adjust how a story is played to suit the audience, or Either way, social media platforms have allowed for kill it off, perhaps prematurely. the near-instant emergence of mass movements. The core differentiator of System A tends to be its focus on the acquisition of facts as the basis for news stories. System B, in its milder versions, either exhibits a close attachment to opinion or the blending of opinion and fact, a natural offshoot of the high costs associated with employing reporters to ferret out Perhaps System B’s shining moment occurred in the summer of 2013, when an Oakland activist named Alicia Garza responded to the acquittal of the man who gunned down black Florida teen Trayvon Martin by posting on Facebook: “Black people. I love you. I love us. Our lives matter, Black Lives Matter.” matters of public interest. Or in its more algorithmic, Soon, the hashtag #blacklivesmatter was born, giving mass-appeal variations, it has been relatively rise to a movement that has come to resemble a indifferent to truth and falsehood. digital-age civil-rights organization. Despite having no This nudges new media toward commentary over reportage, as opinions are cheaper to form than news is to report on. Traditional media, too, are trending in a similar direction as their economic central command structure, it has used the avenues of System B to mobilize and to reveal police abuse, as well as to raise public consciousness of racial exclusion. Without the open architecture of System 65 B fuelling a rapid online ascendance, it may have tell. They briefly crossed paths over a video showing struggled to capture the attention of System A’s Rob Ford, at the time Toronto’s mayor, smoking crack gatekeepers. cocaine. The Star had been struggling with how to tell System B gives its activists the opportunity to report whatever and wherever he, she or zhe desires. It empowers witnesses to events, whether they upload videos of atrocities in Syria or cat rescues in Regina. Anyone with a smartphone and an Internet connection can create and distribute content as readily as the mightiest broadsheet or national news network. System B is wonderful for the individual but more ambiguous for the common good. The disintermediating of large media corporations means that individuals can join like-minded groups, which is liberating when those groups are benign, but can reinforce prejudices and narrow debate when the subject matter is more politicized. System B’s social the story without exposing itself to a huge defamation suit. But Gawker, with no stake in Canada and given greater legal latitude under the U.S. Constitution to report on public figures, went for it. System B’s boldness immediately changed the legal equation, allowing System A to follow suit. Much more telling is what happened afterward. Gawker, having scored a scoop and with no ongoing commitment to Canada, went home. The Star doubled down, publishing hundreds of additional stories on the case over the next few years and seeing Ford’s political career come to an end. With a full-time libel lawyer working intensively with its investigative team, the paper was never sued as a result. media players have erected a giant town hall, then And Gawker? After it returned home, it found another broken it down into millions of sub-units. Thus the misbegotten story with more entertainment value classical liberal view of truth making itself known by than news value. Its publication of sex tapes involving grappling with falsehood falls apart if the two don’t retired wrestler Hulk Hogan sparked a convoluted actually encounter one another in the antechambers lawsuit that ultimately led to the site’s demise. of System B. Perhaps, had it managed to adopt more System A THE STAR, GAWKER AND ROB FORD Which system is better? That can be debated values, including greater legal prudence, Gawker would still be alive. endlessly, and the answer may not really matter System B needs maturation and, at its far end, a because, ultimately, the determining factor remains greater commitment to the civic good. System A which of them is sustainable — or which of them or could use some of the natural democratizing combinations of them should be sustained. tendencies and digital-age openness and interactivity Clearly there is a transition underway, and it moves in the direction of System B. The matter of public interest is how can the democratizing potential of System B be advanced alongside the professional standards and reporting power of System A. The print-based Toronto Star, one of Canada’s premiere news organizations now struggling to find a way forward, and Gawker, a progenitor of the cheeky news site with bite that has gone down for the count, have a System A and System B story to 66 of System B. If one or the other doesn’t reform, it is difficult to see democracy being well served. If they can take some of the best of each, in contrast, democracy would be better served than ever. NEWS MEDIA VALUES The traditional values and practices of incumbent media (System A) are being disrupted along with their business models by new technologies, weakened economics and changing audience tastes. Very different values and practices (System B) are arising in non-journalistic, audience-aggregating organizations. In between, lower barriers to entry are resulting in an erosion of professional standards, on one hand, and a greater diversity of voices, on the other. As well, new journalistic values and practices, such as correcting facts in breaking news stories as they develop rather than verifying before publication, are being introduced. Many incumbent and digital-only news organizations with journalism at their core reside toward the left and centre of the diagram. The fake news controversy is forcing System B operations to re-evaluate some of their values and practices. System B System A Verify before publish Lawyers on staff/retainer Codes of conduct, style books Reader editors/press councils Workplace training culture Editor gatekeepers Elite control Selection and hierarchy Many journalists Iterative journalism Hunter-gatherers of news Factually inclined Balanced Formal style Reporters bear witness Story-driven Trusted news “Objective” journalists Public square Loyal audience Local oligopolies Broad and shallow Local Omnibus Audience as recipient Communities of place Broad-based audience High barriers to entry Industrial culture Watergate/sponsorship scandal Commonweal/free press Publish and correct Post and let be Lawyers on staff/retainer Community standards Fact-checking experiments Programmer gatekeepers Diversity of voices Linking Few journalists Breaking news Processors of news Opinion inclined Passionate Casual style Metrics-driven Clickbait Engaged Activists/independents/partisans Advocacy Promiscuous audience Media ecosystem Narrow and deep Long tail Niche Audience as participant Communities of interest Narrow audience Low barriers to entry Start-up culture Black Lives Matter Freedom Search and social media No journalists ‘Friends’ sharing Packagers of news Factually challenged Reinforcing Users bear witness Algorithm-driven Liked not trusted Entertained Common carriers Mobilization Engaged audiences Walled gardens Narrow and shallow Scale Customized Individual feeds Individualized news feeds Filter bubbles/echo chambers Market consolidator IPO culture Pope Endorses Trump Libertarian 67 Anita Li in the Globe and Mail newsroom: She has worked both sides of the traditional and digital news divide. Credit: The Canadian Press Images/J.P. Moczulski 68 A + B = Li: One journalist’s take on the two systems Anita Li is a young Canadian journalist in New York in a System B way to stories about inclusion and City, where until recently she worked for Fusion exclusion, with a special emphasis on social justice. Media, which serves a diverse millennial audience (See Li’s TED Talk on diversity and digital media) with news, pop culture and justice stories both online and on cable television. Because she did brief stints at The Globe and Mail and Toronto Star before going to the United States, Li has experienced both System A and System B — and has views on their respective strengths and weaknesses. Li has also noted a difference in how System A and System B interact with the audience. Fusion — a three-year-old joint venture of Hispanic media pillar Univision Communications Inc. and Disney/ABC-TV — is heavily into real-time analytics to discern patterns in how and where stories are playing, to scout for further news opportunities (and track While in Ottawa to speak at Carleton University in how its work is received). Reporters and editors can September 2016, she said the training she received see police-brutality content arising on social media at traditional newspapers has made her a much and resonating with audiences before it hits the better reporter. Her System A start infused her with regular media. They know when the audience is on to an aggressiveness in cultivating sources and careful something before journalists are. Which is remarkable, attention to accuracy and clear writing. although Li also realizes, in System A fashion, that “Traditional media work culture can be extremely demanding and very stringent. It made me extremely meticulous,” she said. Digital media are often more accepting when mistakes are made, she explained, because editors can always make corrections online. In contrast, print practises zero tolerance because its this can also be a double-edged sword: Too much attention to audience reaction can discourage journalists from pursuing stories that are important but have a long fuse. PLAY VIDEO errors “follow you around.” On the other hand, while in System A, she was struck by how much she stood out as young, ChineseCanadian and a woman in a world whose editorial decision-makers tended to be older, Caucasian and male. Fusion, meanwhile, has greater diversity in both its editorial mandate and staff composition, better reflecting its target audience. It jumped on police violence against African-Americans in the early days of #blacklivesmatter and is highly sensitized 69 Section In the course of our research for this study, the April 2016, federal departments spent a total of Public Policy Forum conducted roundtables in six $3.3 million on advertising, of which Google received Canadian cities, co-hosted a symposium on digital approximately $1 million, Facebook $904,822, Yahoo innovation in Vancouver, participated in a public $406,920, Twitter $364,090, YouTube $161,847, lecture and discussion in Halifax, debated the future Bing $96,051 and Huffington Post $17,608. All have of news at a fundraising event in Ottawa, attended headquarters in the United States. a half-dozen industry panels and retreats about the future of journalism, commissioned research memos, monitored the hearings of the Commons Heritage committee, received submissions from a variety of interested parties and consulted widely, communicating with industry figures and other experts by phone, email and through about 50 one-on-one interviews. All told, some 300 people interacted directly with the PPF. Among the dozens of issues that were raised, here is a sampling of some recurring themes. In Saskatchewan, we heard from the community newspaper association that government advertising had fallen by 80 percent between 2009 and 2015. Some smaller publications said the withdrawal of government advertising will determine whether they stay in business. Larger companies argued that tax dollars should not be spent on multinationals that neither pay taxes here nor contribute to the production of Canadian news and cultural content. Brian Myles, publisher of Le Devoir, calls it a question of ethics: The state should support companies that Government advertising create employment and wealth locally. At each roundtable, discontent was expressed Level the playing field about reductions in government print-advertising budgets. Those feeling the most aggrieved included minority-language, ethnic, Indigenous and community newspapers, for whom government ad revenues have been particularly material. When challenged whether government should not communicate with its citizens on the platforms it found most efficient and effective, we generally received one of two responses: that print was the most effective means of promoting civic At virtually all the roundtables, small digital news companies expressed concern that any policy measures would inevitably favour incumbent organizations over them. Sometimes the concerns came with a dash of bravado. Why support big legacy companies “if small digital ones can provide the same function without public support?” asked one entrepreneur. engagement and that government should support However, the evidence is far from compelling that Canadian and not foreign-owned media. new digital media have picked up the slack, which A March 2016 report by Canadian Heritage supported at least the factual basis for these complaints. It found that “between 2008-09 and 2014-15, the proportion of government ad spending fell by 96 percent for daily newspapers and 21 percent for community newspapers, while increasing by 106 percent for the Internet.” A further examination in July 2016 most digital operators admitted when pressed, but remained concerned. “Dear government,” Canadaland’s Jesse Brown said at our Vancouver symposium, “leave me alone, so I can continue to bother you independently. When you fund my competitors, you are endangering me. Do not fund Postmedia if they are failing.” by iPolitics revealed that, between Prime Minister Justin Trudeau taking office in November 2015 and 71 Canada Periodical Fund, Canada Media Fund and CRTC local TV fund Bucking the majority We heard a number of complaints about existing outside Quebec and almost 600,000 anglophones government programs. For example, free community inside the province. Like the rest of Canada’s papers are displeased to be excluded from support newspaper industry, they have lost readers and ad provided by the Canada Periodical Fund because its revenue. Unlike others, their business model was criteria insist that publications have paid subscriptions. never robust, especially in remote regions. Several They say the government is indifferent to realities papers have closed in recent years, and others say of the industry’s structure. Community papers, they are teetering because few businesses want meanwhile, were critical of support for what they to advertise with them and their readers tend to be consider esoteric periodicals (sewing, crime and older and less likely to switch to digital. That said, hot-rod magazines) and for titles owned by large they argue that the federal government has a special corporations. obligation to them under the constitution and Official The Canada Media Fund, which is dispensing $371.2 million in 2016-17, was accused of favouring video production over other media, while the CRTC decision to begin allowing local television to reallocate funds provided for community channels to news production was also seen as favouritism. Competitors complained that the $90-million infusion gives TV an unfair advantage. “Focusing on one medium is an archaic approach that could distort the market; the government needs to take more of a holistic approach,” one roundtable participant said. Minority-language papers serve constitutionally protected populations of about a million francophones Languages Act. Ethnocultural media One in five Canadians is foreign-born, and more than 40 percent of the population speaks a mother tongue other than English or French, we were told. The majority of newcomers, who disproportionally settle in large urban centres, are relatively young, with a median age of 31. They also tend to be more Internet-savvy. A 2014 BrandSpark survey found that “Canada’s ethnic consumers spend comparatively less time interacting with traditional media sources, Local television news is in considerable trouble particularly cable television, and more time- in Canada, despite maintaining strong viewership consuming content through online video sites, such ratings. Its audiences skew quite old, making them as YouTube and Netflix.” New Canadians spend, less attractive to advertisers, and production costs on average, 20 percent more time online, perhaps tend to be relatively high compared with other forms not surprising given language challenges and of programming. In recent years, according to a CRTC connections to home countries. Older immigrants are analysis, the cost of producing local news has gone said to still have a strong preference for print. up about two percent a year while revenues have fallen about 10 percent a year. We heard from one station operating in a million-plus metropolitan market that its news staff has been reduced by 40 percent in recent years. In December 2015, MIREMS, a private firm that monitors and tracks trends in ethnic media, estimated that at least 460 print- or web-based ethnic news organizations and 160 broadcast outlets have a total audience reach of 6.7 million. For many, ethnic publications are the primary source of information. In 2008, Ethnique Media found that only 55 percent 72 of those with South Asian and Chinese heritage read may well precipitate a decline in quality that alienates English newspapers, versus 75 percent for ethnic advertisers, who can easily opt for direct relations with publications that at one time primarily presented news farm consumers if a publication loses credibility. from home countries. That role has been usurped by the Web, so now they help their communities better Indigenous media understand local issues and provide a forum for Indigenous journalists have an entire order of cultural expression and social cohesion. government to cover on their own, an often lonely They too struggle and, to control costs, many are and difficult pursuit complicated by scarce resources moving online, only to see how difficult it is to generate revenue despite the huge purchasing power of many minority communities. They also find it a challenge to recruit and retain staff. Many employees begin their careers with an ethnic and tension on the part of those they write about. They must hold elected officials to account, said Maureen Googoo, owner-editor of Kukukwes.com, which reports on Indigenous affairs in Atlantic Canada. She told us that Nova Scotia’s Mi’kmaq newspaper publication but soon move on. folded in 1991 following federal cutbacks and, for The farm press received next to no attention. Today, Kukukwes fills Unlike most specialty publications, the farm press told us they have been able to maintain quality and hold their revenue numbers at 95 percent more than a decade, First Nations issues in the region that void, but employs only one or two people, having turned to ad sales after an attempt at crowd-funding fell short. of what they were five years ago. The farm press The fact that First Nations issues are the first to has a sophisticated readership constantly making be dropped by mainstream media “opens up economic (and political) decisions. It does not want opportunity” for independents like her, Googoo to be penalized: About five percent of its revenue said, echoing a common view among Indigenous comes from the Canada Periodical Fund; losing that journalists. She gave the example of a former finance PLAY VIDEO Publisher and editor Lynda Powless of Turtle Island News, which covers Ontario’s Six Nations of the Grand River. Credit: The Canadian Press Images/Simon Wilson 73 director accused of stealing $300,000 from a band’s “and I’m convinced that by doing this it will only help coffers. “Back in 2010, it was a breaking news story, make [the community] stronger.” but no one followed up on it as it went to trial. I was in the courtroom every day for five weeks...There was a lot of engagement from the community.” Over and over, we encountered Indigenous journalists eager to produce high-quality civic-function journalism, but there are too few news outlets, too Treaty 4 News in Saskatchewan also told us how few journalists, too little revenue and what we were difficult it is to do business, given the poor socio- told is an under-developed “accountability culture.” economic situation in many communities, although Redressing all this must be a major priority in the Lynda Powless, publisher and editor of Turtle Island post-Truth and Reconciliation Commission, nation- News in Ontario’s Six Nations of the Grand River, has to-nation era. One shining light is Aboriginal Peoples made a go of it without government funding since Television Network (APTN), created in 1999 as a sort 1994. She relies instead on advertising but says that, of Indigenous CBC and supported in large measure after two decades of seeking Indigenous customers, by mandatory carriage on cable TV. It employs 65 ad agencies are beginning to turn away. According to journalists at full complement, including 20 frontline Powless, the fake news problem online has included reporters and video journalists, but is currently hurting campaigns to discredit Indigenous people and issues, for staff after some poaching by the newly enriched eroding the credibility of publications like hers. CBC, which is attempting to bolster its own reporting British Columbia’s Nisga’a people signed Canada’s first modern-day treaty 16 years ago, creating a hybrid democracy and guaranteeing a free press, but there is no press gallery. Wawmeesh Hamilton, a reporter at Vancouver’s Discourse Media, points to a lack of trained local journalists. Into this void has stepped Noah Guno who, with no journalism training, in March 2016 launched Aboriginal Press, an independent micro news site with two writers covering northern B.C. “We’re a young democracy,” he says, Noah Guno started Aboriginal Press in 2016 to cover the Nisga’a area of northern B.C.: “I’m convinced that by doing this it will only help make [the community] stronger.” Credit: Discourse Media 74 on First Nations. Leaders of APTN, whose mandate is national, years, its revenues have been relatively steady recognize the inadequacies–or total lack–of regional in comparison with print, with which it competes and local coverage of First Nations communities, and as a text-led digital newspaper. Some detractors have partnered with Journalists for Human Rights want it out of digital, pointing to the Broadcasting to train four young First Nations journalists every Act edict that it “provide radio and television year. They have also started a small program to pair services.” Defenders note that the Act also says CBC a reporter with a community in Northern Manitoba programming should be made available “by the most in order to create the capacity for journalistic appropriate and effective means.” coverage as well as a culture of accountability among band councils and others in leadership positions. “The culture of accountability is our biggest challenge,” said APTN CEO Jean La Rose. “When we start looking at ourselves–meaning looking at our leadership and our community–that is new to them, and that is still something of a challenge.” Mainstream reporters who come in and out of communities quickly are often distrusted by First Nations communities, but APTN news director Karyn Pugliese also noted that Indigenous reporters are also threatened and After a long and intense debate, CBC management proposed in November that it would stop competing for ads, giving up $253 million in commercial revenue, in return for an extra $400 million from the federal government in part to cover the cost of filling the vacant air time. To a large measure, the rest of the news industry seems distracted by its obsession with CBC. Its digital revenues are just $25 million a year, hardly enough to make up for all money flowing to Google and Facebook. sometimes banned by band councils. “There is a QUEBEC: A DISTINCT DEBATE hunger for the type of journalism that we’re doing” in Our Montreal roundtable, with most of Quebec’s First Nations communities, she said. “The pushback leading media players, differed from most of the that we often get are from people under scrutiny…we others: a more apocalyptic tone and less ambivalent have had our people physically threatened.” expectations of government. Many issues were the Fostering openness and accountability is also more difficult when mainstream journalists lower their reporting standards to avoid appearing hostile or racist, Pugliese observed, or when they follow the so-called “Five Ds” and report on First Nations people only when they are dancing, drumming, dead, drunk or destitute. same: the impact of the platforms, the rise of opinion versus news, the pressure (“My boss told me, ‘It is better to be first and wrong than second and true’”). And the consensus was, if something isn’t done quickly, “laissez-faire market laws will apply,” to the detriment of journalism and democracy. The only difference of opinion was over whose need is greater: daily newspapers, weeklies or broadcasters. CANADIAN BROADCASTING CORPORATION Measures suggested ranged from taxing Internet We have heard strong language from private use to forcing Google, Amazon, Facebook, Apple competitors, large and small, that CBC is unfairly and Netflix to adopt “an ethical investment policy” to privileged because it uses public money to build a support the media, and special help for print “because digital operation that then competes with them for newspapers are the providers of content for radio revenue. This may reflect the CBC’s digital success. and social networks.” Other suggestions ranged from Despite trailing in TV news ratings, it is the largest tax credits based on market share to credits based Canadians news site by far with more than 15 million on labour. unique visitors a month. Even with cutbacks in recent 75 With some help, they will make the transition. Ottawa (one each in English and French). BuzzFeed “We follow the technology. We always do. But we shut its Ottawa bureau and moved two Canadian need a time out; it’s going too fast.” They realize reporters to Washington, and Vice quietly shifted its that advertisers and politicians don’t really need Ottawa reporter to Toronto. them anymore but they live in hope: “We innovate, but we lack resources and it becomes a danger to democracy. I do not know what the government can do. It has helped a lot in many areas. It should help media today.” Most branch plants are geared to national and international audiences and are not driven primarily by civic news. Kenny Yum, managing editor of Huffington Post Canada, told us that entertainment coverage is part of his organization’s DNA, along Quebec media have faced and fought the decline with wellness and lifestyle. “We were born as a longer and more thoroughly than others. The province website that covers everything from pop culture to organized a special working group in 2009 that called entertainment, from Justin Trudeau to Justin Bieber.” for state intervention: a tax credit to hire journalists for regional and independent media and the use of Télé- Citizen journalism Quebec’s website as a common platform for regional We began our inquiries with high hopes for citizen news. The report foundered but in May 2016, efforts journalism as an antidote to downsized newsrooms. began anew, spearheaded by the journalist union, La Fédération nationale des communications-CSN. Then in September, representatives of 137 weeklies and nine dailies formed the Coalition pour la pérennité de la presse d’information au Québec (Coalition to ensure the long-term survival of print news media in Quebec), which is demanding treatment similar to the television and film industries. Le Devoir publisher Brian Myles described journalism as a “cultural exception,” given that print is “vital to preserving a diversity of media voices, enriching debate and accompanying communities of readers in their daily lives.” Branch-plant journalism U.S. operations, such as BuzzFeed, Huffington Post and Vice (which started in Canada), have opened Canadian operations in recent years. Even the BBC and The New York Times have increased the attention they pay to Canada. While of net benefit, we have heard that they don’t make a material contribution to the state of Canadian journalism, particularly civic-function journalism. HuffPo, the first to venture north, employs about 40 people here, but only two in 76 The concept relies on the low barriers to digital entry, theoretically allowing anyone to report, with the distinction being that citizen journalists are not paid. Our findings were a mixed bag. The Internet has thrown up a so-called “second layer of vibrancy” by giving individuals a public voice on blogs, specialized sites, social media-based community billboards and academic sites such as opencanada.org and The Conversation. But original journalism of the type described in this report generally requires professionalism, a time commitment, staying power and institutional support. A reporter with a large news organization told one roundtable of an access-to-information request that took six years to bear fruit. Without solid backing and legal resources, she said, it never would have succeeded. E=MC In today’s world, Everyone is a Media Company (E=MC), and we heard as much at all our stops. Not only has the line between journalism and public relations been blurred with the rise of branded or custom content, but brands are also likely to produce content on their own sites or on social to fly with the Prime Minister when covering official media. Governments, professional sports teams and business, or with any party leader during an election. even banks are also now in the business of writing at a roundtable we learned that one team employs New support models for journalism more journalists than a local newspaper does. In Canadian journalism has always been, with a Saskatchewan, we heard how the City of Lloydminster few notable exceptions, operated for profit but, responded to a story it didn’t like on local radio by increasingly, not-for-profit models are also emerging. creating its own “digital newspaper” supposedly They view foundations as a natural source of support. to “provide clarity, balance and perspective to In the United States more than 1,000 foundations news coverage.” The Lloydminster Record site still put about $2 billion a year into journalism. The daily exists, but has been dormant since being described newspaper in Philadelphia is now not-for-profit, and during a public outcry as something straight out of in Britain, The Guardian has been supported for North Korea. decades by the charitable Scott Trust. The Income Tax Act We heard pleas at virtually every roundtable to ease about themselves. NHL.com is highly successful: One solution to the revenue crisis in news mentioned frequently is to extend Section 19.1 of the Income Tax Act to the Internet. The section dates from 1965 and was introduced to discourage Canadian advertisers from using foreign-owned media by restricting the deduction of business expenses to advertising that appears in Canadian-owned media. Extending this policy would not be simple, nor would the impact be the same as it was for print and broadcasting (a shift of seven to 10 percent of total advertising dollars for the conditions in Canada for entry of philanthropy into journalism. The digital-only part of the industry, especially the new generation of millennial-led enterprises, is excited by the prospect of a large pool of capital seeking a social return. Registeredfoundation endowments in Canada were worth $61 billion at the end of 2014, and made grants that year of about $5 billion, according to a submission by Philanthropic Foundations Canada to the Commons finance committee in July 2016. the latter). Many advertisers may choose to pay more We have heard several times that something such to stay with non-Canadian services they find more as ProPublica, an award-winning U.S. investigative efficient and effective, providing little return for a service that employs about 45 journalists, would be highly complicated manoeuvre. very risky in Canada because it could run afoul of Canada Revenue’s constraints on political activity Transparency or advocacy. But Australia’s high court has ruled We heard many times there is one very simple way there is no general rule excluding “political objects” for governments to ease conditions for news media: from charitable purposes. In his 2015 mandate letter, by making their own proceedings more transparent Prime Minister Justin Trudeau instructed his Minister and reducing costs of services to journalists. One of National Revenue to “clarify” the rules governing example cited was to make Hansards of committee political activity and charities, and charitable proceedings and court records more immediately foundations told us they are still awaiting word. available and easily searchable. Another example Even if the rules are altered, we do not see is the cost associated with access-to-information philanthropic financing as a panacea. In research for requests, as well as the often-extravagant charges 77 the Max Bell Foundation, Roger Gibbins, former head Google is primarily an advertising company and of the Canada West Foundation, found that between understands as well as anyone the evolution of 2000 and 2013, only one in 164 charities reported the market. It says that, rather than buying ads on spending anything on political activities. home pages tied to news brands, advertisers now Google and Facebook look to target specific audience segments and pay for ad campaigns based on how well they perform. At our roundtables and in our focus groups, So far, Google and Facebook have succeeded on Google and Facebook were seen as suitable volume, not price. Traditional publishers with strong sources of funding for public programs, voluntary brands sell far fewer ads but often receive three to or not. Roundtable participants pointed to Google’s four times as much for them as Google does. But it’s €60-million deal with France in 2013 and, more getting tougher. Few publishers can provide the scale important, the creation of the €150-million, Europe- required to satisfy the audience slicing and dicing wide initiative two years later. They also spoke now being demanded and often need to partner with openly of their own conflicted relationships with both Facebook or Google to do so. Google says it returns platforms, on one hand admiring their engineering to publishers 70 percent of joint sales. But that is for prowess and depending on them for traffic while, on just one of its products and not the search advertising the other, seething at what they consider arbitrary that it dominates. We also heard that Facebook changes in agreements, especially by Facebook, and has taken increasing control over the “friends” a feeling they lose out in such deals when it comes to publication attracts. One publication told us that when developing their brands and getting to know their it posts something to its Facebook page, the item own audience. goes to only seven percent of its friends; beyond that, The French fund was a three-year undertaking that Facebook charges a fee. gave successful media applicants up to 60 percent As well as the roundtables and focus groups, our of the cost of an innovative project in such areas as research supported having Google and Facebook revenue creation and “daring storytelling,” while the help to finance journalistic production, just as cable Europe-wide fund is, according to its website, part of companies help to pay for television programming. a collaboration with news publishers “to support high- The logic is that, like cable companies, they extract quality journalism and encourage a more sustainable disproportionate benefit from distributing content news ecosystem through technology and innovation” produced by others. And furthermore, the argument by helping publications reduce load times for pages, goes, not only are these foreign giants taking money also critical to Google’s mobile expansion. out of Canada, they do not pay taxes here. It is a In both cases, the agreements followed years of disputes with EU media and competition regulators. Jason Kee, public policy and government relations counsel at Google Canada, told the PPF that the EU fund came in response to political circumstances at the time, and is not to be extended. There is also no intention to create such a fund in Canada — although the benefits, such as the Accelerated Mobile Pages project (AMP), have been widely distributed here. 78 persuasive case, a passionately made case, and one with which we agree to some degree. But cable companies were handed a monopoly by government, so it seems sensible that they invest some of their gains in generating their product. Google and Facebook, however, got to where they are through their ingenuity. They have a better business plan. Moreover, publishers and broadcasters are not forced to use them. Nobody has to set up a Facebook page, and websites can tell the content crawlers and robots used by search engines like Google to stay away or Canadians work, play, go to school and engage with just access certain pages. one another in some 3,600 municipalities across Still, the Silicon Valley titans have knocked the global marketplace off balance. Canada’s media, perhaps even its government, are out-muscled. When the Spanish tried to impose conditions it didn’t like, Google News simply pulled out, harming the publishers Spain was trying to help. Germany also backed off when restrictions on Google led to a drop in traffic for its publishers. a country now celebrating its 150th anniversary. This civic engagement–local, provincial, regional and national–has so far shown itself to be most vulnerable to the disappearance of news outlets. Since 2010, there have been 225 weekly and 27 daily newspapers lost to closure or merger in more than 210 federal ridings. Anyone who views news as a public good will see that this decline damages civil discourse; Democracy relies on shared information– Even so, they put little back into the Canadian on all of us having access to news about what is media ecosystem and, unlike foreign publishers and going on in our communities. broadcasters, are treated the same as domestic sellers of advertising. Nor do they pay consumption or corporate income taxes even though they now account for more than 80 percent of ads served up in Canada and collect about 70 percent of the revenue. Of course, the very thing that makes news special also makes it a delicate subject for public policy. Journalism must maintain its independence from governments large and small, which creates a conundrum that distresses Canadians: how to help Throughout this report, we’ve embraced the something that is increasingly less able to do its job proposition that a public-policy response to the while keeping it free from official influence. What’s economic challenges of the news media is justified more, any measures to confront fake or counterfeit only to counter a risk to the health of our democracy. news must be supremely careful not to risk controlling That is where the public interest lies. speech in ways that are not, as the Charter of Rights We began by examining whether faltering business and Freedoms dictates, “demonstrably justified in a models are impairing the ability of traditional media free and democratic society.” to deliver civic-function journalism and, if so, whether The recommendations below are crafted to strike new digital media or communications now fill that gap. these balances. Their over-arching objective is to Then came the explosion of news meant to mislead ensure that Canadian democracy is well served by a and confuse citizens–and its “viral” dissemination via strong, diverse, independent and trustworthy news the digital-age tools of search and social media. By media sector engaged in civic-function journalism now the term “fake news” is already losing meaning increasingly reflective of the opportunities and as it is applied to information that may simply be realities of the digital age. incorrect. Truly fake news is like counterfeit money –it has been manufactured for profit or to devalue political discourse. They are grouped in two categories that complement each other in helping the media remain vibrant and trustworthy: measures to strengthen economic Either way, this juxtaposition of the upswing of sustainability and measures to promote both civic- illegitimate and inexpensive fake news and the function journalism and digital innovation. downturn of legitimate and expensive real news brings added urgency to the issues at the core of this report. 79 Section Throughout this report, we’ve embraced the conundrum that distresses Canadians: how to help proposition that a public-policy response to the something that is increasingly less able to do its job economic challenges of the news media is justified while keeping it free from official influence. What’s only to counter a risk to the health of our democracy. more, any measures to confront fake or counterfeit That is where the public interest lies. news must be supremely careful not to risk controlling We began by examining whether faltering business models are impairing the ability of traditional media to deliver civic-function journalism and, if so, whether speech in ways that are not, as the Charter of Rights and Freeoms dictates, “demonstrably justified in a free and democratic society.” new digital media or communications now fill that gap. The recommendations below are crafted to strike Then came the explosion of news meant to mislead these balances. Their over-arching objective is to and confuse citizens–and its “viral” dissemination via ensure that Canadian democracy is well served by a the digital-age tools of search and social media. By strong, diverse, independent and trustworthy news now the term “fake news” is already losing meaning media sector engaged in civic-function journalism as it is applied to information that may simply be increasingly reflective of the opportunities and incorrect. Truly fake news is like counterfeit money– realities of the digital age. it has been manufactured for profit or to devalue political discourse. They are grouped in two categories that complement each other in helping the media remain vibrant Either way, this juxtaposition of the upswing of and trustworthy: measures to strengthen economic illegitimate and inexpensive fake news and the sustainability; and measures to promote both civic- downturn of legitimate and expensive real news function journalism and digital innovation. brings added urgency to the issues at the core of this report. Canadians work, play, go to school and engage with one another in some 3,600 municipalities across a country now celebrating its 150th anniversary. This civic engagement–local, provincial, regional and national–has so far shown itself to be most vulnerable to the disappearance of news outlets. Public Policy Principles • Canada matters • Journalists matter • Original civic-function news matters • Freedom of the press matters Since 2010, there have been 225 weekly and 27 daily • Digital innovation matters newspapers lost to closure or merger in more than • Financial sustainability matters 210 federal ridings. Anyone who views news as a • Truth matters public good will see that this decline damages civil • Diversity of voices matters discourse. Democracy relies on shared information– • Platform neutrality matters on all of us having access to news about what is • A balanced marketplace matters going on in our communities. Of course, the very thing that makes news special also makes it a delicate subject for public policy. Journalism must maintain its independence from governments large and small, which creates a 81 Summary of Recommendations Measures to Strengthen the Economic Sustainability of News Media • Section 19 modernization Measures to Promote Civicfunction Journalism and Digital Innovation in Support of News that is Vibrant and Trustworthy • Government advertising • Local coverage via Canadian Press • HST rebalancing • Legal advisory service • Philanthropic support for journalism • Indigenous news by Indigenous journalists • Right of news producers to control their property • Evidence-based research institute, starting with fake news • The Future of Journalism & Democracy Fund • ‘Informing’ CBC’s mandate • Exiting digital advertising • A Creative Commons licence 82 Measures to Strengthen the Economic Sustainability of News Media Recommendation No. 1: minimum thresholds for producing original civicfunction journalism aimed primarily at Canadian audiences. • The minimum thresholds would be based on both a percentage of editorial spending and a labour measure, in the latter case applying the approach of the existing Film and Production Tax Credit. • To fall inside the expanded Section 19, producers of eligible news will be required to show that: Enhance Section 19 and 19.1 of the Income Tax Act • a t least 75 percent of editorial payroll and 75 percent of their eight most highly paid employees are Canadian individuals or personal-service companies. OBJECTIVES • a t least five percent of the company’s revenue generated in Canada is spent on editorial operations, with a significant amount for civic-function journalism. • Level the playing field among platforms; • Remove distortions; • Incentivize Canada-centred news organizations; • Create a pool of funds for reinvestment in journalism and digital news innovation (Recommendation No. 5); and • Make Section 19 the standard for other government actions. RECOMMENDATIONS a) The distinction made in the treatment of Canadian and non-Canadian print and broadcast media should be extended to the Internet. The current situation is neither fair nor sensible: A Canadian advertiser cannot deduct expenses when buying space in The New York Times but can when placing an ad on nyt.com. Similarly, expenses for advertising on a border TV station cannot be deducted but can be if on YouTube. • R eform of Section 19 must be consistent with post-1994 North American Free Trade Agreement (NAFTA) requirements and those of other trade agreements. This means corporate nationality cannot be the basis for policy. b) The Section 19 preference would be extended to digital publications that are not Canadian-owned if and only if a) the operators are subject to Canadian consumption and corporate income taxes; and b) the operators are located in Canada and meet c) The advertising expenses deduction clause in Section 19 (newspapers) and 19.1 (broadcasters) would be changed for Internet companies by introducing a 10 percent withholding tax on advertising expenditures in non-qualifying media. In other words, instead of being denied the business-expense deduction, these advertisers would hold back 10 percent of ad billings and remit them for financing a new Future of Journalism & Democracy Fund. • There would be no changes for print or broadcast media. • Advertisers in digital media that qualify under Section 19 would be unaffected. • Advertisers in digital media that do not qualify for Section 19 would be subject to the withholding tax. • Small-scale advertisers would be exempt. • The withholding tax would cost advertisers less than the loss of a deduction, while producing a revenue stream. d) Qualification for other government programs aimed specifically at news media will depend on meeting Section 19 criteria. e) The Government of Canada should advertise only in media that qualify under Section 19 provisions. Successive governments have expanded Section 19 preferences for Canadian media since they were 83 introduced in 1965. Government should comply with the intent of its own policies, on whatever media platform is deemed best. Virtually no companies today actually lose their deduction under Section 19 and 19.1. Its intention was more to change behaviour in creating a FISCAL IMPLICATIONS disincentive to advertising with foreign-owned media. These changes would be expected to produce Generally, this has worked, although we’ve been told a revenue stream of $300 to $400 million a year government lacks a clear view into how advertisers that would be used to finance a special fund. The apply the sections. financing of the fund would be similar in principle to the dedicated revenue stream provided to the Canada Media Fund through a five-percent levy on cable, satellite and Internet protocol television (IPTV) distributors. This past approach is less likely to work with digital advertising. First off, the ads are not as easily substitutable. In broadcasting, for instance, rather than advertising on a U.S. station, the Canadian advertiser could switch to the Canadian station and place its NOTES ad to run at the same time and usually on the same Section 19.1 allows advertisers the normal course program, given the simultaneous-substitution rule. deduction of an advertising expense only if Second, digital ads take many forms and are served the advertisement has appeared in a Canadian up in many different ways to different audience newspaper or on a Canadian broadcasting outlet. The segments. The services that foreign-owned Internet rules on periodicals are based on Canadian content companies offer in Canada are highly valued by page measurements rather than country of ownership consumers. Third, extending Section 19 and 19.1 to because they were redrawn after NAFTA came into the Internet in their present form could be construed force in 1994 and after Canada lost a case at the as a tax on income and therefore could run afoul World Trade Organization. of income-tax treaties Canada has entered into The 10-percent rate for the withholding is consistent with other nations. These treaties do not cover with what research shows to be the upper limit of the consumption taxes. effects of Section 19.1 on broadcasting. Some sellers of digital advertising in Canada collect Given the multiplicity of small digital sites, it is large amounts of money while providing little or no administratively wise to create a minimum level before programming benefits to Canadians and, in some the withholding tax kicks in. cases, not paying corporate income taxes or sales We would prefer to place this consumption tax on the sellers of the advertising rather than the buyers if the government can design it to conform to obligations under tax treaties and trade agreements. taxes in Canada. As with the cable providers a generation ago, some contribution to the system that provides the content that benefits their enterprises seems reasonable. Ninety percent of digital ad revenue in Canada We understand the Department of Finance looks goes to the top 20 sellers, making this approach unfavourably on dedicated taxes (although these simpler to administer. To accomplish this may require are implemented by the CRTC). In this instance, we deeming such sellers to have a so-called ‘permanent believe the special nature of the relationship between establishment’ (a technical tax term) in Canada, the news media and the government, which is often although perhaps not, given this is a transaction tax and appropriately adversarial, justifies a dedicated based on revenue and not an income tax. tax. An independent and dedicated source of funding puts some space between government and media, 84 and makes changes meant to discipline news media FISCAL IMPLICATIONS more difficult. The cost to the federal treasury of removing the GST/ Recommendation No. 2: HST from news-industry subscription revenue would Extend GST/HST to all digital news subscription and advertising revenue for companies not qualifying under new Section 19 criteria. Rebate GST/HST for those that do qualify OBJECTIVE Remove a tax disadvantage imposed on Canadian companies versus foreign competitors selling digital subscriptions and advertising in Canada. Extend the concept of a Section 19, 19.1 and 19.01 preference from advertising revenue to subscription revenue, given the increasing importance of subscriptions as a newsmedia revenue source. RECOMMENDATIONS a) Reform Canadian tax law so as to subject to GST/HST subscription and advertising revenue in companies not compliant with new Section 19 requirements, thus levelling the playing field. The existing arrangement discriminates against Canadian news media in providing better tax treatment to foreign companies. (This measure applies equally to the so-called Netflix tax.) b) Introduce a consumption tax rebate on newspaper and digital news subscriptions sold by companies compliant with Section 19. be $40 million to $50 million a year. The federal government could gain offsetting revenue by having the GST/HST apply to currently exempt foreign subscription and advertising revenues. (Precise amounts are difficult to calculate due to the lack of transparency regarding the extent to which Canadian advertisers currently report GST/HST obligations when purchasing from foreign-based advertisers; the gain can be expected to be small, given the nature of GST credit transfers.) NOTES Many jurisdictions in recent years have eliminated the discriminatory value-added tax holiday treatment accorded to foreign digital companies. These include New Zealand, Australia, Norway, South Korea, Japan, Switzerland, South Africa, Israel and the European Union. By and large, they have shifted taxation on digital goods from the locale of the company to the location of the customer. The large companies have not resisted. “Facebook pays taxes according to the law in every country it operates, including Israel,” the social media company said when Israel reformed its value-added tax law last spring. Google has commented similarly. SOME EXAMPLES New Zealand: Speaking after the passing of the relevant bill in March 2016, Revenue Minister Michael Woodhouse said: “Collecting GST from the growing volume of online sales across borders has been • The European Union made a similar proposal in December. an issue of growing concern for some time, so the • Several provinces, including Ontario, Prince Edward Island and British Columbia, already rebate sales tax on newspaper subscriptions. We urge all provinces to follow suit and extend this rebate to digital news subscriptions. first step. Currently, New Zealand providers are at passing of this legislation marks a very important an unfair disadvantage because they must apply GST to their services, whereas overseas providers do not. This creates an unfair playing field which this legislation will eliminate.” 85 European Union: From Jan. 1, 2015, telecommunications, broadcasting and electronic services are (according to an EU directive) always taxed in the country to which the customer belongs– regardless of whether the customer is a business or consumer and regardless of whether the supplier is based in the EU or outside. Israel: In guidelines explaining its 2016 changes, the Israeli Tax Authority said that, “due to changes in the ‘traditional’ economy and the transition to ‘digital’ economy, the circular clarifies that ‘permanent establishment’ could be determined in Israel when the economic activity of the foreign company in a permanent place of business in Israel is conducted mainly through the Internet and additional conditions exist, such as: representatives of the foreign company civic-function journalism to qualify as recipients for support from philanthropic foundations and, in some specific cases, become charities themselves. b) Overhaul the rules around policy advocacy by charities to allow for non-partisan civic-function journalistic activity. • We have been led to understand through our research that, if charity rules were reformed and clarified, some Canadian foundations would look favourably on supporting journalistic enterprise, digital news startups and perhaps several of the broader initiatives contained in further recommendations in this section. FISCAL IMPLICATIONS Revenue neutral other than the possibility of taxable deductions to donors, should some journalistic organizations become registered charities. are involved in identifying Israeli customers, in NOTES gathering information and managing customer Canada’s existing charity laws are based on the relations of the foreign company, the Internet service priorities and mores of 19th-century England as provided by the foreign company is adapted to Israeli articulated in an 1891 decision by the British House customers (language, style, currency, etc.).” of Lords. The so-called Pemsel case set out four Recommendation No. 3: Remove obstacles to philanthropic financing acceptable categories for charity–relief of poverty, the advancement of education, the advancement of religion and certain other purposes beneficial to the community. More than a century later, society has evolved remarkably, but the rules, at least in Canada, have remained static. Is the advancement of religion of any greater social import in the 21st century than the advancement of information vital for democratic OBJECTIVE Open a new source of potential financing to Canadian news organizations, easing the philanthropic sector’s ability to assist journalism, especially non-profit models, and bringing Canada in line with practice in the United States, Germany and other countries. Philanthropy-supported media are less likely to support highly partisan and counterfeit stories given choice? Is journalism not education? Should public policy not reflect this? Twenty-first-century Canadian journalism is badly in need of new sources of financing. In the course of our research, several philanthropic foundations expressed interest in investing in journalism, but felt inhibited by the state of charity laws and rulings from the structures of foundations. both courts and the Canada Revenue Agency (CRA). RECOMMENDATIONS There appear to be two distinct but related barriers. a) Amend Canada’s charity laws and regulations to allow non-profit news organizations producing First is the requirement that foundations donate 86 only to qualified recipients, i.e. registered charities. Second, foundations feel chilled by rules limiting so- NOTES called political activities (really, policy advocacy) and We have heard repeated complaints from publishers the interpretations in recent years by the CRA. We as to how fair-dealing provisions in the Copyright note that in his 2015 mandate letter, Prime Minister Act are inadequate in a digital world in which whole Justin Trudeau instructed Minister of National works can be duplicated instantly. In our focus Revenue Diane Lebouthillier to: groups and polling, a strong bias existed in favour “Allow charities to do their work on behalf of Canadians free from political harassment, and modernize the rules governing the charitable and notfor-profit sectors, working with the minister of Finance. This will include clarifying the rules governing ‘political of protecting the rights of content creators over easing dissemination of content. The Copyright Act provides such protection, but also allows for a list of exceptions, known as fair dealing, which include reporting the news. activity,’ with an understanding that charities make an In many cases, the issue arises when aggregators, important contribution to public debate and public bloggers or others use material without permission. policy. A new legislative framework to strengthen the This is good for the aggregator, and perhaps sector will emerge from this process.” convenient for the consumer, but even if the material The minister has appointed a panel to examine this matter. As part of this review, the panel should consider the ability of philanthropy to support civicfunction journalism and of individual Canadians to be links back to its source, the original producer should be able to decide whether it wants to share–and whether it wants to negotiate compensation in some form. able to donate to qualifying journalistic charities. In different circumstances, the New Brunswick Recommendation No. 4: Telegraph-Journal told us of an exclusive photo Review the Copyright Act’s fairdealing rules to strengthen rights of news originators to control their intellectual property posted on its site during the 2014 attack in Moncton that left three members of the RCMP dead. The site maintains what is known as a “hard paywall,” making content available only to paid subscribers. As a result, it experienced a spike in registrations when word spread of its photo. Then the CBC copied the photo without permission, and the spike quickly subsided. What the CBC did is, in one way or another, common these days, and can be argued to be permissible RECOMMENDATION a) The fair-dealing provisions of the Copyright Act, amended in 2012, are scheduled for review in 2017. We recommend that this review tighten usage of copyrighted news material in favour of creators, without unduly stifling the social power of sharing on the Internet. News producers have a right to benefit from their work for a reasonable period while pursuing the business strategy of their choice. under fair-dealing provisions. 87 Recommendation No. 5: Create a Future of Journalism & Democracy Fund OBJECTIVE An independent agency to support digital news innovation—including technical strategies to make fake news less prominent—and civic-function journalism, with a special emphasis on early-stage, local and Indigenous news operations, and research into issues relevant to the interaction of news and democracy. RECOMMENDATIONS a) Creation of the Future of Journalism & Democracy Fund would provide financing for digital innovation, especially in its early stages, and be directed at those operators who produce civic-function journalism at the national, regional and local levels. To qualify, enterprises would have to be Section 19-compliant and deliver original news on digital platforms that are refreshed at least once a week. The fund would cover a maximum of 75 percent of the cost of a project. The ability of applicants to attract support from other partners would factor into grant decisions. b) The fund would be administered at arm’s length from government in keeping with the principles of a free press. To further promote independence, the fund’s governance structure would go beyond that of most granting councils, borrowing instead from the bicameral model of the Canadian Foundation for Innovation. There, a group of 13 members– serving as proxy shareholders–appoints the board, which in turn hires the chief executive officer. The members select their own replacements. (A formula will need to be worked out with the news industry, think tanks and foundations for recruitment of the first cohort of members.) 88 After examining the mandates of several U.S. foundations that support journalism, such as Knight and Ford, as well as Google’s Digital News Initiative Innovation Fund in Europe, we recommend that the fund pursue two overriding objectives: 1) Excellence in digital news innovation: Support for the transformation of news organizations committed to realizing the potential of the digital age through the adoption of innovative approaches to technology that advance civic-function journalism. A portion of the fund would be reserved for early-stage operations and the transition of community newspapers to digital. 2) Excellence in civic-function journalism: Support for independent journalists and organizations that produce civic-function journalism, with special attention to local news, investigative and accountability journalism, and the use of data and evidence in journalism. Additionally, the fund would finance Recommendations 6, 7, 8 and 9 (below). FISCAL IMPLICATIONS A startup investment in year one of $100 million. After that, financed through a withholding tax on sales of advertising that is not compliant with the revisions to Section 19. NOTE The Canada Periodical Fund provides small levels of support for digital transition to paid community newspapers. Potentially, this function could move to the new fund. Measures to Promote Civic-function Journalism and Digital Innovation in Support of News that is Vibrant and Trustworthy FISCAL IMPLICATIONS Recommendation No. 6: expression. A legal advisory service for investigative/accountability journalism OBJECTIVE Help small and early-stage news operations assess and manage legal risks so they can pursue their journalism without fear of reprisal; Remove an obstacle to robust and accurate journalism. RECOMMENDATIONS a) The board of the Future of Journalism & Democracy Fund would work with the news industry, philanthropic foundations and universities to establish an advisory service to provide prepublication legal advice for newer and smaller news services as well as other legal assistance as judged necessary. Such regular access to legal advice would both give smaller organizations greater confidence in pursuing difficult stories and impose the discipline of having to maintain high journalistic standards. b) This legal advisory service would be available only to organizations that qualify under the new Section 19 provisions, and are members of the National NewsMedia Council, created from the 2015 amalgamation of provincial press councils with a mission to promote ethical practices within the news media and to serve as a national forum for complaints from the public. The costs, to be determined, would be fully covered by the Future fund. NOTES Smaller news organizations often cannot afford to hire lawyers to vet their work for possible libel and slander or to defend against legal actions that may be intended to intimidate or suppress freedom of The decision to take on a client would be at the discretion of the advisory service. Costs would be fully covered for the vetting of stories, representation in pre-publication motions and fighting so-called “slap” suits meant to intimidate and delay. News organizations could also apply for support for the co-payment of premiums to cover legal risk after publication, thus ensuring that a news outlet can reduce its exposure while maintaining a full stake in the quality of its journalism. News organizations (and their insurers) would be responsible for any damages. We would also urge other provinces to follow the lead of Ontario in adopting legislation to give courts the power to dismiss slap suits more easily. Recommendation No. 7: Establish a local mandate for The Canadian Press OBJECTIVE Create a professional, open-source news service to supplement waning local and regional coverage of civic-function news with trustworthy news from an organization with high journalistic standards. Ensure this news is available for the widest possible dissemination. 89 RECOMMENDATIONS Supplementary funding would be generated from a) Civic-function journalism is being steadily degraded across the nation. We recommend that The Canadian Press (CP), which has a 100-year history of generating and sharing news coverage in both official languages and the infrastructure to distribute it, establish a second, non-profit service to fill these gaps. This service, CP-Local, would be distinct from CP’s existing subscription service, with a separate editor and staff. It would be financed by the Future of Journalism & Democracy Fund, including an annual management fee paid to CP. service contracts with individual municipalities. b) The news produced by this second service would be published under a Creative Commons copyright licence, which would make it available for commercial use by any organization or individual with appropriate attribution. Other news agencies, such as Agence France- CP-Local would hire 60 to 80 journalists across Canada to supplement coverage of courts, legislatures and city halls. It would be run by a NOTES This recommendation has been discussed at length with Canadian Press management over the past several months. There is some sentiment within CP for it to be part of an act of Parliament so that, once established, it could not be altered by the executive alone. There is already a Canadian Press act on the statute books. Presse (AFP), receive some form of state payment while those of Portugal’s Agência Lusa, ANA in Greece, EFE in Spain and AGI in Italy feature boards of directors with representatives from governments, media organizations, journalists, unions and civilsociety groups. separate management team and would be expected In the case of AFP, a 1957 law stipulates that the not to duplicate coverage areas of the main Canadian agency “gather and provide, continuously and in Press service. CP would share an interest in not several languages, exhaustive, accurate, objective undermining its paid-subscription service. Generally, and impartial coverage of what is happening in the the news of CP-Local would be unlikely to move world. It must be fully independent and have a global outside a given region. reach.” In 2015, AFP received €100 million from the CP-Local’s core services would be augmented by contracts with community groups or municipal governments that recognize journalism as a social French state to finance its so-called “missions of general interest.” That constitutes slightly more than one-third of its revenue. good and want to ensure it is available to the We would hope that such a service would mitigate residents of their community. These clients would against the creation of “official” journalistic enterprises have to sign long-term contracts (three to five years) run by the communications departments of with CP-Local, and would exercise no control over municipalities. editorial decisions, including the hiring and firing of journalists. As a footnote, CP was subsidized by the Canadian government as it built its communications infrastructure in the early 1920s. FISCAL IMPLICATIONS Working with CP, we estimate the costs of CP-Local at $8 million to $10 million a year, which would come from the Future of Journalism & Democracy Fund. 90 Recommendation No. 8: Establish an Indigenous journalism initiative in keeping with a new era of reconciliation, self-government and nation-to-nation relations programs, and recommend further work on the education and training of Indigenous journalists. We note that APTN already has entered into a small program with Journalists for Human Rights, which could be scaled up. Scholarship money for journalistic education would be set aside. FISCAL IMPLICATIONS The extra level of support would be financed from the Future of Journalism & Democracy Fund. We estimate the Indigenous Journalism Initiative would cost $8 million to $10 million annually. OBJECTIVES NOTES Support civic-function journalism by Indigenous news We have encountered a number of hard-working organizations covering Indigenous government yet frustrated Indigenous news organizations in our institutions, public affairs and community matters, research. They generally are shoestring operations overseen by a highly professionalized news unlikely to become self-supporting in the foreseeable organization; Increase the number of reliable and future, and unable to provide the depth or breadth of informed sources of news on Indigenous affairs. coverage they desire. RECOMMENDATIONS Indigenous journalism merits special consideration for a) Create a support and training structure for the coverage of Indigenous governmental institutions by Indigenous news organizations and journalists. public support beyond that available from the Canada b) Embed responsibility for developing this journalistic capacity within Aboriginal Peoples Television Network (APTN), which is currently the only journalistic organization of scale devoted exclusively to Indigenous issues and governments. This service, APTN-Local, would be financed by the Future of Journalism & Democracy Fund, and would support the development of Indigenous media across the country. APTN would be paid an annual management fee, beyond direct costs. media in holding an order of government to account c) Have APTN sponsor 60 to 80 journalists over time who would work for Indigenous news organizations across the country. An APTN editor would be in charge of ensuring these journalists meet standards and practices of news organizations associated with the initiative. We would urge APTN to talk to Canadian Press about creating a distribution network for the journalistic production. This node would be similar to CP-Local, but more of d) We endorse the Truth and Reconciliation Commission of Canada’s call to action (No. 86) regarding journalism schools and media-training Periodical Fund, given that it shoulders the same responsibilities for civic-function news as mainstream and keeping communities informed. More Indigenous journalists are needed to pursue civic-function journalism. We see the need for a central node of excellence that can train Indigenous journalists, anchor them in high journalistic standards and support them if and when they receive pressure from Indigenous government authorities. a networked approach of independent organizations, with APTN, which enjoys a strong journalistic track record, receiving funding to operate a hub for the network. We believe it is important in the context of Indigenous self-government and nation-to-nation relations to increase capacity and coverage of Indigenous issues and institutions by Indigenous journalists. 91 Recommendation No. 9: Establish a research institute dedicated to the study of news and democracy democracy when newspapers or TV stations close; the level and impact of fake news in Canada; the financial state of various parts of the industry; evolving monetization models; the impact of global platforms on different actors in the news ecosystem; the role of algorithms in Canadian civic discourse; the lessons to be drawn from failed and successful news-innovation models, and the ongoing state of public opinion pertaining to news and democracy. OBJECTIVES Create a centre of excellence for ongoing research into the evolving interplay in Canada between news and democracy; Counter the dearth of data about Canadians media habits, preferences and attitudes in the understanding that better evidence can lead to better insights and solutions; Track the challenge of fake news and assess measures for countering it. RECOMMENDATIONS a) Canada has no research institute truly devoted to the myriad issues involving the implications for democracy that are emerging from the profound changes sweeping through news media. We recommend that the Future of Journalism & Democracy Fund, working with foundations and academics, fill this gap by creating such an institute, with an independent governance structure. b) Its first order of business would include an evidence-based study of the existence, origin and impact of fake news in Canada. FISCAL IMPLICATIONS Such an institute would receive up to $2 million a year or an endowment producing such a revenue stream from the Future of Journalism & Democracy Fund. This would be supplemented, we hope, by foundations and granting agencies. NOTES Despite the efforts of some academics, we have been struck throughout our study by the paucity of quality information about, and analysis of, the state of journalism and its impact on civic engagement and the health of Canadian democracy. Little is known about where news originates; the effect on local 92 To arrive at good policy conclusions, Canada must have the capacity to accumulate proper evidence, which currently is either not available on a timely basis (2016 operating margins for the Canadian newspaper industry will not be known until 2018, four years after the most recent such data) or often must be inferred from research in other countries. Recommendation No. 10: Bolster the ‘inform’ imperative in the CBC mandate OBJECTIVE Greater emphasis on the news and information aspects of CBC operations to address the serious decline in original civic-function news; Enhance the base layer of reliable news to inform Canada’s citizenry. RECOMMENDATION a) Have the CBC do more to emphasize the instruction “to inform” Canadians that is contained in its mandate. This includes paying particular attention to civic-function news, which may not attract the biggest audience but must be a public broadcaster’s raison d’être in a digital age. FISCAL IMPLICATIONS A reallocation of funds is likely required. NOTES The 1991 Broadcasting Act stipulates that: “The parliamentary appropriation so as not to weaken the CBC’s transition to digital. Canadian Broadcasting Corporation, as the national FISCAL IMPLICATIONS public broadcaster, should provide radio and $25 million, the approximate value of CBC’s current television services incorporating a wide range of annual digital ad sales. programming that informs, enlightens and entertains.” NOTES This mandate, which came into force just as the In light of the wider review of cultural policies being World Wide Web was being created, is overdue for conducted by Canadian Heritage, we will leave it an overhaul; even the title of the act speaks to a to others to weigh the merits of having the CBC bygone era. abandon the substantial but shrinking market for In the interim, the board of CBC should consider television advertising. News counts for a relatively the order of the wording: informs, enlightens and small portion of CBC-TV’s ad revenues, and there is entertains. The priority of “informs” has become ever little evidence it is a burning, or distorting, issue in the more critical as the condition of the news industry same way that digital ads are. worsens. The weight Canadians place on CBC’s news Our call for CBC to vacate the digital ad space has operations can be discerned from public-opinion less to do with who may inherit the $25 million research and the heavy traffic for news on the CBC/ in forgone revenue (little will go to newspaper SRC websites. The public views news at a higher publishers) than with freeing CBC from the traffic- level than drama, sports, comedy and other areas of maximizing, clickbait mentality that devalues serious program spending. journalism. The CBC, especially now, must favour No public-policy objective for today’s CBC is more quality over quantity. important than providing the iterative, on-the-ground The government and CRTC must be mindful to ensure news reporting described in this study. In times like there is a healthy news ecosystem, and that CBC’s these, Canadians turn to a relatively well-financed strength by virtue of being publicly funded does not CBC to keep them informed of the developments and undermine the diversity within that system. events in the country’s democratic life. Recommendation No. 11: Recommendation No. 12: Financing for CBC online Encourage a digital-age approach to public broadcasting OBJECTIVE OBJECTIVES Free cbc.ca of the need to “attract eyeballs” for digital advertising, which can run contrary to its civic-function mission and draw it into a “clickbait” mentality. Transform CBC’s content distribution so as to increase the impact of its journalism and nourish the development of a more dynamic and diverse news RECOMMENDATION ecosystem; Broaden the dissemination of CBC news a) The CBC should stop selling online and other digital ads, with a one-year phase-out period to make necessary adjustments. These funds should be replaced through the corporation’s to act as a counterweight to the presence of fake news and in support of digital innovation by young media innovators across the country. 93 RECOMMENDATION The best defence to fake news is a strong offence, a) The CBC should move to a system of publishing its news content under a Creative Commons licence, marking the next logical step of a public-service news supplier in the digital age. Such an opensource approach would go a long way toward moving the organization from a self-contained, public-broadcasting competitor to a universal public provider of quality journalism. It would strengthen the media ecosystem overall, anchoring it in greater integrity and maximizing the reach of CBC journalism. In already posting its journalism on Facebook and Google-owned YouTube, CBC has implicitly accepted the principle that production and distribution can be separated. The transition to a Creative Commons licence would have to be carefully mapped out to minimize unintended damage to other organizations that provide civicfunction news, such as Canadian Press. It would be best to start by making CBC news available to non-profits. The move to a Creative Commons approach furnishes a powerful use of policy that would, as Thomas Jefferson said, “contrive” to make the same body of high-quality information available to the whole public to help them in their democratic decisions. widely disseminating real news produced to the FISCAL IMPLICATIONS news organizations compliant with Section 19. As the Zero, with the potential for news business creation. possibility of unintended impact is being assessed, it NOTES would be best to begin by opening content to non- CBC attracts more web traffic than any other news profit media. site in Canada, yet it still feels the need to post content on Facebook and YouTube. In so doing, it has de facto accepted the viability of a division between its production and distribution. Unfortunately, as CBC News managers acknowledge, the social media sites are far more interested in highly shareable content rather than, for example, stories about Big Power thinking and human suffering in the Syrian civil war. In a world of fragmented media, where news is increasingly not consumed via home pages and single organizations but rather through individual pieces of content most often shared by friends and followers, opening its content would enable the CBC to better fulfill its mandate to inform Canadians. 94 highest standards. Sharing the CBC’s content in this manner would see significantly more quality journalism coursing through the social media ecosystem. Such a move would also enrich digital-only and traditional news organizations and unleash new creative approaches to adding value to CBC News beyond what can possibly exist within a single organization. There are seven types of Creative Commons licence. We recommend that the CBC use the “Attribution + No Derivatives” class, which would require those using its material to provide attribution and forbid the “remixing” of CBC content while allowing it to be monetized. There is little precedent for this kind of digital-age approach among public broadcasters. CBC would be staking out a leadership position. The goal would be to open CBC News content to all Some Final Thoughts Looking Forward 1. Defining civic-function journalism audiences for digital advertising, so will it be possible Throughout this report, we have described a deficit of advertising control 90 percent of Canadian ad in what we have called civic-function journalism, impressions. to track whether those ads end up in an environment that is Section 19-compliant or not. A mere 20 sellers with attendant risks posed to the functioning of a healthy democracy. We define such journalism as: the coverage of elected officials and public institutions, from legislatures, judicial or quasi-judicial bodies and city halls to school boards and supporting public services; issues and debates related to these officials and bodies; and the ability of communities to know themselves for civic purposes. 3. Potential pitfalls for foundations With a more liberal regulatory regime, we expect some charitable foundations would seek to invest in journalism, in the way that those in the U.S., such as Knight, Pew, Ford and MacArthur, have been doing for years. We don’t expect this to be a panacea. Most We recognize that such a definition can always be Canadian foundations are small and have long- improved and will inevitably be subject to some standing mandates. For those that choose to become interpretation, but recommend it as a guideline for the involved, there are opportunities for significant impact. Future of Journalism & Democracy Fund and other policy proposals. There are dangers of unintended consequences, as well. Foundations will have to take care not 2. Section 19 and the Internet to inadvertently bend the practices or priorities Applying Section 19 of the Income Tax Act to the Journalism, with its open pursuit of truth, without fear Internet will not be as straightforward as extending it to broadcast was in the 1970s. In that case, there were a finite number of outlets, and those advertising on U.S. border stations could easily substitute Canadian stations and still reach the same audiences, especially with the accompanying policy of simultaneous of a journalistic enterprise toward their agendas. or favour, is not the same as activism. It needs to go where the trail of inquiry leads, directions that may make foundations championing particular causes uncomfortable at times. There will be practical matters to ponder: Should substitution. foundations finance reporters directly? Will they Today, there are myriad Internet-based services and reporters cover? And, if so, only in terms of subject intermediaries in the advertising supply chain. Many buyers place their ads not in a particular media brand, but in front of demographic groupings that may exist on thousands of sites. That said, advertisers are familiar with Section 19, 19.1 and 19.01 (for periodicals). And, just as it is possible to track and measure expect to influence or even direct what those matter or also the outcome? Should the foundations secure assurance that, at the end of the day, this coverage will in fact be published (a very real issue for independent journalists)? Will they withdraw their support if they don’t achieve the result they seek? 95 Will unions give foundation-backed reporters a Nonetheless, there is a public interest in following the pass on the last-in, first-out rule of seniority should 2009 lead of Victoria’s CHEK-TV, purchased and kept layoffs occur? viable by its employees. Governments should not only Certainly, foundations will want at the very least to support an area of coverage that conforms to their strategic plans, as has been the case with the Ford Foundation financing of the Los Angeles Times for reporting on poverty or support from Canada’s Atkinson Foundation for a labour reporter at the Toronto Star to write about precarious types of employment, a subject not otherwise given consider requiring that owners provide reasonable notice before they can shutter a news organization but also consider offering incentives if a convincing business plan will help to keep an operation alive. 5. The downside of tax credits Many groups representing financially pressed news organizations have called for tax credits to help them regular attention. make the transition to the digital world. Otherwise, We have seen in our study repeated praise heaped deteriorating state of their businesses. We carefully on ProPublica, a highly regarded investigativejournalism service in the United States. It offers a good model in this regard. Supportive philanthropists have provided backing, but left the rest to the editors. Even with the best of intentions, doing otherwise runs they say, democratic health is threatened by the considered tax credits before deciding they were not the best way forward. Tax credits have the apparent attraction of simplicity and neutrality. They are seen to be a means of the risk of compromising the results. maintaining a distance between the beneficiaries Foundations should think about a less-direct easily removed or reduced if a government becomes approach as well. As set out in this report, there is a lot of journalistic infrastructure that begs support. Digital innovation, legal advice, ongoing research– these are just a few examples of other ways foundations can support journalism without becoming (media companies) and government. But they are also unhappy with the media. This poses a greater risk of allowing government undue leverage than does our proposal of a dedicated tax going from industry to an arm’s-length granting council. de facto publishers or editors themselves. Tax credits also suffer from being a very blunt tool. 4. When newspapers close digital transition equally with those whose record Mayor Cam Guthrie told us of the shock that swept his community when the Guelph Mercury died in January 2016. An eight-day warning provided no real opportunity to mount an effort to save the 149-yearold paper. Short notice was an issue as well with the infamous twinned closings of the Winnipeg Tribune and the Ottawa Journal in 1980, which gave rise to the Kent Commission on newspapers. In both cases, it probably suited the owners to shut down rather than sell. They treat those with a good record in making the is poor. Meanwhile, their treatment of for-profit and non-profit news organizations is unequal. We have detected throughout our study a great apprehension among early-stage digital news operators that tax credits would favour established for-profit companies that have lobbying power and lock in their position over potentially more innovative newcomers. The coalition representing four major Quebec newspaper groups has specifically called for tax credits to be available only to print publications. Tax credits are also difficult to police for leakage. Money is highly fungible and, once credits are 96 received, companies could apply them in many been the job of electors, not the elected. Certainly, different ways, even if they are specifically for labour nobody should want governments in a free society or digital technology. They could even be applied to a to act as arbiters of truth–the slope toward regulated company’s bottom line, to the benefit of shareholders free speech steepens very quickly. Governments, and and executives. all of us, should proceed cautiously. From a fiscal point of view, tax credits have a We should feel no more comfortable with tendency to grow indiscriminately, as businesses organizations that control mountains of personal data adjust their operations to fall within the ambit of the on tens of millions of Canadians and determine via tax credit. A case in point: The Ontario Interactive private computer code and artificial intelligence who Digital Media Tax Credit was introduced in 1998 to is exposed–or not exposed–to different information. support the growth of Ontario’s emerging digital The sheer size and influence of major social media media industry and the creation of high-skill jobs. platforms places them within the realm of the Eventually, news companies launching digital public interest. products fell under its ambit. In the 10 years leading up to 2015, the cost of the credit grew by more than 40 percent a year, from $2,850,840 in 2005-2006 to $133,170,947 in 2014-2015. This led to a reform that excluded news media corporations, many of which, by then, had built the credit into their business planning. Some proponents have positioned tax credits as a short-term measure that would be in place only while the news industry made its transition to digital. In reality, there is no certainty about how long this transition will take or whether it will even work. Nor is the oft-heard comparison with General Motors germane. The news media of 2017 are not the auto industry of 2008 for two reasons: Firstly, in the GM case, the transition back to profitability depended on general economic factors, not a specific technological disruption, and economies tend to recover; secondly, governments could hedge their exposure by taking shares in GM, which would be wholly inappropriate in the case of news organizations. 6. Thinking hard about the problem of fake news There is no simple answer to the fake news issue, which simmered for years before seizing public attention during last November’s U.S. presidential election. Separating fact from fiction has historically Although “proceed with caution” should be the watchwords, there is no reason why Canadians, or anyone else, should be subjected to an Internet filled with polluted rivers of information. There are ideas worth exploring in assuring the Internet can be trusted. We divide these into two sides: supply and demand. THE SUPPLY SIDE: 1) Certain categories of fake news are already addressed in Canadian law. The Internet gets no free pass from hate, bullying or pornography, for example, or from civil actions against slander and libel. Canada does not have a First Amendment, but rather the reasonable-limits test in Section 1 of the Charter of Rights and Freedoms. It guarantees rights “subject only to such reasonable limits prescribed by law as can be demonstrably justified in a free and democratic society.” If individuals violate laws in using the Internet, legal remedies should be applied. 2) Lies present a trickier challenge for public policy. Some are clear, others open to interpretation. Certainly, assertions that are demonstrably unproven, and challenged as such, should be corrected by those who have produced or distributed the bad information. The principle is long-established that publishers are ultimately responsible for all information in their domains, even if it doesn’t originate with them. Nondefamatory untruths have usually been the purview 97 of self-policing by news organizations, starting with such simple standards of verification as double sourcing and editing. Sometimes, regulation of accuracy and truthfulness is pushed up to an ombudswoman, readers’ editor or press council. Public opinion also plays a role. There should be an expectation that search firms, aggregators and social platforms are responsible for the information they trade in; they should correct errors, just as newspapers and broadcasters do. We would be cautious, at this point, of going as far as Germany, where fines have been proposed if such action is not taken within 24 hours. But governments, alone or collectively, should initiate discussions with these platforms. There is a leadership role here for Canada. 3) There is already considerable discussion, as there should be, about the lack of transparency regarding the computer algorithms that govern how and with whom information is shared. Given the outsized influence of these algorithms and their opacity, we accept that they constitute more than simple private intellectual property. One wants to take care not to turn the Internet, a wonder of innovation, into a public utility. But the public interest points to understanding how these algorithms prioritize information and to exploring whether they should be calibrated to provide more information that is significant and challenges assumptions versus information that reinforces predispositions and makes people happy. A good place to start would be to revisit the algorithm changes last summer that downgraded material from established organizations in the content of Facebook’s News Feed. We would urge caution when it comes to asserting a role for human editors. There are one billion posts a day on Facebook alone. Human intervention cannot shoulder this load. More important, this would amount to recreating the gatekeeping function of System A within System B. Turning the Internet into a faster version of traditional media advances some democratic values while suppressing others. 4) Finally, the argument is being made that the best defence against fake news is a strong offence; in other words, the creation of more news from reliable sources will overwhelm falsehoods. 98 This entire report is based on the understanding that serious civic-function news is at risk, and this will have consequences. We have embraced the admonition of Thomas Jefferson that contriving to get a common set of facts before citizens serves democracy better than not. Still, one cannot forget the rise in the digital world of echo chambers and filter bubbles–meaning that truth and falsehood are not necessarily grappling with one another. The promotion of more news from reliable sources cannot be divorced from either the wider question of how the algorithms work or how innovation occurs. THE DEMAND SIDE: 1) The number of people, according to post-U.S. election research, who believed preposterous assertions made in fake news stories is uncomfortably high and crosses party lines. How media literacy varies, and what can be done to raise it, deserves serious consideration. 2) That said, it would be a mistake to confuse fake news symptoms for the disease. The opening for fake news has been created by deeply sociological phenomena related to exclusion and breakdowns in societal trust and cohesion. Certainly, the larger lesson from the U.S. election concerns the significant cohort of alienated, aggrieved and under-educated voters prepared to suspend disbelief and embrace fake news. There is nothing new about this. Writing in Harper’s Magazine in 1936, author Aldous Huxley cautioned: “Propaganda gives force and direction to the successive movements of popular feeling and desire, but it does not do much to create those movements. The propagandist is a man who canalizes an already existing stream. In a land where there is no water, he digs in vain.” In other words, let’s not forget the context. 7. Competition policy and the marketplace of ideas Concentration of ownership has been a major preoccupation of Canadian media analysis for at least five decades. In the past several years, media critics have been highly critical of Canada’s Competition Bureau for approving Postmedia’s acquisition of the Sun newspaper chain and for discontinuing a three- The problem can be understood, says Canadian year investigation into whether Google’s search and academic Mike Ananny, a professor at the advertising businesses engaged in the abuse of their University of Southern California’s Annenberg dominant position. School for Communication and Journalism, only In the Sun case, the bureau was caught by surprise eight months after greenlighting the takeover when the Postmedia and Sun newsrooms were combined, something Postmedia CEO Paul Godfrey said he would not do when the deal was first approved. by understanding that both platforms can set the conditions under which news disseminates (i.e., which types of news are favoured, which types of distribution are more likely to occur) and set the conditions under which advertisers reach audiences through this news distribution. “It’s this structural Competition law has long focused on economic double whammy of dominating ideas and money marketplaces and questions about whether undue that’s the real third rail of platform power,” he says. concentration was being used to raise prices, lessen competition and ultimately harm consumers. That may have been fine under the assumptions of the day. But now it may be time for governments to reconsider media concentration through the lens of a robust marketplace of ideas. Information and ideas constitute markets that must operate freely and with sufficient diversity of voice (competition) that news and opinion have a chance to clash and inform democracy. This is a discussion that has yet to flower, so it is premature for this study to pronounce upon it. Our intent is to flag to government the risk that highly successful business models may be creating unintended consequences by suppressing the production of the goods necessary for the marketplace of ideas to function well. If the government agrees, it falls to it to consider whether the present structure of this particular market is sound The extraordinary dominance of platform companies, in serving democratic aims going forward and what, if particularly Google and Facebook, raises issues anything, should be done about it. This is not the stuff beyond economic harm in the usual sense. After all, of current competition regulation. news is being widely disseminated and advertising prices are being reduced through enhanced efficiencies. This conversation obviously goes well beyond Canada, and cannot easily be addressed by any single nation, given the size and global nature of The issue at play begins with the relationship platform players. There may be a crucial role for between the growing economic might of a handful Canada in a broader discussion of the marketplace of of platform companies engaged in distribution and ideas, but probably not for Canadian exceptionalism. their effect on the capacity of news originators to provide the goods that nourish the marketplace of ideas. Without news, opinion and understanding, democratic decision-making cannot be well informed. The issue that policy-makers need to consider is whether the evolution of the economic marketplace is unduly harming the marketplace of ideas and whether there is a role for competition policy in this broader societal framework. 99 Afterword Journalism allowed a shy kid to find his voice. For this others of my journalistic generation, I became seized alone, I will always be grateful. The licence to ask by an equally compelling civic calling. questions on behalf of others, to push and prod in pursuit of truth (and be constitutionally protected in so doing) is a tremendous privilege and serious responsibility. Journalism bestows an extraordinary gift on its practitioners–intellectual freedom–along with the everyday urgency to make use of it. I started out at the Lloydminster Times, where our three-person newsroom published a skinny daily and ad-filled weekly. There, I received my highest honour, a makeshift Feather in the Cowboy Hat Award from local farmers for revealing that the city was dumping raw sewage on their land and lying about it. At the As a delivery boy for the old Montreal Star, I got my Regina Leader-Post, I covered everything from first look at life’s intricate tapestries by observing drought to the first shooting of Colin Thatcher’s ex- the households on my route. Collection nights were wife, JoAnn, and, as the Financial Post’s Prairie bureau replete with the smells of different cooking styles, chief, I reported on such towering provincial leaders the faces of happy homes and stressed ones, and a as Peter Lougheed and Allan Blakeney. running commentary by those engaged in the articles I had thrown on their doorsteps a couple of hours earlier. I came to appreciate from an early age the social glue that is news. Eventually, after going overseas to study political change in democracies and dictatorships, I would join the charmingly idiosyncratic and frighteningly literate Globe and Mail for the next 20-plus years A morning and evening paper came to our house, as a business reporter, foreign correspondent, too, along with the newscasts of local radio and a Ottawa bureau chief and, eventually, in a series of half-dozen Canadian and U.S. television stations. what were known internally as “management turd” They kept me current with my beloved Canadiens positions–running the Report on Business, directing and Expos, and well-nourished in my unusual appetite editorial operations at the height of the newspaper for the world of politics and current events. war with the National Post and leading one of the In high school, I skipped class to watch day games of the World Series (never the Expos, alas) as well best assemblages of journalists in the world for seven years as editor-in-chief. as every possible moment of the Senate Watergate I had the good fortune after The Globe to join hearings. That was seminal for me. I had wanted to Torstar as vice-president of strategic investments be a lawyer and eventually run for office; instead, like as we launched experimental content businesses 100 in our attempt to find a winning formula for the in the digital age. It quickly became obvious to digital age. And then being invited inside the tent me, though, that amid today’s commotion of news of the extraordinarily successful Bloomberg News, and pseudo-news, we still need people who go to working with global teams on stories where business, work every day to sort the consequential from the economics, politics and policy converged. ephemeral and, yes, fact from fiction. Journalism’s Two career snapshots seem particularly relevant: • Covering the collapse of communism throughout Eastern Europe and witnessing the joyous restoration of civil society and individual freedom in Romania right after the overthrow of Nicolae Ceausescu–what journalism and democracy are all about. • Suggesting to my publisher at the height of the war with Conrad Black that perhaps we were being distracted from the true existential threat coming from the Internet. Several months later, he gave me the green light to create globeandmail.com. In recent years, I’ve felt a growing urge to make a direct contribution to the policy choices that will define our future. A friend tipped me off to a vacancy atop the Public Policy Forum. And so it was, shortly after starting here in March 2016, that I got to bring together my two great professional passions, main job is to keep watch over the powerful precincts of society–to challenge, cajole, educate, pester–and furnish an ongoing, trustworthy account of events that informs democratic choice and strengthens common purpose. That’s not to be treated lightly. After six months examining the ability of Canada’s news industry to fulfill these civic responsibilities, I can conclude we are reaching, or perhaps have already reached, what business people call an inflection point: Two decades into its existential crisis, the news is in a state of distress and the social glue I encountered as a youngster is losing its capacity to bind. This report diagnoses the problem and offers up ideas as to what can be done. We at the Public Policy Forum hope our analysis and recommendations will stimulate a necessary debate and some carefully calibrated action to preserve a foundational social good. journalism and public policy–more particularly the conditions necessary for news in our democracy to continue to deliver on its essential civic function. EDWARD GREENSPON PRESIDENT & CEO, PUBLIC POLICY FORUM Naturally, I feel great solidarity with journalists. But I came at this project with a long-standing reformist bent and didn’t think anyone merited a free pass 101 Acknowledgments Hundreds of people provided input into this report. Canadian Journalism Foundation, joined us as a We are grateful to all for sharpening our thinking or partner in the poll. CJF board member and Carleton introducing new ideas into the process. While none University Prof. Chris Waddell provided feedback on bear any responsibility for the final output, we hope all the questionnaire. will take some level of satisfaction at the contributions they made in pushing this important debate forward. We also received input from Monitor Deloitte’s global managing partner Jonathan Goodman, We’d like to thank a number of people who especially Fortune magazine senior writer Mathew Ingram, gave generously of their time in shaping this report. CPAC president Catherine Cano, Ryerson University We were very fortunate for the regular input of our Prof. April Lindgren, former Toronto Star publisher four principal researchers: Prof. Chris Dornan of John Cruickshank, Hill+Knowlton Strategies vice- Carleton University, Prof. Taylor Owen of University of chairman Peter Donolo, PPF fellow Drew Fagan, British Columbia, Prof. Colette Brin of Université Laval University of Southern California Prof. Mike Ananny, and Prof. Elizabeth Dubois of University of Ottawa. former Wikimedia Foundation executive director Sue They were assisted by graduate students Mike Gardner, J.W. McConnell Family Foundation president Lakusiak, Linda Givetash and Cherise Seucharan at Stephen Huddart and Atkinson Foundation president UBC; Eric Dicarie at uOttawa along with Anne-Marie Colette Murphy. We also were able, from time to time Brunelle, a PhD candidate at Université du Québec to tap into the knowledge pools of Canadian Heritage à Montréal; and Christine Crowther, an instructor at officials Jean-François Bernier, Luc Marchand, Carleton and a PhD student at McGill University. Iwona Annabel Claux and Harold Boies as well as Mark Mazurek at the University of Regina assisted senior Schaan from the department of Innovation, Science policy fellow Dale Eisler in an examination of the local and Economic Development. news scene. Carleton’s J-5000 graduate class (fall term, 2016) provided helpful feedback on a menu of possible policy options. In addition to the work of our principal researchers, various people provided specific research memos, including New Canadian Media founder George Pollster Allan Gregg of the Earnscliffe Strategy Group Abraham, Carleton University communications led our critical public opinion research, assisted by Prof. Ira Wagman, Turtle Island News founder co-investigators Doug Anderson and Stephanie and publisher Lynda Powless, community news Constable. Natalie Turvey, executive director of the advocates Cathy Edwards, Mike Hertz and Colleen 102 Wilson, and University of Regina Prof. Patricia Elliott. and partnerships Julie Cafley, policy director Linsay More than a dozen news organizations provided data, Martens, former policy lead James McLean, policy some of it publicly unavailable, to help us understand associate Darren Touch, communications specialist the shape of the industry. Kelly Levson of Newspapers Sabrina Ahmad and project administrator Dianne Canada, Brent Bernie of comScore Inc. and the Gravel-Normand and intern Alexander Toope. president of Communic@tions Management Inc., Ken Goldstein, were particularly patient in helping us understand industry numbers. The University of Regina, Université Laval, TD Bank, the Canadian Centre for Ethics in Public Affairs in Halifax and Simon Fraser University were kind enough to provide venues for our roundtables. University of British Columbia hosted a digital innovation symposium we co-organized. Former Globe and Mail Focus editor Jerry Johnson edited the manuscript with his customary panache. Jane Taber and Kim West at National Public Relations provided strategic communications advice with the assistance of Mercedes Smith, Michael Cranis, Sarah McNeil, Christina Lo and Tyrone Murphy. The report was translated to French by Larrass Translations Inc. of Ottawa, and revised by Prof. Colette Brin. Finally, from within the Public Policy Forum, this report would not have been possible without the efforts of communications director Carl Neustaedter, himself a former journalist, senior vice-president of policy 103 Canada EN- Tm-l FAMILY For social and economicjustice LA m, IA Ivan ho? Cambridge Caisse de L'J?pc'nt at placement du Ou?hec The Canadian Journalism Foundation La Fondation pour Ie journalisme canadien Max Bell Foundation PUBLIC POLICY DES Pounouss PUBLIQUES ppfo m.ca ISBN 978-1-927009-86?4