Canadian government exempts Google from Online News Act, signaling a potential end to the link tax idea in North America.
The controversial link tax, which aimed to regulate online news and require platforms like Google and Meta to pay news publishers for displaying their links, may be losing traction in North America. The Canadian government recently reached an agreement with Google, exempting the tech giant from the Online News Act and allowing it to continue linking to Canadian news websites. This development, coupled with Meta’s withdrawal of news from Canada earlier this year, raises questions about the future of the link tax in the region.
The Impact of Canada’s Decision on Local Press Woes in California
Next week, California State Senate judiciary chair Tom Umberg will lead a hearing on the state’s local press challenges. The discussion will include the California Journalism Preservation Act (CPJA), which proposes a link tax similar to Canada’s Online News Act. The fate of this bill could have significant implications for the local news landscape across the United States. If the CPJA passes unchanged, it may strengthen the reemerging federal Journalism Competition and Preservation Act (JCPA) or encourage other states to follow suit.
Flaws in the Allocation of Payment Formulas
Both the Canadian law and the CPJA bill favor larger publishers over smaller ones and prioritize broadcasters over print and digital media. These payment allocation formulas fail to differentiate adequately between different types of content, such as national vs. local news, human-created vs. AI-generated content, and clickbait vs. quality reporting. The flawed approach of using news links as a basis for determining payment amounts has led to confusion and unintended consequences, prompting the Canadian government to reconsider its stance.
Unintended Consequences for Local Publishers
Jeff Elgie, a Canadian news entrepreneur, has built a network of 21 local news sites in response to the decline of local press in his country. While he stood to receive some financial support under the Online News Act, Elgie now criticizes the legislation, echoing the concerns of many other publishers. The unintended consequences of the link tax have led to uncertainty and halted the expansion of Elgie’s company. The loss of Google links, in particular, poses a significant threat to publishers, as Google and Facebook combined account for up to 80% of their traffic.
The Importance of Google and Facebook for the Publishing Industry
Elgie emphasizes that losing Google and Facebook as traffic sources would devastate the entire publishing industry. These platforms play a crucial role in reaching audiences and generating ad revenue. Without them, publishers struggle to attract new subscribers or members, endangering the sustainability of the industry as a whole.
A Chance for California to Take a Different Path
California has an opportunity to learn from Canada’s experience and take a different approach. Any legislation or agreement should prioritize increasing the production of original local news reporting. This can be achieved through a combination of platform payments, tax credits for hiring local journalists, and state-funded advertising set-asides for local media outlets. By focusing on supporting local newsrooms and ensuring funds are allocated appropriately, California can set an example for the rest of the country.
Conclusion:
As the Canadian government exempts Google from the Online News Act, the link tax idea may be losing momentum in North America. The impact of this decision will be closely observed in California, where the fate of the California Journalism Preservation Act is being debated. By prioritizing the production of original local news reporting and allocating funds to support local newsrooms, policymakers have the opportunity to ensure the sustainability of the industry and meet the information needs of their communities.
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