Ecommerce Law Expert Warns ‘Link Tax’ Could Harm, Not Help Publishers



Representatives of the Canadian news media industry are pushing for federal Liberals to allow media outlets to charge license fees to websites that link to their work, though a copyright expert says it could do more harm than good.

John Hinds, CEO of industry association News Media Canada, said he was excited to see a so-called “link tax” included in legislation expected to be introduced by the government this fall. and which would amend the Copyright Act.

“If you want a sustainable media industry, you have to create the market conditions where it will happen and the [link tax] is one of the ways to do that, ”he told iPolitics.

HALL WRAP: News Media Canada Lobbying on Compensation Rights

Erin Finlay of Stohn Hay Cafazzo Dembroski Richmond LLP signed up last week for News Media Canada to lobby for copyright and remuneration rights for news media in the Copyright Act .

Heritage Minister Stephen Guilbeault said the Liberal government was looking for ways to ensure big tech companies – such as industry superpowers like Google and Facebook – pay their “fair share” when they profit. content created by Canadian media companies.

However, Michael Geist, a law professor at the University of Ottawa, said a link tax rule could further hurt the news media industry if tech companies like Google and Facebook change their policies. to refuse the sharing of links, in turn diverting valuable page visits. away from publishers.

“If implemented, it is quite possible, if not likely, that the [link tax] is actually going to hurt the industry, not help it, ”he said in an interview with iPolitics.

At BWorld media festival anff in June, Guilbeault said he is mmonitoring developments in France and Australia, two countries that are implementing a similarly-linked tax policy, and which he had previously spoken to his counterpart in France and planned to consult with Australian officials. He also said a bill to amend the Copyright Act could be tabled as early as this fall.

Camille Gagné-Raynauld, press secretary to Minister Guilbeault, said in an email that the minister is currently reviewing models adopted in other countries on remuneration for information content and will come back with new proposals in due course.

A comprehensive review of the Copyright Act was completed in June last year by the House Industry Committee, with the body making 36 recommendations – none of them advised to put in place a bonding tax. If the fiscal nexus policy were adopted, royalties would be collected and distributed directly to the media, at rates established by a Copyright Board. The federal government would not collect any of the money.

Geist, who also holds a Canada Research Chair in Internet and E-Commerce Law, said Google and Facebook are more likely to replace an article written by a Canadian news company with one written by a publisher in another country free of charge, if the rule is legislated. For example, he noted in a blog post that Google responded to a new law on links and article summaries in France by removing article summaries and providing only a link, to which the French competition regulator responded by ordering Google to negotiate a link license.

Additionally, Geist said the news content was not financially important, pointing to an argument made by Facebook in Australia when creating the policy. The social media giant argued that between posts on personal photos and news, a link to a news article didn’t mean much from a financial standpoint. Facebook is in the midst of a row with the federal regulator that it doesn’t earn much from links, but sent over two billion clicks to Australian publishers in the first five months of 2020 – benefiting hundreds of millions of dollars for these media companies.

“This idea that Facebook or Google is enriching itself with this content is just not the case,” Geist said.

And while content may not represent a big financial margin for social media giants, news agencies can benefit from the number of times their links are shared and their articles opened. The more website traffic a post has, the more it can charge for advertising on its sites. They also have an interest in receiving more subscribers through sharing their articles.

For media editors who think they are not benefiting from it, Geist said, the option to opt out of link sharing already exists. He said they could choose not to index their content on a search program and Google would stop connecting to it.

“If this is hurting the industry and they don’t want the links, there is a ready-made solution,” he said.

Hinds said the exact method of compensation is an issue they hope to discuss with the government, but noted that the revenues from a link tax could be significant to the Canadian media industry, with the Australian media industry potentially raising between $ 600 million and $ 1 billion from its new tax.

INFORMATION SHEET: Federal Government Pledges $ 600 Million In Incentives To Canadian News Organizations

News media Canada has made its voice heard in demand for government assistance to support the country’s struggling news media, which have had to contend with a sharp drop in advertising revenues. A report of Statistical found that the newspaper industry’s advertising revenue was $ 3.43 billion in 2003, but had more than halved to $ 1.63 billion in 2018, and publishers suffered a further blow from the COVID-19 pandemic.

Geist said Guilbeault could view the policy as a way to support the media sector without public funds after the minister announced last month that the government should not fund Canadian media. Guilbeault also said the federal government has only rolled out measures to support the media sector in recent years due to the crisis facing the industry.

Geist called the minister’s new stance “shocking,” saying Guilbeault has spent most of his tenure as minister advocating for new federal programs to support the sector. In addition, Geist said the minister should follow through on his commitments to implement measures like the Journalistic Labor Tax Credit, which allows qualified Canadian journalistic organizations to claim a 25% refundable tax credit on the salaries or wages of eligible newsroom employees for periods beginning on or after January 1, 2019, and a digital news subscription tax credit.

These programs, along with a new policy that allows nonprofit news organizations to apply for charitable status, were announced by the federal government in 2018 at a cost of $ 595 million, but supporters industry say problems in the way the legislation was drafted prevented the money from being distributed.

READ MORE: News Media Industry Problems Intensify During COVID-19 Pandemic

“I think the starting point is to follow through on the commitments that [the federal government] done, ”Geist said.

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