Good morning, everyone. I'm going to call the meeting to order. We have a few people who will straggle in, but I think we need to begin.
I would like to apologize to the witnesses who have been waiting. We had a vote, and of course that delayed things.
I'm going to put it to the committee as a group to tell me if you are interested in doing an extra half an hour. We do have the ability, with Google, to stay half an hour from their end. We have this room—there's nobody else coming in—and if some of you need to leave, well, six is a quorum, so hopefully we may be able to still have a quorum here.
Is there any feeling about this? Can I get some indication that everyone thinks this is worthwhile? People have prepared, and to cut off their time is a little unfair.
Maybe we can get the whip's office to look at that.
We shall begin. This morning in our first hour we have Cogeco Media, Monsieur Martineau on video conference. We have Influence Communication, Jean-François Dumas. We have The Globe and Mail, Phillip Crawley, publisher and chief executive officer. We have Rebel Media. Mr. Levant is not here, but we do have Brian Lilley.
This is our first hour. Because of the time and because of the number of witnesses, normally you have 10 minutes, but I'm going to ask you to please make your presentation in five minutes. After that, there will be an interactive session in which there will be questions and answers, so if there are pieces in your report that you weren't able to fit in, I am sure somebody will ask you those questions and you can fill them in then.
Our first witness is Monsieur Martineau, for five minutes, please.
I would like to pass on to you some observations from 30 years of experience in radio and television, in both major and intermediate markets. I have worked in Trois-Rivières and Montreal, and I have been working here in Quebec City for five years now.
Right off the bat, let me say that, in the markets where I have worked, people had reasonably easy access to local information. Even in smaller markets, reporters are working around the clock, seven days a week. They are ready to become involved and get on the air whenever anything happens. They are also ready to work on the websites of the companies for which I have worked.
Here in Quebec City, the audience is well served with information, because we have two dailies, two television stations providing local news every day, and a dozen or so radio stations, half of which are talk radio stations. With a media presence like that, you can see that people have an embarrassment of riches when it comes to information.
It also forces some media to go the extra mile to inform people and to set themselves apart, by investing in investigative journalism, for example.
Of course, an information battle is also being fought on the Internet. Most particularly over the last two or three years, the media have made more and more effort to have an Internet presence. Sites are now being updated around the clock, seven days a week. So the public has access to information instantly.
That said, we are seeing that more and more is being asked of the reporters. With the proliferation of platforms, reporters now have to prepare stories, report live, write content for the Internet, and be active on social media.
In conclusion, in my opinion, the public has never had so many sources of information. The problem that comes with that is that the public now has to distinguish credible information sources from those that are not. Reporters too have to quickly get used to this new reality. They must handle news more and more quickly on various platforms while still keeping their rigour.
That is my presentation. I am available to answer your questions.
Madam Chair, members of the committee, thank you for this invitation today.
The comments that I am about to make in the next few minutes are based on our expertise in the last 15 years. We have conducted a lot of analysis and research and made a lot of observations on the media ecosystem. We have also conducted two studies for the Conseil provincial du secteur des communications of the Canadian Union of Public Employees on the regions as a whole and on local information in various communities.
Taken together, our observations tend to demonstrate that the amount and type of local information becomes a major social, political and economic barometer of a region. In other words, a region’s state of health is significantly expressed through its media. We often see that the more active and dynamic the media, the more economically and politically dynamic the regions.
Those involved in society, whether politicians, the public or the media, often wrongly believe that the importance of a societal phenomenon is directly proportional to its media coverage. The more the media talk about a topic, the more important it is thought to be. That is not true, but it is what people believe. As a result, we have seen over the years that regions as a whole tend to disappear in the media ecosystem.
In the last 15 years, all regions of Quebec have lost 88% of their speed and weight in Quebec’s overall media ecosystem. At the beginning of the century, about 8% of Quebec’s daily media content dealt with the regions. Today, in 2016, it is less than 1%. So content specific to a region tends to disappear. More and more, the same content appears throughout Quebec, from Gaspé to Gatineau, over the entire province. We have seen that those specifics have tended to disappear completely and the regions have tended to disappear gradually from the media ecosystem. That is what is happening in Quebec.
We have also conducted research and analysis on cultural communities elsewhere in Canada, including on francophones outside Quebec.
To give you an idea, according to Statistics Canada, francophones outside Quebec make up more than 3% of Canada’s population, but they do not make up half of 1% of the news on all Canadian issues.
Let me give you some points of comparison. In media terms, francophones outside Quebec receive coverage that is the equivalent of the horoscope in Canadian media. Expressed in terms of an average hockey game in Canada, francophones outside Quebec receive about five minutes of coverage. Essentially, in terms of the media, francophone cultural communities outside Quebec are gradually disappearing from the media ecosystem.
Let us remember what we said earlier: people believe that the more a topic is talked about, the more important it is. They believe that, when a topic is not talked about, either there is no issue or the issue is over and done with. So, like a number of communities, the regions are gradually disappearing from the media.
When we analyze in detail the media that serve local information the best, we make some fascinating discoveries. The primary medium, the one with the most influence in the media ecosystem, is generally television. Television plays a very important role in transforming and influencing the public, in changing ways or in having very short-term effects. Television generates 13% of all news in Canada on a daily basis. However, with local information, television generates only 5% of local content.
Unfortunately, television is one of the media that serves local communities least well in terms of local information. There are fewer and fewer local stations; there are fewer and fewer staff, and we see what we call the “McDonaldization” of the content, meaning that the same content is provided everywhere, in all regions.
We have even noticed that, with local information on the major national networks, there will need to be a national hook for a region to be covered. In other words, if they want to cover the Gaspé, there has to be something of interest to the people in Montreal, otherwise there will be no coverage. That serves to weaken the representation of the regions and the communities in the entire media ecosystem, both in Quebec and elsewhere in the country.
There you go.
Thank you, Madam Chair.
Thank you for the opportunity.
I have been running the Globe since 1998. I'm also co-chair of the Canadian Press and I sit on the board of Newspapers Canada and the World Association of Newspapers. Prior to coming to Canada in 1998, I was running, either as an editor or CEO, newspapers in Europe and Asia and in New Zealand. I tend to look outside of our borders for trends, patterns, and solutions.
I've read the evidence that my colleagues from the industry have presented, so I'll avoid repetition. Really, my purpose here today is just to say why The Globe and Mail is a little different to some of the other people you may have been hearing from. We're subject to the same disruption, but our response is different. The Globe is suffering the same steep decline in net print advertising revenue that others are suffering from. It's been going down at about 10% a year for the last four years. Effectively, our print ad revenue was 40% lower in 2015 than it was in 2011.
What makes the Globe different and puts us into a better position is that we've continued to invest in high-quality journalism, because we believe that if you do, readers will pay for good content, whether we deliver it via print or via a digital platform. No other paper in Canada has been able to derive significant revenue from readers paying to access content digitally. Others have tried, and failed because the content is not sufficiently compelling to command a price or sufficiently exclusive. This year our revenue from readers paying for content rose 7%, and we expect that growth to continue. Soon revenue from our subscribers, print and digital, will exceed our total advertising revenue.
Our investigative journalism wins national and international awards for both print and digital. I could list a number of examples, but I think the one most topical recently was that we did a very long, laborious investigation into what was happening to the real estate market in B.C. The B.C. government responded by introducing a foreign buyer tax, and you've seen the federal government announcing measures to cool the excesses of the market. We've also been running a lot of investigative journalism on the suicides among members of the military, which again took a lot of work. It meant one of our reporters spending 18 months combing through every death notice in Canada to find the fact that there were more than 50, because that information wasn't forthcoming from the government.
My point is that this is important work, and I think we need to make sure it continues. It takes resources and long-term commitment. Many newspapers in Canada now lack those resources or that kind of support. The difference comes down to quality of ownership. The Globe and Mail is fortunate to have an ownership that is passionate about good journalism and cares about making a difference for the better in Canada.
That ownership is Woodbridge, which is the investment arm of the Thomson family. It has three generations of rich experience in owning media here, in the U.K., and in the U.S.A. They believe in editorial independence, going back to the early days of Roy Thomson, and they enable me to hire some of the best talent around. That experience, that consistency, is very important. You can see examples in Canada where frequent ownership changes are not beneficial to the preservation of good, strong journalism.
You won't find Woodbridge asking for government handouts or subsidies, but we do like to play on a level playing field. It's not level if taxpayer dollars directed to the public broadcaster make the competition for digital ad dollars more difficult. The CBC is the Globe's largest competitor in the digital ad space amongst Canadian-based media. My colleagues and I in the industry do not support the notion that handing out more money to the CBC helps local or national newspapers.
I think it's worth looking at what's happened in the U.K. with the BBC. I invite the committee to look at the British government's white paper, which restricts the ability of the BBC to accept digital advertising on its domestic websites. Recently it has been announced that the BCC will provide £8 million to enable up to 150 journalists to cover local councils, starting next year. BBC will also make its videos available to local newspapers.
The Globe has benefited from government money in the form of digital tax credits paid out by the Province of Ontario. That has enabled us to hire staff with digital capability at the Globe in a very positive way—journalists, developers, data scientists—to help us with this rapid transition and change in consumption habits from print to digital. Unfortunately, that scheme has now been closed to newspapers, and I invite the committee to think about ways in which digital tax credits could aid that inevitable transition across Canada.
I'll go back to the level playing field for that one final point: the field is sloping unevenly if foreign-based digital companies are exempted from Canadian tax rules as they apply to advertising sales.
I want to thank you, Chair, and all the members for having me today. Some of you will know me, and to some of you I might be a new face. I've been on the Hill for the last 10 years, first as the Ottawa bureau chief for Standard Radio, which was bought out by Astral, and those stations now, of course, have been bought up by Bell.
I've been working in media—print, radio, television, and Internet—for the last 16 years. I've been in the business long enough to have started in radio when we still cut tape with razor blades, but young enough to have been early on the Internet side. I have worked for most of the major broadcasters and I still, in addition to working for the Rebel, do work for one of the major broadcasters, hosting a talk radio show on News Talk 580 CFRA, but my comments here today are directly from me and from the Rebel and do not represent CFRA or their owners, Bell Media.
Rebel.media came out of the fall of Sun News. Perhaps that experience is why my message to you will not be that we need help, or that the media industry needs help, but that the best thing you can do is create a level playing field, and mainly you can do that by getting out of the way. Sun News was a victim of an awful lot of bureaucracy and an awful lot of government mandates that were not met by the support that you would expect when the government requires certain things. I would be happy to answer questions on that.
From the fall of Sun News came the Rebel. We started in our living rooms, I and Ezra Levant, recording videos the day Sun News went down. People laughed at us, these two guys who had been on big TV shows, creating lots of controversy, starting in their living rooms. Well, almost exactly one year and nine months later, we have a staff of 25, which is small potatoes compared to some, but we've been hiring, which is rare in this industry.
We have 425,000 YouTube subscribers. When I started preparing my notes yesterday, it was 422,000. It's 425,000, and growing, today. This is more than any legacy media outlet on YouTube in Canada. It's not as much as my neighbour next door here at VICE, but it's probably the biggest of a Canadian-based media outlet, with 105 million video views to date, 100% viewer supported, and zero tax supported. We've been able to grow by providing content that the audience wants.
We've just had crews come back from a UN conference in India with the WHO. We have a crew over in Marrakesh, Morocco, for the COP conference, and we plan to do more reporting like that in addition to opinion-based commentary.
I agree with what has been said, by Mr. Crawley and by others, that you can't have a level playing field when the public broadcaster, the state broadcaster, call them what you will, has decided they want to be all things to all people. CBC has a mandate from Parliament. You and your colleagues in the House of Commons supply that mandate through the Broadcasting Act, and I will tell you emphatically that CBC has been violating the Broadcasting Act and their mandate for a long time. There is no reason on God's green earth that CBC should be running a service of digitally streaming music that competes with Apple, Google, Spotify, and every single private music radio station in this country. There is no reason they should be expanding into digital-only platforms of opinion. When people complain about that, we're told, well, they have to have a digital presence. Nobody's going to argue against that, but this isn't promoting their radio or television programs; this is creating new areas.
I reported several years ago on Radio-Canada deciding that what the Internet actually needed was more free pornography. They bought a series from France and posted it online for free. It was a little bit shocking. I think everyone knows that this is actually something that the Internet has an awful lot of, and we didn't need taxpayers' money going to it.
Good morning, Madam Chair and committee members. My name is Michael Gruzuk. I am the head of news and digital for VICE Canada. Thank you very much for including VICE as a witness here this morning.
In my remarks today, I'll talk about how VICE does tell local stories and delivers them globally in a world of expanding consumer choice.
For those who may know a small bit about us, let me tell you a little bit more. We have come a very long way since our humble beginnings as a free punk publication in the streets of Montreal, founded by Canadians Shane Smith and Suroosh Alvi. We are now the world's pre-eminent youth media company. We are a news, content, and culture hub and a leading producer of award-winning video that reaches millions of young people around the world on our unrivalled global network. Spanning the globe with production offices and editorial operations in now 35 countries, VICE reaches hundreds of millions of young people per month across all platforms, including 11 different digital channels, linear TV, mobile, and increasingly film.
In Canada we have experienced tremendous growth in the last couple of years. We now have offices in Toronto, Montreal, and Vancouver. We maintain a strong network of diverse freelancers across the country. We make hundreds of hours of original in-depth and often provocative—admittedly provocative—content focused on under-reported stories about under-represented people and places, with a firm commitment to our immersive storytelling style and, again, to diverse voices.
To say a little about news, in 2014 VICE successfully launched the digital vertical VICE News, a separate section of vice.com. It is there that we produce in-depth video and editorial content from communities here in Canada and around the world. Just this past September, we celebrated the launch of VICE Québec, our digital vertical for the Quebec market. In fact, the team there recently won two Gémeaux awards for documentaries produced in the last year. Both of their documentaries are great examples of the kind of “local goes global” storytelling that VICE is committed to and finds success with, telling stories from Montreal—or in one case a small community in the Gulf of St. Lawrence—and bringing them to a Quebec audience but also to a global audience.
Last month, we also launched VICE News Tonight, a new groundbreaking daily news show that airs on VICELAND and HBO in the United States. It's our first foray into nightly news, with a format geared towards a youth audience. Just yesterday, we launched our own Canada-specific VICE News site. This is very exciting for us, because we now offer our audience at home a VICE perspective on Canadian news, and news from a Canadian perspective.
While we currently have a major presence in such centres as Toronto, Montreal, and Ottawa, as well as Vancouver, we have spent a lot of time travelling this country in the last couple of years with a firm commitment to covering the margins geographically of this country—the north, Nunavut, Fort McMurray, and northern Manitoba as examples. Our investment in local storytelling isn't traditional bricks and mortar, but we do travel to these local communities and are committed to telling stories there. We go over to the stories that interest us and we tell them in a way that's relevant to youth in those communities. What we find is that it's very relevant to youth around the world. We can be present without being rooted in one place.
The amazing thing about VICE is that when we produce content—let's say some of our work on radicalization out of Calgary—we can translate the story to all 35 countries around the world, bringing local stories about Canadians to a global youth audience.
Our approach is quite simple, and this is the one message I want to stress today: we are platform agnostic, which means we're not beholden to formats. We speak directly to our audience, when and how they would like it. Our method allows us to connect with audiences outside of our own network and build upon this by actively leveraging social media to increase engagement. With the assistance of social media, in Canada alone VICE currently reaches an audience of more than 30 million a month.
At a time when traditional media are becoming more and more concentrated and newsrooms are shuttering and looking for strategic partnerships, we are open to this. VICE currently enters into partnerships that are symbiotic with our brand, such as those with Google, Rogers, Facebook, and Live Nation. These partnerships enable VICE to deliver content on all platforms and connect with an audience outside of our network. For example, VICE recently launched Daily VICE, a partnership with Fido. Daily VICE is a five- to eight-minute daily video feed with up to three stories covering news, content, culture. Just this past weekend, we did a lovely local story about the park across the street from where Leonard Cohen lived.
In closing, we know that the cost of producing traditional news programming is very high, one that has caused other media outlets to struggle or even shutter as a result of their inability to keep up with the changing media landscape. Our model scales these costs, such that we can produce local, national, and international news that local community and even some national programmers are experiencing difficulty with. We can help other media with their local programming needs. If those media outlets engage with VICE to produce content that is relevant for the millennial consumers in their given market, then we can share in those content endeavours.
The digital revolution has very much disrupted the media industry, but it also provides content creators with a tremendous opportunity to tell stories and distribute them beyond their own neighbourhoods. No other media company can mimic VICE's voice, but we can help others by lending our voice to local content, with a global reach that you want to reach.
Newspapers clearly came from a perspective 125 to 150 years ago. Political parties literally published lists of which were the acceptable newspapers if you were a supporter of that political party.
Mr. Crawley, your predecessor at the Globe, George Brown, was full time trying to take down Sir John A. for several decades. It wasn't the kind of mainstream or serious media that pretends to be objective you see today, or later. But now, with the disruption that's happening, you have digital outlets like the Rebel, like VICE, which I think are quite clearly speaking to a perspective.
We've heard, of course, in recent days that people are concerned that folks are living in more and more isolated bubbles of like-minded thought, and they aren't going to be exposed to different perspectives. There is a lot of suggestion that even the so-called serious media represent their own separate serious, perhaps, but same isolated bubbles of thought of like-minded people.
In our study, as we wrestle with whether the trends are a bad or a good thing, my question for Mr. Crawley, Mr. Lilley, and Mr. Gruzuk is the same. First, do you think that's necessarily a bad thing? Second, is there anything we can do about it, if you think it's a bad thing? And third, is there anything we should do about it?
What should they be doing? Well, they should be sold off. I've written a book on that. I can tell you the history of why they were never actually needed. We could have that debate.
Given that this won't happen, I won't flog that dead horse, I'll just say: stick to their knitting. They have a mandate from Parliament. You have given them a mandate, and they keep coming to Parliament, regardless of who's in power, saying, we don't have enough money to fulfill our mandate. Great, then why are you running the music streaming service? That should be shut down. Why are they going into markets like Hamilton, London, and Kelowna, with very strong local media presence, local ownership in some cases, and setting up digital-only shops, that don't broadcast over the airwaves, that are going to compete? That is puzzling to me. That should be shut down. I think it's incumbent upon Parliament to tell them, you've received more money, now do what you're requested of by Parliament and stop breaking out into different areas.
Referring back to Mr. Gruzuk's words, he was saying that he was bringing VICE teams to small regions, bringing their stories to the world.
It is just as you said, Mr. Dumas. Actually, that is how the national media treat the region. They will cover a regional event if it is of interest for the major regions. In this sense, that's fine. For example, when I am listening to Salut Bonjour in the morning and I find out that such and such an event happened in Chicoutimi or Gaspé, it's fine.
However, the question is about local news for local people. When VICE does it, it is fine. It gives exposure to the regional reality. That is very important, but there is no local news, communication no longer takes place on the steps of the church. Have you noticed that?
You mentioned a number of really revealing statistics. Could you give them to us again and, if possible, send them to us in writing?
Along somewhat the same lines, if we were talking about Canadian cultural content in our media, we would be pleased if the Observatoire de la culture et des communications du Québec, for example, could provide us with a simple statement to explain that average customers do not want to buy culture today, but they do want to have access to culture, with nothing more to pay after buying a huge TV with lots of wires at the back.
Could you repeat those figures of yours?
Let me ask you another question.
We have been talking about all this for several weeks, and there is an idea floating around in the room that the market may be overvalued. It seems that those who buy advertising for agencies and for customers are overvaluing the market, the social network, the content aggregators, and the Internet. Are you able to help us see that clearly?
I can well believe that there is less advertising, as Mr. Crawley said. However, if a full-page ad for a new Lexus appeared in The Globe and Mail, it could well influence me.
Could this be an area that is not measured as much? Could it be that we are paying too much attention to the novelty?
Let me give you a very striking example. In September and October this year, there was $600,000 less in radio advertising in Quebec City than last year. That involves a dozen or so radio stations. Is that a question of the economic climate? Will the situation be the same in the coming months or is it simply temporary? I do not know.
You are asking me an extremely broad question and my answer is simply that it is all about the survival of the fittest. Unfortunately, the others will disappear.
You also brought up that station in Granby that, in a way, can be called a community station. I believe that the model really is a good solution for smaller communities. My younger son works for one of those stations in a small market, in Joliette, actually. In that case too, the station works extremely well. Ratings are very good. The station broadcasts local information. I think that, in small communities, it has a lot going for it.
As for the future of radio, I think the situation is going to be favourable as long as conventional radio can be received in cars. However, when Internet radio appears in cars, which should not be long, we will have to ask the question again.
Madam Chair, you used the more authentic pronunciation of my name. I am Québécois by heritage. I can only apologize, however, that my facility with French is not good enough for today's hearing.
I'm vice-president of news at Google. I oversee all of our Google news products in our different consumer experiences as well as our publisher partnerships.
At the beginning of my career in the 1970s, I worked for the Public Broadcasting Service, PBS, under Hartford Gunn, its visionary founder and president. There I was involved in several pioneering technology efforts, including the creation of the PBS satellite network and building the first interactive information service using broadcast teletext.
Along the way, Hartford taught me a key lesson that has guided my career and that I believe is particularly relevant to our discussion today. He said:
||Richard, if you want to influence the evolution of media, focus on the technology. Technology changes the rules of the game. It reconfigures the playing field. If we can stay on the cutting edge of technology, and apply that technology to good and proper use, we can have an enormous impact on what we do and what we achieve with media.
Given the extraordinary changes in the last 25 years, Hartford's guidance seems prescient to the point of being obvious, and is largely why we are sitting here discussing the future of local news today. The ubiquity of the Internet has changed the business of everything.
Media is at the forefront of this change. People are consuming more news and information than ever before, and more content is being produced than ever before. The open ecosystem of the web has enabled many new voices, from news sites to job-listing sites to Wikipedia, from a million blogs to a billion social posts. It has also enabled traditional media, like The Globe and Mail and the Toronto Star, to reach global audiences.
The Internet has brought great value to users around the world. It has brought impressive new opportunities for expression and commerce. It has also brought challenges to businesses and media companies born in the pre-Internet era that now must adjust their products and strategies to the new and different opportunities of this new digital world.
Google has had the good fortune to develop popular products based on the open web. Throughout the day, Google Search is used to seek the right answer to queries in the web's one-billion-website corpus of expression. Google sends billions of users to news publisher websites every month. Google's ad platforms are used by millions of publishers, large and small, to help drive revenue and grow their businesses. Google is a company born of the web and is fiercely dedicated to maintaining the web's openness, richness, and diversity.
We believe that Google and publishers share a common cause. We both value and depend on an open platform for free expression and knowledge. We both want to connect people to information. But the open Internet challenges us and our understanding of the economics of information. Take the example of a large city newspaper in the United States in the 1990s, a two- to five-pound bundle of newsprint with a tremendous value proposition to its readers: local and national news, a fashion section, a lifestyle section, an automotive section, and classifieds. In 2016 every section of that newspaper is faced with the competition of a rich array of web-based offerings in each and every category.
With more than 75,000 sources in Google News, for instance, including almost 2,000 Canadian sources, of which about one third are French, local news remains a market differentiator. The local section in Google News surfaces content from regional newspapers to hyper-local blogs that otherwise wouldn't appear. Google News includes a “local source” tag to showcase local coverage of major stories, coverage that's relevant to those local communities.
But what is the business model? We need to unlock new revenue streams and new business models. In Halifax, there is the example of Local Xpress, a news site founded by the journalists of The Chronicle Herald who've been out on strike since January. The site is dedicated to local news. In under a year it has grown tenfold, achieving a peak of 300,000 page views per week. It uses free collaborative tools like Google docs, and is monetizing and growing its news offering. Born out of labour strife, the managing editor now describes Local Xpress as one of the most future-forward enterprises in the Canadian media landscape.
Google is committed to helping publishers succeed. The future of Google and the future of news go hand in hand. We want publishers to grow their businesses and be able to succeed on their own terms. We have developed our entire business on creating value in the ecosystem for publishers. We do this by driving revenue. Globally, we shared more than $10 billion with our publishing partners on display advertising revenue of $15 billion. That's roughly 70% of the revenue directly into the pockets of publishers. We lead and support publishers through initiatives that tackle key issues addressing the industry, like mobile latency and ad blocking.
It was those two issues that led Google and three dozen publishers from around the globe, as well as technology providers, to develop a collaborative effort called the accelerated mobile pages project, or AMP. Research shows that 53% of users abandon a site if it takes longer than three seconds to load. The web today is not instantaneous, and it needs to be. Advertising on the web is too often not respectful of the user's experience, and it needs to be. On average, AMP pages load in less than a second. We've seen AMP adopted by Canadian news organizations and 700,000 domains around the world. We're only a year into this effort, but Canadian publishers are sharing data of increased audience loyalty, and we're seeing strong indications of how AMP can grow revenue.
The digital revolution has changed how we communicate, how we express ourselves, how we learn about the world around us. Yes, there are challenges, but I and my colleagues in the room today are passionately optimistic about the future of news. There are so many new tools and capabilities to take advantage of. There is so much impressive digital work being done that one can easily conclude, as I have, that we are in the early days of a renaissance of journalistic creativity.
Let me conclude by saying that I am eager, Google is eager, to continue to collaborate, to work together, to drive innovation and the experimentation that is so important to building long-term success.
I thank you for the opportunity to speak to you today, and I'm happy to answer your questions.
Thank you very much, Richard. Thank you for taking the time to be here. It was really felt to be important by the committee that Google be represented here. With much of the ground we've covered, all roads seemed to lead to you, and to Facebook particularly.
To set the stage, of course—these are things that you know but others may not be aware of—Alphabet, Google's parent company, is now the world's largest media owner, and increasing. It is 136% bigger than Disney, which is second, and bigger than Disney and Comcast in third combined. As well, 12% of all global media spend is through Google and Facebook. So it's a lot of money. That seems to be the issue for many of the newspaper owners, even the ones who appeared here only a few moments ago.
I guess this is what we're trying to get our heads around. What's interesting is that this is not a Canadian problem, per se. America is unique in very many circumstances. However, when we compare ourselves more accurately to countries in Europe, Australia, or New Zealand, we see very common things coming from their parliaments as well.
A report just came out the other day from the Media Reform Coalition and National Union of Journalists. They want to make Google and Facebook fund public service reporting in Britain. They said:
|| ...Google and Facebook are not only amassing eye-watering profits and paying minimal tax in the UK, they are also bleeding the newspaper industry dry by sucking up advertising revenue. As national and local newspapers try to cut their way out of trouble by slashing editorial budgets and shedding staff, journalistic quality is becoming a casualty. Public interest journalism in particular has been hit the hardest as newspapers are being lured into a clickbait culture which favours the sensational and the trivial.
I can tell you, as a national reporter, I was often brought into clickbait and the need for that in order to maintain eyeballs on the more serious matters that might be on our program.
The report went on:
||In the light of this, we propose a 1% levy on the operations of the largest digital intermediaries with the resulting funds redistributed to non-profit ventures with a mandate to produce original local or investigative news reporting.
I have no idea; I'm reading this out loud, and I have no idea if that's the answer. Whenever I see “1% levy”, I don't necessarily think that's a good thing, but I do have to ask you that question. As you said, and it seems we're at this turning point, we're at a renaissance of journalistic creativity.
On the other hand, David Simon, the creator of The Wire, when he appeared before Congress on this issue, said we are heading towards a golden age of political corruption because there are no small newspapers covering municipal politics where decisions are made on property, where decisions are made on development. That's his big concern.
Help me, in the limited time we have here, to square that circle. I also would really appreciate it if you could tell me—I mean, this is stuff you've heard before—what answers or what agreements you have come to with other jurisdictions, the European Union and otherwise.
I will gladly. That's what I want to do. The point I want to make is that what's ever so important today is that publishers, as they evolve their products, look at how they can create products that obviously not only have relevance to their users, but can create new advertising forms that have relevance to advertisers as well. For instance, The New York Times
has engaged deeply in what they call “native advertising”. It's now 30% of their ad revenue and growing. There are new approaches, so I do think we should make sure to recognize that on the advertising forefront, things are still evolving.
We're also beginning to see areas where there is success, not just with advertising revenue but subscription revenue. I'll point out an example, for instance, in Paris. Edwy Plenel, the former editor-in-chief of Le Monde, eight years ago started an organization called Mediapart. It's very clearly focused on hard news and investigative journalism. It has a paywall. It now has 120,000 subscribers paying 10 euros a month, with 40 journalists, and they're profitable. The landscape does show how things can succeed.
Now, how can Google help? As I mentioned, there are many areas where we're engaging today and will continue to engage. That whole AMP project was largely about how to make that web ecosystem work, from an engagement as well as an advertising perspective. Clickbait ads don't work. How do we have better ads? How do we make sure that people aren't adopting ad blockers?
We still provide many areas of technology to help enable these ventures and existing legacy publishers to take advantage of new technologies to do new and interesting things. Data journalism, for instance, I think has immense potential in terms of helping our communities understand the realities of their communities and what issues are important.
I think there are many, many ways that we can approach this. As I mentioned, we're extremely focused on how we collaborate with the publishing community around the world to address these issues.
Thank you very much for your intervention, Mr. Gingras. I'm trying to square some of the comments that have been made today versus my local reality. That's what I guess all human beings try to do. I was talking to my colleague who represents a riding just to the south of me, and my local reality is that there has been a destruction of purely local media outlets. First they were bought out by larger agglomerations. Then they just lost readership or viewership or what have you. But what's happened—at least in my experience, and Alex Nuttall has had the same experience—is that there's been this blossoming of local content by local people who see an opportunity. In my case, local newspapers were bought out by Metroland. Then there was a general consensus that they weren't really doing as good a job on the local news as the previous local independent newspapers were, so what crops up are either rival newspapers or, more recently, purely online offerings, which is the case of the Doppler in Huntsville, Ontario. In the case of radio, you have community radio that has stepped in with a lot of local programming.
Mr. O'Regan and I just have different experiences in this, perhaps. What I've seen is actually a blossoming, using the technology—Google is a good case in point—to express local news and to hold local politicians to account. That has actually blossomed in the last few years rather than the reverse.
I just wanted to get Google's take on this. You have a worldwide perspective and I have my local perspective. Maybe this would help animate the discussion.
Here in Canada, there are some interesting examples that I think are worth pointing out.
My name, by the way, is Aaron Brindle. I'm on the public affairs team for Google Canada. Most of my work with publishers is actually on the editorial side. I've had a chance to work with local and national newsrooms across the country. I'm also a former journalist. I was at CBC for ten years as a senior producer on The Current.
There are interesting examples. We talked about Local Xpress, but Local Xpress actually leaned on an organization called Village Media, which is out of Sault Ste. Marie. They've become something like the Shopify of local news, where they're working with small markets where there has been disruption, where scarcity has become an issue, and they're helping digital news offerings step in to fill that market demand. They started with a news site called Soo Today. It's amazing. Today they have 80,000 unique visits from 40,000 unique users, and they've replicated this model in Sault Ste. Marie, North Bay, Timmins, Barrie, Guelph. There are really interesting examples at the local level. Then you obviously also have the iPolitics and the Canada Lands. I know that The Tyee has been mentioned. I think they spoke here.
So there's an interesting mix of great Canadian examples stepping in to fill that scarcity.
Thank you for bringing that up, Aaron.
It was interesting when Metroland and Postmedia started to consolidate some of the smaller newsprint organizations. Local members of the community who were interested in local media started their own print media. In my riding, for instance, we have the North Simcoe media. We also have the Springwater News. There's even one that's just for Elmvale, which is about 2,000 people. They're constantly providing information on what's happening at local councils. Barrie Today is the online one that Aaron just mentioned.
My question to Google is that when these start-ups happen, do you see it spreading quickly? I mean, you would have some sort of analytics to tell you. Or is there a long process in place for these new start-up local news organizations to be able to hit a level of sustainability?
First of all, Google News and Google Search are products that in many regards are just about that, about diversity.
Google News, for instance, when it was founded in the aftermath of 9/11, was created by one of our engineers whose objective was this: how can I get a sense of how people are talking and reporting about this incident, not just from a local news organization or a national news organization in the United States, but what are they saying in Jerusalem; what are they saying in Egypt; how can we find, again, more diverse points of view; how can we bring more knowledge and information from more sources into the mix?
That's really our driving mission with those products, and it continues to be. Again, our objective is how do we enable further innovation? I think we all do recognize, which is why we're here, that the world has changed. The ecosystem has changed. Our society has changed. News organizations, for that matter, also have to change to understand what kinds of products they need to build to serve their role as the fourth estate in democracies. It's not the same as it was 40 years ago.
Yes. This is why I'm asking you. Take the fact that your name—Richard Gingras—is French, and we have to pronounce it the English way: that in itself talks about it. In Quebec all the media were built as an ecosystem to make sure that there was still space for that diversity. Even new trade deals like CETA in their first paragraphs specify that these trade deals have to be compliant with the Coalition pour la diversité culturelle, with UNESCO. Isn't it, to such a big player as you, to be part of this, to make sure that you can actually maintain it...? I understand that you're talking about the diversity of point of view. But we're also talking about the protection of self-diminishing, or perhaps “self-evaporating”, content in this global world.
I had the chance to go with Jason Kee, I think, or with some people from Google to visit your office in Montreal. I was there, with you, at the PBI, at the top of Place Ville Marie, when you gave that interview to Ms. Lapierre from Radio-Canada. It's great to see your approach to journalism and to its future. But the reality in some systems—for example, in a small French community in Manitoba—is, well, what do we do to survive?
Can you play a role? Can you sponsor local activities? Are there Google special projects that would bring back the owner's company name, Alphabet, to some meaning in a small community, or do you have to do it broadly all the time?
Our core view is that the way forward is more through innovation, technology, product developments, and developing new and innovative sustainable business models than cross-subsidization. There are a number of reasons for this, largely based on the fact that creating subsidies is not sustainable in the long run. It tends to build in a dependence upon the subsidy and doesn't necessarily spur the kind of innovation that you're looking for to actually have sustainable models.
The big challenge that everyone's facing right now is essentially the disruption. You had an entire industry built around certain preconditions—they were geographically limited, they essentially had control of production and distribution, and they were the ones who had control of the audience. The Internet changed that, by virtue of the fact that anyone can get information anywhere they want. A lot of the core-value propositions that newspapers used to offer, not just advertising but also classifieds, have been disrupted. Craigslist and Kijiji were great disrupters, and this all pulled that bundle of value apart. Now it is the newspapers that are trying to figure out how they can adapt to the age. At the same time, they are effectively encumbered by legacy costs driven by the print business.
Where you're seeing the real innovation is on the pure digital players, the guys who are emerging from local communities who aren't coming from that space. They are not encumbered by those costs, and they can actually leverage the digital tools. This means they can produce at very low cost, except for their time, sweat, and tears.
Yes, we do pay federal taxes. We don't typically disclose sensitive financial information like that.
On the question of the GST, which Mr. Nantel flagged, I'll quickly explain that it's a function of the structure of the tax. GST, remember, is a tax on consumers. It's payable by consumers, not by Google, by a retailer, by whoever. CRA has rules. In the case where you're serving services from outside of the country, you're not required to register, collect, or remit GST. In that case, it belongs to the end consumer, who has the obligation to report it and then to remit. This is why we said that for some services, they will charge it, and for other services, they don't. It depends on the specific context.
If this is something that the committee is contemplating changing—this is not the first circumstance where I've heard this, and Netflix tends to come up frequently as well—the main thing you need to consider is what the implications are. It's one thing for Google, or Netflix, or whatever, but if you think about the challenge that you may be creating for every single small enterprise existing on the Internet that wants to serve the Canadian market being required to register for GST, collect GST, and remit GST, that's going to be a challenge for them, and it may result in smaller services not being being able to break into the market. It actually hurts them more than it hurts us.
Specifically, no. The global average is around 70%. The details depend a lot on the specific arrangements. We have specific arrangements with particular publishers, and other ones with others, which is why it's hard to put a dollar figure. We also don't break out our financials on a country-by-country basis, so I couldn't break that out. I do know it's fairly considerable. It also depends on how the individual publisher, news or otherwise, wants to structure their business.
The other thing, which I don't necessarily think has been conveyed to you during the course of these proceedings, is that the digital ad ecosystem is extremely complex. It isn't just a world of a buyer and a seller, or an advertiser and a publisher. There is an array of entities that exist in between those two in terms of a digital ad ecosystem. That includes the ad networks, which essentially aggregate and sell the advertising throughout an entire network of publishers, instead of to a single one. It includes ad exchanges, where there is actually real-time bidding on ad impressions, so it's extremely efficient. There are also demand-side and supply-side platforms that help manage this, just amongst a few. I remember one advertising executive say that when you're making an ad buy, you are not just buying the media; you are buying data. You are actually buying 3,800 companies that are providing a variety of value-added services in the ecosystem, which is what makes this very complex.
Each individual publisher will manage their own ads in different kinds of ways. In some cases they'll utilize our services; in some cases they'll go it alone. It depends on whether they have a sales team or not.
I do not have statistics in terms of consumption by gender, but as I mentioned earlier, I think it's very important for those working in the media space, in the news space, to understand their audiences. One effort that we instigated, along with a university in the United States, is something called the Trust Project. It's a global effort. It's not a Google project. It was to start a conversation in the industry about how one rethinks the journalistic model to build trust and credibility.
From research we've seen there, one thing that's clear is that to attain a sense of trust and credibility, audiences are looking for some affinity with the news organization as well. So as you might expect, women are more comfortable when they see a news organization that's, say, not all men, and you might find the reverse as well. I think these are important dynamics as we work these things out going forward.
As I said, how do we, and how do news publishers, get a better understanding of the audiences, get a better understanding of how to connect with those audiences, to make journalism as effective as it can be to allow quality journalistic content to get the credibility it deserves?