Canadian Heritage Committee on Sept. 27th, 2016

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Then there's the monopoly situation of Alphabet, the owner of Google. Their business model is that they have cut off the oxygen to the advertising market for the system we were working with. Are you under the impression that there is some international response to this? I'm thinking about the cultural diversity coalitions. We may not be talking necessarily about a culture product, but we're talking about specific information related to some geography. I keep having this impression that Google has it easy now.

[Dr. Robert Picard]

Any large firm that has an oligopoly or a monopoly is going to find that, and you certainly have it today, because for the gateways and the distribution platforms we now have, there are about three or four major players there and they set the terms for doing business with them. Efforts to start other kinds of gateways are under way, and we may see those change in the future, those strengths that are there.

The important thing in terms of public policy, I think, is to ensure that gateways and aggregators, and networks and others, are not discriminating in one form or another against other [Inaudible—Editor]

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

There's a neutrality to preserve.

[Dr. Robert Picard]

It's that discrimination that becomes the real problem. Certainly, they can set their prices, and they are price-setters at the moment. The price is about 30% of everything that moves through and then on advertising about 70%. It is a huge issue.

It is somewhat of a misnomer, however, to say that these major players in the digital environment took all the advertising out of newspapers. That is not true. Most of the advertising that is going into the digital environment is a different kind of advertising than was ever in the newspaper. By having online activities, where you can now have classified advertising and other such things for free, you've just destroyed the print media—

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

That's true. You're right.

[Dr. Robert Picard]

—because the product is no longer needed. That's what has really hurt them. That's what has really hurt the major advertising.

[Pierre Nantel, NDP, Longueuil—Saint-Hubert, QC]

Mr. Picard, allow me to be a little chauvinistic and let you know about La Presse, because I hope you have the chance to see this new model, where advertising actually is more exciting than ever within the news format.

I think I'm done.

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Nantel.

Now, for the Liberals, I'll go to Ms. Dabrusin.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Thank you, Mr. Picard.

You've seen many different models when you've looked at different jurisdictions. We've talked a lot about what we should do. Having looked at what's happened in other jurisdictions, can you can tell us some of the pitfalls we should be avoiding or any things that we should not do when we're looking at this?

[Dr. Robert Picard]

The first thing is, don't try to import a model that you see someplace else. Every country is so different in culture and politics and in what can be effective that you have to fashion your own. What works best is that you make it easier for people to start new enterprises in news, and you make it so that existing enterprises can better transition to the digital news. Those two are absolutely critical and go hand in hand. It takes care of issues where monopolies might exist, and it takes care of people, particularly in local communities, as a lot of publishers do not have the wherewithal to do something.

If you have the Toronto Star wanting to start a digital operation, it can put millions into it. If a small local daily, a community newspaper, puts $10,000 into it, it's a huge investment for them. To somehow create platforms, networks, or software that is easy for them to use to go into local news provision in a digital way is really important, so that they can start transitioning and providing better local community news.

Also, because of the economics of the news industry today, even though daily newspapers are still making money and some of the local radio operations are making money, finding ways to incentivize them to hire new local journalists is really important. We've seen that working in some countries.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Do you have any models for how we incentivize hiring new local journalists?

[Dr. Robert Picard]

The ones that are being used most now are tax credits. They have specific descriptions of the kind of work those journalists have to do. They won't allow them to cover national sports, necessarily, or to cover food beats or something like that. They want them covering government or community services or something of that sort. When you have that kind of specificity, you know that it's going to deal with the local news needs.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Let's move into something that goes all the way back to the start of this study, when I was talking about how there was a bit of a controversy with BuzzFeed. There was a call for reporters and it was specific call for diversity—essentially, not white men.

I'm curious. When we're going forward and looking at this digital shift, and when we're looking at promoting start-ups, how do we ensure a diversity of voices?

[Dr. Robert Picard]

Diversity of voices is always an issue. The gender issue is not going to be as strong in the future as it has been in the past, primarily because of who is in journalism schools today. Quite frankly, the majority of students in most journalism schools today are women, so that's shifting along the way.

Efforts can be made, even in digital start-ups and others, to say that we will give tax credits, for instance, if you hire persons of diverse backgrounds and from minority communities. They could be given subsidies or credits to do so and could make that work. Of course, it's a lot easier in broadcasting to put requirements on the staffing and others, because you can put those in as a condition of the licensing of broadcast operations.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

Have you seen any of those types of tax credits in operation anywhere else in other jurisdictions?

[Dr. Robert Picard]

I've seen tax credits doing that. I've seen start-up loan funds being used to do that.

The Netherlands has been very creative in the use of media loan funds to start up minority and other media to try to deal with some of the diversity issues and to deal with existing newspapers or broadcasters who want to increase their ability to deal with those communities.

[Julie Dabrusin, Liberal, Toronto—Danforth, ON]

We've talked a fair bit about start-up funding. You mentioned that several times. You've mentioned not only focusing on start-up funding, but also looking at making sure that some of the traditional media is also kept vibrant.

What are your best ideas for how to form that start-up funding? What I mean is, we heard a bit when we were listening to the The Tyee witnesses about becoming more platform-agnostic and supporting local reporting as opposed to certain types of institutions. Do you have any other ideas along those lines?

[Dr. Robert Picard]

I'd say start-up funding, and there are different ways to think about it. Part of it is start-up training, specifically for people who are going to do local journalism.

The other is setting up mechanisms they can use, off-the-shelf kinds of technologies, to run locally. That could be done through a grant or funding that would be available to anybody anywhere in Canada, for instance, and maybe even sold abroad.

On start-up funding, if you're actually going to go into the venture funding of starting an organization, that becomes very different, because you have to start dealing with grants. You have to start dealing with some sort of granting agencies to deal with that. It can be done, and it can be done in a way such that it is not discriminatory. It often has to be done with funding through mechanisms where the funding board is completely non-partisan. That has been done. It has worked in other locales. It can be done.

It can also be done by linking to local community organizations that are already there, for example by asking the local university or college, or maybe even some high schools, if they could start a local news site and get it running and telling them that you'll give them some money to get the software they need to do that, to buy the site, and to do things that need to happen.

There are many ways you can do that, but it doesn't take a great deal of money to start up a local digital operation, because you often start with only two to five employees, with everybody else working part-time or contributing their efforts.

[The Chair, Liberal, Hedy Fry]

Thank you very much.

We've finished this round. We have time for a second five-minute round, which is what we always hoped we'd be able to do.

We will begin with Mr. Maguire from the Conservatives, for five minutes.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you, Madam Chair.

Thank you, Dr. Picard, for your presentation.

There were a couple of things that you commented on earlier. One was that we're in an age of transformation. Another was that we were protected from competition for far too long, and last, news is not a commercially viable product.

That's not earth-shattering news for this committee, but can you expand on where you see it going even now and also in the future? You've talked about the next 10 years. Many who have come before us said that one of the big changes is that people aren't even subscribing to cable anymore for news and information.

Can you talk about other media mechanisms and the philanthropic rules? I don't know if you're familiar with them, but we just had a presentation saying that the philanthropic rules in Canada need to be changed and opened up some. Could I have your comments on that?

[Dr. Robert Picard]

What we're moving into is an age in which people get information in very different ways than they used to. We used to get up in the morning or come home in the evening from work, sit down with our newspaper, and work through all 34 or 56 pages of whatever was there. I still do it every morning; I fight my wife for the papers. About a quarter of the population in most communities is doing that, and others are getting their information from television news, but the days of sitting down and watching the half-hour television newscast are disappearing along the way.

What we're getting are bits and pieces of news delivered to us through our social media sites and through news alerts on our phones. We're getting them on buses. We're getting them on the sides of buildings. If something interests us, we go to it. If our friends that there's something local that we need to look at, we look at it through our social media.

That is ultimately changing how news has to be distributed and the funding of that news. The problem is that somebody has to create that news to begin with. That's where all of this changing environment is creating the bottleneck: it's who creates that news to begin with. The national news isn't a problem and the international news isn't a problem, because there are enough sources doing it that we can get it through them. The problem is provincial and, really, local news. Large cities can take care of themselves. They would like to have help doing it, but where help is really needed is in the smaller communities.

How do we do that? What we see now is that, more and more, even those in the smaller communities in many countries are having to seek multiple sources of funding for local news. For the past 25 to 50 years, they have basically relied on advertising, which in North America provided 75% to 85% of the income. In Europe, it was about 60% of the income. The rest came from circulation sales.

What we're going back to is a day when news organizations have to have other sources. We see some doing events along the way. Some are getting grants to get support. Some are engaging in other kinds of commercial activities, such as providing advertising, ongoing services, and other such things to try to spread the revenue sources that they have.

That actually looks much more like the way newspapers and media operated 100 years ago, when the local printer in town printed everything from church bulletins to books and others things. That's what they used to fund the newspapers along the way. That's kind of where we're moving now in terms of funding local news. That becomes I think an important part of where things are going: to find multiple sources of revenue. I think we'll see that occurring much more.

On the issue of not-for-profit, yes, not-for-profit is one mechanism. It is not the mechanism that will work, or the only mechanism, but it is one mechanism that can work and can add to the mix to make things work. It also creates secondary sources of news, so that local communities are not dependent on only one. What we do know is that when there is more than one source of news in a community, all the news providers in that community start getting better and putting more resources into local news, because they have to. It means that the publisher gives up a new Cadillac for another couple of years and instead hires another journalist. You see this happening over and over again around communities when there is competition.

[Larry Maguire, Conservative, Brandon—Souris, MB]

Thank you.

[The Chair, Liberal, Hedy Fry]

Thank you very much. I think we've come to the end of that round.

We'll go to Mr. Samson and Mr. Breton, who are going to be sharing their five minutes. That's going to be tough, but we'll try it.

[Darrell Samson, Liberal, Sackville—Preston—Chezzetcook, NS]

I have just one important question.

You made reference earlier to schools. As an educator for 30-plus years, I'm very interested in seeing your vision or understanding how we could be more effective in the public school system in order to allow this to continue and to grow. How can we get students more involved and engaged?

[Dr. Robert Picard]

Schools are a particularly interesting institution in any community, because the first thing they have is facilities, and they also have digital infrastructure, and those are two critical things to begin with. For instance, if you have education in journalism in the schools, they can be used to start covering the local community. They can then also be linked to other organizations in the community to build this up and do better kinds of information provision in order to have a useful site.

There's a site in Finland that I visited, and that's run out of a school. The community supports it. The school supports it. All of the political parties in town support it, as do others, because it gives them access to the local community by creating a portal that they can all use. That is really important for discussion of local issues and other things that are going on. On top of it, all the local businesses and all the churches and organizations that are having activities want to use it. It builds community engagement because “this is our place”.

Schools can play a really important role by facilitating and bringing those people together to make that link.