Canadian Heritage Committee on Nov. 15th, 2016

[Richard Gingras]

I think it's important to note a few things. Yes, Google has obviously been fortunate. We developed a very popular product with Search. We also introduced, in a sense, new forms of advertising that have obviously been effective in the marketplace.

That's not the first time, by the way, that new technologies have disrupted media ecosystems. We can go back to the history in the 1950s of how television disrupted newspaper economics and changed the landscape there as well.

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

In my limited time, I'd love to talk about the present and the future, though, if you wouldn't mind.

[Richard Gingras]

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.

[The Chair, Liberal, Hedy Fry]

You have one minute left, Mr. O'Regan.

[Seamus O'Regan, Liberal, St. John's South—Mount Pearl, NL]

One of our previous witnesses brought up something that we had discussed before here at this committee, and that is the BBC's decision to fund, I think at the cost of some 8 million pounds, a series of local journalists who would be able to feed into the BBC. I realize it's a state-run institution, but it has a large footprint and it has a huge effect on ad revenue for upstarts and local publishing, printing, and radio in the U.K. This is their way of feeding a very local network but at the same time perhaps understanding that their larger footprint in this digital age is having a serious effect on those voices.

Is there kind of a moral responsibility, at some point, that may play a factor here?

[Richard Gingras]

As I said in my opening remarks, obviously Google as a company believes very much in open environments and in open and free democracy. Our objectives there are the same, which is why we focus on how we can enable the right things architecturally. I think artificial financing of journalistic efforts is an area of potential problem. Is Google the one that should determine which journalists get paid and which not? No. That's not to mention the fact that the technology environment continues to change. As our CEO, Larry Page, has often said, we have to keep thinking how we change. Because we're successful today doesn't mean we'll be successful in two years.

That's why I think we have to look at systemic approaches to how we take and enable innovation and success.

[The Chair, Liberal, Hedy Fry]

We're going to have to move forward.

Mr. Clement for the Conservatives, you have seven minutes, please.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Thank you.

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.

[Aaron Brindle, Head, Communications and Public Affairs, Google]

I'm happy to weigh in with some Canadian examples. I can't expect Richard to know everything from Washington.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Sure.

[Richard Gingras]

I would agree, and I think we're seeing more and more of that. We mentioned Xpress in Halifax. You could look at Texas Tribune in Austin. You could look at Voice of San Diego in San Diego and at many others around the world.

Clearly, again, as we look at that landscape and we look at our efforts, how can we all help establish the right environments for innovation so that we see more and more of those flowers bloom? As I said, I've always felt there was just huge potential on the Internet for all kinds of journalistic expression, but we have to evolve; we have to drive that innovation so that those things can happen and be successful. It's great to see examples of where that success is already being had.

[Aaron Brindle]

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.

[The Chair, Liberal, Hedy Fry]

Mr. Clement, you have another two minutes.

[Tony Clement, Conservative, Parry Sound—Muskoka, ON]

Maybe Alex would like to say something.

[Alex Nuttall, Conservative, Barrie—Springwater—Oro-Medonte, ON]

Thank you.

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?

[Richard Gingras]

I think it depends on which part of the world we're talking about, how quickly they get off the ground and how quickly they find sustainability. As I mentioned earlier, one of the reasons for my optimism is first of all that the cost of developing a new publishing venture on the Internet is so incredibly small compared to what it was in print. The cost of production is so much less. The cost of distribution is almost zero. The cost of building an audience is again almost zero.

Let me give you an example. In the world of print, how did print publications build their audiences? They put their products on newsstands, which they paid for. They put news boxes on street corners, which they paid for. They put promotional circulations on airline seats, which they paid for. As I mentioned, Google News, across its canvases, sends 10 billion visits to new sites well beyond that every month. Deloitte Touche in Europe estimated that each one of those visits is worth five to ten cents, and it costs the publishers nothing. By the way, that value is separate from the $10 billion I mentioned earlier that comes out of the 70% revenue shares of our advertising platforms. That's why I say I don't think we've had a greater opportunity to see local media flourish. But it does take time, obviously.

[Jason Kee, Counsel, Public Policy and Government Relations, Google Canada]

That's not to mention that you have a far smaller carbon footprint as well when you're using online media, which I think is a priority of the day.

[The Vice-Chair, NDP, Pierre Nantel]

Merci.

I am now chairing the meeting, since our chair had to leave. However, I am still entitled to ask you questions.

Have you heard about these committee witnesses coming here, and have you heard that all these advertising sellers are actually feeling the difference because you guys are coming in and grabbing so much advertising revenue? Have you heard about that?

[Richard Gingras]

I did not hear this morning's testimony. I have heard expressions like that before. One point I would challenge: Google is grabbing nothing, from no one. Google was fortunate enough to put into place new kinds of advertising systems, highly scalable advertising systems. By the way, we're not the only ones out there who are doing this. We have obviously been effective, but they are high scale and they are effective.

As I noted earlier, our ad systems are used by two million publishers around the globe. As noted, the typical revenue share is 70% to those publishers. This is huge. They don't need sales forces to do this. In many regards that's game-changing.

[The Vice-Chair, NDP, Pierre Nantel]

Absolutely that's game-changing. I was working in the recording music business at one time, and I was using Lotus Notes for emails. At the time, I was using Yahoo as a search engine. To me, Google was some sort of very slow marketing. I preferred the very flashy Yahoo. It came to building that Google brand that everybody loves. From Republicans to Democrats in the U.S.A., for everybody you're in the top five of the best brands.

My feeling is that people here are structured in an industry. It's specifically true in the French portion of Canada, which is Quebec, and small pockets across Canada too. What we just heard today is that local news, especially for French, is going down the drain in the regular exposure that we have in the media. What can you do to help voice out this cultural diversity?

[Richard Gingras]

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.

[The Vice-Chair, NDP, Pierre Nantel]

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?

[Richard Gingras]

We do it at scale all the time, and we don't focus on one population or on one language or another. We do it across the board. We have, as you know, a French language edition of Google News. Jason can probably give you an indication of how the percentage of revenue generated by Google advertising in French Canada is roughly proportionate to the GDP in French Canada.

We look at these things across the board. We don't look at it and ask ourselves what it is we do in the English language versus not. We do it everywhere. We do it comprehensively as best we can. This is not to say we're perfect. We continue to improve in all ways, with our algorithmic systems, with our technology. Yes, we've developed a very successful business. You mentioned Yahoo. What we always remember is that nothing keeps someone using Google Search. Other search engines are a click away. We're only as good as what we're doing today, and hopefully that will continue to lead to our success and the success of others we work with.

[The Vice-Chair, NDP, Pierre Nantel]

Mr. Kee.

[Jason Kee]

Many of the tools that we focus on developing are specifically designed to enable local communities, essentially being, in Quebec, local towns in Quebec and so on and so forth. I think the challenges that local news face in communities in Quebec are not that dissimilar to local news in other places of the world, especially in remote and rural areas. Our concept, which was.... The narrative that I think was established with the committee was that part of the challenge with the local community papers was that there were generally broad acquisitions. Some of those entities basically ended up closing shop. What we have seen is the emergence of these new hyper-local publications, like we had in Village Media, which enables a number of those. Similar outlets occurring in Quebec are very much focused on local issues.

In our case, we are doing our utmost to enable this by offering a number of advertising products and services they can leverage so that they can build advertising revenue. In case it isn't clear, when everyone says Google is eating up all the advertising revenue, it doesn't account for the fact that 70% of what we take in is going back out. It's going out to the ecosystem of publishers out there, not just news but across the entire web.