Canadian Heritage Committee on Nov. 17th, 2016

[Ken Waddell]

In emphasizing the local news and paper, I think we must not lose sight of the fact that something has to be in writing to be verifiable in the long term. We've heard today the term “post-truth”. We've also heard the term “fake news”. You add to that sometimes sloppy newsgathering and sometimes even malicious newsgathering, and it needs to be verifiable in the long term. The only way to do that is to have it in writing, in print, as a permanent record. I have a 120 years of permanent record in my office of the happenings in my community. We can go back and verify just about anything that was ever said back to 1896.

I think it's very important to have that bedrock base for our news industry. We have to have advertising. The way of the subscription-based newspaper has gone pretty much the way of the dodo bird. It doesn't really exist very much anymore, at least not successfully. We have papers whose subscribers I know, and they're good friends of mine, and their subscription numbers are down by 50% or 60% from what they were a couple of years ago.

[The Chair, Liberal, Hedy Fry]

Mr. Lessard.

[Casey Lessard]

I have a few ideas. First is to encourage the government, whether it be the federal government or territorial or provincial governments, to advertise locally. I think that's probably the number one thing that we've lost for sure. Bruce wasn't able to be heard, but we experienced major losses over the last five years. We had a pretty good run until probably about 2011-12, when it started to hit, and then it really hit hard the last year in Nunavut. There were some major drops in advertising revenue. I think probably for the first time in a lot of people's memories in our chain, we had to have layoffs last year.

I think the government has to start getting ready for this, or maybe it already has. I'm not sure. We're a few years behind in the north of what happens in the south. The more people who can't make a living doing local media, the more people there will be trying to find work. It tends to be older people. I've seen it many times in the south, my friends who have worked at local papers who don't have a job anymore because they're not digitally prepared.

I think training programs through EI or whatever you use to help people learn how to be digital journalists, digital media producers, would help. Another thing is encouraging MPs and other businesses by having tax credits for local advertising. I'm not saying this is strictly for newspapers. It can be digital too. If you look at the Canada periodical fund, I know it has some programs to do digital publications, but I would not say they're as strong in support for people to make that transition to digital as they are for subscription-based.

There's no support for a company that wanted to do a full distribution. There are major advantages for attracting advertising. Probably the cheapest way for you to do it would be to support free distribution, which would give that appearance and reality of a hard copy in everybody's hands. That's far more quantifiable than the tales of fraud that you're hearing even today about Facebook and Google, and the false numbers that are well beyond what is really being delivered to people who pay hard money to outside companies. If a dollar of Canadian money goes to Facebook, and only 50¢ is being delivered in product, it's not really a fair model, when you can physically hold every dollar in your hand.

Those are my thoughts on that.

[The Chair, Liberal, Hedy Fry]

Thank you.

I think that's it.

Mr. Breton.

[Pierre Breton, Liberal, Shefford, QC]

Do I have any time left?

[The Chair, Liberal, Hedy Fry]

I will allow Mr. Lever to comment quickly.

[Mark Lever]

Again, I would agree with the idea that the Canadian government should spend advertising dollars, money that contributes to Canadian journalism and Canadian content. Google and Facebook, which frequently appropriate content produced by Canadian newspapers, should not add insult to injury by appropriating government spending also.

Canadian Heritage and its Canada periodical fund should be broadened to incorporate daily subscription-based newspapers. Also, there's the idea of creating national endowments for investigative journalism, whereby each endowment would subsidize investigations on a mathematical formula, based on the number of citizens who read the reports.

Those are three specific areas where I think the government could help. I don't think for a second that the government has to get into our business. The base of this transition—and every business has to deal with disruption—and the challenge for us is our legacy, which is so important to the heritage and the history of Canada, but that legacy comes with costs. Therefore, in terms of transitioning, it's not as if we can start with a white board and start fresh. We have to deal, and we have to transition.

Mr. Samson brought up the strike that we're incurring at the Herald and that's a great part of and an expensive—

[The Chair, Liberal, Hedy Fry]

Thank you, Mr. Lever.

I do think we have another part of this committee to go. I again would like to thank the witnesses for being here. I am sorry that you waited for so long, but as you well know, votes take precedence in Parliament and we had votes that kept us from coming to you. That's why we asked you to cut your presentation time down to five minutes, and that is why we're only going to one round of questioning. I want to thank you again for patience and for accommodating us because you gave us very good testimony today. Thank you very much.

Now I will tell the committee that we're going to have to move very quickly. We need to be able to get the room shifted so we can get our new witnesses in. In the meantime, Mr. Nantel, there is a report Mr. Bert Crowfoot presented to us, but because it's only in English, we are not allowed, under the rules of the House of Commons, which govern committees, to send it to you. The clerk will have it translated and all members will get a copy distributed to them.

I will call the next part of this committee to order. We had suggested that we would finish at 1:30, but doing the simple math, we have to go five minutes over 1:30 if we're going to actually have everyone ask a question. I'm going to ask the committee if they concur with the fact that a round cannot be seven minutes; it's going to have to be a five-minute round. All of those asking questions will ask a five-minute question round instead of a seven-minute one. Otherwise, if you wish to, we can go much later, but I think that would not be a positive way to move.

I want to welcome and apologize to Facebook, Inc., for having to decrease their presentation time to five minutes. Thank you for accommodating us. We have Mr. Kevin Chan, head of public policy, Facebook Canada, and Marc Dinsdale, head of media partnerships, Facebook Canada.

I understand, Mr. Chan, that you will be doing the presentation for five minutes.

[Kevin Chan, Head, Public Policy, Facebook Canada]

That's correct, Madam Chair.

[The Chair, Liberal, Hedy Fry]

Thank you very much. Can you please begin, Mr. Chan?

[Kevin Chan]

Madam Chair and honourable members, my name is Kevin Chan, and I am the head of public policy for Facebook Canada.

I am joined here today by my colleague Marc Dinsdale, Head of Media Partnerships at Facebook Canada.

Facebook's mission is to make the world more open and connected. We are honoured by the fact that 22 million Canadians use our service. I want to take advantage of our being here today, on Parliament Hill, to say that we are proud to see to what extent our platform has enabled Canadian political parties to create connections with Canadians from across the country. As you can see, we are proud and honoured to work with all the political parties.

Canadians engage on Facebook primarily because they wish to connect with friends and family and to share personal stories and information with each other in the form of messages, photos, and videos. Facebook was not originally conceived for news content, but it is certainly true that people are now regularly using the platform to share news articles and videos. This has significantly increased the potential audience size for news at the local, national, and international levels.

While we are, first and foremost, a technology company that has built a platform for people to connect with each other, Facebook takes very seriously its responsibility in helping people gather information about what is going on in the world around them. I want to note some of our engagement in Canada on this important issue. We are pleased to participate in the Public Policy Forum's study on news and democracy. Earlier this fall, we worked with the forum to organize a round table focusing on Facebook's products for news publishers, and we were delighted to have representation from Mr. O'Regan, Madam Fry's office, and the Prime Minister's Office.

We are also honoured that the Minister of Canadian Heritage is using Facebook Live as a key platform to engage and consult with Canadians in her cultural consultations.

I would like to walk the committee through how Canadians connect with each other and share information on Facebook. At the heart of this process is Facebook's newsfeed. The newsfeed is a feed-based technology developed with the goal of showing each individual person the stories that matter to them the most. With nearly 1.8 billion people on Facebook globally, there are 1.8 billion unique newsfeeds.

People on Facebook build their own newsfeeds by connecting to people and organizations they find most meaningful to them. News is one example of these sorts of organizations and stories. In order to read an article, people click on a post from a publisher on their Facebook page, which then takes them directly to the news organization's website, and they consume the news there. People can also prioritize content from specific news publishers, ensuring that they always see news content first on their newsfeed. We think this is a pretty powerful way to ensure that you never miss the news from your favourite news outlet.

Beyond the newsfeeds, we have also worked in partnership with news publishers to build innovative products, and today I'm happy to talk to you, honourable members, about Facebook Live, Facebook 360, and instant articles.

Facebook Live is our streaming product, and many Canadian news outlets have used it in a range of ways. Here is Chatelaine's Katie Underwood in a recent live video attempting to eat a Michael Phelps breakfast.

CBC has been streaming The National on Facebook Live every night for the past few weeks now, as you probably are aware, regularly getting thousands of views per episode. The Cable Public Affairs Channel, or CPAC, recently streamed the entire questioning by parliamentarians of Supreme Court nominee Malcolm Rowe directly on Facebook Live, generating around 32,000 views.

We engage with publishers constantly to understand how we can make it an even better tool. Here is an example of something that we have not released, but we are giving the parliamentary committee a preview. This is an ad break. It is not available yet. We understand from publishers that they love the product but they wish to monetize, and we hope this is one way they will be able to monetize in the future, directly off Facebook Live. Here is an example of an ad break.

Facebook 360 is a new product that enables news publishers to provide truly immersive experiences to their audiences in 360° videos. Here is an example from The Huffington Post Canada up in Fort McMurray for the wildfire.

Last year, we were honoured to partner with Rideau Hall and the Governor General on a 360° video for his Innovation Awards, which has been viewed more than one million times.

Lastly, Facebook's instant articles is a product that enables news publishers to give their audiences an incredibly fast and immersive experience on Facebook. Publisher content loads instantly, and they have images and charts in them. Perhaps interestingly for the committee, where publishers use their existing ad inventory for instant articles, they keep 100% of the revenue.

We are constantly seeking feedback on instant articles. One key thing—and perhaps my colleague can speak more to it later—is that they asked for more advertising space in instant articles, and we have accommodated by altering the product to allow them to put even more ads into instant articles.

I would like to thank the Standing Committee on Canadian Heritage for listening to our presentation.

I am available to answer any of your questions.

Thank you.

[The Chair, Liberal, Hedy Fry]

Thank you very much.

We will begin the question and answer session with Mr. O'Regan, from the Liberals. You have five minutes, please, Mr. O'Regan.

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

We are very happy that you gentlemen are here because it seems like, as we've said before, all roads lead back to Facebook and Google. That's something that we heard from our previous witnesses and throughout the testimony of our study.

There's no question that Facebook, although it doesn't characterize itself as a media company, is certainly the world's largest content aggregator. I don't know what the numbers are in Canada when you talked about newsfeeds in your presentation, but I suspect they're not much different from the States. About 44% read or watch the news on Facebook. When you look at ad revenue, Facebook had, I think, $7 billion in ad revenue in the third quarter alone this year, which is up some $3 billion year over year from last year. It is huge, and as you said, the newsfeed is very powerful, and with great power comes great responsibility.

As you described newsfeeds and your ability to choose viewpoints that you're comfortable with or attracted to, I'm just wondering how myopic that becomes. There are a lot of people worried right now.

I was reading an article in Fortune magazine saying there are no editors, of course, to encourage alternative viewpoints. Fortune said in this dire analysis that the traditional media withers and political discourse becomes ever more insular at a frightfully accelerating speed. It used the example that, by the time a fabricated story about the Pope endorsing president-elect Donald Trump was proven bogus, it had been shared a million times.

There is great responsibility that comes with that. I know your CEO and president has insisted that the site did not have any influence on the election, but apparently that has provoked a fierce debate within your company. I'm just wondering about that moral responsibility of alternative viewpoints and how perhaps that may affect your newsfeeds in the future.

[Kevin Chan]

To give you some stats, in Canada, nearly 1.5 million people, or approximately 10% of Canada's mobile daily active users, click on an instant article every day, and more than seven million people, or more than 40% of Canada's 17 million daily active people on Facebook, engage with publisher content by clicking on the link that takes them directly to their website.

With respect to your other question, sir, I believe you are referring to references with regard to a filter bubble, or an echo chamber, as I've read it described. There is empirical research, which is peer reviewed, published on this. It shows that, in fact, when you look at the numbers, people are actually exposed to more differing views online, it turns out, than they would be in their day-to-day lives. This, perhaps intuitively, is interesting, because in our day-to-day lives we're going to go and meet with the same few people every day, whereas on Facebook, as an example, you connect with friends from high school, friends from university, friends from work, and neighbours.

Our CEO Sheryl Sandberg has described these people as both strong and weak ties. In fact, you will likely see much more diverse views expressed on Facebook than you would in the past when you would presumably interact with five to 10 people a day or consume your content from one particular television station or newspaper.

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

Let me ask you about the fake news concern. I know that Google and your company announced on Monday an attempt to halt the spread of fake news on the Internet by targeting some of the purveyors of phony content and how they make money, really, through advertising. What a lot of people are wondering is how, and this might be an early question, but how do you implement that and how do you enforce the refereeing of fake news?

[Kevin Chan]

At this point, it is very early days. We don't have more to say, other than Mark Zuckerberg's post, which I can circulate to you after, if you haven't seen it.

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

I've read it.

Okay, thank you.

[The Chair, Liberal, Hedy Fry]

You do have another 30 seconds.

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

Dare to dream, Madam Chair.

[The Chair, Liberal, Hedy Fry]

Thank you.

Mr. Waugh, you have five minutes, please.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Thank you.

It's incredible where Facebook is today after 12 years of existence. We just heard witnesses say they're receiving less money in advertising, yet it's an all-time record for Facebook now, with $3.8 million from November of 2015 to June of 2016, by the Government of Canada. We compare those numbers with $5.8 million from April of 2006 to early June of 2014. That's a massive increase going to Facebook.

I have an article here, it's actually paper, that says Destination Canada spent this, and the immigration department spent this. I am a dinosaur. Obviously, the government can spend a ton of money on digital ads, but do we know they're working?

That's my issue with digital. If I see it in the paper, if I see it on television, or if I hear it on the radio, I pretty well have traction. I don't know if I'm getting the traction on digital. Are we seeing that? Does Public Works, in charge of advertising for the federal government, know what's going on?

[Kevin Chan]

Obviously, sir, the questions for Public Works, I respectfully submit, would probably be best directed to Public Works.

I think the benefit of digital ads, and I'm speaking just for Facebook, is this idea that you will be able to have a very good sense of whether people have engaged with those ads.

John Stackhouse's book has been invoked in the past, and I think he describes it quite well in the book, which is to say that, before, you would presumably put an advertisement somewhere and not really have a sense of whether that was reaching your intended audience. The impressive nature of digital advertising is that you will have much greater certainty that you will be able to reach people.

As for the Government of Canada's spending plans, unfortunately, I am not in a position to answer.

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

Has Facebook included any agreements with Canadian copyrights?

[Kevin Chan]

We have not done that. I'm not entirely sure what the nature of the question pertains to. I'm not a copyright expert, but if you—

[Kevin Waugh, Conservative, Saskatoon—Grasswood, SK]

I'm just wondering. Sometimes, as was said, stuff appears on your site. There are copyright rules. I see you're going to ad breaks now, so you're going to be competing with other media in this country, if you don't mind me saying.