Industry Committee on Nov. 26th, 2018

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

Thank you, Mr. Price.

Mr. Chan, you mentioned earlier that you have a local team at the advertising sales office in Toronto. I'm sure that many people who know about public finances—which isn't the case for me—reacted strongly when they clearly heard that Canadian companies were required to collect taxes, but American companies weren't required to do so. It's still heresy, but it isn't your fault. It's our fault. It's up to us, the government, to resolve the situation.

Mr. Kee, Mr. Sheehan mentioned earlier that the Fédération nationale des communications, journalists' associations and cultural groups were complaining that your company now collects 50% to 80% of online advertising sales revenue. We're talking only about the information industry here. This situation has led to the loss of several thousand jobs.

I had a great-grandfather who worked in the ice box business. When the refrigerators and freezers arrived, he wasn't happy. He wanted us to continue chopping ice in the river and placing it in ice boxes. He lost his business. That's normal.

Our current news media may be less trendy and less modern than your company. However, in the past, advertising sales have enabled these media companies to hire many people. About 130,000 people work in the media industry in the area of advertising sales. If you've claimed 50% of these sales, how many jobs have you created in Canada?

[Jason Kee]

I don't think I can answer the question.

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

I'll ask you in English.

Mr. Chan said he now has a sales team to advertise in Canada. He has employees and an office with people in it. Overall, the Coalition for Culture and Media is totally right. You are now grabbing at least 50% of the advertising money on the Internet; some say 80%. If all these jobs are jeopardized by this lack of revenue....

My grandfather said he was not selling any more ice because the guys working for you and your ice box and stuff are now working for a refrigerator company. It's okay; times change.

How about you? By your presence and your very useful tools, you are grabbing 50% of the advertising market on the web. Are you creating that many jobs in Canada?

[Jason Kee]

Our systems don't work in direct employment. I can't comment on the revenue, the relative market share, but we have a wide variety of advertising tools available. A number of publishers like The Globe and Mail and the National Post and so forth use our advertising infrastructure. They have a revenue share of 70%-80%—

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

You're so good at it, Mr. Kee. You're so good at it.

[Jason Kee]

They actually—

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

My question is not that.

[Jason Kee]

What I'm saying is that they actually earn revenue from us, and we also are deploying a number of different programs, including the Google News initiative—

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

I want to have a clearer conversation. Some say that you grab—and I've seen this many times—80% of the Internet advertising sales, you and Facebook. I've seen that. Maybe they are going too far. Let's say it's 50%. I think we can agree on this minimum.

In this new consumer tendency to go and check the Internet advertising and check on Facebook—“Oh, I see that”—we consumers are reacting. You are not forcing anyone, but you are changing the habits of advertisers.

What I'm wondering is whether you are creating a good number of jobs as important as the losses of jobs we see in the old world—in the newspaper world and the regular TV world. How many jobs has Google created in Canada over the last 10 years?

[The Chair, Liberal, Dan Ruimy]

I'm going to have to jump in, because you're way over time.

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

Thank you.

[The Chair, Liberal, Dan Ruimy]

If you have a five-second answer, let's go for that.

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

Can we ask for an answer in writing?

[Jason Kee]

I'm happy to provide the full Deloitte economic impact report, which says it's several hundred thousand jobs we've created through these systems.

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

Thank you, Mr. Kee.

[The Chair, Liberal, Dan Ruimy]

If you can submit that to the clerk, that would be—

[Jason Kee]

I think it's already been circulated, but I'll send it again.

[The Chair, Liberal, Dan Ruimy]

That's the link we sent to everybody? Okay, great. We already sent it.

For the final question, we have Mr. Sheehan.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much.

We're undertaking a statutory review of copyright, which happens every five years. It's a very important review. We gather information and send our report to the minister. The minister then responds.

Going last, I would frame the question in this way. What recommendations could this committee make to the minister that will support small—call them small—and medium-sized content creators in Canada, artists in Canada, and at the same time make sure that we are not doing anything to harm the innovative economy, which has been growing by leaps and bounds in the last five years as part of our innovation agenda?

Does anybody want to go first? Facebook?

[Kevin Chan]

I guess it's going to be me.

As I concluded in the opening statement, we do appreciate the fact that Canada actually has a pretty robust and balanced copyright system. We think that the balance is struck pretty well between rights holders and users and folks who want to innovate with content, and we would urge the committee to continue down the path of having a flexible system.

Beyond the specifics of the framework, in terms of the smaller emerging artists, I think one of the biggest challenges they have faced, from what I understand, is this question of discovery and being able to find new audiences or to find people who discover them because they like what they're doing. Sometimes it can be very niche and very specific. A platform like Facebook, which is a discovery platform, actually enables that. The ability of creators and artists to have a presence on Facebook and be able to connect directly with people is a very powerful thing. For the Internet writ large, this is how that ecosystem has worked. Being able to continue to have frameworks that allow for an open and innovative Internet is a very good thing for emerging creators.

I don't know, Probir, if you have some thoughts on that....

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you.

[Jason Kee]

I basically support that. I flagged in my opening remarks specific information with respect to the exception around artificial intelligence or machine learning, just because it's not clear in the current act if that's permitted.

A number of companies and the Canadian government itself have invested hundreds of millions of dollars into basically developing that area and making sure that we as Canadians have a substantial competitive advantage in that area. To basically maintain that against the extent that it's potentially hampered by copyright is something that I think the committee needs to look at.

I think one of the biggest challenges that you have as a committee—and this touches on a lot of the issues that Jeff was talking about—is that I don't necessarily see copyright as the primary vehicle to resolve these. It's actually a bit of a cumbersome tool that allows you.... The discussions are about taking away intermediary liability or not, and there are profound consequences by actually engaging in those.

A lot of the discussion is about how we don't actually have accurate information with respect to the rights holders. How can we administer that? How are we actually setting the royalty rates, and how are people being paid? How are the platforms engaging in this process?

In my own view, it's actually an issue better addressed through collaborative and co-operative approaches, with the various stakeholders sitting at a table and working through it, often facilitated by the government. It's not something that a legislative response is necessarily going to assist without invoking tremendous unintended consequences and causing tremendous collateral damage.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Jeff, do you have any last words?

[Jeff Price]

Number one, we have to get away from the philosophy of black boxes and guesstimates. We live in a world of technology; the information can be known. Money that is generated should be held until given to the appropriate copyright owner and should no longer be split up and handed out based on market share.

Number two, there has to be education for the creators. They have to understand the value of what they're creating and how to monetize that.

The third one is a bit of a radical statement, and it's based on my experience: Copyright owners need to have a lever that they can use to enforce their rights in the event that their rights are infringed upon. In the United States, we have statutory damages, which still persist despite the passage of the MMA. That leverage enables a copyright holder to stand up to a multi-billion-dollar corporate behemoth and say, “You can't do that.” If you take away the right of those who create—copyright holders—to pursue that damage, then there's no recourse for them. It is a bit of a radical statement, and it flies against some of the statements made here, which would like less regulation and more blanket licensing.

However, I keep falling back on this: None of us would be here if not for the creation of the content that is driving people to these megacompanies. That's okay, but get a license and make a payment or don't use it.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

I want to thank you all for that great testimony. There's a lot for us to think about.