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Canada Free Expression Link tax Community Resources

What’s wrong with the Link Tax? (an FAQ)

Common questions and answers on the Link Tax – from OpenMedia’s community

The Link Tax can sometimes be confused with the Streaming Tax, another one of Guilbeault's harebrained policies he's pushing forward at the same time. If you have a question about the Streaming Tax, check out our Streaming Tax FAQ that we've developed in collaboration with the OpenMedia community!

What is the Link Tax? 

The Link Tax is a dangerous proposal that would require platforms (like Facebook or Google) pay news outlets every time they display a link to a news article – including when those links are shared directly by their users. “Make big tech pay” appeals to many people, but this particular proposal fundamentally breaks the Internet works for us, undermining both the way that hyperlinks are used online, and the way we value and share quality content.

The tax would work by applying copyright to the previews (or snippets) that are displayed when a link shows up in your news feed, or search results. Platforms would have to pay copyright fees for displaying these pieces of content, even though they’re there to help us – the users – navigate the Internet more seamlessly.  (Those snippets tell us a lot more about if we want to click on something than a very long URL!).

The plan is an attempt to try and provide funding to news media - and that’s an important cause! But unfortunately, the Link Tax catastrophically misunderstands how the Internet works. If Canada adopts the Link Tax, we’ll be creating an Internet with less quality Canadian journalism, and more space for misinformation to spread.

Why are we talking about the Link Tax right now?

The Link Tax isn’t an original idea – it’s already been adopted in a handful of countries in Europe (where OpenMedia fought hard against the proposal), and is currently being introduced in a slightly different format in Australia.  Unfortunately, while it has caused serious issues in each country it’s been introduced, Canada is currently looking at adopting it here too. 

The proposal’s champion is Minister of Canadian Heritage Steven Guilbeault, who seems to see the Link Tax as a quick fix to the long-term systemic challenges facing our journalism industry. 

This isn’t the first time the Link Tax has been proposed in Canada: it was included in the parliamentary committee review of Canada’s Copyright Act, and the Broadcasting and Telecommunications Act Legislative Review (BTLR) report, tabled in January of this year. We have fought against the Link Tax every single time it’s been raised, and until now, our leaders have listened to reason and backed off. But this time could be different, as we’re hearing it proposed directly and repeatedly by the Minister.

We’re still waiting for specifics of how Minister Guilbeault’s version of a Link Tax would work to become more clear, as the Minister has suggested and walked back several versions - and we’ll update this FAQ as we learn more. But we know it’s squarely on the government’s agenda, and we have serious concerns that it will fundamentally break the Internet as we know it, without actually dealing with any of the problems the Minister is trying to fix.

The Link Tax’s threat to the Internet in Canada is incredibly serious, and we can’t afford to let a proposal like this pass.

What’s wrong with the Link Tax? 

Fundamentally, the Link Tax breaks the Internet as we know it. Free linking between sites and stories is what has made the Internet the incredible resource it is today. Breaking that ability to link freely is bad for news outlets, bad for news readers, and will further entrench the power of tech giants. 

The core problem is that in a world in which there’s a fee attached to every link to news stories, online platforms will stop or slow down the free sharing of those links (We’ve already seen it happen in other countries!). 

As a result, the Link Tax creates barriers to sharing the high-quality information that Canadians need most. That means a Canadian Internet with less high-quality and local news; more misinformation on social media; and in time, if the pressure of the tax is successful, increasing the dependency of our surviving news outlets on the business decisions and goodwill of a small handful of tech giants. 

That outcome is bad for the Internet, and a disaster for our democracy and access to information.

I’m worried about the news industry in Canada. Won’t this help support them produce quality news?

NO. In fact, just the opposite. Every possible outcome of how this proposal plays out is a threat to the finances and the long-term independence of Canadian news outlets. 

Let’s start by looking at just the ‘best’ case scenario from the perspective of supporters of the Tax.

A ‘successful’ Link Tax would fossilize Canada’s current news industry, while making it permanently dependent on tech giants to survive. This plan actually ensures that journalism becomes completely reliant on the big tech platforms they’re often fighting against, in two problematic ways:

First, the Link Tax makes newspapers directly reliant on Facebook clicks and shares for their funding source. This inevitably means the paper’s content will be designed to go as viral as possible. That kind of clickbait content is exactly what we’re trying to avoid, in supporting real journalism.

Second, this plan means Facebook and Google’s profits need to keep continuously growing for our own news industry to grow. That means we’re making our news industry completely reliant on the platforms that are already too big, to continue getting even bigger. That’s the opposite of what we want!

AND, if Facebook fails, so do our news outlets. We can’t tie journalism to Big Tech; we need to make sure it’s completely independent, and sustainably funded.

Has the Link Tax been adopted anywhere else? What happened there?

YES. And it’s been a huge failure. In practice, the Link Tax has proved a dismal failure, decreasing publisher revenue and production of quality news.

The Link Tax has been tried in Germany and Spain, and is currently being rolled out in France and Australia. It hasn’t worked there, and won’t work here either. 

Countries that have already adopted a version of the Link Tax have discovered their legislation discouraged online platforms from promoting links to new stories. This actually hurt overall publisher revenues who saw a significant drop in traffic to their sites, hitting small publishers especially hard. 

In Germany, many publishers chose to give free licenses to search engines or aggregators like Google News – essentially opting out of the Link Tax, even though it was supposedly to benefit them. They decided that it was better to have the traffic driven to their sites through these widely-used aggregator services, than not at all. 

In Spain, Google News pulled out of the country entirely. A study commissioned by a publisher association one year after the Link Tax was introduced found over  €10 million in lost revenue due to the Tax, and 14% decline in small publisher traffic following the closure of Google News. In the words of the study, the substitution effect of people reading a snippet preview of a news story on a platform and not clicking through to the news site was much smaller than the expansion effect of free distribution through the platform, which drove the greatest possible awareness of and traffic to news publisher stories. 

That pattern is now threatening to repeat on a larger scale in Australia after the passage of their own Link Tax, where Facebook has announced its plan to block sharing any news links altogether. 

We need to learn from others, and stop trying to recreate solutions that just don’t fix the problem. Repeating this mistake in Canada would further batter our already excessively consolidated news industry, not support its diversity and success.

Doesn’t Big Tech rely on news content for profits? 

NOT MUCH. News is a very small percentage of overall platform and search engine content. 

News outlets badly need their stories to show up in social media and search engines to sustain their online ad-revenue models. As citizens, we need the news to be freely shared there too, to fulfill its core social function of informing society and promoting debate of important issues. 

But the relationship between news outlets and platforms isn’t symmetrical: platforms don’t need news for their model to work. Tech giants’ biggest profits come from ad revenue – news is just something else they also display. Think about all of the ads you see on Facebook. Now, picture the news story that you shared. You didn’t pay for that to be there, did you? Facebook just displays it because you, as a user, decided to share it. 

So yes, platforms are generally more profitable the more users they have, and the more content that’s being shared. But news content isn’t the money-maker for them; they just want people to be using the platform in general. You posting a photo of your dog has just as much value to Facebook as the link to a news story you just shared. 

And that’s why when the Link Tax has come to other countries, like Spain or Australia, platforms have opted to limit or opt out of sharing news stories, rather than participate in the Tax. Sharing news just isn’t a major part of what companies Google or Facebook do, or what most of us are using their services for, most of the time.

Links from search engines and online platforms are a major source online traffic and revenue to news outlets. As a result, news outlets are today deeply dependent on these platforms and their algorithms to sustain their business. Think about it. What makes you go to a particular news story? You have to find it somewhere, right? While you may have a subscription, or go to news sites directly, a number of those links probably came from someone else sharing a story they’ve read.

When professor Michael Geist recently looked into who was producing what are supposedly revenue siphoning Facebook shares of a recent Toronto Star story that touched on Guilbeault’s Link Tax proposal, he found the vast majority of shares came from the Toronto Star’s own posts

Will the Link Tax help to reduce the influence of Big Tech over news?

NO. The Link Tax actually makes tech giants more influential and inescapable parts of our news consumption. 

In France, the government is trying to get around these negative effects by forcing platforms to pay a fee and requiring them to carry news. On one level, that’s a questionable and dangerous exercise of government power to compel the speech of private entities. It is also likely to be an ineffective one, given that news is shared in a bewildering variety of ways across platforms, and ranked and structured by a diverse and evolving range of optimizing algorithms.

But let’s assume for the sake of the argument that companies can be forced to unwillingly share and pay for news – what kind of climate would we be building for the future success of news?

Most of us would like Facebook and other social media to have less influence over the information we receive, not more. But in the world of the Link Tax, our media would be more dependent than ever on crafting stories and headlines with maximum potential to go viral through the algorithms of these platforms. That means more outrage producing, clickbait reporting, and less thoughtful, slow burn investigative journalism. 

And that’s just the start. Over the longer term, dependence on revenue from a few tech giants could compromise our media’s ability to report on these giant platforms themselves, binding them to supporting a closed and increasingly monopolistic model for the Internet.

Tech giants are just too powerful. Will the Link Tax rein them in?

NO. We agree that tech giants have far too much power! But the Link Tax would make the problem so much worse. We need fundamental systemic changes to return the Internet to a more open, decentralized space, not symbolic levies that further entrench Big Tech’s walled gardens.

A lot of people in OpenMedia’s community are angry, anxious, and profoundly distrustful of tech giants like Amazon, Apple, Facebook, Google, Microsoft, and Netflix, as well as their smaller (but still giant) peers. And we need to address the root causes of those feelings head-on – not just through symbolic actions.

If we believe Big Tech companies are not paying enough back to our society, we should tax them more heavily – for general government revenue, not industry subsidies. That means applying the GST to any activities that Canada-based businesses already pay it towards, and potentially increased general direct corporate taxation on the advertising revenue that is the source of their power.

If we believe some tech giants are overly dominant in the market – and we at OpenMedia do! – there’s a place for addressing that, and that’s through empowering our antitrust laws and anemic Competition Bureau. 

And if we want to limit the power they gain over us through the collection, use and sale of our personal data, we should do that through specific, easily enforceable legislation that gives the power over our data to us as citizens – not deals that make government, media and big tech co-beneficiaries in the theft of our data.

Isn’t the real issue lost ad revenue? Does it make sense to say tech giants are ‘stealing’ ad revenue from news outlets?

NO. The change in where ad revenue goes is about changes in how we as a society consume information and connect with each other, not theft by tech giants.

Through the 20th century, news outlets drew much of their revenue from paid ads, not their subscription fees. Before the Internet became dominant, newspapers and broadcast were central community information sharing hubs with many functions, from advice, weather and entertainment, to commentary, community classifieds, and, of course, news. While hard new stories were a prestigious and celebrated output of news outlets, they were not necessarily where subscribers spent the majority of their time.

Today, the Internet has disaggregated the functions that news outlets used to fulfill. We satisfy many needs more quickly and effectively than we did in the past, using the endless library of search engines, specialized online services and communities, and the personal connection functions of social media, not a central community hub. The breadth of sites and services on the Internet has also meant that there are WAY more places for ads to be placed, and individual ads are much cheaper as a result. Newspapers don’t have a monopoly on ad space anymore. 

With that splitting off of social functions and increase in the availability of ad space, we’ve seen a large drop in advertising-driven funding to news outlets and journalism. Given the importance of independent and well-funded journalism at all levels, a lack of revenues for news outlets is a big problem for democracy, good governance, and public access to information. 

That’s a huge problem for all of us, and we need to adopt serious, multi-pronged, innovative solutions. That said, trying to cram the evolution of our information consumption habits back into a version of the old model just won’t work. We can’t go back in time, and trying to force advertising revenue back into a version of the old model is doomed to fail and will produce many new problems.

Misinformation is becoming more common online. Will the Link Tax help reduce it?

NO. The Link Tax would make our misinformation problem much worse. 

Any platforms required to pay the Link Tax will inevitably do what they can to reduce the burden of the Tax. In the best case scenario, that means fewer high-quality news articles with snippets that inform the reader about their content appearing at the top of search engine results and being pushed to the top of social media feeds.

In the worst case, it means professional news disappears altogether from some major platforms. In our current digital ecosystem, high quality news already struggles to compete with alternatives – but in this world, many platforms become exclusively home to ‘news’ by bots, trolls, political partisans and scam artists. 

What if additional legislation requires platforms to carry and pay for news, as France is attempting? This model is both difficult to enforce and requires a disturbing level of government involvement in and monitoring of online content on every major platform we use. 

Beyond these obvious concerns, it would create a two-tier system for news outlets in which they’re encouraged to hoard their news, and share it only through paying platforms.

Today, producers of quality news want everyone who cares about their story to click through to their site and read all about it. That open flow of quality journalism has created the relatively robust online information system we use today. While the news industry is definitely facing challenges, the Link Tax and promotion of misinformation simply isn’t the solution.

 

Want to stop all this before it gets started? Send a message to Guilbeault asking him to stop the Link Tax!