No, Toronto Star. A Google and Facebook “Monopoly” Are Not To Blame For Your Disappearing Headlines.

Yesterday the Toronto Star, along with several other newspapers in Canada featured a blank front page, with a message at the bottom accusing Google and Facebook of “using their monopoly power to pocket 80% of online advertising revenues.” They go on to claim that “These corporate giants benefit from the news content produced by Canadian journalists and publishers – without paying for it.” While both of these statements may hold some truth individually, they have nothing to do with the reason why newspapers are failing. In our free market, advertising dollars are not owned by anyone, and the advertising offered by Google and Facebook is simply far superior to the outdated form of advertising offered by newspapers.

It’s easiest to show how outdated newspapers are with an example. Let’s say you are a plumbing company, looking to advertise your services. Your options are to go with your local newspaper, or to try running Google ads to direct users to your website. To run newspaper ads, you will likely have to sign a contract and commit to thousands of dollars in ad spend. Your ad will then be shown to whoever happens to look at that newspaper, regardless of whether they need a plumbing service or not. Then, there is no way to tell how many people have actually viewed the ad, versus how many of the ads ended up in the recycling bin.

With Google Ads, you will be able to set a monthly budget that works for your business, and you can change it at any time. You can see results from ad spends as low as $300/month. What makes Google Ads superior to traditional advertising is they utilize user intent, in that your ads will only be shown to people after they search for a specific phrase you have targeted, for example, “Toronto plumbing company”.  You are only charged when someone clicks on your ad, and visits your website. You can then clearly track every penny of your ad spend, and see how many people visit your website, filled out a contact form, or phoned your business as a result of the ad. If you were in charge of this plumbing company, which form of advertising would you choose?

Newspapers are not entitled to the advertising budgets of Canadian small businesses. Any government regulation designed to force small businesses into using these expensive, and outdated forms of advertising will hurt the businesses, and potentially lead to more job losses across broad swaths of the economy, than the losses we are seeing at newspapers.

Newspapers Are Preying On The Naïveté of Legislators

The truly reprehensible part of this campaign is that the newspapers are betting that our legislators, and the general public isn’t tech savvy enough to see the hypocrisy in their arguments. If the newspapers truly do not believe Google has a right to index their content, then all they need to do is add 1 line of code into their website, and Google will no longer crawl their website, and will remove their articles from Google search. All of these newspapers employ web developers who clearly know how to do this, however, they benefit from the vast amount of free traffic that Google sends their way.

There are many other flaws with the newspapers proposed legislative solution, and we encourage interested parties to read Michael Geist’s blog to learn more. Newspapers declining revenues are not due to any big tech monopoly, or due to big tech linking to their articles, they are simply failing because big tech offers Canadian businesses a far more effective form of advertising. This isn’t to say big tech doesn’t need regulation. How their algorithms behave during elections, for example, is one area that deserves greater scrutiny. Forcing them to pay newspapers because they link to their articles (when newspapers can easily remove their articles if they wish, but choose not to because they benefit from the traffic) is against the principles of net neutrality, and will harm Canadian small businesses.

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