Loopholes in the written journalism bailout panel report

It’s called the Journalism and Written Media Independent Panel of Experts. Eight people proposed by organizations (two of them unions) hand-picked by the federal government, who were supposed to set the criteria for how to determine what are “Qualified Canadian Journalism Organizations” that would be eligible for a tax credit on labour and another one on news subscriptions, part of a $595-million bailout package over five years.

This week, the panel submitted its report to the government. It sets some criteria for how to judge whether an organization is doing real journalism (or real enough to deserve a tax credit), but it also leaves me with a lot of questions. The headline to the report is that the panel thinks the funding is insufficient and is calling on a lot more to be added to the budget (this is not something it was asked to look at in its mandate). It also demands the government greatly increase its ad spend on newspapers and newspapers’ websites, and change the Copyright Act to force digital giants (presumably Google) to compensate news organizations, more things it was not asked to comment on.

As someone who enjoys finding loopholes in rules, I’d like to go through the report and point out some of them.

Preamble: Journalists aren’t accredited

It might surprise a lot of non-journalists to hear this, but there is no central authority that decides who is and is not a journalist. There are organizations, like the Parliamentary Press Gallery or the Fédération professionnelle des journalistes du Québec that set criteria and will authenticate journalists in some way, but there are many professional journalists that are part of neither, whose only credentials are given by their employer and have no legal powers attached to them.

This is by design. In Canada, anyone can be a journalist. The profession is not regulated, and allowing the government to decide who can and cannot practice it would be a Very Bad Idea.

So when we talk about giving money to journalism, we have to define what that is. Hence the panel, set up for the sole purpose of laying down some criteria, which would be applied by others. It’s not an easy job, and any rules you set only lead to more problems, as we’ll see below.

Let the CRA decide, or maybe journalism professors

In the interests of moving quickly, we have recommended that the tax credits be implemented and administered directly by the Canada Revenue Agency. We have recommended that the Government appoint an advisory body, with members drawn from the faculty of post-secondary journalism schools across Canada, to assist the Minister of National Revenue with this program.

The panel proposes that rather than a new government bureaucracy, the Canada Revenue Agency itself make calls on whether an organization should qualify for a tax credit. This is a good idea. The CRA is independent of partisan interests, and staffed by accountants who can be trusted, at least more than a politically-appointed body, to apply the criteria objectively.

But then, if the CRA is unsure (and I would be pretty unsure about a lot of organizations here), it can turn to an “advisory body” made up exclusively of journalism professors. The panel makes the assumption that such professors would be similarly objective (perhaps even more so). I’m not sure why. University professors have a reputation of being more left-wing, and that might not sit well with more conservative media outlets.

“It has published at least 10 editions in the last 12 months”

This makes sense for print media, and for edition-based outlets like La Presse+. But what does “edition” mean in terms of a website? How many “editions” has this blog put out? Or CBC.ca? Or the National Observer? Or iPolitics? These organizations wouldn’t be eligible anyway for other reasons, but this line alone seems to betray the fact that this isn’t about saving journalism as a whole or written journalism, it’s about saving newspapers and former newspapers.

“…in the case of web sites that offers video and audio files, at least 60% of the content is written.”

This makes sense until you ask yourself the obvious question: How do you quantify audiovisual content in a way that can compare to written content? Is it by file size? That’s unfair because video is so much larger. Is it by time spent consuming it? Then you’d have to establish some average reading speed. Or maybe one story = one video or podcast, regardless of length of either?

Even if we could establish some proper criteria for this, it encourages a gaming of the system, by finding a cheap source of written content and/or artificially restricting the amount of multimedia content.

“Journalistic processes”

To determine what qualifies as “original written news content,” a phrase used in the legislation for both the labour tax credit and the digital subscription tax credit,  the committee provides these “processes and principles”:

Journalistic processes and principles include:

  • a commitment to researching and verifying information before publication;
  • a consistent practice of providing rebuttal opportunity for those being criticized and presenting alternate perspectives, interpretations and analyses;
  • an honest representation of sources;
  • a practice or correcting errors.

These sound great (well, except for that unfortunate typo in the sentence about correcting errors). And most serious news organizations follow these principles. Most of the time. But how do you enforce this? Leave it to the CRA to determine whether enough errors were corrected by a publication, or whether enough research and verification was done on enough stories? There is no central body regulating written media, and even if you made membership in an organization like the National Newsmedia Council a condition for getting the tax credit (and it’s not), such bodies act only on complaints and have no real power.

Content mix

Content not considered as editorial content: advertisements, listings, catalogues, directories, guides, financial reports, schedules, calendars, timetables, comic books, cartoons, puzzles, games and horoscopes. Advertisements include promotional content, sponsored content, branded content (any content where a third party, advertising client or business partner, participates in the development of the concept or directs or gives final approval to a large portion of the content) as well as stories produced primarily for industrial, corporate or institutional purposes.

This is interesting, and at first glance it would seem to mean that publications that have large amounts of listings, ads or cartoons wouldn’t qualify. But the point of this paragraph is actually to exclude all this content from the calculation of how much editorial content is original to the publication, and seems specifically designed to tilt the scale in favour of newspapers and other publications that have a lot of advertisements and other non-news content.

The original news content (or original editorial content) is the content for which research, writing, editing and formatting are conducted by and for the organization. This original content should represent more than 50% of the publication’s editorial content, over the course of the year. The rewriting, translation, reproduction or aggregation of news from external sources (including articles from news agencies or any other publication) is not considered original news content. The publication of this type of content must not represent the principal activity of the journalistic organization, in order for it to be eligible.

There’s a lot to unpack here:

  • What is “the organization”? A lot of newspapers are part of chains. Does the organization mean the individual newspaper or the chain?
  • Does “editing and formatting” mean that newspapers that outsource things like page layout would be ineligible?
  • If a publication is more than 50% wire content, it would not be eligible. But how is this counted? By number of stories? By number of words published? How do you calculate that for a website that might have automated feeds of wire stories?
  • The paragraph makes “rewriting” and “aggregation” of news not count towards the quota. But how strict are these definitions? If a newspaper matches a story from a competitor with one of its own, or a column summarizes something reported elsewhere, does this not count as original content?

Democratic institutions

To be considered as an eligible QCJO, the publication must regularly cover democratic institutions and processes.

Democratic institutions include legislatives bodies, municipal councils, courts of justice, school boards, etc.

Democratic processes has a broader scope, and includes all issues of public interest that may come before government or any other public decision body.

Another clause that nudges us toward traditional newspapers and away from specialized media, this one requires eligible organizations to “regularly cover” (another undefined term) legislatures, courts or school boards (or other unspecified “etc.”). This might seem obvious, but we live in a world where many legislatures aren’t covered by journalists full-time. There are lots of journalists at Parliament Hill or Queen’s Park or the National Assembly, but in smaller provinces like Saskatchewan, New Brunswick or PEI, you can fit their full-time press galleries in the back of a van. It’s not a given that all traditional media would meet this criterion, and the vague way it’s described would mean more work for the CRA.

General interest

Furthermore, the publication must be focused on matters of general interest. It means that:

  • it is aimed at a general audience (lay persons) rather than specialists of a specific field,
  • it offers a diversity of content, including at least 3 among the following 9 areas: local news; national news; international news; social issues (such as health, education, faith and ethics); business and economy; sports; culture; science and technology; environment.

This brings up an important question: Why is this aid only for general interest newspapers? Is it just assumed that more specialized media are bankrolled indirectly by the industries they cover? One consequence of this is that it artificially tips the scale toward general interest media, and will discourage such media from becoming more specialized, even if that might be in their economic, readers’ and even society’s best interest. (This is a problem with the legislation, mind you, not the panel’s work.)

No freelancers

The expression “regularly employs” refers to the employment of journalists at regular intervals, either fulltime or part-time, even if their position is temporarily unoccupied.

This sentence, which gives context to an element of the legislation requiring at least two journalists, makes it clear that freelancers don’t count. That would exclude many media who rely mainly on freelancers. Not necessarily a bad thing, but worth noting.

Who is a journalist?

The term “journalists” should be understood in the broad sense given to it by media companies and professional associations of journalists, which includes all newsroom employees who exercise journalistic judgement in selecting, planning, assigning and producing news content, including research and collection of facts, data analysis, writing and copy editing, fact-checking, illustration, photography and videography, graphic presentation and adaptation of news content to digital formats.

This is a broad definition of journalist, but not overly so. It includes editors, managers, assignment editors, researchers, photojournalists and illustrators. But it doesn’t include people in administrative tasks or who work in non-editorial departments. It’s not clear how people who have multiple tasks will be counted. Do journalistic activities have to represent the majority of work for them to qualify as journalists? (The labour tax credit says it should be 75%, but it’s unclear if this same quota would apply to an organization that wants a digital news subscription tax credit.)

Ineligible organizations

publications whose editorial content is primarily reproduced or repeated from current or previous issues of the same or other publications;

This clause would seem to exclude publications that primarily reproduce content from other publications. That could cause a problem for organizations like Postmedia (my employer) and Quebecor, whose newspapers share a lot of content. Postmedia broadsheets, the Sun tabloids and the Journal de Montréal and Journal de Québec share not only content, but entire pages between them for non-local news and features. Would they have to limit shared content to under 50%? It depends how this is interpreted.

publications with editorial content that is more than 50% of the following, singly or in combination: listings, catalogues, directories, guides, financial reports, schedules, calendars, timetables, comic books, cartoons, puzzles, games and horoscopes;

Wait, hold on. Above, they said “listings, catalogues, directories, guides, financial reports, schedules, calendars, timetables, comic books, cartoons, puzzles, games and horoscopes” are “not considered editorial content.” If they’re not editorial content, how can they possibly make up more than 50% of editorial content?

If we use this definition that apparently includes these things as editorial content, then this might cause trouble. A newspaper with a cartoon page, a puzzles page, a movie listings page, a TV listings page would have that all count against their editorial content (counted how exactly?) and on a slow news day might push it over the top.

Also note how the word “advertisements” is missing from this list, which is otherwise identical to the definition of “not considered editorial content” earlier in the report. That makes sense, but it also underscores the fact that nothing in this set of criteria sets any limit on the amount of advertising in a publication.

pamphlets and other publications whose editorial content consists mainly of opinion texts;

This might cause problems for publications that rely heavily on columnists.

Publication used for the diffusion of hate content;

This sounds good. It also sounds like something lots of activists will pounce on to argue publications they don’t like should have their tax credits revoked. But why are “hate content” publications allowed in the first place?

loose-leaf publications.

I don’t know why this is here. I can’t think of a publication that might otherwise be eligible that requires this clarification, or a reason why a publication that would otherwise be eligible should be disqualified because it’s distributed in loose-leaf form.

Experts must agree with us

The qualifications for panel members should include that they:

support the package of tax credits to help written news outlets covering general interest news

I mean, I guess it would be odd if a panel member opposed the thing they’re here to judge, but it feels weird to require an independent expert to support a political policy. If they express criticism of a tax credit, do they get booted off the panel?

Actually, maybe freelancers

Later, in its list of additional recommendations, the panel says:

Allowing small publications, which have served established audiences for more than 10 years but do not have two regular employees for the last 12 months, to be able to count freelancers and independent contractors among journalists who regularly contribute to the creation of original content in order to allow them to be considered Qualified Canadian Journalism Organizations. This would include individuals who work as reporters, editors, page designers, photographers and columnists on a regular basis.

It’s unclear why freelancers shouldn’t count in general but should be allowed to count for small publications with fewer than two employed journalists. Allowing this exception essentially eliminates the entire point for setting that two-employed-journalist minimum in the first place.

Make Google pay

Reform the taxation system so that media companies that benefit from the use of Canadian content contribute to its creation. This includes social media, search platforms and internet providers. This can be done by creating a dedicated fund and redirecting levies paid by these entities to support Canadian news outlets.

I won’t go into all the out-of-mandate recommendations from the panel, which mostly translate into “more $$ plz”, but this one is pretty significant, requiring search engines and even internet providers to pay taxes to support Canadian news outlets. News organizations have repeatedly said Google and Facebook need to help them financially because they’re taking their content. Meanwhile those same organizations devote lots of time and resources to get their content as prominent as possible on Google and Facebook.

Amend the Copyright Act so that originating news outlets are properly compensated for the creation of copyrighted news material that is duplicated across digital platforms.

This isn’t explained, and it’s unclear what it means. Is it referring to when Google excerpts the content of pages in search results, or is it talking about the wholesale copying and pasting of entire stories on sketchy websites?

Transparency

A list of companies that have successfully filed for status as Qualified Canadian Journalism Organizations be publicly available.

Good. Taxpayer money should be doled out transparently. Though it’s unclear if the CRA itself would publish this list or some other organization. And it’s unclear why companies that unsuccessfully apply shouldn’t also be publicly available.

Executive compensation

Given that the initiatives outlined in the budget legislation aim to support the creation of news content and coverage of democratic institutions, and that certain companies have eliminated jobs in their newsrooms at the same time as giving executive officers excessive compensation, this Panel strongly urges the Government to require qualifying organizations to recognize that they have an obligation to use publicly funded benefits for the intended purpose of investing in news operations by not awarding excessive compensation to executives at the same time as they receive assistance from the program.

Certain news organizations have been accused of spending too much on executive compensation while seeking a bailout. So some people have suggested this paragraph is aimed at a particular person or type of people.

Let Le Devoir in

The panel specifically recommends that the legislation that allows non-profit news organizations to get charitable status be amended so that organizations that support non-profit news organizations can also be charities. Le Devoir is supported by such an organization, and under the current law (which was drafted more to support La Presse) it wouldn’t be able to issue charitable tax receipts. This seems like a no-brainer, provided the assistance organization otherwise meets the definition of a charity and the news organization itself would otherwise be eligible.

Le Devoir reacted to the report with outrage, as if the report itself was the problem, rather than simply confirming what’s in the legislation and seeking changes on Le Devoir’s behalf. Quebecor, meanwhile, says the report shows the Liberals are in bed with La Presse, but doesn’t point to any specific part of the report or the law that unduly favours its competitor.

An improvised report with big consequences

This panel had only a month to come up with its recommendations, and had to work under the rules set by legislation they did not draft, so I don’t want to criticize them too much. But this report underscores the fact that defining what is and is not journalism is very hard, and not at all easy. Even though we know which kinds of media will likely get the most help (daily newspapers, news magazines plus La Presse), there’s a lot of play around the margins.

What’s more important, though, is that once the government sets some official standard for what constitutes a journalist or journalistic organization, that standard can be referenced or copied elsewhere, creating a slippery slope. Certain privileges meant for any journalist could be restricted to those who meet these criteria and are deemed eligible for the tax credit. Other privileges could be created that give officially accredited journalists more rights than the rest of us. And we need to think hard about the consequences of that.

Tax credits for journalism might be a good idea. But these tax credits support a very specific type of journalism to the detriment of others, and the criteria proposed here just add to the problems.

See also: Andrew Coyne has similar thoughts, expressed more sarcastically.

4 thoughts on “Loopholes in the written journalism bailout panel report

  1. Dilbert

    It’s still a really big government had out to legacy businesses that are failing for simple reasons.

    Deciding which dinosaur of the digital age deserves a bigger slice of the pie might be meaningful to the dinos, but for the rest of us it just looks like free money spewing that will keep well paid owners, upper management, and board members well paid for a little bit longer.

    Reply
  2. Rob Braide.

    A well thought out analysis that should be but probably won’t be read by anyone in government.

    Funding legacy industries is a huge mistake and counterintuitive to technological progress.

    Reply

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