Link Taxes Backfire: Canadian News Outlets Lose Out, Meta Unscathed

As California (and possibly Congress) are, again, revisiting instituting link taxes in the US, it's worth highlighting that our prediction about the Canadian link tax has now been shown to be correct. It didn't harm Meta one bit to remove news.

The entire premise behind these link taxes/bargaining codes is that social media gets so much free value" from news orgs, that they must pay up. Indeed, a ridiculously bad study that came out last fall, and was widely passed around, that argued that Google and Meta had stripped $14 billion worth of value from news orgs and should offer to pay up that amount.

$14 billion. With a b."

No one, who understands anything, believes that's true. Again, social media is not taking value away from news orgs. It's giving them free distribution and free circulation, things that, historically, cost media organizations a ton of money.

But, now a study, in Canada is proving that social media companies get basically zero value from news links. Meta, somewhat famously, blocked links to news in Canada in response to that country's link tax. This sent many observers into a tizzy, claiming that it was somehow both unfair for Meta to link to news orgs AND to not link to news orgs.

Yes, media organizations are struggling. Yes, the problems facing the news industry are incredibly important to solve to help protect democracy. Yes, we should be thinking and talking about creative solutions for funding.

But, taxing links to force internet companies to pay media companies is simply a terrible solution.

Thanks to Meta , not giving in to Canada and blocking links to news, we now have some data on what happens when a link tax approach is put in place. Some new research from McGill University and the University of Toronto has found that Meta didn't lose very much engagement from a lack of news links. But media orgs lost out big time.

Laura Hazard Owen has a good summary at Nieman Lab.

We expected the disappearance of news on Meta platforms to have caused a major shock to the Canadian information ecosystem," the paper's authors - Sara Parker, Saewon Park, Zeynep Pehlivan, Alexei Abrahams, Mika Desblancs, Taylor Owen, Jennie Phillips, and Aengus Bridgman - write. But the shock appears to have been one-sided. While the ban has significantly impacted Canadian news outlets," the authors write, Meta has deprived users of the affordance of news sharing without suffering any loss in engagement of their user base."

What the researchers found is that users are still using Meta platforms just as much, and still getting news from those platforms. They're just no longer following links back to the sources. This has done particular harm to smaller local news organizations:

This remarkable stability in Meta platform users' continued use of the platforms for politics and current affairs anticipates the findings from the detailed investigation into engagement and posting behaviour of Canadians. We find that the ban has significantly impacted Canadian news outlets but had little impact on Canadian user behaviour. Consistent with the ban's goal, we find a precipitous decline in engagement with Canadian news and consequently the posting of news content by Canadian news outlets. The effect is particularly acute for local news outlets, while some news outlets with national or international scope have been able to make a partial recovery after a few months. Additionally, posting by and engagement with alternative sources of information about Canadian current affairs appears unmoved by the ban. We further find that Groups focused on Canadian politics enjoy the same frequency of posting and diversity of engagement after the ban as before. While link sharing declines, we document a complementary uptick in the sharing of screenshots of Canadian news in a sample of these political Groups, and confirm by reviewing a number of such posts where users deliberately circumvented the link-sharing ban by posting screenshots. Although the screenshots do not compensate for the total loss of link sharing, the screenshots themselves garner the same total amount of engagement as news links previously had.

I feel like I need to keep pointing this out, but: when you tax something, you get less of it. Canada has decided to tax news links, so they get fewer news links. But users still want to talk about news, so they're replacing the links with screenshots and discussions. And it's pretty impressive how quickly users switched over:

Meaning the only one losing out here are the news publishers themselves who claimed to have wanted this law so badly.

The impact on Canadian news orgs appears to be quite dramatic:

But the activity on Meta platform groups dedicated to news doesn't seem to have changed that much:

If news links" were so valuable to Meta, then, um, wouldn't that have declined once Meta blocked links?

One somewhat incredible finding in the paper is that misinformation" links also declined after Meta banned news links:

Surprisingly, the number of misinformation links in political and local community Groups decreased after the ban.

Political Groups:

• Prior to the ban: 2.8% of links (5612 out of 198,587 links) were misinformation links
• After the ban: 1.4% of links (5306 out of 379,202 links) were misinformation links

Though the paper admits that this could just be a function of users recognizing they can't share links.

This is still quite early research, but it is notable, especially given that the US continues to push for this kind of law as well. Maybe, just maybe, we should take a step back and recognize that taxing links is not helpful for news orgs and misunderstands the overall issue.

It's becoming increasingly clear that the approach taken by Canada and other countries to force platforms like Meta to pay for news links is misguided and counterproductive. These laws are reducing the reach and engagement of news organizations while doing little to address the underlying challenges facing the industry. Instead of helping news organizations, these laws are having the opposite effect. Policymakers need to take a more nuanced and evidence-based approach that recognizes the complex dynamics of the online news ecosystem.