Mother, did it need to be so high?
— Roger Waters, “Mother”, The Wall, 1979
In its first Annual Information Form for investors to treat “Digital” as a distinct revenue category, the Free Press‘ parent company boasted that “[t]raffic grew by 48 per cent, based on page views, in 2009. [winnipegfreepress.com] currently attracts about 100,000 visits and 370,000 page views on average every day”. Over the following year, “[t]raffic grew by 25 per cent… The web site currently attracts about 140,000 visits and 500,000 page views on average every day”. Two years later, “Free Press web sites and mobile applications now get approximately one million page views daily”. By 2015, “more than one million page views daily” was the figure given.
But behind those impressive-sounding headline metrics, FP Newspapers remained somewhat of a laggard, relative to its peers, in terms of monetising this rapidly growing online audience. According to Newspapers Canada, by 2014 the “average” Canadian news-daily derived roughly fifteen per cent of its total advertising revenues from “Online” sources. That same year, FP Newspapers reported fewer than six per cent of total ad revenues as coming from “Digital” channels. In an August 2015 interview, Free Press VP Digital Christian Panson would even confess that “we could technically lose 50 per cent of our traffic and still serve every ad that we sold last year”.
Upon the launch of its unique “micropayments” model, the Winnipeg Free Press‘ leadership had projected that some ten thousand new “all access” digital subscribers would establish a brand-new revenue stream for the paper. As for ad sales, per FP Newspapers’ 2014 annual report:
Traditional digital revenues, which come primarily in the form of website advertising, are expected to continue the multi-year growth trend and in 2015 we are anticipating an overall increase in this category of between 10% and 15%.
Figure 4: Estimated annual net advertising volume in Canadian news-dailies (left) versus FPLP’s non-circulation revenues (right), 2003–2014.
In time and actual fact, neither of those predictions would pan out. Let us review, however briefly, the “Management Discussion and Analysis” sections of FP Newspapers’ next few annual reports to shareholders. Here’s a bit from 2015:
Newspapers Digital advertising revenues are increasingly being impacted by the dominance of the large multi-national social media and search engine sites. After a number of years of increasing digital advertising revenues 2015 saw a small decline of $0.2 million or 5%. Our 2016 plan is to grow this revenue source back to the 2014 level or beyond by continually improving our digital product offerings and making small investments to promote both our desktop website and our mobile apps.
In February 2016 there are approximately 4,000 “all Access” subscribers paying $16.99 per month for digital access to our Winnipeg products and we have planned to grow this to 4,400 by the end of the year. For single article digital sales we are charging $0.27 per article and also have approximately 4,000 registered accounts.
The following year:
As of March 2017 we currently have exceeded 5,600 “all access” digital subscribers and have over 6,300 “read now pay later” accounts…
In 2016 digital ad revenues were down by $0.9 million and we are targeting to keep these revenues relatively stable in 2017.
Digital revenues for 2017 decreased by $0.5 million or 19.3%, primarily due to on-line advertising revenue declines on the Winnipeg Free Press website and other digital offerings…
As of February 2018 we have exceeded 7,000 “all access” digital subscribers… The number of “read now pay later” accounts… stands at just over 7,100… Digital revenue for individual articles on our digital website did grow by 64% in 2017 but is still less than $0.1 million overall… In 2017 digital ad revenues were down by $0.5 million from the prior year and we are trying to keep these revenues relatively stable in 2018 with the help of improved resources in the digital sales area.
As of February 2019 we have exceeded 9,000 “all access” digital subscribers… The number of print subscribers who have activated their free digital access stands at approximately 26,400… Digital advertising revenues declined slightly in 2018…
Notably, that last MD&A, for 2018, did not even mention “read-now-pay-later” accounts; and besides, “Management” had already long since pivoted its messaging around the pay-per-article model. To quote again from the interview that Christian Panson gave to Marketing, about eighteen months after the paywall’s launch:
The Free Press is currently earning about $8,000 per month from micropayments, said Panson. “It’s not at all material to anybody here in our finance department, it would have to quadruple before it becomes material,” he said. “But it’s a psychological thing.”
Similarly, in his speech to the “Newspapers Canada 2016 National Conference”, publisher Bob Cox told the crowd:
It would never work on its own. One article at a time isn’t going to keep your paper alive. It’s part of our strategy to build our subscriber base and an engaged audience.
Four days after giving that speech, Mr. Cox would be in Ottawa, in his capacity as Chair of the Canadian Newspaper Association, to address the Standing Committee on Canadian Heritage. He arrived with his pockets turned out:
A local car dealer spent money with my company, the Winnipeg Free Press, to advertise and reach consumers. There was an immediate benefit to the car dealer, but there was also a secondary one. The Winnipeg Free Press employed people, reported news, and supported community organizations. That money went back into the Winnipeg economy to people who bought cars. The car dealer supported journalism in its desire to reach consumers; we supported vehicle purchases in our desire to serve readers.
This model is breaking down. As companies increasingly reach consumers by using foreign media, Facebook, Google, Twitter, and the like, advertising money is sent out of our communities and does not return. For the most part, these companies spend nothing to do journalism in our towns and cities or to provide support to community groups. They employ hardly anyone in our communities, and the money is not recirculated.
You’ll notice that I did not use the term “digital”. The fact that these are digital companies is coincidental. In the past, Canada has reacted to such seepage of ad dollars to the U.S. by making it harder to have a U.S. TV station that showed only American programs but sold ads to Canadian merchants or to have a U.S. newsmagazine sell Canadian ads into an edition produced south of the border, but we have not become alarmed by this much larger outflow of cash through digital channels.
After sharing the CNA’s five key recommendations for how the federal government could better support its members — more federal spending on ad-space in print newspapers; “encouraging Canadian companies to spend their advertising dollars here” through a carrots-and-sticks approach; new tax incentives for news publishers; more generous treatment under Canada’s copyright laws (specifically through new limits on “fair dealing“); and expanding the eligibility criteria for the Canada Periodical Fund — Mr. Cox was invited by Minister Dan Vandal to speak to his hometown paper’s rather unique business model. Bob Cox then told the House committee:
We set this [micropayments] up somewhat reluctantly. I was always an advocate of having a wide-open digital service that was free for everyone to use, but we found that we couldn’t attract enough advertising to support it. Our audiences really aren’t big enough. No newspaper’s audience is really big enough, not in the Canadian environment. Services such as Google and Facebook make money by repeating advertising hundreds of millions of times. Online advertising rates have gone down a great deal in recent years—in recent months, even—so we can’t do it. We reluctantly went to a paid digital environment, and we’ve had a lot of success with it because there is demand for local content. People do want to know about their local communities.
Forgive me; I do not wish to seem unkind. So let me say only that Mr. Cox’s remarks were mistaken. As Chair of the CNA, it is impossible to conceive that Cox was not familiar with La Presse, the Montreal broadsheet founded in 1844 which had, not six months prior to his testimony, ceased printing a weekday edition altogether after the runaway success of their bet on a free, ad-supported “La Presse+” mobile app (developed in-house over three and a half years on a total budget of $40 million). Guy Crevier, La Presse‘s President and Editor, had even appeared before that very same House committee just two weeks prior, speaking to his newspaper’s web-based successes. And yet here, Cox insists that despite all good intentions and his own best efforts, no Canadian newsroom can afford to provide free, ad-supported news services online… because… none of Canada’s media markets is big enough for the economics to work? I really don’t know what else to tell you. The man’s just wrong.
His key error is seemingly obvious: when Cox refers to ad rates trending “down a great deal in recent years”, he describes his own newspaper’s experience. By the advertising industry’s best estimates, quite the opposite was happening on the macro level. And in the programmatic media economy enabled by our modern commercial Internet, to put it simply, if the Winnipeg Free Press’ products — that is, its ad-space and audience data — were better, then it could stand to charge more for them, and still find willing buyers. Instead, its leadership had simply failed to grasp the nettle of what digital-first, mobile-first web publishing would (or could) become, assumed that the pitiful “digital” revenues they had eked out thus far were all that the market can bear, and now proffered this experience to Canada’s federal government as the general case for all web publishing.
Months later, the Public Policy Forum (a lower-case liberal think tank) would release “The Shattered Mirror” in January 2017, an extensive analysis and enquiry into all that ails Canada’s long-struggling news media. Both that report and Cox’s testimony before the House featured prominently in the resulting “Fry report” — officially, “Disruption: Change and Churning in Canada’s Media Landscape” — tabled by the Heritage committee on 15 June 2017. Guy Crevier’s testimony merited but a single cursory mention in its one-hundred-plus pages.
The Fry report contains some twenty recommendations in total; each one was well worth considering. But within hours of its release, “News Media Canada” — a new industry group, still chaired by Bob Cox, formed through the merger of the Canadian Newspaper Association and the Canadian Community Newspaper Association — issued a counter-proposal of its own.
Echoing the Fry report’s “Recommendation 7“, News Media Canada called on the federal government to expand eligibility for the Canada Periodical Fund, to include daily and free community newspapers. However the industry group went further, calling for that Fund to be more than quadrupled, from $75 million to $350 million per year, so that these same newly-eligible newspapers could draw, on an ongoing annual basis, “a subsidy of 35% of the total of all journalists’ salaries“. As the Canadian journalist and academic Marc Edge has noted, “[a] draft of News Media Canada’s proposal that was circulated to groups for endorsement came on letterhead of the Public Policy Forum, but the final version made no mention of involvement by the think-tank.”
…Before I get to the punchline — and since we’re here in the timeline anyways — please indulge me in a brief detour. On 25 May 2018, the “General Data Protection Regulation” (or GDPR) came into legal force in all E.U. member-states simultaneously. Over the years since then, similar laws and regulations have been adopted by the peoples and governments of Brazil, China, South Korea, Japan, and many other countries (including some two dozen U.S. states, and the province of Quebec).
In response to that watershed moment in the history of digital privacy rights, the Winnipeg Free Press elected to block all EU-based traffic from all of its digital properties, unless those users were logged-in, paid-up subscribers. All other Europeans were now redirected to a simple landing page, prompting them either to subscribe and accept the publisher’s existing terms of use, or else to “[a]sk a friend to mail you a newspaper, which we guarantee to be compliant with the requirements outlined in the GDPR”. Variations on this “help page” remained live until mid-2022, though they have since been removed.
To be clear, winnipegfreepress.com has not achieved compliance with the GDPR, nor with any similar privacy law around the world. It is arguable — I would argue it — that they aren’t even compliant with the more basic provisions of PIPEDA, which its publishers have been subject to since 1999. That no one in a position of authority seems to have noticed, nor cared, nor compelled FP Newspapers to remedy those deficiencies, is quietly illustrative of the current state of both consumer data protections and of broader privacy rights afforded to residents of Canada.
Where was I? Ah, yes: in his “Fall Economic Statement” to Parliament on 21 November 2018, Finance Minister Bill Morneau announced $595 million in new tax credits and supports for Canada’s beleaguered news publishers. This money was to be spread out over five years — so not quite the $1.4 billion that NMC had asked for over a similar timeframe, but certainly nothing to sneeze at. Postmedia CEO Paul Godfrey exclaimed that “everyone in journalism should be doing a victory lap around their building right now”. Mind you, this was almost a year to the day after the Torstar–Postmedia swap, in which — strictly speaking — Paul Godfrey fired me.
Fuller details on how this new federal money was to be doled out arrived on Budget Day. To claim any slice of the pie, a news outlet would first have to be declared a “qualified Canadian journalism organisation” (or QCJO) by the Canada Revenue Agency (CRA). Once designated, a QCJO could claim refundable tax credits worth up to 25 per cent of all “eligible newsroom employee” salaries, up to $13,750 per employee per year. From 2023–2026, this rate was raised to 35 per cent, or up to $29,750 per employee per year. In addition, any Canadian paying for a QCJO’s digital news subscription could now apply for (non-refundable) tax credits of their own, worth up to 15 per cent of that subscription’s cost.
Obviously, having the federal government pick up one-quarter (or one-third!) of the tab for a newsroom’s wages is a pretty massive market advantage to hand to some news publishers, and to withhold from others. But how would the CRA go about determining which news outlets receive QCJO status? Say, that’s a really great question! It depends. Thanks for asking.
The joke is, exactly one week before that Budget Day, on 12 March 2019, the Winnipeg Free Press published its first-ever mobile app… for Android devices. Overnight, the potential audience for its news apps — the “total addressable market”, if you like — effectively doubled. But you know the old saw: better late than never. And the timing was even auspicious; soon enough, the Free Press‘ readership would find themselves spending a lot more time with their screens.
Figure 5: Quarterly operating revenues (left) and expenses (right) of FP Canadian Newspapers Limited Partnership, Q2 2015–Q4 2019.
Entering our Pandemic Era
PLAGUE!! We are in the middle of a fucking plague! And you behave like this. Plague! 40 million infected people is a fucking plague, and nobody acts as it is—as if it is…
We are in the worst shape we have ever, ever, ever been in. Nothing is working. None of that shit you saw on that screen is working. Nothing—none of the shit that is in the pipeline that these people are studying is working… That’s what we’re in. Every person I talk to, in every city, in every agency—gay, straight, AIDS—is as despondent as they can possibly be. Nobody knows what to do next. Nobody knows what to do next.
[…] And I don’t know what to do next. I don’t know what kind of an organisation to start. I don’t know how to give advice. I don’t know how to lead anyone, should they want to follow. I don’t know what to write anymore. I don’t know how to write any more articles, ’cause I have said what I have said to you tonight, in one form or another, for ten fucking years.
— Larry Kramer, at a public forum organised by Positive Action of New York, 19 September 1991
On 27 January 2020, the National Microbiology Laboratory — that’s in Winnipeg, too — confirmed Canada’s first known domestic case of a novel coronavirus then-recently reported in the city of Wuhan, China. But for our story’s purposes, there’s not a whole lot else to say about the year that followed. It was a fairly “heads-down” time for the world.
In spite of widespread industry gloom, Q2 2020 would prove to be FP Newspapers’ most profitable operating quarter in the past six years, as the Winnipeg Free Press’ unionised workforce agreed to temporary pay cuts of 12–20 per cent, while their employers recognised $4 million in additional federal support through the Canada Emergency Wage Subsidy (CEWS). In total, FP Newspapers received close to $5.4 million through the CEWS program in 2020, and another $1.6 million in 2021.
Beyond that, Christian Panson would turn up in some sales materials for Piano Analytics, after its $48 million CAD acquisition of Norway-based Cxense (one of the Free Press‘ two key external tech partners), but that was about it.
Then, in February 2021, a development: certifiable rock legend and managing editor of Canstar Community News John Kendle announces that the “soft paywall” which was added to each of its six weekly titles back in 2015 was coming down. “From now on,” he told readers, “when you visit canstarnews.com, you will go straight to our site”:
Here at Canstar Community News, we are part of the FP Canadian Newspapers group, which publishes the Winnipeg Free Press, Brandon Sun and several other papers.
As such, all of our papers’ content has, for the past few years, been behind a soft paywall which asks readers to register their email addresses and, after they have read a certain number of articles, to pay a small fee per story or sign up for a subscription. It’s a model that has worked very well for the daily papers.
However, since the printed versions of our weekly community newspapers are distributed free to every household in their coverage areas, we have now decided to ensure that readers of these papers can enjoy the same free access to our stories and photos on the web that they get with their printed copies at home.
We should note that nothing had changed here — all of Canstar’s papers had been freesheets all along — but let’s not look a gift horse in the mouth. FP Newspapers apparently now saw sense in dropping a login wall on its free community news-weeklies.
In March 2021, Panson tells crypto-blog The Defiant that “[w]e will add Google, Apple and Amazon Pay [payment options] sometime in the future”. Earlier in the month, Australia’s “News Media Bargaining Code” passed into law. Pin that one in the back of your mind; we will return for it, later.
In May, Bob Cox stands down as Chair of News Media Canada, after four and a half years in the role (plus two and a half years as Chair of its predecessor). Jamie Irving is elected as NMC’s new Chair at the group’s annual general meeting. Cox will remain on the Board, though now as a director-at-large.
In early November, U.K.-based Aptitude Software acquires MPP Global — the second of the Freep’s two key tech-partners — in a deal valued at roughly CAD$63 million. Then, toward the end of that month, Cox announces his retirement, prompting the glowing retrospective written by Martin Cash that I told you about way back at the beginning, roughly… gosh, seven thousand words ago. I told you then about how Cash’s article claimed that “[u]nder Cox’s helm, the paper has not lost money”. So, let us now take stock:
Figure 6: Estimated annual net advertising volume in Canadian news-dailies (left) versus FPLP’s non-circulation revenues (right), Q3 2003–Q2 2022.
Bob Cox served as Publisher of the Winnipeg Free Press for fifteen years — from July 2007 to July 2022. In the 2007 calendar year, FP Newspapers reported annual operating revenues of $126 million; by 2021, they were just $55 million. Print advertising had declined more-or-less in lockstep with the national average among news-dailies, according to both Statistics Canada and Newspapers Canada: fairly stable from 2009–2012, before declining steadily from 2013–2019, and reaching a somewhat stable nadir circa 2020–2022. By that time, digital advertising made up roughly half of the “average” Canadian daily newspaper’s total ad revenues. At FP Newspapers, it was nearer to thirteen per cent.
Internal web analytics, also from 2021, suggest that winnipegfreepress.com was seeing fewer than 170,000 pageviews on the average day that year. That’s less than half of the site’s reported traffic from back in 2009, and a far cry from the “more than one million page views daily” that its parent company had boasted of back in 2015, the year its domestic paywalls went up.
Figure 7: Quarterly operating revenues (upper pair) and expenses (lower pair) of FP Canadian Newspapers Limited Partnership, Q3 2007–Q2 2022.
The picture that inevitably emerges is one of a newsroom now reaching far fewer people, who collectively “consume” far less of its journalism, and whose publishers, as a consequence, make less money than they did. And while Bob Cox did indeed “marshal in federal legislation that has produced millions of dollars in federal government support” for Canada’s newspapers — including millions for his own — his stewardship of the Winnipeg Free Press has rendered it largely dependent on that same federal largesse, on a sustained and ever-increasing basis, to remain a going concern.
He was also once quite rude to my mother, over the telephone.
But our story is not yet over; we are only at the close of its second act. Having reimagined themselves as rent-seekers first and profit-seekers second, and journalism as a “club good” rather than a public one, Canada’s press barons have prised open the public coffers, and ensconced themselves into every pertinent decision loop. Next, they will set out to pull up every ladder left behind them.