Huffington Post's Ever Growing Canadian Ambitions

Home to its very first international edition as well as a French language edition in Québec, this fall The Huffington Post (HuffPo) is set to launch two new regional editions, HuffPo Alberta and HuffPo B.C.

The move into Western Canada is part of an ambitious international expansion effort being led by controversial, if charismatic, president and editor-in-chief Arianna Huffington. With plans in the works to further expand AOL's decision last year to purchase the company -- to the tune of $315 million -- is proving to be a worthwhile investment.

In a different era, the entrance of such a large American company into the Canadian media landscape might have stirred some controversy and even elicited a swift response from government. Direct government intervention to nurture and protect domestic media was once commonplace, thought necessary to protect Canadian culture from the threat of Americanization.

The times have changed. HuffPo's impact on the Canadian media ecosystem has largely flown under the radar and gone unexamined by both government and the public.

Though there is a lot at stake, the reason for the disinterest is no mystery. Canadians access news online from different outlets all over the world everyday. Does getting their domestic news from a foreign-owned website deserve special attention?

Dormant as cultural protectionism has been for the past decade, the precarious future of Canada's newspapers has begun to rekindle interest in answering this question. Paul Godfrey, CEO of Postmedia recently called on the Canadian government to "level the playing field" in media advertising rules:

"Corporations like Google, corporations like Facebook, corporations like the Huffington Post and AOL have all come to Canada. They are getting -- without providing the content -- more than 50 per cent of all the advertising revenue going to the digital world."

Canada has never outright restricted foreign ownership of newspapers. Instead, it has used a provision in the Income Tax Act that effectively discourages it by making advertising in foreign-owned papers a non-deductable expense. But this prohibition has never been extended to electronic media like the Huffington Post:

"We should either remove the foreign-ownership [restrictions]... or provide the same rules to Google, Facebook, the Huffington Post and others that if they're not controlled by Canadians. the advertising that goes on there should not allowed to be deducted as a legitimate business expense."

Godfrey is no leftie lamenting the loss of Canada's cultural sovereignty and calling for state intervention to save the day. For Postmedia, the goal is to open up newspapers to foreign ownership rather than to extend advertising restrictions to electronic media. Attracting foreign owners with ample capital, Godfrey hopes, will allow Postmedia to better position itself to compete with the big boys. To that end, it has hired lobbyist David Angus to make the case to government for the changes.

So HuffPo's arrival and regional expansion is clearly ringing alarm bells at the country's struggling newspapers. But it's difficult to predict what it means for the fortunes of Canada's smaller alternative and independent outlets, particularly those that have carved out a space online like iPolitics, The Tyee, The Mark News and Rabble. Already competing for readers with Canada's corporate media giants, it's reasonable to wonder what impact HuffPo will have on their ability to grow and prosper.

Regional expansion and economies of scale

Huffington Post's international expansion is no fluke. Having attracted tens of millions of dollars in capital through several rounds of fundraising, expansion was on its agenda well before the company was bought by AOL last year. With the help of its new deep pockets, HuffPo Canada can amortize its production and editorial costs by using the abundance of content HuffPo has already produced for its U.S. and other markets. This economy of scale has helped it to move aggressively into Canada where it now competes with domestic outlets that have to pay to produce their editorial content from scratch.

From a business perspective, then, the decision to expand into Canada was a no brainer. When HuffPo Canada first launched, it was already attracting well over a million readers to its flagship U.S. edition. According to HuffPo Canada's managing editor Kenny Yum, its latest traffic numbers from Comscore are an astounding 3.4 million unique visitors, about one in 10 Canadians. For those unfamiliar with web traffic, that is a massive audience for a news website in Canada.

What might come as a surprise is that over one-third of that readership already comes from Western Canada. "We're not trying to build an audience from scratch," Yum explained about the expansion. "Our regional expansion helps us reach our existing readership and give them more content they actually want."

HuffPo has an even greater competitive advantage in B.C. and Alberta. When you consider that content -- including the site's mix of lurid celebrity gossip, pop culture riffing and political reports -- can be pooled not only from the U.S. edition, but from its other Canadian properties to fill its pages, the startup and operating costs of the new bureaus are comparatively low when compared to what it would take to establish a more traditional news outlet.

The expansion will mean more competition for scarce online ad dollars. It's something the provinces' news outlets, both corporate-owned like the Vancouver Sun and Calgary Herald, or "fiercely independent" like The Tyee and Vancouver Observer, cannot ignore.

To marketers in B.C. or Alberta, HuffPo's large audience will make them an attractive option. That's trouble for domestic newspapers that desperately need to increase their share of online ad revenue if they are to stay afloat.

The economic impact is harder to discern in the case of smaller outlets, especially those that don't rely exclusively on online advertising revenue. Smaller media outlets have less of a margin within which they can weather losses than do the corporate-owned newspapers. This suggests that HuffPo will only make their lot more difficult. On the other hand, many are already innovating to find new ways to fund their journalism.

Whatever one makes of HuffPo's expansion and competition vis-à-vis relatively disadvantaged and cash-strapped domestics, its appeal to a growing number of readers across the country clearly means it is doing something right.

Yum attributes HuffPo's success to its "social reading experience" -- the ease of social media sharing for all its content, the lively and sizeable community found in its comment sections and its seemingly endless roster of audience-seeking bloggers. HuffPo, Yum quips, sees social "as a pillar of [its] coverage."

"Other organizations may dip their toes in social and start to understand social but we were born in that social age. HuffPo was created within weeks of Youtube... It is a news organization that was born in a time when a lot of people's habits in how they consume information changed."

Having built their audience in the share-happy generation of social media dependents, HuffPo claims to have an audience of hyper-engaged "influencers." "A reader of ours is more likely to share, tweet, email or comment than [a] reader for another site."

While indisputably popular amongst Canadian readers, HuffPo remains controversial, even reviled in traditional journalistic circles, both in Canada and abroad. Criticisms generally focus on HuffPo's content production model -- namely, its coupling of columns from an ever-expanding roster of unpaid bloggers with news stories aggregated from other sources.

Exposure as pay

Critics deplore the practice of a profitable media organization making money "off the backs" of an unpaid labour force. They argue that not paying bloggers devalues the trade and places downward pressure on freelance wages that are already declining in what few disagree has become a tough market to make a living. It has also drawn the ire of labour activists more generally who see it as part of increasing trend towards unpaid work and internships elsewhere in the economy.

"Writers should be paid for the work they produce. Period." Canadian Freelance Union President Michael O'Reilly told me. "This goes for the entire spectrum of publishers who want to pay little or nothing for the works produced by freelancers. But it is especially galling when this kind of slave work is demanded by a company so successful as the Huffington Post." 

Despite (failed) lawsuits and writer boycotts, HuffPo bloggers continue to line up to write. HuffPo Canada has had no problem attracting Canadians to write pro bono either and there's little to suggest it will be any different in British Columbia.

Why?

Well, in exchange for their writing, HuffPo bloggers are offered the services of an editorial staff and, more importantly, a platform from which they can reach a wide audience. The exposure has a lot of appeal, especially for those (politicians, academics, celebrities) that don't care about the freelance fee.

While the web has made everyone with a computer and Internet connection a potential publisher, Canadian media critic Marc Edge believes it's still a myth that online journalism poses a threat to mainstream media: "Most online journalism goes unnoticed."

But HuffPo's success, he says, is bucking that trend with a successful business model, one which he sees as "the biggest challenge yet to traditional media."

When HuffPo arrives in B.C., the MLA, business leader, or academic who might previously have gone to the the Vancouver Sun or The Tyee could choose instead to write an op-ed for HuffPo. With its established popularity, Huffpo is certainly a compelling option.

But as the National Post's comment page editor Jonathan Kay explained to me, quality still counts: "From a reader's perspective, I find [The Huffington Post] problematic, because there are way too many articles, and most aren't that good. I generally prefer outlets... that publish a much more limited range of articles, but which are more choosy about whom they publish."

The site, he says, is more appealing "for beginner writers looking to make a name for themselves, or for established writers who simply produce too much copy for their higher end outlets." The difficulty is that those "higher end outlets" Kay is referring to, including the National Post and other big Canadian newspapers, are under serious financial strain and can ill afford to lose more readers. The same goes for Canada's smaller independents.

Aggregation, curation, consternation

At their fiercest, critics warn that HuffPo's "predatory" business model puts in jeopardy the kind of quality and in-depth reporting that was once the hallmark of the newspaper. By aggregating stories, and taking away needed revenue from a story's original outlet, they prevent the reinvestment of that revenue back into more reporting. HuffPo therefore threatens not only the future of the newspaper and other news websites, but the future of journalism and the health of democracy.

For Kenny Yum, this characterization of aggregation is not only inaccurate, it's incomplete. Yum sees HuffPo's editors as curators, journalists in their own right that bring something new to the stories they select and cover. HuffPo's news, he states emphatically, "has a very specific tone and personality." In a world of diminishing attention spans, the catchy headlines and condensed but contextual news summaries ("quick reads") are what many online readers seem to be looking for.

Yum also believes that there is a misunderstanding about the site's distinction as a pioneer of aggregation. "Aggregation has been done for a very, very long time. If you turn on your radio any morning, you're listening to a broadcaster rip and read from... the newspapers that they got delivered into that news feed."

Marc Edge disagrees. He believes the arrival of HuffPo to Canada is a real concern. "[The Huffington Post] model tends to undercut other news websites both by stealing, I mean aggregating, their content and by taking away advertising that might otherwise support original online journalism."

HuffPo Canada pays license fees to run stories from The Canadian Press, a privately owned company, and The Canadian Broadcasting Corporation, which is taxpayer funded -- meaning that Canadian taxpayers in essence finance the creation of journalistic product that Huffington Post then licences to build its brand in Canada and compete with the Canadian public broadcaster.

While bigger outfits like CP and CBC currently benefit from HuffPo's business model, its hard to see how smaller operations like The Tyee stand to take a cut beyond some links to their content. That is unless HuffPo is willing to pay smaller outlets for the rights to license their news.

Original content

Though it remains miniscule relative to traditional newsrooms (HuffPo will employ only six employees to staff its B.C. and Alberta editions), the company has invested resources into original reporting. In April, senior military correspondent at its flagship U.S. site, David Wood, was awarded a Pulitzer prize in National Reporting for his 10-part series, "Beyond the Battlefield." He's one of a number of top of the line journalists HuffPo has added to its ranks.

At HuffPo Canada, Yum is particularly proud of the "mainstream approach" they've taken to business and economic reporting in their Mind the Gap series. A mix of original reporting and aggregated news on income inequality, he believes this series really differentiates HuffPo's coverage from the likes of the Report on Business and Financial Post. That differing approach is evident in the tone of business editor Dan Tencer's writing.

HuffPo Canada has hired experienced and local editorial and reporting staff to do original reporting in Canada too. This includes Parliament Hill reporter Althia Raj as Ottawa bureau chief and business reporter Rachel Mendleson. Mendleson's piece on the links between income inequality and the decline of unions in Canada won the inaugural labour reporting award from the Canadian Association of Journalists. The news editor for HuffPo B.C. will be former CBC Vancouver veteran Andree Lau; former digital editor from the Calgary Herald Michelle Butterfield will take the helm at HuffPo Alberta, along with Pablo Fernandez from the Calgary Sun.

HuffPo blogs: Diversity of voices?

HuffPo's ability to attract traffic demonstrates there is demand for its brand of news-meets-blogosphere in Canada. But how big a blow is HuffPo really landing against to diversify points of view within Canada's concentrated media landscape?

British Columbians are no strangers to the deleterious effects that having a concentrated media ownership can have -- a dearth of competing voices in editorial pages and undue control of the issue agenda by publishers. This was not uncommon when the once-mighty Asper media empire had a strangle hold over B.C.'s news media.

Which brings us back to the question of whether HuffPo being foreign owned should be a matter of concern to Canadians at all. From a reader's perspective, why should one care if AOL ultimately collects the ad revenue so long as HuffPo's editorial team is staffed by Canadians, provides Canada-focused content and is a platform for lively and diverse commentary?

As we've seen, the issue of editorial staff -- or more properly how HuffPo might affect the ability to staff other Canadian news outlets -- is a matter of concern even as HuffPo itself hires some Canadian talent. Likewise, its model of curating Canadian news content -- the paid licensing of content from wires aside -- can only be of net benefit to readers so long as it doesn't sink the other news outlets from which it aggregates from in the first place.

The blogging section, however, remains a place where HuffPo could distinguish itself by offering a diversity of viewpoints that are difficult to find anywhere else. While in the U.S., HuffPo has typically been a space for "left-liberal" discourse, that's not been the case in Canada. In fact, blog posts from prominent conservatives like David Frum, Conrad Black and Peter Worthington can be found almost daily on the homepage of the site. These are personalities and viewpoints that can be found aplenty elsewhere in Canada's centre right-dominated mainstream news.

The prominent presence of these voices is likely due to their close association with HuffPo Canada's blog editor Danielle Crittenden. A former editor at the defunct conservative broadsheet the Toronto Telegram, Crittenden is more widely known as a right wing columnist, a vocal critic of modern feminism who's been accused of insensitivity and a lack of nuance in her coverage of islamophobia and racial profiling of Arabs. She is married to the conservative columnist David Frum who crafted messages in the White House for President George W. Bush, and she is the stepdaughter of Peter Worthington, the founding editor of the right-wing Toronto Sun tabloid.

All this is not to say that Crittenden has shut out voices on the left. Consider the success of NDP MP Charlie Angus' impassioned post about the plight of Attawapiskat residents that went viral on HuffPo Canada last November. Tweeted and shared tens of thousands of times, the blog led to weeks of media coverage on the abhorrent poverty First Nations communities continue to experience as disinterested citizens and our elected governments look the other way.

But if HuffPo was founded to differentiate itself by creating a space for alternative viewpoints, as it did in the U.S., Crittenden seems a strange choice for the Canadian iteration.

Its difficult to gauge to what degree the blogs section at HuffPo Canada has broadened the confines of Canada's political discourse. The majority of HuffPo's traffic does not come from blogs. Like it or not, it's difficult for any website dedicated exclusively to commentary to pull in sufficient traffic to stay afloat.

At the time of HuffPo's Canadian launch, I was working as an associate editor at The Mark News, an independent Canadian website that had launched back in 2009. The Mark had tried its hand at creating a digital home in Canada for expert opinion and analysis that operated not unlike the Huffington Post's blog section. By the time I had joined the editorial staff there at the beginning of 2011, The Mark's business model had, by necessity, changed. There simply wasn't enough money coming through the door from online ads alone and much of the staff was delegated to work on revenue generating projects.

To save or not to save home grown media

An often cited study of U.S. newspapers published recently found that for every $7 publishers lose in print, they earn only $1 in digital revenue. There's little to suggest that the picture is any brighter in Canada. Sinking earnings have already led to deep cuts to reporting and editorial staffs across the country as companies like Postmedia try and shift to digital first business strategies.

Huffington Post's arrival in Canada has made this transition job that much more daunting. With their laser focus on digital, they compete for the meager scraps of what as-yet is a paltry (if a supposedly growing) online advertising pie. As outlined already, HuffPo Canada also has the added bonus of being flush with content from their affiliate sites, content that they do not themselves have to pay to produce. This is a luxury that neither Big Media newspapers nor independents like The Tyee enjoy.

That's why Postmedia's Paul Godfrey, perhaps accidentally, has re-opened the foreign ownership debate. As he well knows, any changes enacted to protect domestic media will not come easy.

The near total destruction of Canada's ability to enact new cultural policy since the onset of neoliberal global trade governance is described in detail in political economist Stephen Clarkson's tome, Uncle Sam and Us. To summarize, Canada's global trade obligations have restricted our ability to enact any new cultural protection without facing fierce retaliation from the United States.

In the nineties, Canada tried to block powerful American media from destroying domestic magazine producers. Much like with HuffPo now, the issue had to do with economies of scale. For decades, the Canadian government protected Canada's fragile homegrown magazines from American competitors able to produce Canadian editions on the cheap and then undercut the domestics by offering cheaper advertising rates. When Time Warner began using satellite technology in 1993 so its "split-run" Sports Illustrated Canada could bypass government protections for domestics, Canada responded with a prohibitive excise tax and eventually an outright ban on advertising in "split-run" magazines. Using both NAFTA's notwithstanding clause and the newly minted WTO judicial apparatus, the United States forced the Canadian government to back down and scrap the policies outright.

Out the door went Brian Mulroney's "cultural exemption" rhetoric.

The history lesson is meaningful. It suggests that if Canada did try to protect its domestics from the likes of HuffPo, it would almost certainly face retaliation from its biggest trading partner. The Harper government, if they were to do anything, would likely remove Canada's prohibition on foreign ownership rather than extend the Income Tax Act prohibition to online media. Opening up foreign ownership to capital from multinationals may help Big Media outlets like Postmedia compete, but it does nothing to help the viability of smaller online media outlets that are currently eking out an existence on the web.

For those media, the problem from the beginning, and still, has been getting even a fraction of the capital that HuffPo and other big U.S. and Canadian media organizations have at their disposal to acquire talent, license other content, operate on various increasingly expensive media platforms, innovate, market and even merge with other big players.

So from the standpoint of the smaller online media players, the question of whether to allow foreign ownership involves a parallel question -- is Canada serious about creating new and different incentives to finance home grown media experiments?

Government's have been known to do the darndest things under public pressure and Canadians remain very skeptical of foreign ownership of their media. As the Huffington Post has itself reported over two-thirds of Canadians oppose opening up foreign ownership of our media.

The issue of foreign ownership in Canada, it seems is poised for renewed discussion and vigorous debate. The public deserves to be informed by thoughtful arguments in the press... or perhaps in the blogging section of HuffPo Canada.