In April 2007, a rising political star set his heart on building a national broadband network to connect 98 per cent of Australians with superfast internet to the world.
It would cost $43 billion, Communications Minister Stephen Conroy told the voters, who gasped.
I liked Conroy. He had balls and a vision. You knew where you stood with him.
Then, through mutual connections, I was called in by the government’s mandarins to help them decipher whether Conroy was getting his messaging right.
Was fast internet important with voters, they asked? Was it going to win more public support than say, a new hospital, cut price childcare, or a new apprentice scheme?
I gave a simple answer. People would absolutely love it once they got it, but it needed safeguards.
Today, the failure to act on that warning is ripping the guts out of national economies all over the world.
“If you build a giant pipe from the Australian economy and hook it up to the US, then you better have a plan ready to stop all the country’s money leeching out,” I told them.
I was commissioned to create a series of policies around digital taxation, domestic advertising quotas, ways to preference national interests and media companies, etc.
Australia then went ahead and built its NBN ($57 billion and counting) and Australians were delighted.
Netflix used the fast speeds to dominate broadcast, millions became hooked on YouTube video on Google search, more sucked up Meta, and later TikTok.
It was great.
But Australia forgot to lock the gates, and today, $15 billion a year of its GDP, its economic activity, chugs down that pipe to Big Tech’s offshore tax havens and then to the US.
Then, in the past few days, I got a call from my friend and (until recently Dentsu CEO) ad scion Sarah Thompson in Canada.
She had decided to get her teeth into this massive and thorny problem, putting a team together and setting her North Star to put real numbers to the great digital suck.
And this week, her first-of-its-kind report revealed the true cost of unrestricted access for US digital monopolies on another nation’s economy.
She joined Chris Duncan and I on Scotch and Watch live this morning - with a re-run for those of you who missed it.
The highlights are below, but before I get there, welcome to new subs from Netflix, TikTok, The Washington Post, Snap, The Center for News, Technology & Innovation in Maryland, Australia’s Foreign Investment Review Board, UNICEF, Scotland’s International Magazine Centre, Capgemini Invent, and many more.
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Sarah Thompson has had a front row seat to the decline of Canada’s advertising and publishing industries, and now she has a number.
“We’ve lost about $7.5 billion from digital advertising that has leaked out of our market,” she told Scotch&Watch.
“If you had waterfront property in Canada, it’s the economic equivalent of eroding your beachfront by 10 metres a year.”
Her study Canadian Media Means Business is more than a moan. It’s a manifesto for action, designed to mobilise news orgs, agencies, and advertisers together.
Her data shows ~200,000 jobs rely on media and advertising in the country, outnumbering the auto industry (129,000) and telecoms (122,000).
The make-up has shifted with the times:
Advertising, PR and marketing: 55,700 jobs.
Digital media: 37,400
Newspapers and mags: 19,400
TV: 17,800
Radio/audio: 6,700
Out of home: 1,000
Together, they support CA$23 billion in GDP - the accepted measure of a nation’s economic activity.
And every $1 million invested by advertisers in Canadian-owned media outlets creates:
8.2 jobs
CA$630,000 in salaries, and
Adds CA$1 million to GDP.
The study also revealed how the drain of ad dollars to platforms has impacted on journalism.
Since 2019, 11,342 media jobs have gone as CA$7.46 billion in ads have been lost to foreign platforms (7,693 in newspapers, 3,232 in radio and TV, and 417 in pay TV).
That’s wiped out ~$6.7 billion from Canada’s economy, and left just 11,900 journalists covering a landmass a third larger than Australia, and comparable to continental Europe.
In their place, global platforms have hired just 7,500 people - that’s one for every 13 jobs lost.
And the domestic share of ad take has fallen from 30 per cent to single digits in just five years.
If action is not taken, the suck will continue, and the study concludes only one per cent of digital ad dollars will remain in Canada within five years - wiping out the creative industry entirely.
Sarah told Chris and I the publishing, advertising and agency industries need to work together to plug the hole and save themselves and the industry.
“We have an interdependency that’s really important that we don’t talk enough about,” she said.
“If a dollar stays in Canada, that’s a very good thing for our economy. The end.
“We need way more collaboration amongst media owners and to stop focusing on our Canadian media being a charity.
“This study proves that we’re not a charity. We are an economic powerhouse that drives our economy, and we need to get our hands back on our steering wheel.
“We need more collaboration. I love the out-of-home industry in Canada which collectively built a map where all the out-of-home locations are.
“These are important for us in the advertising holding companies to be able to redirect money.
“Historically, we’ve just had moments of misses - the right idea, just at the wrong times.
“Now we need an appetite, a motivation, and the leadership to want to see the possibility because it has to be everybody.
“Collaboration, conversation, doing a study like this on your local economy. What are we losing? What is it costing us? What’s the Plan B?”
