Robyn Allen

Industry self-regulation doesn’t work and never will for a simple reason: He who pays the piper calls the tune.

Companies that tell fibs to their customers don’t like being regulated by their own tame “watchdogs” any more than they like being told what to do by the government. The difference is, in the case of in-house regulation, they’re big enough to kick the dog.

So DeSmog Canada needn’t have held out much hope that Advertising Standards Canada would do or say anything about its complaint that Postmedia has been passing off paid advertising from the petroleum industry as unlabelled editorial content.

And a news organization that gives its readers the impression that advertising copy was written by real journalists is telling a fib. So, not to be needlessly cynical, you could see where this was going as soon as DeSmog complained to the industry self-regulatory body about stories that were really ads in the Vancouver Sun and the Regina Leader-Post, both newspapers and websites owned by Postmedia Network Canada Corp.

Advertising Standards Canada describes itself as “the national not-for-profit advertising self-regulatory body.” DeSmog Canada calls itself an organization that “exists to clear the PR pollution that is preventing us from having sensible public conversations about critical issues around the environment, social justice and the economy.”

The story in question, which ran on both papers’ websites last December, told about an executive for Enbridge Inc., the company that wants to build the Northern Gateway pipeline. The cheerful yarn made a claim that the loss to Canada of not having sufficient access to export markets for its oil is $50 million a day.

Some environmentalists and economists took issue with this statement.

B.C.-based economist Robyn Allen submitted an opinion piece to the Sun arguing the $50-million claim was untrue. What happened next, said DeSmog, was that “she was informed it couldn’t be run because the article she was responding to was actually a paid advertisement.”

DeSmog’s complaint cited one of the points in the group’s “Canadian Code of Advertising Standards” called “disguised advertising techniques,” which declares “no advertisement shall be presented in a format or style that conceals its commercial intent.”

After a couple of months, said DeSmog, they got a letter from the watchdog that the case was closed, and Advertising Standards Canada would not be issuing a ruling against Postmedia.

The article was later quietly pulled from the Sun’s website, but the same thing has happened again since, DeSmog said, as Postmedia works with the Canadian Association of Petroleum Producers to pass off stories about the oil industry’s commitment to the environment as works of journalism, not advertising.

The problem, as DeSmog’s writer correctly noted, is that the news business in general, and the newspaper industry in particular, is in deep financial doo-doo. Publishers are desperate to find new ways to generate revenue in a desperately shrinking market that’s beset by low-cost and no-cost Internet competitors and changing technologies that keep leaving them in the dust.

Last week, long since the DeSmog story appeared, Postmedia reported third-quarter financial results that showed some improvement from last year, but in the context of the industry do not really inspire confidence in the company’s future. Net loss for the quarter was only $20.6 million, certainly better than the loss of $103.3 million the company reported in the same quarter a year earlier.

Postmedia’s own newspapers gave the story an upbeat spin — worthy of a paid advertisement, some might say. It’s rolling out a new four-platform-based digital strategy at the Ottawa Citizen, it said — completely different content for mobile smartphones, tablets, desktop computers and even those literate dinosaurs who still like to get their news on paper.

The same scheme will be introduced at the company’s other papers over the next year and a bit.

“Postmedia’s revenue for the three months ended May 31 was $171-million, a drop of $20.8-million from the same period last year as advertising continued to slip, consistent with the North American industry-wide trend,” the Financial Post story said, as cheerfully as possible under the circumstances.

“The owner of the National Post and another nine metro dailies across the country said print advertising revenue slipped 16.5 per cent to $94.7-million while digital ad sales dropped 4.3 per cent to $23.1-million,” said the Globe and Mail, owned by another company facing the same challenges, in a report that took a decidedly more negative view of Postmedia’s troubles.

But hey, the Post quoted Chief Executive Paul Godfrey saying, Postmedia’s “still a very young company.”

So all this cool new stuff, explained the Post, “is part of a leading transformational effort aimed at positioning Postmedia to adapt to the enormous upheaval in the industry in recent years, with a significant proliferation of new on-line competition and rapidly shifting audience habits.”

Well, good luck to Postmedia with this. Alas, while it may be a young company, it’s a young company that bought up a lot of very old newspapers and can’t squeeze sufficient revenue out of them.

The company’s dirty little secret is that while it really has made some gains figuring out how to increase readership in different technological platforms, like everyone else large and small who is trying to eke a living out of the Internet, it doesn’t have a collective clue in a carload how to make any money from it.

You’ve heard of companies that are too big to fail. Given the nature of the Internet, Postmedia may be a company that’s too big to succeed.

But one thing they do have that actually works — which neither the Post’s own story, nor the Globe’s, undoubtedly written in part from Postmedia’s news release, remembered to mention — is something called editorial partnerships.

These aren’t the special advertising features of old, which were either clearly marked as “advertorial,” as we used to say back in the day, or which were published to sell ads to a niche market, but maintained a strict division between church (news writing) and state (advertising).

Instead, they are paid ads unethically masquerading as news in the pages of Postmedia’s newspapers and their websites.

The problem with this, of course, is that over time it’s going to make readers distrust the real news printed by Postmedia, if any.

Indeed, thanks to DeSmog’s efforts, we know now that you can’t completely trust anything Postmedia writes about Alberta’s bitumen sands, pipelines to British Columbia, New Brunswick or Texas, or the environmental record of companies that engage in these activities.

Why? Because it just might turn out it was written by the companies themselves.

So what else that Postmedia publishes can’t you trust?

Election coverage comparing Prime Minister Stephen Harper’s Conservatives to the Justin Trudeau’s Liberals or Thomas Mulcair’s NDP?

Say it ain’t so, Paul!

This post also appears on David Climenhaga’s blog, Alberta Diary.

David J. Climenhaga

David Climenhaga, author of the Alberta Diary blog, is a journalist, author, journalism teacher, poet and trade union communicator who has worked in senior writing and editing positions with the Globe...