It will take at least a couple of years to judge the full impact, but it appears as if Canada’s broadcasting regulator and foreign streamers are going to have a contentious relationship.
To be fair, it’s not unusual for the Canadian Radio-television and Telecommunications Commission (CRTC) to have difficult conversations with those it oversees. Historically, those have involved a range of domestic stakeholders such as Bell (BCE Inc.), Rogers Communications, and Telus Corp. For these and other companies impacted by CRTC decisions, no matter how contentious individual decisions may be, it’s important to maintain a healthy, functioning relationship with the regulator over the long term. Their businesses depend upon CRTC licences and their conditions, often in both the telecommunications and broadcasting worlds, and executives work hard to make sure those aren’t at risk.
Since the passage last year of the Online Streaming Act, however, the CRTC’s world is no longer restricted to telecommunications and broadcasting. The act, also known as Bill C-11, gives the CRTC authority over all audio and visual content on the internet. That means that if you can hear it or watch moving images on it, the CRTC has jurisdiction over it.
One of the primary purposes of the act is to force streaming companies such as Spotify and Netflix to contribute directly into Canadian funds that then distribute the money to support producers of certified Canadian content (Cancon) on a two-thirds English, one-third French-language basis.
The reasoning for this is that one of the traditional sources of financing for Cancon has been a 5 percent levy on cable company revenues. The advent of the internet has caused increasing numbers of Canadians to terminate their cable subscriptions, putting that source of financial support for the funds at risk.
The streaming companies and others argue that they have been investing in Canada heavily and directly (i.e., not through funds) without the involvement of the CRTC, and the regulator should be giving them credit for that. There is considerable evidence to support their claims, as according to statistics published by the Canadian Media Producers Association, the Canadian film and television business has doubled in size over the past decade to become a $12 billion industry. While it is true that much of that involves the creation of foreign film and TV onsite in Canada, Cancon has also enjoyed a period of prosperity, growing by 50 percent.
Still, in the first of its decisions since the passage of the legislation, the CRTC declared on June 4 that all companies with Canadian revenues of $25 million or more annually, will have to contribute 5 percent of that to “support the Canadian broadcasting system.”
“The funding will be directed to areas of immediate need in the Canadian broadcasting system, such as local news on radio and television, French-language content, Indigenous content, and content created by and for equity-deserving communities, official language minority communities, and Canadians of diverse backgrounds.”
The response from some streamers left little to the imagination.
Wendy Noss, who heads the Motion Picture Association Canada representing Disney+, Netflix, Hayu, Paramount+, and PlutoTV, was also unhappy.
This was just the first of what will be a number of CRTC decisions that, over the next two to five years, will flesh out Canada’s approach to regulation of the internet. So, while it’s a contentious start, it’s unlikely there will be any radical reactions this year. If there is one, it will most likely come from Spotify which, not being profitable, seems to have little choice other than to increase its current $9.99 monthly subscription price.
They and the others also have an option no one in the CRTC’s past experience has ever had before: They could just leave Canada.
Maybe they will, maybe they won’t. But if they stay, they will most certainly pass along, as the cable companies have done for decades, that additional 5 percent cost of doing business to their customers.
