The Online Streaming Act, rushed through Parliament as Bill C-11, isn’t in full force yet. Already, though, it’s begun to claw back a generous cut of streamer revenues — and we’re already worse off for it.
In June, the Canadian Radio-television and Telecommunications Commission (CRTC) announced that it would be taking a five per cent cut of Canadian revenues from major foreign streaming services, such as Netflix and Youtube, starting in 2024, supposedly to invest in Canadian programming. In dollars, that’s supposed to bring in $200 million per year.
Fast forward to earlier this month, and Spotify announced that it will be hiking the price of its premium plans starting in December. Hardest hit is the music streamer’s family plan, which will rise by $4 — a 23.5 per cent hike, which will cost an extra $48 per year. Individual plans are rising by a 5.5 per cent hike, costing another $20 per year.
According to the Toronto Star, which obtained a statement from Spotify, the heftier monthly charges are a factor of government intervention. Last week, the paper reported that “new federal regulations under the Online Streaming Act are one of the reasons for the higher fees, along with ‘local macroeconomic factors’ and market demands.”
Netflix, too, has made some adjustments to how it does business in Canada. Last month, the Globe and Mail reported that Netflix was halting support to the various media support initiatives its funded since 2017. These include documentary non-profit Hot Docs and imagineNATIVE, an Indigenous-focused filmmaking org.
“Despite our long-standing commitment, the government has chosen not to acknowledge our substantial support for the Canadian film and TV sector,” read a Netflix statement at the time. “Consequently, we will be unable to continue funding many of the programs that have come to rely on our backing, as we are now required to allocate resources to meet the CRTC’s new investment mandate.”
The CRTC is making the corporations pay up because it wants to do their charity work for them. The five per cent cut they’re asking for will be distributed to industry groups that exist largely to advance identity interests on the screen.
For audio-visual online streamers like Netflix and Youtube, that five per cent cut will be distributed as follows: two per cent to the Canada Media Fund, which the Liberals saddled with diversity quotas in 2021; 1.5 per cent to the Independent Local News Fund, which at least is a hodge-podge of local TV stations; 0.5 per cent to funds supporting creators who are Black, people of colour or disabled; 0.5 per cent to official language minorities; and 0.5 per cent to Indigenous creators.
For audio-only broadcasters like Spotify, the breakdown is slightly different, with a smaller emphasis on diversity.
This, the CRTC might have us believe, is a good compromise. The big Canadian traditional broadcasters wanted their online competition to pay out a massive 20 per cent cut to the regulator.
Nevertheless, the government is reaching into the balance sheets of these companies and forcing them to send a certain amount of revenue towards what are often politically steeped funds. But it’s also doing so in a way that leaves Canada worse off in the global market. The CRTC’s cut dwarfs what other countries offer, which is typically around two per cent.
The deal Canadians get so far isn’t a good one: we pay more in ever-increasing subscription fees for services that are now being made to prop up identity-centric content to whom most Canadians don’t relate. Some companies, like Netflix, were already doing this — but at least they were doing it voluntarily. Now, it’s compulsory. And it’s also costing us: naturally, some of these big streamers, such as Google, have launched court challenges to dispute the new regulations.
It’s going to get worse.
The CRTC isn’t anywhere near close to completing its implementation of the Online Streaming Act. Aside from that five per cent rake, actual interference with content will be on the way, with Canadian content requirements, as well as likely diversity targets. That’s still a long way off, with CRTC consultations slated for 2025 “to look at how the broadcasting system can better reflect the experiences of all people in Canada and foster access to diverse voices and perspectives.”
The CRTC has already decided that “reflecting “ the diversity of Canadians requires the enforcement of diversity quotas in the case of CBC, which is now required to spend a certain share of its content budget on projects and creative teams that check diversity boxes. It wouldn’t be a surprise if this flower-arranging exercise ends up being required for the rest of the Canadian internet sometime after its 2025 consultations.
There’s a principle problem here: this government has taken affirmative action too far — having mandated diversity hiring in some areas of academia, it’s now moving on to media. In both cases, discrimination becomes the standard in spending and hiring, robbing other worthwhile projects and people of fair consideration.
But more directly, there’s also a cost problem. When diversity quotas are brought in on the regulatory side, companies have to build up their own internal systems to comply. On which system are these metrics tracked? How can we track these metrics without violating human rights and privacy laws? How can tracking the ethnicities of contractors and staff go wrong, and how can we mitigate? Answers often require the services of lawyers and consultants.
Today, it’s the nuisance of a higher Spotify bill. Tomorrow, it’s a higher bill from every other subscription service that’s forking over revenue while trying to track and fund the mandated amounts of CanCon and diversity content.
National Post