New Canadian streaming rules could cost you: expert

Online streaming giants like Netflix and Spotify will soon be forced to contribute a percentage of annual their revenue toward the production of Canadian content (CanCon).

The move is being enforced by the Canadian Radio-television and Telecommunications Commission (CRTC) as part of Bill C-11.

On Tuesday, the CRTC announced that as of September 1st, foreign streaming services will be mandated to disburse five per cent of their annual Canadian revenue to a fund supporting local TV and radio news, Indigenous and French-language content, and content from diverse creators.

The federal broadcasting regulator anticipates it will be generate roughly $200 million for Canada’s broadcasting system every year.

The legislation is meant level to the regulatory playing-field between tech giants and cable companies as they compete for views — and sometimes broadcast the same content, such as sporting events or live shows.

But one expert believes it’s consumers who could end up covering the difference.

“[The CRTC] always said it was about making web giants pay,” law professor at the University of Ottawa, Michael Geist told CityNews.

“But from a consumer perspective, remarkably, the word ‘consumer’ does not even appear once in a 44-page decision. Because at the end of the day, it’s consumers who I think are going to foot the bill for all the millions this is expected to generate,” he added.

Geist said that on top of potential price hikes for video streaming services, some major platforms may also scale back on their current investments in Canada.

“These companies promote Canadian content, they help discover new Canadian programs, and yet, at least for the moment, the CRTC hasn’t factored any of those contributions into what they’re required to pay.”

“There’s no news [content] on Netflix, there’s no news on Disney, and yet they’re expected to help fund the news sector,” he said.

On the audio streaming front, Geist suggests it’s conceivable for companies like Spotify to either exit the Canadian market entirely — which the audio streaming leader has already done in some countries — or pass on additional costs to consumers.

“That’s already an industry with very slim margins,” he said.

Geist contended that another oversight by the CRTC, in his view, is the substantial investments already made by streaming giants in Canada.

“We have seen record amounts of spending on film and television production in Canada in recent years… and the foreign streamers are a big part of that story,” he said.

“But if they’re not going to get actual credit for that spending, now being told that in addition to that investment, you’ve now got to kick in additional money. It’s likely they are going to say ‘listen this is a deadweight cost to us.'”

Geist also believes that one rationale behind requesting these payments is to imply an urgency or emergency in funding CanCon-based programming.

“The data tells us that’s not the case,” he said.

Another concern Geist raises about the bill is the lack of clarity regarding the current contributions from these companies. Pointing out that the CRTC is allegedly not collecting those figures at this juncture.

“I don’t think anybody would argue with the notion that these companies have got to pay their fair share,” he expressed. “If there is a belief there needs to be a greater contribution, then the obvious way is the way every other company is required to do it — and that’s through our taxation system,” he said.

“It’s a micro-management of a sector that seems less interested in what commercial success looks like and more about lobby for more regulatory hand outs.”