(Ottawa) The Canadian Radio-television and Telecommunications Commission (CRTC) expects to collect $200 million a year from foreign streaming services such as Netflix and Spotify, which it promises to redistribute “where there is has an immediate need” in the Canadian ecosystem.
More specifically, the CRTC announced on Tuesday that, as part of the implementation of Bill C-11, it will require those commonly referred to as “digital giants” to pay at least 5% of their revenue. made in Canada.
This “baseline” requirement will be in effect from the “2024-2025 broadcast year”, i.e. from September 1, 2024 to August 31, 2025, and will be repeated annually thereafter.
The contributions raised will be redistributed to ensure the production of “local news on radio and television,” we read in the regulations specifying how the reform of the Broadcasting Act applies.
The CRTC also promises that the redistribution of money will target “French-language content, Indigenous content and content created by and for groups deserving of equity, official language minority communities.”
“The Commission is of the view that additional support is required for those elements of the broadcasting system which would not otherwise be viable,” it was written.
The regulator did not provide a list of streaming services that will be responsible for paying a contribution of 5% of their Canadian revenues. However, he clarified that these will be companies which are not affiliated with a Canadian broadcaster, but which generate revenues of at least 25 million in the country.
The CRTC has chosen that revenues from audiobook, podcasting and video game services be exempt. Likewise, content generated by users of social media platforms is explicitly excluded.
The CRTC considers that it “would not be appropriate” to extend the contribution requirement to streaming services established in Canada, such as Tou.tv for example, since “the traditional companies with which they are affiliated” already pay sums to the regulator.
“Typically, in the television and distribution industries, contribution requirements for traditional businesses range from 5% to 45% of their annual revenue. In the radio sector, the requirements range from 0.5% to 4% of their annual revenues,” specifies the CRTC.
This decision, which the organization says it is taking in order to “level the playing field”, is at odds with what foreign services have argued in recent months.
The CRTC recalls in the documents it made public Tuesday that these actors “argued that it would be inequitable and discriminatory to impose basic contribution requirements only on foreign online companies.”
This demand was notably put forward by the Canadian section of the Cinematographic Association (MPA-Canada), which represents major producers and distributors of films and series in the country such as Disney, Paramount, Netflix and Universal.
The association in question was quick to express its disappointment on Tuesday. “The discriminatory decision […] will make it difficult for international broadcasters who wish to collaborate directly with Canadian creators and invest in first-rate stories made in Canada for audiences here and around the world,” argued the president of MPA-Canada, Wendy Noss.
Conversely, the first reactions from broadcasters established in Canada and organizations sympathetic to their interests were rejoicing. Most of them have been pleading for months that it would have been “unfair for the Commission to impose basic contribution requirements” if they offer streaming at the Canadian level, the CRTC also reminds them by giving them reason.
“They argued that such a measure taken now would worsen the financial challenges facing Canadian broadcasters and accentuate their competitive disadvantages,” notes the regulator.
This position was notably defended by the Canadian Association of Broadcasters (CAB), whose president, Kevin Desjardins, applauded, through a written statement, Tuesday’s news.
“The contributions that the Commission has decided that these (foreign) services must make allow us to begin to rebalance obligations among all players who benefit from their access to Canadian audiences and advertisers,” he said.
Similar story from Arsenal Media, which owns regional radio stations in Quebec. “The CRTC’s decision marks a significant step in trying to establish a level playing field,” reacted the company’s president and CEO, Sylvain Chamberland, mentioning the costs of producing regional content and “ the size of the territories to be covered”.
Although the CRTC has not extended its requirements for foreign companies to traditional Canadian streaming broadcasters, the regulator has signaled that the “contributions… will be refined as the Commission moves forward.” ‘forward in its implementation of the amended Broadcasting Act’.
The annual amount estimated at 200 million is “rather substantial” and will represent “good investments”, declared the Minister of Heritage, Pascale St-Onge, in a press scrum. She was therefore delighted with the follow-up given to C-11, a file that she oversaw when the initiative was at the bill stage.
“It is entirely in line with the law, that is to say, to create a system which is fair, which allows Quebec, in Canada, to have the means of its production, to also ensure that those who benefit from the content participate in the creation of content,” she said.
The CRTC has chosen to redistribute the money it will collect through pre-existing channels, such as the Canada Media Fund (CMF) and the Community Radio Fund of Canada.
The largest part of the contribution requested from foreign companies – equivalent to 5% of their annual Canadian revenues – must be paid, in the case of video broadcasting, to the CMF, i.e. 2%.
Saying it wants to show “a certain flexibility” towards the digital giants, the CRTC gives them the possibility of deducting 1.5% of this 2% if they invest directly in Canadian productions in both French and English.
For this “incentive” to be applied, the CRTC requires that a maximum of 40% of these investments be allocated to French-language content and a maximum of 60% to English-language productions. If only the language of Shakespeare is used, the deduction could not exceed 0.9%.
Regulator officials have insisted that more decisions are coming on C-11, such as those related to the promotion – or “discoverability” – of Canadian content in the global ecosystem.