The Canadian Radio, Television, and Telecommunications Commission (CRTC) on Tuesday announced that online streaming services such as Netflix, Hulu, and Amazon Prime will be required to “contribute” five percent of their Canadian revenue to funds for local broadcasting.
CRTC anticipated the payments would raise about $146 million per year for Canadian broadcasters.
“Today’s decision will help ensure that online streaming services make meaningful contributions to Canadian and Indigenous content,” said CRTC chief executive Vicky Eatrides.
CRTC said the new rule, which will take effect in September, will funnel money to broadcasting content such as local news, radio broadcasts, French-language material, and Indigenous content. The rule was also touted as a job creator for Canada and a means of ensuring that Canadian culture flourishes in a world of online streaming.
The CRTC rule includes some exemptions from the five percent tax, including streamers that earn less than $25 million annually in Canadian revenues and those affiliated with Canadian broadcasters.
“This decision demonstrates a strong commitment to the sustainability and growth of our film and television production sector, leveling the playing field and positioning Canada alongside other jurisdictions that have adopted measures to protect their cultural sovereignty and bring their broadcasting systems into the digital age,” applauded Directors Guild of Canada president Warren P. Sonoda.
Directors Guild of Canada executive director Dave Forget said the rule will increase “the offer of great international productions” available to Canadians, as well as boosting “shows that get made here, and that reflect their own experience a little bit more closely.”
Forget did not elaborate on how seizing five percent of their revenues would inspire streaming services to offer more great international productions to Canadians.
“If you take away five per cent of revenues and say that has to now go into this fund and [streamers] don’t even benefit from any of this, it seems likely that you have to increase prices if you’re going to stay in the market to ensure that you remain competitive,” University of Ottawa law professor Michael Geist pointed out.
Geist also said CRTC has not worked out some crucial elements of its proposed system, such as how “Canadian content” would be defined, or what measures would be taken to ensure that only bona fide creators of such content receive funding from the new revenue stream.
“We are disappointed in today’s decision that reinforces a decades-old regulatory approach designed for cable companies. Today’s discriminatory decision will make it harder for global streamers to collaborate directly with Canadian creatives and invest in world-class storytelling made in Canada for audiences here around the world,” said Motion Picture Association – Canada president Wendy Noss.
Amazon Prime separately said it was “concerned by the negative impact” the rule could have on Canadian consumers.