Anatomy of a legacy media power grab.
This statement was originally published on openmedia.org on 11 December 2020.
- Bill C-10 – commonly known as “the Streaming Tax” before it was introduced in Parliament – is a piece of federal legislation tabled by Canadian Heritage Minister Steven Guilbeault in November 2020.
- C-10’s primary goal is expanding Canada’s Broadcasting Act to apply to all streaming audio or video content on the Internet, including Netflix, Spotify, Youtube, and other popular streaming services.
- C-10 is a complex multi-part bill, and some parts of what the government intends aren’t fully explained in it. But key priorities of the bill include:
- Putting new taxes and/or content production requirements on Internet streaming services. That could mean direct payments from online streaming services into the Canada Media Fund (CMF), a government program that funds officially recognized ‘CanCon’ content; or the CRTC might decide on another way to force streaming services to fund and produce recognized ‘CanCon’. C-10 doesn’t make clear which option is most likely.
- Applying the CRTC’s broadcast television regulations and powers to online streaming. In addition to the taxes or production quotas mentioned above, C-10 grants the CRTC the right to set quotas for how much of a streaming platform’s content must be CanCon, and to require changes to apps, websites and search results to make CanCon appear more frequently and prominently within the service.
- Not following the CRTC’s currently unclear rules could cost platforms up to $15 million dollars, which creates a significant incentive for any service not certain they can comply to stop offering their services to people in Canada.
No, though the government would like you to think it is. In public, Heritage Minister Steven Guilbeault is telling Canadians that C-10 is all about the need for Canada to ‘tell our stories’ in the 21st century.
If telling our stories on new media is C-10’s top priority, you might expect it would start with a bold vision for how the government will rebuild its systems that fund Canadian storytelling to focus on all the new media platforms that make the modern Internet great, including the podcasts, Patreon accounts and Youtube channels which many younger Canadians flock to over traditional broadcast. A top priority would also be updating our wildly out of date 1980s era CanCon points definition system that governs which stories get funding today, to make sure that it meaningfully reflects both emerging and historically underrepresented forms of Canadian identity with specific financial commitments.
Sadly, that’s not the case. C-10 has no vision for reaching younger Canadian audiences, nor means to support our storytelling on the user and independent creator driven Internet. It promises to exclude user-generated content from legislation – more on why that may not wholly work below – but that’s where the government’s vision stops.
What about broadening our story-telling to reflect more of Canada’s diversity?
There’s some rhetorical progress in the bill, which amends the current Broadcasting Act by calling for the “needs and interests of all Canadians” to receive some support, including “Canadians from racialized communities and Canadians of diverse ethnocultural backgrounds, socio-economic statuses, abilities and disabilities, sexual orientations, gender identities and expressions.”
Yet despite this promising start, C-10 doesn’t actually turn these good intentions into meaningful policy or funding. Supporting more diverse storytelling isn’t possible without first updating the definitions the government uses to decide what counts as ‘Canadian’ content – currently determined by a points system last updated in 1984. That CanCon system produces absurdities like funding documentaries on the Kennedys and English Tudors as official CanCon, while broadcasts of iconic Canadian creator stories such as Margaret Atwood’s “The Handmaid’s Tale” don’t quality. This bill does not even start to revise the CanCon system – the brunt of that work will be left to the CRTC, and take years to complete.
So until that definition is radically revised, CanCon status remains far more about supporting one flavour of content made in Canada, not Canadian storytelling.
Canadian storytellers not supported by the current CanCon system won’t see a dime from C-10 for many years (if ever) – and truly Internet-based creators on new media platforms may never qualify.
So if Bill C-10 doesn’t support new storytelling, why is Minister Guilbeault in such a rush to regulate streaming companies?
In short: It’s a fast cash-grab for traditional broadcast industries.
Legacy broadcast media companies, like Bell Media, Rogers and Corus Entertainment.
Rather than being about “telling Canadian stories,” as Minister Guilbeault is telling us, Bill C-10 is driven by much a cruder vision – that major streaming platforms are earning a lot of revenue, and legacy Canadian media companies want a piece of it.
Companies like Bell Media and Corus Entertainment built their businesses around TV, not the Internet, and would much rather the Internet look like cable than adapt what they do to the modern web.
There’s no crisis for funding for their broadcasts that qualify as traditional CanCon, which reached a several year peak in 2018 and has remained stable over the last 10 years. But overall revenue from television broadcast has been declining for these companies since 2014 – people are less and less inclined to pay for their overpriced, overstuffed cable packages.
Meanwhile, streaming companies are already massive contributors to broadcast production in Canada, with the CRTC’s chair Iain Scott calling Netflix “probably the single largest contributor to the (Canadian) production sector.”
But streaming companies like Netflix are currently ineligible to receive Canada Media Fund funding, even when they’re producing what would otherwise be Canadian content by the current points system, using Canadian production teams and creators. And that means a golden opportunity for legacy television companies to have the government force popular streaming competitors to fund their less popular content!
This isn’t about our stories, and it isn’t about our jobs; it is about inflating the profits of legacy media companies.
4. Would Bill C-10 “level the playing field” between streaming companies and legacy broadcast companies?
No – just the opposite. Under the current system, legacy broadcast companies pay into the CMF, and are eligible for hundreds of millions of dollars in funding back, as well as benefiting from a wide range of commercial rights and protections within the broadcast market that foreign or streaming only companies cannot access.
Under C-10, if streaming companies are asked to pay into the CMF, they will be ineligible for funding back – taking from streaming services to subsidize legacy broadcast production.
That’s tilting the playing field towards legacy media companies, not levelling it, and it is why they’re so keen on it that Bell’s CEO Mirko Bibic infamously ‘tipped his hat’ to Guilbeault on Twitter shortly after C-10’s introduction.
Higher prices, much less of the content we love, and the potential for some streaming services to leave Canada.
We don’t know how individual streaming platforms will respond to C-10, or exactly how the CRTC will apply its regulatory powers. But any platform paying into the CMF without receiving support back will most likely take that money back in higher Canadian subscription fees, not cutting their margin below that in other countries. And what’s the simplest way of accommodating CanCon content quotas? Not producing tons of new CanCon content – it would be blocking a whole lot of our favourite streaming content in Canada, so CanCon takes up a larger share of what’s left.
C-10 could also mean some streaming services pull out of Canada entirely, or never come here in the first place. Any platform unsure where they stand under C-10 and unwilling to deal with the hassle of the CRTC’s process could block their service in Canada rather than pursue a comparatively expensive and over-regulated market.
6. Does Bill C-10 exclude small streaming platforms and user content from broadcast regulation and levies?
Not clearly or cleanly. Minister Guilbeault has promised the public that the Act will not be extended to any but the largest streaming platforms, and will not affect user-generated content.
But that’s not what the bill actually says. As written, only streaming platforms the CRTC specifically excludes at their discretion will be exempted from regulation and levies. Any small streaming platform that wants to serve people in Canada will need to contact the CRTC and seek a judgment on whether they can be excluded, or risk facing legal consequences. Platforms who are unsure of their status and don’t want to enter a potentially multi-year CRTC process could easily decide to block their service in Canada altogether.
It’s impossible for us to know what the CRTC thinks should or shouldn’t count – or if that opinion won’t change over time.
And even if individual user content and the platforms that host it are excluded by the act, most platforms that host user content could still be affected. Modern streaming platforms like Youtube and Spotify increasingly contain a mix of user-generated, sponsored and platform-commissioned content, which will bring them into the Act’s purview and significantly change how they serve Canadian users and creators.
No. The government has separately proposed applying sales tax to streaming platforms, which is a simple loophole closing that does genuinely level the playing field, and is supported by both OpenMedia and many concerned academic experts – we’ve written more on the subject here.
We believe the government should slow down and take seriously their promise to help us tell Canadian stories. Given that the financial crisis for our funding for Canadian stories supposedly driving C-10’s haste just doesn’t exist, we need to hit pause NOW, and make sure that the reforms we’re building are truly about supporting innovative, culturally diverse Canadian content everywhere on the Internet.
We believe five core principles should inform a healthy C-10 successor
- Fix CanCon First: Our CanCon points system was last updated in 1984 and badly needs a makeover. Canadian stories for far too long have been limited by the government’s rigid, top-down CanCon criteria. Not only has this fickle system allowed great Canadian stories to slip through the cracks and fail to meet the standards for CanCon (the Handmaid’s Tale, anyone?), it’s also long reinforced outdated ideas of “old stock” Canadian identities. A CanCan overhaul for the 21st century should instead center the full diversity of Canadian identities – including multicultural identities – and recognize their equal roles in the future of Canadian content.
- Support Canadian content discoverability through user choice: The Internet isn’t broadcast media; we’re in control of what we want to watch and listen to, and it should stay that way. Any regulation that imposes new requirements on how streaming platforms present our home pages or search results should be focused on giving us more choice, not less. And that should mean the choice to turn on seeing more Canadian content in our feeds, or more content of any other type that matters to us.
- Reward anyone who produces recognized Canadian content: Anyone who is producing CanCon to the creative and employment standards of our revised CanCon definition should be eligible for CanCon funding support, full stop. When special rules exclude some making high-quality Canadian content from support, we’re left with a public conversation far more about industry politics and manoeuvering than Canadian creativity and storytelling.
- Meet Canadians on all our platforms: Beyond the definition of CanCon, a well thought through regulatory approach needs to explicitly recognize and support new online media, like podcasts and other user-generated content, that more and more Canadian creators use to make a living. While traditional broadcast and radio should of course remain part of Canadian storytelling, failing to engage platforms preferred by younger Canadians will increasingly separate the stories the government wants to support from the online lives Canadians increasingly live.
- Showcase Canadian culture to the world: Back in 2017, Heritage Minister Mélanie Joly had an optimistic vision of Canadian broadcast content’s ability to compete with and thrive amidst the panoply of world cultural products. Facing industry criticism, the government has backed off that vision; but as the reams of awards recently issued to Schitt’s Creek demonstrate, Joly was right. A C-10 successor should not be about protectionist measures that shut Canadian culture off from the world and force it on people in Canada whether we want it or not, but outward-facing efforts that give Canadian creators the support they need to create great new and old media content that appeals at home and abroad.