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Still Buffering: Why Canada’s Online Streaming Act Isn’t a Blockbuster Hit

Still Buffering: Why Canada’s Online Streaming Act Isn’t a Blockbuster Hit

March 22, 2024

Canadians reviewing their monthly expenses may soon be surprised to see the costs of their streaming subscriptions rise again, but this time it will be because of government policy.

The Parliament of Canada last spring passed the contentious Online Streaming Act that requires foreign streaming services like Netflix, YouTube, and Spotify to extensively promote Canadian content in Canada, and pay into a fund that supports the creation of Canadian content. The federal government has said that they could see these online streaming services forking over $740 million to a media fund, or over 22 percent of the total online streaming market in Canada. These costs will be passed on directly to consumers, with Spotify already doing just that in France after the French government implemented a streaming tax to support its music sector.

The $740 million question to ask then: what problem is this law trying to solve?

The government’s rationale for the law is that Canadian stories and music must have a place in the world of streaming. This is absolutely true—Canadian artists and media are creative and groundbreaking enough to deserve a spot on every playlist and binge session. Stories like Netflix’s Golden Globe-winning Handmaid’s Tale by renowned Canadian author Margaret Atwood, and songs like Despacito, featuring Canadian singer Justin Bieber have been wildly successful, both worldwide and across Canada. Yet neither of these two are what Canada’s telecommunications regulator would consider Canadian content, and accordingly don’t deserve to be promoted to Canadians. Convoluted and overly reductive rules about who directs and who stars in films and shows, and who wrote the lyrics for a song mean that content by, for, and about Canadians may not even qualify to be promoted as Canadian content.

The government’s FAQ about the new streaming law cites a decrease in the overall levels of Canadian television production between 2018 and 2020 as the reason to act, extrapolating that the market would decrease by half a billion dollars by 2025 if that downward slide continued. What is not included in the answer is that the global pandemic that occurred in the span of those two years gravely affected film and television production worldwide, and that the Canadian production industry actually outperformed the global average between 2019 and 2021. In fact, the Canadian Media Producers Association’s most recent annual report shows that Canadian production volume is now growing at three times the rate than it did in the previous decade.

Then if the problem is not actually about Canadian media production, is it about Canadian demand for Canadian content? It is unclear from the government’s perspective whether it is Canadians being unable to find Canadian content despite wanting it, or Canadians not wanting to consume Canadian content at all. The issue is certainly not the former—a quick search of various Canadian musicians on YouTube or Spotify will very quickly fill your feed with similar content, as the algorithms adjust based on your interests. If the problem is the latter, throwing money at the problem has not worked thus far to prevent Canadians from seeking out global content, so why would it work now after taxing Canadian streaming subscribers to give them something they are not all that interested in? Indeed, taking money from Canadian consumers and giving more money to media funds controlled by legacy broadcasters to film bigger budget versions of Big Brother Canada, the Amazing Race Canada, or Law and Order Toronto is unlikely to drive Canadian viewership.

Existing Canadian content laws came from a world with limited airtime and set television schedules, where Canadian shows would compete with higher production value American and international shows, and where Canadians had few avenues for accessing Canadian content other than the CBC.

This is no longer the case in the 21st century, as high-definition phone cameras and AI tools make it easier than ever to record and produce content, and social media has ushered in a golden age for indie filmmakers and SoundCloud rappers alike in finding their audiences. Forcing companies, and in turn, consumers to pay more for even more of the status quo is not a winning strategy and will simply work to add costs on Canadians and discourage consumption. Similarly, mandating platforms recommend videos and music to the wrong audiences could, at worst, cause viewers to skip or dislike the video, reducing their standing in the algorithms. Many Canadian creators aren’t making content to cater solely to a domestic market now, and reducing their clickthrough rates on platforms by mandating the promotion of their content to unwanted audiences will hurt more than help.

Moreover, Canadian artists now have access to streaming platforms that give them direct access to a global audience. That is why there has been an explosion in the number of artists, musicians, filmmakers, comedians, photographers, and other creators across the country: Because they can find niche audiences worldwide that love their creations.

Should Canadian stories and music have a place in the world of streaming, it must be earned, not given. The government needs to modernize the way it thinks about supporting Canadian content. It needs to leverage instead of fight technological innovation to promote Canadian content. Forcing streaming services to feature Canadian content will not help Canadian artists, nor will heaping additional costs on Canadians make them more likely to stream Canadian content. If the goal is to improve and promote Canadian content, it should be funded by the government instead of adding additional costs to consumers’ bills.

As the telecommunications regulator works through the process of thinking through how this law should be implemented, the government needs to ask itself whether taxing streaming services to fund more of the same is the winning strategy.

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