Last June, as part of the implementation of the federal government’s Online Streaming Act, the Canadian Radio-television and Telecommunications Commission (CRTC) announced its decision to require foreign online streaming services to contribute 5 percent of their Canadian revenues toward various media funds to support broadcasting areas such as local news, French-language content, and Indigenous content. This requirement was politically easier than providing these subsidies out of general funds; after all, they could claim that American companies would be footing the bill. The reality is that Canadian consumers will bear these costs, raising the question of whether Canadians who watch streaming services should pay the extra $40 a year for more status quo on Canadian content.

When other countries like Denmark and Switzerland implemented similar streaming taxes, the costs were passed on directly to consumers. For example, in response to France’s 1.2 percent music streaming tax last year, Spotify increased its prices for all subscription plans by the equivalent 1.2 percent. As such, we can reasonably expect Canadian streaming services to pass on the costs of the Online Streaming Act to consumers.

Canadian households subscribe to an average of 3.5 video streaming services and 1 music streaming service. Given a weighted average video streaming cost of $13.81 per month and a weighted average premium music streaming cost of $18.79 per month, the average family pays $67 per month on streaming services, or $805 per year. (See tables 1 and 2.)

With the 5 percent revenue contribution requirement, the average Canadian family will pay an extra $40 per year, or almost an extra month of streaming subscriptions, into various media funds.

To the CRTC’s credit, it resisted calls from traditional broadcasters and cultural groups to set the contribution requirement to upwards of 30 percent of annual Canadian revenues, which would have cost the average Canadian family $241 extra per year. That increase would have certainly forced Canadians to subscribe to fewer streaming services to stay within their budget. Nonetheless, the CRTC wants to use the new revenues for activities like subsidized art workshops. It includes subsidies for French-language music, even though it has never been easier for Canadian French-language artists to reach global audiences with the aid of streaming services. In fact, according to Spotify, Canadian artists were discovered by first-time listeners more than 3.8 billion times in 2023, and royalties exceeded $435 billion.

The goal of proliferating and promoting Canadian stories and music is important and ought to be pursued. And the rise of global music and video platforms makes achieving that goal much easier. However, putting additional costs on Canadian consumers is unlikely to make them more likely to watch Canadian content. Nor does the existing strategy of pouring hundreds of millions into the media funds and hoping that something good comes out seem to be working. Many of the projects funded by the Canada Media Fund, the Independent Local News Fund, or the Certified Independent Production Funds do not make it onto streaming services, meaning that Canadians will be paying more for their video and music streaming services for content that they will ultimately never have the opportunity to hear about.

The creation and promotion of Canadian content should not come primarily at the cost of subscribers to streaming services. If it is a societal goal, then it should be funded by the government. And if the government wants to create Canadian content that showcases the talent and wit of Canadians, then it needs to encourage innovation rather than tax it.

Appendix

Streaming costs and market share as of Q1 2024:

Table 1: Video Streaming Services

Table 2: Music Streaming Services