Expert says consumers should foot the bill for new streaming laws

Online streaming giants like Netflix and Spotify will soon be forced to contribute a percentage of their annual revenue to Canadian content production (CanCon).

The measure is enforced by the Canadian Radio-television and Telecommunications Commission (CRTC) as part of Bill C-11.

On Tuesday, the CRTC announced that starting September 1, foreign streaming services will be mandated to pay five percent of their annual Canadian revenues to a fund to support local TV and radio news, indigenous and French-language content and content from diverse creators. .

The federal broadcast regulator expects this to generate about $200 million annually for Canada’s broadcast system.

The legislation is intended to level the regulatory playing field between tech giants and cable companies as they compete for views – and sometimes broadcast the same content, such as sporting events or live shows.

But one expert believes it’s consumers who could ultimately make up the difference.

“(The CRTC) always said it was about making web giants pay,” Michael Geist, a law professor at the University of Ottawa, told CityNews.

“But from a consumer perspective, the word ‘consumer’ remarkably does not even appear in a 44-page decision. Because at the end of the day, I think it’s the consumers who are going to foot the bill for all the millions this is expected to generate,” he added.

Geist said that in addition to the potential price increases for video streaming services, some major platforms could also scale back their current investments in Canada.

“These companies promote Canadian content, they help discover new Canadian programming, and yet the CRTC, at least for now, has factored all of these contributions into what they have to pay.”

“There is no news (content) on Netflix, there is no news on Disney, and yet they are expected to help fund the news industry,” he said.

In audio streaming, Geist suggests it’s conceivable that companies like Spotify will either exit the Canadian market entirely — which the audio streaming leader has already done in some countries — or pass on the extra costs to consumers.

“That’s already a sector with very small margins,” he said.

Geist claimed that another area of ​​CRTC scrutiny he believes is the substantial investments already made by streaming giants in Canada.

“We’ve seen record spending on film and television production in Canada in recent years… and foreign streamers are a big part of that story,” he said.

‘But if they don’t get real credit for those expenses, they are now being told that you now have to put in extra money on top of that investment. It’s likely they’ll say, ‘Listen, this is an excessive cost to us.’”

Geist also believes that one of the reasons behind requesting these payments is to imply an urgency or emergency in funding CanCon-based programming.

“The data tells us this is not the case,” he said.

Another concern Geist expresses about the bill is the lack of clarity about the current contributions of these companies. Noting that the CRTC is reportedly not currently collecting these figures.

“I don’t think anyone would dispute the idea that these companies should pay their fair share,” he said. “If one believes there needs to be a bigger contribution, then the obvious way is the way every other company should do it – and that is through our tax system,” he said.

“It’s a micromanagement of a sector that seems less interested in what commercial success looks like and more interested in lobbying for more regulation.”