Streamers ‘disappointed’ in five per cent base contribution requirement

Online streaming services generating over $25 million in annual Canadian revenues will be required to pay five per cent of those revenues to support domestic content, the CRTC announced Tuesday. Scheduled to come into effect in September, the beginning of the 2024-2025 broadcast year, the new policy is expected to inject approximately $200 million each year into Canada’s broadcasting system. Contributions will be directed towards priority areas of immediate need, explained the CRTC, including local news on radio and TV, French-language content, Indigenous content, and content by and for equity-deserving and minority groups. To ensure these areas quickly receive the money, the commission is leaning heavily on existing funds to manage the contributions. Of the five per cent contributed by audio-visual services, two per cent will go towards the Canada Media Fund (CMF); 1.5 per cent to the Independent Local News Fund; 0.5 per cent to the Black Screen Office, the Canadian Independent Screen Fund for BPOC creators, and/or the Broadcasting Accessibility Fund; 0.5 per cent to certified independent production funds supporting official language minority community producers and producers from diverse communities; and 0.5 per cent to the Indigenous Screen Office. Audio services will allocate two per cent towards FACTOR and Musicaction; 1.5 per cent to a new temporary fund supporting local news production by commercial radio stations outside of Montréal, Toronto, Vancouver, Calgary, Edmonton, and Ottawa-Gatineau; 0.5 per cent to the Canadian Starmaker Fund and Fonds RadioStar; 0.5 per cent towards the Community Radio Fund of Canada; 0.35 per cent to direct expenditures targeting the development of Canadian and Indigenous content and/or a variety of selected funds; and 0.15 per cent to the Indigenous Music Office and a new fund to support Indigenous music. A CRTC spokesperson said that the base contribution requirement is a first step in implementing the Online Streaming Act, bringing money into the system where it is needed most. The regulator highlighted in its decision that, during the consultation process, it received “over 360 written submissions” and held a public hearing with “over 120 appearing parties.” It pointed to some of the arguments made during those proceedings. Online undertakings affiliated with Canadian traditional broadcasters are exempt from the new contribution requirements for now. The CRTC said it would be unfair to impose such rules on them, given that their parent companies are already subject to existing contribution requirements. The regulator reminded parties that it will consider how to “fine-tune the contributions of all broadcasters, including consideration of their affiliated online undertakings,” as it moves forward. The CRTC also made sure to restrict the $25 million revenue threshold to specific broadcasting revenues, excluding revenues derived from audiobooks, podcasts, video games, and user-generated content. Advertising and subscription revenues associated with user-generated content will also be excluded. Alphabet Inc.'s Google previously called for the user-generated videos on its YouTube platform to be exempt from regulation. It noted that only a small portion of its content falls under the scope of regulation, like professionally licensed music videos uploaded by record labels, or catalogues of movies and TV shows available for purchase or rental. In April, it filed a notice of application with the Federal Court of Appeal, asking for a legal review of the CRTC's broadcasting fees regulations. Google argued that the regulator was out of line for not explicitly excluding from its calculations revenue from ads placed on user-generated content. Google did not respond to a request for comment before publication. Although the new policy will allow some flexibility for audio-visual undertakings to deduct up to 1.5 per cent of their two per cent CMF allocation if it is spent on the production or acquisition of any certified CanCon, foreign streamers said it is not enough. “We are disappointed in today’s decision that reinforces a decades-old regulatory approach designed for cable companies,” said Wendy Noss, president of the Motion Picture Association-Canada (MPA-Canada), in a statement. “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 and around the world.” MPA-Canada represents various major entertainment studios, including Walt Disney Co., Netflix Inc., Paramount Global, Sony Corp., Comcast Corp.’s Universal and Warner Bros. Discovery, Inc. It highlighted the significant investments the global studios have made in Canada, totaling more than $6.7 billion annually. “Global studios and streaming services… invested more in the content made by Canadian production companies last year than the CBC, or the Canada Media Fund and Telefilm combined,” the association stated. MPA-Canada’s statements echoed the arguments it made during its appearance at the CRTC’s hearing on the issue. “We hope the next stages of the process will consider the full scope of benefits that global streaming services bring to Canada, modernize the definition of a Canadian program, and lead to a new flexible approach that will deliver more value to Canadian creative workers and consumers,” concluded Noss. Foreign online undertakings have previously argued that they should be able to access any of the funds that they make contributions to. However, the direct beneficiaries of these funds will be local radio and TV news, French-language content, and Indigenous content. A CRTC official noted that online services can still benefit indirectly by working with groups that would be receiving these funds. Canadian Heritage Minister Pascale St-Onge echoed that sentiment. “ will benefit them because this is money that will go back into Canadian creation, whether it's music, whether it's a television series or movies, that will most likely go back on their platform,” she said. “So it's actually good not only for the cultural sector here in Canada, but it's also good for the online business.” While the streamers expressed their frustration with the decision, various domestic stakeholders rejoiced. "Today showed that the federal government has the backs of Canadian creators. By requiring online streamers to meaningfully contribute to Canadian content, the government has made an investment in the future of our industry,” said Eleanor Noble, national president of the Alliance of Canadian Cinema, Television and Radio Artists (ACTRA). “On behalf of 30,000 union members, this is a proud day for ACTRA.” The Canadian Media Producers Association (CMPA) also welcomed the decision, calling it “a watershed moment that was years in the making.” “Today, the CRTC delivered a fair and reasonable decision that lays a solid foundation of support for Canada’s media production sector,” said president and CEO Reynolds Mastin in a statement. He highlighted the significance of the CRTC’s explicit recognition of support for content from Indigenous and equity-deserving groups. “Today’s decision tilts our industry toward a more level playing field.” Unifor also applauded the announcement, adding that it hopes support for “vertically-integrated news outlets that are also struggling” will be addressed in future proceedings. "Foreign streamers have been competing directly with Canadian broadcasters, and they should have the same responsibilities and obligations to support local news and Canadian storytelling,” said national president Lana Payne. – Reporting by Phalen Tynes-MacDonald at pcreed@thewirereport.ca

Streamers ‘disappointed’ in five per cent base contribution requirement

Broadcast | June 4, 2024

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Streamers ‘disappointed’ in five per cent base contribution requirement

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