Audio streamers’ group, Canadian advocacy org disagree on Streaming Act ‘tax’

An audio streamers’ advocacy group is looking to the public for support in convincing members of Parliament to drop the requirements of the Online Streaming Act. The Act, also known as Bill C-11, requires foreign streamers generating over $25 million in annual Canadian revenues to allocate five percent of those revenues to various production funds, as a base contribution. But the Washington, D.C.-based Digital Media Association (DiMA), whose members include streamers Amazon, Apple Music, Pandora, Spotify, YouTube, and Feed.fm, launched a campaign earlier this week called “Scrap the Streaming Tax.” The campaign asks people to “take action” against the Act by sending messages to MPs “urging them to prioritize affordability and protect consumers” through a dedicated website for the campaign. DiMA says in a press release the campaign comes in response to concerns that the requirements of the Act “could lead to increased costs for consumers, making music streaming services less affordable.” It’s the first time the group has appealed to the public for help. DiMA CEO Graham Davies told The Wire Report Thursday, Oct. 3 that calling the financial requirements of the Online Streaming Act a “contribution” is “disingenuous.” “This is a compulsory obligation that is imposed on our members to operate in Canada… I think the consumer will feel like this is an imposition that is being imposed on their national services, and so that's why we've gone out and used that language,” he said, explaining DIMA’s choice to use the term “Scrap The Streaming Tax” for its campaign. Companies already supporting Canadian content themselves, Davies says Davies said DiMA understands the objective of the Act, but that streaming companies have already been putting in that work on their own to bolster Canadian content. “We've been trying to explain to the government and the regulator that music streaming has been achieving those objectives, and it's been a really great success from our perspective. It's been a success on the back of the investments and work that our members have delivered, and delivered that working on the ground in Canada with artists, creators in the industry,” Davies said. “Our members have also invested in strong promotion of music from Canada, and we’ve done that via playlisting and promotion on the platforms, as well support programs and funding and cultural events in Canada.” Davies’ argument is similar to one made by Netflix Inc. in late September, when it said it is pulling its financial support of programs in the Canadian film and TV sector due to the financial requirements placed upon it by the Online Streaming Act. When asked if he thought any of DiMA’s members would go even further by considering exiting the Canadian market altogether in response to the act, Davies said he does not know the individual business strategies of the group’s members. “As the regulator has started to make these decisions and started to progress, it's definitely making our members have to review their strategies,” he said. Among other issues, Davies said DiMA additionally does not believe legislators nor the regulator have done the work to understand the differences between music streaming and radio. “We have no faith in their ability to bring forward something that is workable. So that's why we're now saying it should be scrapped,” Davies said of the Act. In a joint letter to the CRTC with Canadian trade association Music Canada, publicized by the two advocacy groups around the same time as DiMA’s campaign launch, they take aim at a set of workshops they say were held by the regulator on Canadian content. DiMA and Music Canada say that during the workshops, “there was a clear attempt to place the continuation of radio regulations on audio streaming services as an obvious next step.” “We do not agree,” the groups wrote. “Today’s radio regulations were carefully crafted for Canada’s radio environment. One that is shaped by our vast geography, linguistic duality, and a willingness in an analogue system to make decisions about what is available to Canadian listeners,” they said. “They also reflect the limitations of the medium: a finite number of hours, increasingly centralized programming, and a live broadcast format, and relatively small number of recordings that radio broadcasts.” Streaming does not rely on those same qualities, DiMA and Music Canada write. “Being driven in terms of each consumer’s individual interest and activity, it represents nearly infinite hours of listening, a vast catalogue of recordings, a plethora of languages, and has broken down not just physical geography but international borders as well. Three of the top 10 songs streamed in India in 2022 were by Canadian artists – a fact that would be inconceivable to the founders of our terrestrial broadcasting system.” Canadian Association of Broadcasters disagrees with equating Act’s contributions to ‘tax’ The Canadian Association of Broadcasters’ president Kevin Desjardins disagrees with DiMA’s classification of the financial contributions required of streamers by the Act as a tax. Desjardins argued in an interview with The Wire Report that the requirements of the Act are “clearly not a tax.” “These are spending obligations which are placed upon anyone who is participating as a broadcaster in the Canadian media business, and this was written into the Online Streaming Act,” he said. The Canadian Association of Broadcasters represents private radio and television stations, networks, specialty, pay and pay-per-view services in Canada. “Look, I represent one of the most highly regulated industries in Canada. I don't blame other players for not wanting to be regulated in the same way that we are, but we think that if they're going to come and compete for listeners and advertising and subscribers with our members, they should have to play by the same rules we do,” Desjardins said. “Whether that means rebalancing of the obligations so ours aren't as strenuous, we would be open to that, but they can't come in and not have any regulatory obligations on them,” he argued. Desjardins believes that up until the past several years, the government took a “very hands-off” approach to foreign media companies entering Canada and establishing themselves. “There was a notion of not wanting to curtail that… But what ended up happening out of that is that they established themselves as competitors to Canadian media players, and yet have spent the past decade plus without any regulation or any of the other constraints that Canadian companies have.” Streaming act faces variety of challenges DiMA’s campaign is not the only challenge that has been raised against the Act. Amazon.com, Inc. and MPA-Canada, the Canadian arm of the Motion Picture Association, continue to pursue legal challenges against the CRTC’s decision. MPA-Canada is seeking an appeal of the commission’s requirement that part of the base contribution – 1.5 per cent of Canadian revenues – must go towards the Independent Local News Fund, which provides financial support to independent local news outlets that are not part of large-scale companies. Amazon takes issue with the base contribution requirement as a whole. The company accused the CRTC of being discriminatory by targeting foreign streamers and not domestic ones. It alleged the policy amounts to inequitable treatment that is not only beyond the commission’s authority, but also disregards existing contributions that foreign streamers have been making to the Canadian broadcasting system. Additionally, Apple Inc. and Spotify AB have filed separate challenges against the CRTC’s decision. hdaley@thewirereport.ca

Audio streamers’ group, Canadian advocacy org disagree on Streaming Act ‘tax’

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By Hannah Daley
| October 3, 2024

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