Canada demands 5% of the income of Netflix, Spotify and other streamers

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Canada has ordered large online streaming services to pay 5 per cent of their Canadian revenue to the government in a program expected to raise $200 million a year to support local news and other local content. The Canadian Radio-television and Telecommunications Commission (CRTC) announced its decision yesterday after a public comment period.

“According to the public record, the CRTC requires online streaming services to contribute 5 percent of their Canadian revenue to support the Canadian broadcast system. These obligations will begin in the 2024-2025 broadcast year and will provide an estimated $200 million per year in new financing,” the regulator said.

Rates apply to both video and music streaming services. The CRTC imposed the rules despite opposition from Amazon, Apple, Disney, Google, Netflix, Paramount and Spotify.

The new rates are scheduled to come into effect in September and apply to online streaming services that generate at least $25 million a year in Canada. The regulations exclude revenue from audiobooks, podcasts, video game services and user-generated content. Excluding revenue from user-generated content is a win for Google’s YouTube.

Streaming companies have recently raised the prices they charge consumers, and the CBC notes that streamers could raise prices again to offset the fees charged in Canada.

Rates to support local news and indigenous content

The CRTC said it is relying on the authority of the Online Broadcasting Act, which was passed by Canada’s parliament in 2023. The new fees are similar to those already imposed on licensed broadcasters.

“Funding will be directed to areas of immediate need in the Canadian broadcasting system, such as local news on radio and television, French-language content, Indigenous content, and content created by and for equity-deserving communities, official language minority communities, and Canadians. of diverse origins,” the CRTC said.

CRTC president Vicky Eatrides said the agency’s “decision will help ensure online streaming services make meaningful contributions to Canadian and Indigenous content.” The agency also said that streaming companies “will have some flexibility to allocate part of their contributions to directly support Canadian television content.”

Industry groups criticize CRTC

The Motion Picture Association-Canada yesterday criticized the CRTC, saying the ruling on rates “reinforces a decades-old regulatory approach designed for cable companies” and is “discriminatory.” The fees “will make it more difficult 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,” the lobby group said.

MPA-Canada said the CRTC did not fully consider “the important contributions streamers make by working directly with Canada’s creative communities.” The group represents streamers such as Netflix, Disney Plus, HAYU, Sony’s Crunchyroll, Paramount Plus and PlutoTV.

“Global studios and streaming services have spent more than $6.7 billion annually producing quality content in Canada for local and international audiences and invested more in content created by Canadian production companies last year than the CBC, or the Canada Media Fund and Telefilm together,” the report said. the group said.

The fees were also criticized by the Digital Media Association, which represents streaming music providers including Amazon Music, Apple Music and Spotify. The “discriminatory tax on streaming music services… is effectively a protectionist subsidy for radio” and may worsen “Canada’s affordability crisis,” the group said.

The Canadian Media Producers Association praised the CRTC’s decision, saying the decision benefits independent producers and “tilts our industry toward a more level playing field.”

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