We finally reach the second segment of hearing 19, the last segment of the Bill C-11 senate hearings.
We didn’t anticipate that this series of hearings would go on for so long, but we nevertheless stuck with it to the very end. Now, here we are, analyzing the final segment of the entire Senate Bill C-11 hearings. The last time I recall having a huge journalism project was the What File-Sharing Studies Really Say back in 2012 which was ultimately cross-posted to here in 2016. It was a 20 part series that looked at various studies on the topic of file-sharing.
While this series wound up being 32 posts long (as of this post anyway), the amount of effort that went into this, I believe this project is easily twice as large as that massive project because some posts wound up going north of 10,000 words (no, that wasn’t a typo). Even I struggle to think how I managed to get this far, but although this last segment is running a little late, I think it is more than understandable why it is considering the pure volume of content in this project. It’s difficult to understate the size of this project.
So, with that, let’s get through this last part and put this project to bed.
Hearing 1 – Privacy Commissioner and Global Affairs/Justice Department
Hearing 2 – Digital rights organizations and lobby groups (1)
Hearing 3 – Lobby groups (2) and platforms (1)
Hearing 4 – Lobby groups (3) and lobby groups (4)
Hearing 5 – Lobby groups (5) and lobby groups (6)
Hearing 6 – Music Canada / platforms (2) and lobby groups (7)
Hearing 7 – Scholars/researchers (1) and digital first creators (1)
Hearing 8 – Digital first creators (2) / lobby groups (8)
Hearing 9 – Digital first creator (3) / lobby group (9) / platform (3) / Lobby group (10)
Hearing 10 – Record Label / Lobby Groups (11) and Scholars/Researchers (2)
Hearing 11 – Scholars/Researchers (3) and Lobby Groups (12)
Hearing 12 – Scholars/Researchers (3) / Digital First Creators (4)
Hearing 13 – Statistician / Lobbyist (13) / Canada Media Fund / Lobby Groups (14)
Hearing 14 – CNIB / H264 / Lobbyist (15) and Lobby Groups (16)
Hearing 15 – Lobby Groups (17) / Lobby Groups (18)
Hearing 16 – Canadian Taxpayers Federation / Lobbyists (19) / Lobby Groups (20)
Hearing 17 – Indigenous organizations / Digital First Creator (5) / Lobby Group (21)
Hearing 18 – The CRTC (Part 1, Part 1)
Segment 1 of hearing 19 featured the Heritage Ministry. Specifically, it featured Heritage Minister, Pablo Rodriguez. For those who know the debate before that point, you can probably see where this is going. Yes, it was a disaster featuring many moments of word salad and question dodging while sticking to easily disproven talking points.
This segment features more representation from the Heritage Ministry, however, Rodriguez wasn’t present in this segment. Still, his henchmen colleagues were there to answer further questions.
As always, the video we are following can be found on the ParlVu website. It is the second half of the video we are focusing on today. Also as always, nothing will beat the original video or official transcript in terms of thoroughness. Still, we are happy to provide a detailed summary as well as analysis as an added bonus. So, with that, lets get into this final segment of the Bill C-11 Senate hearing special.
Opening Statements
(Since they already had an hour of hearings earlier, they apparently forfeited their opening statements for this segment.)
Questioning the Witnesses
Senator Pamela Wallin said that she would like a quick clarification. The Minister said that to “regulate”, the phrase as it is used in English, might be misinterpreted. Is there some other way to understand “regulate”?
Thomas Own Ripley responded that he is not entirely sure of the context.
Senator Wallin said he just said it a moment ago. One question by Senator Klyne. She also caught Senator Julie Miville-Dechene’s eyes on that one and he said to regulate, as it is used in English, may not be clear.
Ripley responded that he can’t speak for the Minister, he would characterize it as that which is for the purposes of this bill that the focus is on online services or streaming services, making a contribution to the broadcasting system. The way that would come about is regulatory obligations being placed on them to do certain things. Thus, the question of being regulated.
Senator Wallin said that the other question that she wanted to follow up on is that it’s not really a section 3.anything or 7.anything in response when Ripley was clarifying responses to Senator Paula Simons and also to Senator MacDonald. It’s not so much that CUSMA is going to break down over this, but the message that this bill sends to other countries and other organizations. Ripley said that interventionist government interference might be perceived in a certain way. Is Ripley concerned that it might actually provoke retaliation? (It darn well should.)
Ripley responded that they’ve crafted the bill in a way that respects our international obligations (yeah, so much so that the US is still sharpening pitchforks over it). They have had good open communication with the main big streaming services. He thinks they understand the objectives of the bill. They obviously have a deep economic relationship with Canada. They understand the intention behind the bill and the messages that they have gotten from them is that they will be constructive as the bill is implemented.
Senator Walling said that yesterday at a conversation with a young, very successful person who is running a website. An economic advice website, etc. She’s on Twitter, she’s here, she’s there, she’s everywhere. She had asked her about this bill and they were getting into a conversation and her response, completely unprovoked after about 10 minutes is, ‘well, I think what I should do is simply move the base of the company to the US.’ She can continue to live and operate here, but she would just move there so that she is just not subject to what is, she thinks Ripley’s heard today, extremely confused, unclear legislation. The outcome which Senators really don’t know because they haven’t seen the regulatory side of it.
(This is a disturbingly common thought process for many digital first creators who are aware of this legislation. People are rightfully panicked that the government has basically decided that they are an obstacle to big business goals and, as a result, are seeing a government preparing to steamroll them into the ground by saddling them with impossible to comply with regulations. I have an idea of what is in all three bills that make up the Canadian governments war on the internet and I really don’t know if this site can survive all three. So, it’s no surprise that others are thinking the same sort of thing in all of this.)
Ripley responded that for the purposes of clarity, there is no instance where an individual using a social media service is subject to CRTC regulation. That is very clearly precluded in Section 2.1 (their content is. This is a standard talking point where the person isn’t regulated, but their content is which makes no difference form the perspective of a digital first creator) that says individuals, whether it is a business or an individual-
Senator Wallin said that she just wanted to pre-empt Ripley because she does generate revenue both for herself and the site. The content is replayed and used on traditional broadcasters as is she, etc. etc. She’s assuming that there would be a unique identifier, therefore. So she’s very much in this category and her answer is to move her operation to the US. So, she would not be the only person in this country getting ready to do that. (Indeed, she is not the only one.)
Ripley responded that even in the instance where somebody is uploading commercial content to a social media service- and again, the prime example that they’ve been using are record labels who are, you know, are uploading sound recordings to a service like YouTube and using it for distribution. The record label, the individual company using YouTube. There’s no question about them being subject to any kind of obligation by the CRTC. That is precluded by Section 2.1. The question is what obligations YouTube may have with respect to commercial content, for example, that is uploaded to YouTube – to its service. There is no possibility for an individual company using that service to be treated as a broadcaster. (The CRTC Chair disagreed with that assessment. Our summary of those remarks at the time: “Scott responded by suggesting promotion, advertising, helping creators produce content, any number of ways and the algorithm is simply one.”)
Senator Wallin said that but, by the Minister’s own words and Ripley’s, if you meet the test, you are theoretically subject to regulation and the extraction of funds.
Ripley stammered and said that the streaming service, so the social media service, such as YouTube, for example, would have obligations (not the point). The individuals or the companies uploading the content to the service do not, would not, because it is clearly precluded at Section 2.1. (Their content, however, may never be seen again as the government shoves it down the ranks in favour of content no one wants to watch like the abomination that is Family Feud Canada.)
Senator Wallin commented that it would be helpful if that were said throughout the bill, so again, they’ll discuss that in the context of amendments.
Senator Miville-Dechene said that she would like to continue on with her colleagues question. If the platforms are taxed or there would be asked to make financial contributions because of record labels who are on their platforms, well of course the platform is going to pass on that additional cost to the business. So, it ends up being the same thing. If you go ask the platform to pay, but the platform knows that it is because of the music content. Well, it’s going to end up being the exact same thing because it’s Sony, for example, will be told “here’s the invoice”. Is she dreaming here or what?
(The Senator is not far off here on this one. Platforms pay royalties and they run ads to share with labels. If a Canadian record label is on YouTube, showcasing their music, then they do get paid for those plays. The ask, as far as I can tell, is double dipping where the platforms pay the royalties and are asked to pay again because they happen to be popular.)
Ripley responded that in a majority of the cases, social media offers their distribution services for free. So, there isn’t an exchange in value that goes both ways for the majority of them. The value- well, what the social media makes in terms of money is mostly from advertising. So, there is a value to have this type of service on their platform because a lot of Canadians use YouTube, for example, as a streaming service for music.
Senator Miville-Dechene said that she will bring Ripley to another subject now. This is in Section 3 (r) (7) (r). So, here we talk about results generated for discovery, but the word “discovery”- do you see where she is? (they spent a moment getting onto the same page) So the word “discovery”, whether it is in English or in French, is never defined anywhere and it only appears one time in the bill. So that’s rather peculiar because the other word that appears more frequently that discoverability is not defined either. Yet you can understand that this is one of the reasons why it’s creating anxiety around discoverability. (Did a word search in the text of the bill. She’s right.)
When it says generates results, she continued, well that’s the same thing. What results? What exactly is being talked about here? Beyond that, this clause, the whole clause “R”, she heard the minister say that the platforms will be able to decide whether or not they will be able to use their algorithms to generate these results. However, that is not exactly being said in this sentence. It says “ensure that any means of control of the programming generates results” (she said “all”, but that’s probably an interpretation thing). So this sentence says indirectly that the algorithms must also be used. Do you see where she is at in the bill? So no definition of discovery or results and a sentence that seems to say that they will use everything they can, including algorithms, to get the results that seem to be unknown, but there seems to be some sort of quota.
(That was actually fascinating.)
Ripley responded that the first thing he’d say is that 2.1 (a) is a policy objective for the specific power of the CRTC. According to him, the key power of discoverability for the CRTC is that 9.1 (1)(e) which talks about the presentation of shows and programming that can be selected by the public including showcasing Canadian service providers and Canadian programming and so on. This is really the power that belongs to the CRTC which is at the basis of the obligations around discoverability. She is right that the concept of discoverability, or of showcasing, is not defined in the Act. This allows the term to evolve over the years with the idea of promoting content because the tools that they have right now are not the same as they had many years ago. He thinks that there will be many new tools available for streaming to promote content in five years from now. So, it allows this concept to evolve over time.
(Why is it that it seems that every time there is a revelation, the response is always about how it’s all about flexibility? This seems like the all-purpose get out of jail free card for those making this bill.)
Senator Miville-Dechene asked what about discoverability that only shows up once?
Ripley responded that it’s connected to this notion of discoverability.
Senator Simons said that 4.2(2), but she has to circle back because she feels profound misunderstanding in what the Minister said and what Ripley said today. This issue isn’t, as she understands it, that the digital creators are afraid that they have to pay into a fund, they are concerned that YouTube will be required to institute discoverability guidelines that will prejudice their chances of being seen (bingo!). That is the concern. She thinks it is a straw man to say that they don’t have to worry because they won’t be asked to pay into the Canadian creator broadcast fund. They’re not going to be asked that they are Canadian bone-fide. The concern is that the host platform, specifically YouTube, will be required to engage in activities that may prove prejudicial to those Canadians being able to reach their audience.
Ripley responded that he was doing his best to respond to Senator Wallin to understand what her question was. He agrees about the characterization about the concerns have been brought forward by digital first creators in terms of, you know, concern about how the two systems are going to work together. One, in the context where YouTube is being used essentially as a substitute for other type of streaming services which, again, is a way that YouTube used vs when we are using YouTube to search for organic creator content for example. Again, the goal is to do that in a way that does not disrupt the livelihoods and these business models of digital first creators who he knows- very successful business models and they bring value to the creative sector. They bring value to Canada. This is not intended to result in negative impacts for them. The challenge for the CRTC and for industry, digital first creators, and for the traditional creative industries to work through what those details look like when regulations under 4.2 are put in place.
(That’s a long-winded way of saying “You’re on your own, kid.”)
Senator Simons said that she put it to Ripley that the challenge would be minimized if we had clear language in 4.2 (2) about scoping. It’s fine for the Minister to be saying that it’s additive, that you have to consider all three things, this and this and this. That’s not the way the bill is written. In the first category, the very first category, is does it create any revenue directly or indirectly? That captures almost everyone.
Alright, Senator Simons continued, now she’s going to get to her actual question which is about the Statutory Instruments Act. The Statutory Instruments Act does not apply in Sections 9 and 11. She said that Senator Wallin and herself were having a side-bar about this. She asked about the effects of this.
Ripley responded that the Statutory Instruments Act contains obligations with respect to the making of regulation, etc. He spoke at length about this.
Senator Simons said that it seems to be a trivial concern in the context of all of this, but it’s a real one for her as a former journalist. The CRTC practice of posting its decisions is opaque. Things are not posted proactively. you have to search for them. She worried about things moving backwards.
Ripley responded that the intention is to strike the right balance between making sure that the CRTC can do things in an efficient and effective manner while everyone has clarity as to what those obligations are.
(The chair tagged out to the brief moment of confusion of Senator Simons. Senator Miville-Dechene then played the role of committee chair.)
Senator Rene Cormier said that he would like to bring Ripley back to Section 3.1(f) and 3.1(f)(1), the distinction between Canadian and foreign businesses. He asked about the distinction for human resources of foreign and domestic companies.
Ripley responded that there is a distinction between Canadian and foreign companies. This with the exception of 3.1(a). He said that there are a lot of different broadcasting services and the intention was to create flexibility to determine the best contribution.
Senator Cormier said that, has the Government of Canada has been hearing very clearly the fact that they are very concerned about this or is it that they are very hesitant that they are putting forth Canadian human resources?
Ripley responded that the distinguishing thing between (f.1) and (f). This idea starts with a maximum use. He spoke about specialized services.
Senator Marty Klyne said that the Act is intended to bring online broadcasters under similar requirements to the traditional broadcasters. The relationship with online streaming services showcase Canadian music and stories in support of creators and producers. Further, it would make programs by talented artists in both official languages and indigenous languages more accessible to Canadians. Finally, streaming platforms that broadcast commercial programs would be required to contribute to the Canadian series, music, and movies. We’d make sure that Canadian programs are showcased. Is all of this something that Canadians are asking for or is all of this intuitive – something someone thinks a majority of Canadians want?
Ripley responded that Canadians, when you look at Canadian public research, Canadians value finding Canadian stories and music. That is something that we value as a society. The bill is constructed so that as we migrate to other means that we continue to find those Canadian stories on these new platforms.
Senator Klyne said that this is empirical evidence and asked if Ripley could share that. Ripley said that they would be happy to share it.
Senator Klyne said that it has been incremented that this new Act would bear roughly $900 million in new revenue. He doubts that’s going to come off willingly from shareholders of the online broadcasters, streaming services and platforms. In that scenario, the revenue is likely going to come off of the backs of Canadian subscribers. Are there provisions or policies that says otherwise?
Ripley responded that it relates to the Senators previous question to the Minister. The bulk of the modelling behind that had those, what they would call, expenditure requirements. That’s an expectation that the streaming services invest in a certain amount of money on an annual basis in the production of Canadian programs. So, it’s not a ‘pay all of that money into a fund’, for example, which he agrees with Senator Klyne would have a (couldn’t catch the last part of that sentence). This starts with the premise that these services already have a deep production footprint in Canada. They are producing a variety of different programs here. The bill is about saying, fundamentally to them, in that production footprint moving forward, they expect a portion of that to be Canadian programs where you tell the stories with Canadian talent or you tell Canadian stories, and that relates back to the discussion they were having about what the definition is of Canadian programming moving forward.
Senator Klyne said that this will be an incremental expense on their part to play in the Canadian sandbox.
Ripley responded by saying no, it will not be an incremental expense. Many of these streaming services are already investing in billions of dollars in production (talk over talk) he always characterizes it as about- there is a spectrum of that- about kind of challenging them to move a portion of that investments into what is Canadian programming. They work through what that new definition is going to be. It’s great that you do business here. Yes, obviously (muffled) shooting in Canada for a big production streaming service that has a big footprint in Canada. It will also be about challenging them to invest in a certain percentage of their production budget into Canadian programs. It’s not 100% all on top of what they are already doing, it’s about shifting the ambition around production.
Senator Jim Quinn said that as revenues accrue, will there be any offsets from the departmental budget?
Ripley responded that with respect to expenditure requirements, that money is never transferred. The expenditure requirements stay within the company. It’s essentially an investment obligation on their part to invest that in Canadian production. They retain control and the decision making for how they will do that. He went into further details.
Senator Quinn then asked if the department make contributions to those areas that Ripley just mentioned?
Ripley responded that the department does make contributions to the Canada Media Fund. right now, the CMF is what they call a public private media partnership.
Senator Quinn then said that he wanted to back to the issue of checks and balances and the process and whatnot. The issue is that (muffled) doesn’t have to react to that. The Department of Justice lawyer said that they have the scrutiny of public regulations. That’s after the fact (muffled) regulations come into force. Again, he is just going to come back to that. A lot of the concern they’ve heard here has to do with the power of the CRTC. Concern with the regulations proposing that maybe it will be helpful for them to come back before parliament because that’s where the law emanates from to see that the laws and the regulations are consistent (muffled). Why wouldn’t we consider that?
Ripley responded that the model that has been put on the table is a common model in the sense that the Canada Gazette Part 1 and Part 2 is quite (didn’t catch that word) across a variety of regulatory spheres. He then spoke about the intention of the government trying to be transparent and all stakeholders can be part of the process.
Senator Quinn then went to the question of clarity. Senators have heard that there are areas of the bill that aren’t clear. Isn’t it in the best interest of the government, and also the department, to produce clear legislation so that Canadians can clearly understand what the legislation is trying to achieve? Wouldn’t that be a good thing? Isn’t that something that should be embraced and make those incremental changes that people are talking about so that Canadians can understand exactly what this act is trying to achieve?
Ripley responded that the existing Broadcasting Act is structured in a way that the policy directives at the front set out essentially Parliaments desire of what it hopes to achieve. He went on to say that things are in transition and this is intended to be that interim step of that policy direction. Bill C-11 seeks to build on that, it doesn’t seek structural change.
Senator Michael MacDonald said that he wanted to go back to the trade implications. This bill provides the CRTC with the power to make regulations requiring undertakings to make expenditures and contributions to funds such as the Canadian Media Fund for the production of Canadian content. The former CRTC Commissioner, Konrad von Finckenstein, hes argued that entitlement to the benefits from such expenditures should not be limited to Canadian ownership or control of producers where Canadian ownership intellectual property rights because of potential retaliatory reaction from CUSMA. He then quoted him. The Minister doesn’t seem to be too concerned about it. He’s been on (Canvu US?) Society for 13 years, he’s been the Chair of the Senate for years. He knows how the American’s operate. He thinks it will invite retaliatory measures from the US unless the bill is altered. American officials have raised this. Mr. von Finckenstein has raised this. Why is Ripley so unconcerned. Why is the Ministry and the department so unconcerned about this? Because he thinks it’s a real threat.
Ripley responded that he would start by saying that, you know, that they have carefully considered the relationship with the United States all throughout this process and they’ve had regular ongoing communications with American officials as the bill has moved forward. They sought to respond to their questions. He thinks he has taken that very seriously. At the services level, the bill will apply in a non-discriminatory way (with the power of his imagination, all problems will magically go away. The problem is, we exist in the real world). So, obviously, yes, there are big American services that operate here in Canada, but this is not giving the Canadian services that do exist like Crave, like Q Music, like others, a free pass. The expectation is that both Canadian and non-Canadian services make a meaningful contribution. That’s the starting point at the services level.
(The problem with that is the fact that, to my knowledge, streaming services are not being required by the US to make contributions to American culture which is where I think the problems will arise.)
Senator MacDonald responded that he will make the point that American officials are not Congress. Congress operates on a much different level. If they push, the American officials will give way. Mr. von Finckenstein also said that one way to avoid trade retaliation as a result of Bill C-11 is to permit platforms paying into a fund to then be eligible to benefit from that same fund. The principle would be that you pay, you can play. Was this considered by the department? If so, why wasn’t it incorporated. He also wanted to add that witnesses have also commented on the payments made by platforms, the funds that are determined by this bill should be paid to Canadian digital creators who use those same platforms. Was this considered and why wasn’t it incorporated?
(The latter question was a question I have also had on my mind for a long time now. If new funds are being made to fund Canadian productions, why don’t digital creators have access to those funds? Why the two tiers of Canadian content that seems to be so rigorously defended by the government? Why do digital first creators so often not seemingly count as creating culture?)
Ripley responded that it goes a little bit to Senator Klyne’s question. The working assumption of the department in terms of how the bill will be implemented for the big streaming services is that they would be subject to similar type of requirements that the big Canadian broadcasting group requirements are subject to. For those businesses that are in the business of production and commissioning content, right now, that takes the form of an expenditure requirement. It’s not a question of them paying into a fund, but it is a question of an investment obligation on their part. That harnesses and creates a degree of flexibility for them to use their market intelligence, and what they are very good at in terms of making those commissioning decisions. Again, there are certainly that possibility that some services, you know, that will not be the appropriate form of contribution for them and then they will be looking at a question of paying into something like the Canada Media Fund. The parameters of the Canada Media Fund are not set out in legislation. It’s actually a departmental program that oversees that. Senator MacDonald is right that as C-11 gets implemented, they may need to look at the policy framework for the Canada Media Fund and consider questions such as those- there’s been no decision taken on them as of now.
Senator Housakos said that, let him understand correctly, the government created the bill for streamers and internet platforms to pay more into a particular structure like the Canadian Media Fund – set certain obligations for them. So, it seems to him here the only people that have been regulated here to be put in line in order to conform to traditional broadcasting are the streamers. There’s been no modernization for the traditional broadcasters from what he sees in this Act. So, back to the point Senator Dawson made that, yes the Chair has made on a number of occasions, pointed out that this bill is an attempt to take modern ways of communication and bringing it into line into traditional broadcasting rules and guidelines that we have in Canada.
For him, Senator Housakos further explains, the analogy is like taking a horse and a buggy and try to align it with the Lamborghini. Now, they are both forms two forms of- they both provide transportation, they just do it in a different way. So, we’ve taken the hose and buggy, guess what that is, the traditional broadcasters, and we have the Lamborghini which is streamers and internet platforms, and you are creating a maintenance and operating manual for both of them. You are saying to the Lamborghini, well you better adapt to the horse and buggy. The truth of the matter is in today’s era, the horse and buggy, unless you go to a museum, or to some movie set, they are not very relevant. The Lamborghini is. So, that is the issue he has with the bill and he really believes that sums up months of study what he has been seeing here is an attempt with this bill.
Now, Senator Housakos continued, in an answer to the question about the projected $900 million of new revenue. Again, it’s revenue you are taking out an industry that exists, internet and digital content creators and platforms that are investing an historic amount, based on what witnesses have said before Senators committee, and what he suspects will be reflected in their report. We have a historic amount of investment in our arts and movie and culture and all of the rest of it, and we’re saying to those particular individuals, now, it’s not a question of paying your fair share, we want you to pay into that traditional mainstream broadcasting industry that’s suffering, that’s bleeding. It’s a feeble attempt on the part of the government in parliament to save that industry. If those comments don’t make sense, he’d like to give Ripley the opportunity to the officials to correct him and correct him with specific examples because he’s heard a lot of testimony in the last few months and it all correlates in the lines to the views that he just shared with the witnesses.
Ripley responded that on the question of what are the implications for traditional Canadian broadcasters, there is going to be a huge transition for them. What the bill will do is, right now, each of their obligations is baked into their life. For the most part, it’s a bespoke model where when their license comes up for renewal, the CRTC looks at it and considers what specifically that company should have to do. Just as the obligations for streaming services will be based on new regulatory instruments of orders and regulation, the broadcasters will migrate to that model as well. So that provides an opportunity for the CRTC to make sure that it is looking at the treatment of comparable business models in an equitable and comparable way (that’s basically what Senator Housakos said). Right now, our Canadian broadcasters face a competitive disadvantage in the sense that they are subject to supporting Canadian cultural objectives whereas streaming services are not (those broadcasters also receive truckloads of subsidies to keep them afloat whereas streaming services do not, but we’ll conveniently ignore that aspect of the industry because of course we will).
Ripley continued by saying that that is why one of the objectives is to make sure that there is a more level playing field in Canada who are all services operating here are expected to contribute. To Senator Housakos point, obviously, the market will continue to be competitive to the extent that Canadian services succeed in the future. They will have to continue to rise to the occasion of offering services to Canadians that Canadians want to use.
Ripley added that, on Senator Housakos question, the $900 million, it is not coming out of the system. It is about how that money is to be used in the system. So, again, this is not taking that $900 million away from those streaming services and saying that the government is now going to use that for alternate purposes. Again, the modelling, the vast majority of that is expenditure requirements where those companies will continue to have decision making over how that’s used with the understanding, though, that those investments go into Canadian programming because, at the end of the day, that’s what this bill is all about, it’s about making sure that those streaming services are investing in television and film and music that involves Canadian creators, tells Canadian stories, and so, it’s about, again, as he kind of characterized, shifting the ambition of kind of investment footprint here in Canada and making sure an important part of it goes towards those investments.
Senator Housakos said that should have kept in mind when we put the bill together that all traditional broadcasters are rushing to go digital. He hasn’t seen anybody from the internet or digital platforms rushing to become Canadian broadcasters.
Senator Donna Dasko asked if she can read into what Ripley is saying to say that, down the road, the online streamers might be able to access funds from the Canada Media Fund or some similar arrangement? Is that what she can read into what Ripley said? (Well, that was kind of spooky. We both more or less had the same kind of thought process when we heard that previous exchange. I suspect the answer is “no”.)
Ripley responded that the governments model, the Canada Media Fund, right now is built on that public private partnership he described where the contributors are Canada’s cable and satellite companies and, in order to access the fund, a producer has to have an agreement in place with a Canadian broadcasters. That’s called “the trigger”. Depending on how C-11 gets implemented and the various contributions that players may be asked to provide, we may need to relook at that governance model. He would say that is a big policy decision because, at the end of the day, direct government support is one of the biggest levers you have around questions of, for example, Canadian intellectual property and making sure those investments stay in Canada.
So, Ripley continues, what he’s saying is that he thinks we are going to have to have that debate and it’s obviously something that they are going to be looking at. He’s not putting his foot on the scale one way or another other than acknowledging that it’s an important discussion to have.
Senator Dasko said that her other question she has deals with the fact that, right now, the Commission has the authority to resolve disputes between distribution undertakings and programming services, but this authority does not extent to disputes involving online distribution. Was that, sort of, left out, not extended to arrangements on the online environment? Was that intentional? s this part of the bill something that was intended or was it something that might have been left out?
Ripley responded by saying that it was intended in the sense that, and it relates a little bit to the discussion that he was having with Senator Simons about kind of the distinction being made between the traditional power vis-a-vis 91I services and the new ones, that’s that 91I. the regulatory powers the CRTC has right now is really grounded in the context where we have a very consolidated Canadian industry with heavily vertically integrated companies that controls both programming assets as well as distribution assets. As we now include these global streaming services, global distribution services in the Canadian context, it is going to give the opportunity for there to be new kinds of business arrangements, new business partners to work with, the assessment was, you do not need the same degree of economic regulatory tools that existed in that Canadian context in the new one. Look, he appreciates that some stakeholders disagree with that, but that’s government (muffled).
Senator Dasko said that but surely it should encompass the online environment, the online platforms in the ability for the CRTC to be involved and to settle and be involved in disputes among these players. Wouldn’t it seem just not quite right to have it as it is in the bill without that power, without that ability to be part of that decision making process when there are disputes?
Ripley responded that right now, the Canadian system is a closed system. There is a limited number of business partners, right? So the challenge has always been, if you are an independent programming service, so if you are an independent TV channel, you know, if you want a distribution network, you have to do business with one of the big cable or satellite companies who may be competing because, again, they are vertically integrated, they may own a programming asset that looks very similar to yours. So, the regulatory tools that the CRTC currently has is designed to make sure that consolidation in the vertically integrated companies is not abused. There continues to be opportunity for independent programming services to have distribution and to, for example, have independent cable or satellite companies in smaller regional markets, for example, to make sure that they are able to access programming that’s owned by the big vertically integrated companies so that they have a competitive offering. So, again, those tools are pretty much grounded in that context.
Moving forward, Ripley continued, you’ll have, again, he thinks, different business partners and the idea is that there is no longer- you know, we are recognizing that global services now operate in Canada, you don’t have the closed ownership restrictions that have, you know, in part, given rise to that consolidated business environments in that Canadian context.
Senator Dasko said that so Ripley thinks it’s fine as it is, not including the online platforms in this mechanism.
Ripley responded that the intention is that the CRTC does not, so yes, the intention is that the CRTC does not have the same economic tools that it currently has. There’s been intentional decisions made in which ones should be extended and which ones should be looked at slightly differently and which ones should not exist at all in the online environment.
Senator Wallin said that she wanted to formally ask Ripley to please table with Senators the public policy or the public polling or the consultations. Ripley and the minister have both said that their results show that Canadian’s want to protect and find more discoverable access to music and art. The issues that they have been talking about here have to do with the tens of thousands of content creators that talk about financial issues, political issues, their educational services. There are companies that have testified here that did that. She just wanted to read into the record. Ryerson did a study that found there are 160,000 content creators (you mean I was conservative with my estimate?) The number of YouTube channels making $1,000 or more in annual revenue is up 35% year over year. In Canada, 550 channels have over 1 million subscribers which grew 20% over last year. 2021, YouTube’s creative ecosystem contributed $1.1 billion to Canada’s GDP.
So, Senator Wallin continued, this is serious stuff and want to know what Ripley thinks and obviously, what Ripley is basing his policies and direction on whether Canadians are concerned about the future of these businesses that are generating hundreds of millions of dollars for themselves and for the economy because Ripley also said in response to, well, to several comments, but to the Chair as well that the $900 million that Ripley is not sort of taking that out of the system, but if you tell companies how they have to spend it, then you are not only just taking control of their business model, you are actually taking it out of their control. So, how is this not, she doesn’t know, use the word everybody is using, manipulating the platforms including, as Ripley said again here in this hour, force ad placements on screen. This very much sounds like Ripley wants to run these companies through regulation.
Ripley responded by saying that the creator economy that Senator Wallin as, Senator, he thinks it’s fantastic, the creator economy that’s developed in Canada. You know, and, uh, the governments position is that those two things can co-exist and his hope is that the creator economy that Senator Wallin described continues to grow because he agree. It brings a lot of-
Senator Walling said that they fear they are going to be impacted by your decisions to promote, to pick winners, to promote some things at their expense.
Ripley responded that a platform like YouTube is very sophisticated. The challenge is for them, with respect to this bill, is that it plays two functions. It hosts that organic creator community and, you know, YouTube has told them that approximately 50% of watch time is that. The other 50% is what they characterize, or what they would characterize as commercial content. Again, YouTube can be an important substitute for another streaming service. The way forward is, just as YouTube is doing right now, is finding a way for those two communities to exist, and with respect to the commercial content YouTube is distributing, the expectations is that they be contributing to the system just as other streaming services are going to be asked to.
Senator Walling said that, again, they’ve had this discussion. It’s not about them contributing to the system. Everything that they’ve heard from them is that they are happy, just tell us what format to do that. What the are saying is please stay out of our successful business model and please stay out of the business of choosing what it is that consumers get to watch or listen to.
Senator Housakos noted that time has elapsed and he hoped that the Senates contribution has been helpful. With that, the hearing adjourned with the note that, next time they meet, it’s going to be clause-by-clause review.
Concluding Thoughts
It may not be anywhere near as noticeable this time around, but I found that Ripley’s responses were highly evasive of the questions. You could get a real sense of him being a sort of brains of the operation because he was manipulating the language of the bill to mislead Senators into believing a host of different things. Sometimes, Senators picked up on that and brought him back to the actual question, other times, they didn’t either realize it or didn’t want to fight the specifics on an issue.
An example of Ripley’s evasiveness revolved around whether or not users would get regulated. The fear, obviously, is that their content is going to get downranked because of promotion of other content. Ripley deflected by pointing to Section 2.1 – essentially, the classic lie about this legislation. He pointed to that section and misleadingly said that this section shows that users and uploaders aren’t regulated. Of course, that wasn’t the question. The question wasn’t whether the person uploaded will get regulated, but rather, that their content would get uploaded. This is a very important distinction that Ripley danced around carefully while trying to sell Senators on the idea that user generated content isn’t touched in the bill (even though it very much will be as per the text of the legislation).
Another way Ripley tried to mislead Senators on was whether or not users would be negatively impacted. Ripley mislead by saying that platforms are going to have to pay into a fund and it’s all well and good. Of course, that completely dodged the original question and simply ran to a completely different and more safe topic for Ripley to discuss.
At the end of the day, this was an exercise in playing with language to try and trick Senators into believing that isn’t factually true. Ripley very expertly manipulated the language of the text to pretend it says a whole host of things the bill clearly did not.
Ultimately, that is the core of the whole problem of the bill. When you are trying to sell a piece of legislation, you want to base you sales job on facts, the text of the bill, and solid evidence that this legislation was warranted. We really didn’t get that here. Instead, we got a number of misleading statements and efforts to try and trick Senators through a certain degree of wordplay and subtle manipulation of language. If that is the only tactic to sell this legislation, then a very strong case can be made that the bill has no merit and no reasoning behind it that says that this is a must-pass bill – as the government seems to be intent on doing. That alone should tell you everything you need to know about (lack of) the merits of this bill.
Drew Wilson on Twitter: @icecube85 and Facebook.
