CRTC Hearing: FRIENDS Falsely Claims That User Generated Content is Out of the Online Streaming Act

We are continuing our coverage of the CRTC hearings in the Online Streaming Act. Today, we look at what lobbyist organization, FRIENDS, has to say.

Our coverage of the CRTC hearings on the implementation of the Online Streaming Act continues. Our coverage of the hearing, at this point, appears to be second to none.

Throughout it all, we’ve noticed a number of themes. One of those themes is coming from streamers. Specifically, a number of streamers have called for a flexible regulatory regime where the contributions they are already making in Canada is recognized. Those calls come from streamers like Spotify, Paramount, Netflix, Amazon, and Apple. Similarly, Google/YouTube also made such calls and, additionally, asked for a regulatory regime that doesn’t harm the digital landscape.

Another theme coming from these hearings originates from Canada’s cultural elite and their lobbyist representatives. The general theme is a pushback against the streamers. That pushback being that all the jobs created, economic investments, and discoverability opportunities for Canadian creators that they would never otherwise have doesn’t count as contributing to Canadian society. The lobbyists, in turn, claim that the streamers contribute nothing and are expecting the federal government to slap a massive tax on these streamers with all the proceeds going directly to their own bank accounts instead. The numbers vary, but the general range so far appears to be demands of a 5% to 25% additional tax rate on the streamers. Calls like that come from corporations like Bell, Rogers, Corus, and Sahftesbury.

Also making an appearance is Digital First Canada. That organization represents Canadian creators. They appeared before the CRTC to make the case that regulations moving forward shouldn’t harm Canadian creators. These calls are rooted in the fact that lobbyists are envisioning a regulatory framework that undermines the chances of success for Canadian creators by demanding, among other things, changes to the algorithm that would have their content downranked in favour of content produced by Canada’s cultural elite.

Another organization making an appearance is ACTRA. They more or less pushed back against Digital First Canada and attacked Canadian creators as little more than producers of “cat videos”. They went on to call on the CRTC to disqualify Canadian creators as “Cancon” unless they are paying fees to organizations like them first. They more or less envisioned a system that requires months of regulatory hoop jumping just to produce content at all, hamstringing Canadian creators in the online environment in the process.

Finally, more recently, we covered what Unifor had to say. Their comments were a bit more muted, but accused Netflix, Apple, and Amazon of being solely responsible for supposedly destroying Canadian news. They didn’t back this up with anything solid, but was more than happy to make these wild accusations in the first place.

Today, we are covering another lobbyist organization. This lobbyist organization is known as FRIENDS. A transcript of what was said can be found on the CRTC website. So, if you wish, you can follow along with what we are quoting for yourself. With that, let’s check out what they had to say.

In their opening statement, they had this to say:

9074 That cultural heartbeat pounds inside all of us. It’s why Parliament created the Act in the first place: to uphold the principles that bolster our independence and cultural sovereignty by protecting our own distinct voices and identities.

9075 Our neighbours south of the border have never and will never have to worry about preserving their cultural identity. They are the most prolific and influential producers of audiovisual content in the world, and with that comes the safety and the privilege of knowing that your stories will always be told ‑‑ and told the loudest.

So, really coming out swinging with that classic fearmongering of the US somehow in the process of swallowing up Canadian culture. They argue that the close proximity to Canada plays a role in that. This despite the fact that we have long lived in the digital age where geographic location is less and less meaningful. Obviously, with the advent of the internet, Canadian culture has never been more vibrant as more people can express themselves in ways that was previously thought unimaginable just 30 years ago.

Usually, when lobbying organizations say that Canadian culture is disappearing, what they really mean is that their monopolistic influence on culture is disappearing. Organizations like FRIENDS are losing the power to be arbiters of what Canadians can see or listen to. People can go online and see Canadian creators who exist outside of the cultural elites influence of power and, conversely, Canadian creators can reach audiences without the help of large cultural entities. So, when these lobbying organizations make such wild claims as the above, I think this is what they really mean. The above example is no exception to this.

The opening statement then continues with this:

9076 MR. SHOAN: That shadow looms large over the border, and it’s why the modernization of the Broadcasting Act is our best chance at getting out from underneath it. If done correctly, we can bolster our local news supports to ensure we have a robust and sustainable news sector that meets the needs of all Canadians.

9077 At the same time, we can create the next golden age of Canadian television, one in which Canadian performers, producers, directors, writers, broadcasters, and distributors have a prominent place of pride and can proudly tout their work on Canadian productions; one where our independent producers will not be beholden to deep‑pocketed American companies and will be part of a system that preserves their rights and interests so they can create even more opportunities for Canadian creators to tell even more Canadian stories.

This is actually a pretty amusing statement to make because Canadian producers had all the time in the world to create that “golden age” in Canadian television. What they chose to do instead is push for the rebroadcast of American television. Whether it is NCIS, Survivor, Big Brother, Two Broke Girls, or a plethora of other shows, Canadian broadcasters were more interested in cheaply purchasing the rights to broadcast those shows in place of all the Canadian programming they could have been making over the last several decades.

Compounding the issue is broadcasters like Bell demanding that the regulations for producing Canadian content be loosened so they won’t be as obligated to produce or show Canadian content as much any more. In fact, Bell went so far as to work on defunding local journalism, begging the CRTC to not have to produce as much local news.

To be fair, Bell is far from alone in saying that they shouldn’t be obligated to produce Canadian content. Other’s have made similar calls that they shouldn’t be burdened with the task of having to tell Canadian stories or show Canadian productions. So, the stated goal above really doesn’t match the steps that has been proposed to get there.

FRIENDS then went on to follow the themes of other lobbying organizations by saying that streamers revenues really belongs to them:

9078 That can all start right here, right now, by requiring initial base contributions from foreign online undertakings. This is indisputably the fastest way to inject much needed cash contributions into a broadcasting system that is buckling under the weight of a decade of undeniable inequity and regulatory inaction.

So, how much are they asking for? Apparently this:

9092 That brings us to our recommendations for the initial base contribution. Foreign online undertakings should provide a five per cent contribution as soon as possible and, importantly, the existing commitments of licensed Canadian broadcasters should remain status quo.

So, basically, they are demanding that the government slap a 5% tax on streamers and have the proceeds of those taxes go directly to them. It’s on the lower end of what is being called for, but still quite a chunk of change they are hoping to get out of this obvious shakedown.

They then called the MPAs comments of streamers being able to invest in Canada “untenable”.

9097 It is untenable to accept the MPA’s position that its members ‑‑ who have a significant, verging on dominant, market share of the Canadian audience ‑‑ should be exempt from contributions to the public policy objectives of the Act.

The strange thing in this statement is that I don’t recall any streamer or producer actually saying that they should be completely exempt from this. The calls I’ve been hearing is that they want flexibility that acknowledges the contributions the producers are already making in Canada rather than all new investments being forked over to legacy corporations. Last I checked, there is a pretty significant difference between the two concepts.

So, to break this down, what I heard from the streamers in these hearings is that if a streaming platform makes a $10 million investment in Canada to produce content, then that should be a factor in the contributions already being made. What the lobbyists are demanding is that the $10 million investment should not count and in order to continue making such investments, streamers must first pay (in the case of FRIENDS) an additional 5% tax first before they can make those investments in Canada. Only then can they be permitted to make those investments in Canada. Based on the statements I’ve read up to this point, that is what I’m getting from this part of the debate.

It was shortly after that there was a question and answer period. The period kicked off with FRIENDS essentially claiming (falsely) that user generated content isn’t touched in this bill:

9100 THE CHAIRPERSON: Thank you very much to FRIENDS for being here, for sharing your perspectives with us, for sharing your personal stories about video stores and recording at home.

9101 I will turn things over to our vice‑chair for Broadcasting, Alicia Barin, to start with the questions for the Commission. Thank you.

9102 VICE‑CHAIRPERSON BARIN: Thank you, Madam Chair.

9103 Welcome, Ms. Boltman, Mr. Shoan and Mr. Miller. Thank you for the clarity of your proposals in your oral presentation this morning. That takes care of a lot of my pointed questions.

9104 And so I think I am going to focus instead on some of the consumer‑facing issues that you addressed in your intervention. And I’m going to start with the distinction between user‑generated content and the content that you think the Commission should focus on. So you mention in your intervention regarding social media services that services that monetize user‑generated and uploaded content through advertising should be exempted, and those that provide movies and TV programs and music ‑‑ so content that is provided by other undertakings ‑‑ should not be exempted.

9105 So my question to you: is it only the programming that should dictate the distinction between social media services and programming services?

9106 MR. MILLER: Madam Vice‑Chair, maybe I can take a stab at that. As you know, the Act clearly exempts user‑generated content, in other words, content made by individual Canadians would not be classified ‑‑ and I hate to use the term ‑‑ as “professionally produced” content.

9107 The platforms themselves are subject to regulation, but you have to draw a distinction, obviously, between what part of their service offering is within the ambit of the Broadcasting Act and what isn’t. And all we were suggesting is that when you look at the platforms ‑‑ and this obviously includes YouTube, but it also includes Facebook, it also includes TikTok ‑‑ you’ll have to make an assessment as to what amount of the content that is being posted or otherwise provided is coming from ‑‑ again, I’ll just use the term because I don’t have another one ‑‑ professionally produced sources.

9108 So if it’s news, if it’s movies, if it’s music, if it’s anything that sort of falls in the category of what we would normally consider radio or television programming, it has to be included. And then there’s obviously a calculus ‑‑ not a trivial one, but a doable one ‑‑ as to then how you would make the assessment as to what element or aspect of an online undertaking’s ‑‑ social media online undertaking’s activities fall under the ambit of the Act.

Now, credit where credit is due here: there is the hesitation of using the term “professional content”. A lot of lobbyists throughout the debate have long accused Canadian creators of being “unprofessional” and “not art”. Essentially, Canadian independent creators were attacked as more or less being not meaningful in the cultural debate. ACTRA, as earlier noted, even attacked Canadian creators as being little more than producers of “cat videos”. This ultimately ignored the significant time, money, and effort for Canadian creators to produce the well produced content that is showcased on various social media platforms.

Unlike the distaste expressed towards Canadian creators in past debates, at least FRIENDS made an attempt to strike a more diplomatic tone here. They were more just saying that they don’t really know of a good term to describe such content. I think terms like “online creators” or “digital first creators” or even “online digital creators” are all acceptable terms. For the content in question, suggestions like “digital content”, “online content”, or even “made for internet content” are workable terms. Sure, some might start getting down into the nitty gritty of whether or not those terms are perfect, but they are all certainly a major improvement over “not art” or “unprofessional content” at the very least.

With that said, it’s still disingenuous to claim that online content produced by digital first creators aren’t in, but the platforms they are on are somehow in. This goes all the way back to nearly the beginning of the debate where there was this false claim that online creators content is out and platforms are in. The simple truth is that separating the two is pretty much impossible. You affect the platform and you affect the content of digital first creators. So, when lobbyists demand that their content be prioritized, someone elses content would, as a result, be negatively impacted.

Platforms generally have a recommendation system through the ever famous “algorithm”. Based on user choice, the algorithm picks and chooses video’s that is of interest to the different audiences. What the lobbyists are demanding is that government certified “Cancon” be promoted instead, overriding user choice. The CRTC would demand certain outcomes of what content is picked as recommendations. Since there are only so many spaces for recommendations, then everyone elses content – including Canadian produced content – gets downranked as a result.

The affect of this is Canadian creators no longer getting access to the audiences they currently enjoy. In fact, clear back in 2021, I offered visualizations of this effect. In short, Canadian creators will see their audiences stolen away from them and redirected to those who are competing for their audiences attention.

As a result, it’s misleading to say that digital first content is not covered in the Act because other content is getting that priority over their content. Simply put, legacy corporations are stealing audiences from the small Canadian creators who would otherwise be entitled to access them. That is the nasty expected affect of the Act on digital creators. Lobbyists can try and invent whatever terminology or re-imagine how the internet works all they want, but that is ultimately what the expected results are going to be in the end.

So, yes, user generated content is in. There’s no getting around that.

Overall, I found that FRIENDS struck much more diplomatic tones here. This is, obviously, nice to see compared to what was happening before. Still, there’s a lot of misleading statements or outright disinformation being pushed by the legacy lobbying organization which is easily debunked.

We’ll continue to look at other appearances and find out what else was said during these hearings.

Drew Wilson on Twitter: @icecube85 and Facebook.