The Online Streaming Act continues to work its way through the CRTC. Music Canada is reacting to one of its rulings.
The troubled Online Streaming Act is currently making its way through the CRTC consultation process. Last month, the regulator released its decision on the funding side of things. Among other things, they imposed a 5% tax rate on all revenues generated by several major streaming services.
Understandably, the reaction to this was quite negative. The Digital Media Association (DiMA) lashed out at the decision, pointing out that it would worsen the affordability crisis in Canada. Others, however, took their opposition to the next level by filing not one, not two, but three lawsuits against the CRTC for its decision. To say that the rate decision was unpopular would be an understatement.
Today, we learned that Music Canada is joining in the chorus of voices condemning the decision. In a statement, Music Canada said that the decision puts the careers of Canadian artists at risk:
Earlier this summer, Canada’s broadcast regulator, the CRTC, announced that music streaming services will need to pay an unprecedented 5% of their Canadian revenues to support the legacy broadcasting system. And almost half of that money will be used to prop up traditional radio. If that sounds like outdated thinking, it’s because it is.
When the CRTC launched their process to implement the Online Streaming Act (Bill C-11), they promised a “blank sheet of paper” approach that would help them re-imagine the Canadian broadcasting system. Music Canada encouraged them to “turn over every stone”. If our broadcasting regulations were going to be extended to streaming, then we had to treat it as the once-in-a-generation regulatory process that it was. The framework needed to reflect the power and competitiveness of streaming if it was going to create new and meaningful opportunities for Canadian and Indigenous artists in the global streaming environment.
So it was with a mix of surprise, disappointment, and confusion that we read the CRTC’s decision. If the CRTC had truly set out with a blank page, it had the old regulatory rules written on the back. At some point in the process, faced with the immensity of the task at hand, it seems they simply turned the page over.
Bill C-11 was designed to require audio streaming services to pay into the Canadian broadcasting system – but a 5% contribution rate is staggering. For context, it’s roughly 10 times what radio broadcasters are required to pay. And when you look at how that 5% is divided up, you see that 40% of it goes to funding the radio industry. It is truly confounding that such a large sum of money from streaming services like Spotify, Amazon Music and Apple Music will be used to subsidize our radio industry.
We asked the CRTC to carefully consider the existing investments made by the music streaming services in Canada and not impose requirements that could jeopardize them. The music platforms’ local teams curate playlists featuring Canadian and Indigenous artists, which introduce Canadians and global audiences to new voices; they educate artists and label teams on the best ways to leverage their platforms; they host industry events and seminars. Simply put, these local teams – these investments – are integral to the growth of the Canadian music industry and the success of its artists.
The decision ignores the role that licensed streaming plays in the growth of the industry and furthering the careers of our artists. Paid subscription streaming services that pay royalties when music is played are what allow all music companies, big and small, to reinvest in the next generation of Canadian and Indigenous talent.
It’s too early to know for sure what the consequences of this decision will be for Canada’s music industry. It’s easy to predict that the new costs will be passed on to consumers, which could threaten Canadians’ participation in the licensed, legal music economy that sees artists paid when their music is played.
But it could also trigger a reduction in streaming services’ investments in our country – or worse, an exodus. If that happens, the CRTC’s decision won’t just be a missed opportunity, it will be a cultural policy disaster.
Indeed, an exodus of services is one of the major things that has been concerning to us. Multiple platforms have openly contemplated pulling up stakes and leaving Canada over the Online Streaming Act. In fact, there have already been investment pauses by some of these streaming platforms thanks to the Online Streaming Act.
The Online Streaming Act is a strong signal to those who want to innovate and create new business opportunities that Canada is closed for business. For the most part, streaming platforms have heard that message loud and clear. Some are hoping to find a way to make it all work anyway despite the many obstacles the Canadian government threw up before them to even be in the Canadian market while others are pretty much preparing to make their way to the exits.
Obviously, this will have huge ramifications for Canadian creators as they find opportunities to build their careers in Canada dry up quickly. With consultations forthcoming on how the CRTC plans on downranking Canadian creators on various platforms, things are only going to go from bad to worse. All in an effort to prop up legacy media companies who really could care less about serving the interests of Canadians.
