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Netflix And Canadian Content: Should Online Video Services Be Made To Follow CanCon Rules?

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The CEO of one of Canada’s largest media companies has rekindled a burning question about the future of the country's media: Should Netflix be required to follow CRTC rules on Canadian content? And is it even possible to make an online video service follow the rules?

In a speech Monday, Astral Chief Executive Ian Greenberg called for the CRTC to apply Canadian content regulations to online video services the way it applies them to broadcasters.

“The reality that currently exists [is that] foreign Internet broadcasting competitors ... reap the benefits and revenues of doing business in this country, yet are not subject to the same rules of engagement as Canadian companies,” Greenberg, whose company owns The Movie Network and Teletoon, among others, said Monday.

Greenberg’s comments highlight the problems the CRTC is facing as media technology undergoes rapid change in the internet era. Canada’s telecom regulator is struggling to find a way to balance its mandate to protect Canadian culture, while at the same time adapting to the new realities of digital media, in which decades-old rules requiring the production and broadcasting of Canadian content appear irrelevant. And any effort to regulate the internet would inevitably be met with accusations of censorship.

The CRTC’s challenge is growing more difficult as an ever-larger number of so-called “over-the-top” media companies set up shop in Canada. Earlier this month, Google-owned YouTube Movies expanded into Canada. Apple TV, Best Buy’s CinemaNow and others are already operating in Canada.

Astral’s CEO is just the latest figure in Canada’s “traditional” media establishment to demand CRTC intervention. Advocates of the move say Netflix’s unfettered operations amount to “unfair competition” (the CRTC currently doesn’t regulate the internet).

Media representatives concede that content rules requiring a certain amount of CanCon to be broadcast don't make sense with an a-la-carte video service like Netflix, which streams to individual TVs rather than broadcasting. But they say Netflix and others like it could still be required to carry a certain percentage of Canadian-produced movies and TV shows, and could be required to contribute to the Canadian Television Fund and the Canadian Media Fund, which fund home-grown productions.

That doesnt’t sit well with Ted Sarandos, chief content officer for Netflix, who told a media conference in Banff this spring that “we make a meaningful contribution” to Canadian media “by licensing Canadian content,” suggesting the company isn’t willing to go any further.

Nor did it sit well with internet freedom advocates, who chafe at the idea of a Canadian government agency attempting to regulate online content. They also question the practicality of such a move. Even if Netflix were regulated, they argue, what’s to stop companies operating outside Canada from providing video services to Canadians? In the global internet media marketplace, they argue, there simply isn’t any space for regulation of content according to national boundaries.

In a column last spring, Jesse Brown of Maclean’s illustrated how regulating Netflix could lead to absurd extremes.

CanCon regulations for YouTube: … From now on, if YouTube wants to compete with our own beloved television networks, distracting Canadian viewers from their own cultural heritage (i.e. MuchMusic’s Pants Off Dance Off), then surely YouTube must give something back and pay into the CanCon funding regime. … I suggest the establishment of a Canadian Viral Video Fund. A percentage of every dollar YouTube makes in Canada by streaming videos of cats on skateboards will be used to produce our own YouTube videos of cats on skateboards...

And YouTube could, indeed, be one of the sevices that would be regulated if the CRTC were to expand its mandate to include the internet, as the online video site recently began offering its YouTube Movies service in Canada.

Some observers suspect that the Canadian media’s insistence on CanCon rules for the new arrivals is simply an attempt to suppress new competition.

“They say they're doing this in the hopes of fairness and equity,” former Industry Minister Tony Clement said last spring. “I think it's also a way to strangle the competition.”

(Internet freedom advocates have also argued that recent efforts by Canadian Internet providers to cap customers’ bandwidth usage is another attempt at preventing online video streaming, which hogs large amounts of bandwidth. Many of Canada’s ISPs are part of corporate conglomerates that also own broadcasters.)

The video streaming companies aren’t deaf to their opponents’ arguments, and have taken steps to appear in step with efforts to maintain Canada’s cultural identity online. Netflix has partnered with the the CBC to provide Canadian content, and other streaming services have followed suit.

But for the most part, these companies don’t appear willing to bend their business models for the sake of “fair play” with Canada’s traditional media.

“Regulating the Internet has not been very politically popular anywhere in the world, and it doesn’t work very well,” Netflix’s Sarandos said, “except for maybe China and North Korea.”

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