BUSINESS
11/03/2020 19:43 EST

New Canadian Content Rules Could Mean Pricier Netflix, Less Choice, Critics Say

Expanding CanCon to streaming services could result in $800 million more in investment into Canadian productions, the feds say.

Mike Cassese / Reuters
Netflix CEO Reed Hastings speaks at the Canadian launch of the streaming service in this file photo taken in Toronto, Sept. 22, 2010. The federal government's plans to regulate Netflix and other streaming services could make them more expensive and reduce consumer choice in the short run, critics say.

The federal government’s plan to mandate Canadian content (CanCon) rules for streaming services such as Netflix and Spotify could result in less choice and pricier services for consumers, some critics of the legislation say.

The federal Liberals proposed new legislation on Tuesday that expands CanCon rules to streaming services such as Netflix and Spotify, in what they describe as an effort to level the playing field between streaming services, which are seeing booming subscription numbers, and legacy broadcasters, who are seeing revenues slowly decline. 

Heritage Minister Steven Guilbeault, who brought the legislation forward, says it could result in an additional $800 million in investment into Canadian “creators, music and stories by 2023.”

The rules would apply only to online services that serve curated content, like Netflix and Amazon Prime Video, and not to places where individuals or businesses generate their own content, like YouTube and Facebook. But a curated service like YouTube Music would be regulated.

Watch: The Canadian’s guide to paid streaming services. Story continues below.

 

 

Critics argue the legislation is a misguided attempt at reforming internet content by treating it like cable TV, and only serves to protect legacy media at the expense of new media.

They argue Canadian content has been “flourishing” online without regulation, noting that Netflix has already become one the largest producers of English-language Canadian TV content.

Much of the details are left to be decided by Canada’s telecom regulator, the Canadian Radio-television and Telecommunications Commission (CRTC). It will have to decide such things as how streaming services are to make Canadian content “discoverable,” and whether and how much streaming services will have to pay into a fund that pays for Canadian TV and film production.

That “places the CRTC in an enormously powerful position,” wrote Michael Geist, a law professor at the University of Ottawa and prominent commentator on digital issues. 

“[T]he bill creates considerable marketplace uncertainty that could lead to reduced spending on Canadian film and television production and delayed entry into Canada of new services,” Geist wrote on his blog Tuesday. 

“Once the policies are in place, the end result will be CRTC-approved versions of Netflix, Disney+, or Amazon Prime in which the regulator decides how these services promote Canadian content to their subscribers.”

Others criticized the bill as a misguided attempt to apply broadcast regulations to a very different online environment.

“Today’s proposal draws on ideas developed in January’s Broadcasting and Telecommunications Act Legislative Review, which was widely criticized for its view of the Internet as an extension of broadcasting,” said Laura Tribe, executive director of the consumer advocacy group OpenMedia, in a statement Tuesday.

“By wrongly treating online content like a limited resource, (Minister Guilbeault) fundamentally misunderstands the very nature of what makes streaming platforms so popular in the first place – unlimited choice, and customized content.”

Geist argued that the rationale for the reforms is “based on fictions.” Despite the government’s protests, Canadian content is booming these days, with record-setting production levels in both English and French content in recent years, he wrote.

“The overall financing picture shows an industry that has had record amounts of investment in film and television production with the total amount nearly doubling over the past decade,” Geist wrote.

‘Culturally desirable’ content

In technical briefing documents, the government said it will likely ask the CRTC to determine the merits of giving additional regulatory credits to those producing content that is “culturally desirable, but otherwise less likely to be produced, such as supporting Indigenous peoples, French-language creators and racialized and ethno-cultural communities.”

It committed itself to updating “broadcasting and regulatory policies to better reflect the diversity of Canadian society, including gender equality, LGBTQ+ and racialized communities, persons with disabilities, and Indigenous Peoples.”

Bill C-10 would also make it a goal of broadcast policy to “provide opportunities for Indigenous persons, programming that reflects Indigenous cultures and that is in Indigenous languages, and programming that is accessible without barriers to persons with disabilities.”

The note said the CRTC may also be ordered to look into what qualifies as Canadian content and whether that definition takes into account tax credits or intellectual property.

OpenMedia’s Tribe also urged a rethink to what constitutes “Canadian content,” arguing there is a “conflation” between things made by Canadians, and things that are Canadian cultural artifacts. 

“If the intention is to support jobs in the Canadian cultural industries, then let’s be clear about it. But if we’re looking at ensuring the creation of content that reflects the lived experiences of people in Canada, the current definition has a long way to go,” she said in an email to HuffPost Canada.

― With a file from The Canadian Press