Foreign online streaming services must now pay into fund for Canadian news, content

OTTAWA — Online streaming services such as Netflix and Spotify are being told they must start contributing money toward local news and the production of Canadian content.

On Tuesday, the Canadian Radio-television and Telecommunications Commission directed foreign streamers to pay five per cent of their annual Canadian revenues into a fund.

That fund will be devoted to producing local TV and radio news, Indigenous content, French-language content and content created by those with a diverse background.

The CRTC said the fund is expected to inject about $200 million into Canada's broadcasting system every year beginning in September.

Companies that are not affiliated with a Canadian broadcaster, and that make at least $25 million from Canadian broadcasting, would be required to pay.

The move is meant to level the regulatory playing field between tech giants and cable companies as they compete for views — and sometimes broadcast the same content, such as sporting events or live shows.

"At a high level, we heard that Canadians care about content. We heard concerns that certain types of content like local interest stories will not be made or distributed anymore," said Vicky Eatrides, CEO of the CRTC, said during a speech in Toronto.

"Or that they will become less available because they will not be funded by market forces alone."

The new measure is part of the CRTC's work laying out regulations for the Online Streaming Act, a law passed by the Liberal government that is intended to modernize Canada's broadcasting system.

It forces streaming platforms to contribute to and promote Canadian content — a requirement traditional broadcasters already follow.

Social-media users are not regulated under the law. That includes local businesses that upload content online, even if they use commercial content such as songs.

Most foreign streaming companies have long opposed the streaming act, along with the idea of paying into a fund.

Motion Picture Association Canada, which represents platforms including Disney+, Netflix, HAYU, Sony's Crunchyroll, Paramount+ and Pluto TV, said the new mandate doesn't take into account the contributions these companies already make within the Canadian media industry.

Global studios and streaming services have spent over $6.7 billion annually producing quality content in Canada, the association said.

"We are disappointed in today’s decision that reinforces a decades-old regulatory approach designed for cable companies," said its president Wendy Noss.

"Today’s discriminatory decision will make it harder for global streamers to collaborate directly with Canadian creatives and invest in world-class storytelling made in Canada for audiences here and around the world."

But the local media industry praised the measures as a win for Canadian culture and jobs, which they argue have been disrupted by streaming services.

"Foreign online streamers have benefited immensely from their presence in the Canadian marketplace for more than a decade without any obligation to support our domestic broadcasting system," said Kevin Desjardins, the president of the Canadian Association of Broadcasters, in a written statement.

"The contributions the commission has set out for foreign streamers begin to rebalance the obligations between all players who benefit from their access to Canadian audiences and advertisers."

Streaming companies will benefit indirectly from the fund, Heritage Minister Pascale St-Onge argued Tuesday following the announcement.

"This is money that will go back into Canadian creation, whether it's music, television series or music that will likely go back on their platform," St-Onge said Tuesday.

"So it's actually good not only for the cultural sector here in Canada, but it's good for the online business."

She touted the announcement as a win for the preservation of Canadian and Indigenous culture.

This report by The Canadian Press was first published June 4, 2024.

Mickey Djuric, The Canadian Press