As predicted, the Online Streaming Act is unfolding as another disaster, bringing an era of creative prosperity to a close
Having knee-capped the news industry with one bill, the film and TV biz is about to succumb to the uncertainty introduced by another
All the noise, all the clatter surrounding the Online Streaming Act was always going to fade once the legislation was passed and turned over to the Canadian Radio-television and Telecommunications Commission, which is nothing if not good at boring things into oblivion.
That said, watchers of the bill, which gave the CRTC majesty over all things audio and visual on the internet, had been led to believe regulation of the online world would be relatively straightforward. Chairs and Heritage ministers, previous and current, assured the public and politicians that a new structure designed to force foreign streamers to divert their investment into Canadian content funds would be in place by the end of 2024.
After that, the story went, foreign streaming money would be pouring into funds dedicated to Canadian film and television content which would soon become preeminent among your Apple TV and Netflix offerings. In Quebec, francophone music would top everyone’s playlist and existentialist angst would ease - all in time for the election scheduled in 2025.
Outside observers - including this one - were less optimistic, offering Eeyore-like predictions of a process that could drag on for the remaining years of the decade. That, we said, risked bringing an end to the years of prosperity the industry had enjoyed since the dawn of online streaming. There was every reason to believe the greatest period of investment in the industry’s history would fade away in the mists of uncertainty and the nation’s digital producers and musicians would have less access to global markets.
Guess who’s predictions were most likely to have made you money had you fancied a wager?
Those of the skeptics, of course. Who but a fool would put money on the ability of this government and its agencies to get anything done as promised?
The CRTC announced about a month ago that its new target for implementation of the Online Streaming Act (aka Bill C-11) is now - here’s a surprise - the end of next year or 12 months later than its original prediction.
But wait: even if it hits that target, there are still necessary follow up procedures to be completed. One will delve into how TikTok, YouTube and everyone else can be better at reflecting the government’s diversity, equity and inclusion agenda. The other will review the regulator’s practices and procedures to make sure they are “more agile, easier to understand and more efficient.”
So, practically, we’re now looking at the second half of 2026 before consumers notice any regulator-driven changes in their entertainment choices.
That’s if everything goes smoothly and there aren’t too many more legal actions like the one Google launched challenging the CRTC’s calculation of the fees it charged online content providers to cover the cost of regulating them. Google paid up, but is appealing in federal court because the CRTC included revenue from user generated content - which isn’t supposed to be regulated - in its calculations.
In summary, one year after the Act was passed, the CRTC has incurred one related court appeal, dropped two proceedings, added five more and still hasn’t published any decisions from the three-week marathon hearing held last November and December.
No one outside the CRTC knows for sure why the brakes have been so firmly applied to what appeared to be a hell-bent-for-leather process. But it’s likely the consequences of pretending the Internet is broadcasting are beginning to dawn. Those are many, but among them is that any actions taken by the CRTC are likely to increase costs and reduce choices for consumers.
That will happen because if the CRTC wants streamers like Netflix to pay into it’s preferred funds instead of or in addition to the way they’ve been investing for the past decade, the money has to come from somewhere. Or - and this is something the CRTC hasn’t faced before - if streamers don’t like the regulator’s new rules, they could just leave the country. Some no doubt will.
In other words, a debacle every bit as precipitous as that which resulted in news providers being banned from Facebook thanks to the Online News Act is possible.
That would not be a good look for the CRTC and it would be an even uglier prospect for a government already facing annihilation - at least if current polls are to be believed.
So it should not come as a surprise that CRTC Chair Vicky Eatrides and Heritage Minister Pascale St-Onge have concluded that prudence is the preferred course.
Under the circumstances, they have chosen wisely. Because evidence continues to show that the premise upon which the bill has been justified - that there is a crisis in certified Canadian content production - is imaginary.
The latest data from the Canadian Media Producers Association (CMPA) shows that the industry continues to thrive.
As the CMPA chart above shows, it has doubled in size over the past decade, growing from a $5.96 billion industry to $12.19 billion. The Golden Goose has been foreign production, but Cancon is among the golden eggs, increasing in strength by more than 50 percent to $3.68 billion annually.
The CMPA, however, is not happy. It cautions that these numbers indicate a “high water mark” fuelled by a post-Covid bounce back.
Indeed, it is dourly predicting that the impact of industry strikes in the USA, combined with a slowdown in Canadian content commissioning will shrink the business back to pre Covid levels.
People will debate the extent to which that dire forecast is due to regulatory uncertainty, but it is well established that investment goes only where its outcomes can be depended upon.
And, as predicted, Canada is no longer that place.
(This commentary first appeared in The Line)
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