Regulating streaming services will offend Internet purists – but it’s long overdue

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Surely it was no coincidence that Minister of Canadian Heritage Steven Guilbeault chose Tuesday of all days to introduce his proposed amendments to the Broadcasting Act. While all eyes were on the U.S. election, Guilbeault unveiled brave changes that would bring music and video-streaming services, such as Netflix and Spotify, into the Canadian regulatory system. The changes are only fair and long overdue, but because they will offend Internet purists and could potentially cause small increases to the cost of those services, you can be sure there will be squawking. Best not to unveil them with a fanfare, even if you can boast that they should generate $800-million in Canadian media production by 2023.

By adding the two little words “online undertaking” to its definitions, the revised act will finally acknowledge that streaming services are broadcasting – and broadcasting is regulated by the Canadian Radio-Television and Telecommunications Commission.

The amendments give the CRTC the power to license and regulate online services where it sees fit: The government has made it clear user-generated content is not to be included but that a curated service, such as YouTube Music, would be. Meanwhile, relief for the news industry from Google’s parasitic business model is going to wait for a different bill, while Guilbeault has pointed out that it’s the finance department that will have to decide how to force Netflix to starting collecting GST in Canada.

It’s not clear yet how the CRTC will proceed under the proposed legislation, but the first expectation would be that the services reveal how much Canadian content they have in their catalogues and what they do to promote it: Often, the point is that it appears high up on the home page, not that it necessarily be flagged as Canadian. More important still is what the services are spending on Canadian programming. Before the pandemic, Netflix was already investing at least $100-million a year shooting in Canada but most of that activity is “service production,” U.S.-led productions that hire Canadian crews rather than actual made-in-Canada programming. The CRTC could choose between setting spending requirements for Canadian programming of the kind that Canadian broadcasters such as CTV or Global face or, less likely, it could impose direct levies on revenues of the kind paid by Rogers and Bell.

What if Netflix, Disney or Apple TV+ don’t play ball? The CRTC has been given the power to fine but you can guess there will be fights over regulation, considering that Netflix and Google (which owns YouTube) both refused to provide numbers to the CRTC during a 2014 hearing.

Nonetheless, the changes should finally start to drag the free-riding services, which raise millions in revenue in Canada but, for the most part, don’t collect GST on subscribers' bills and don’t pay corporate taxes in Canada, into a broadcasting system based on the simple notion that those who benefit from access to public airwaves or digital space should contribute to local production.

Critics from both the NDP and the Conservative Party have complained that the proposed changes are too vague and leave too many questions to the CRTC, but in truth this is how the system has always operated. With a fair amount of horse-trading, the CRTC has generally succeeded in crafting regulations that acknowledge the different circumstances and abilities of various players.

There are always commentators who argue the market will provide all the Canadian content Canadians actually want – although the state of today’s news industry suggests otherwise – and in that regard one of the government’s stresses here is revealing: In its material about the bill, the Department of Canadian Heritage notes that the act needs to be updated to recognize Canadian diversity, including LGBTQ and racialized communities, persons with disabilities, and Indigenous peoples. That’s the reverse of a market philosophy, because those groups are unlikely to be offered targeted programming unless government mandates it. To take a different but politically hot example: Go look for French-language content on Netflix. There’s very little and most of it comes from France, not Guilbeault’s home province. The notion that Netflix is going to serve Canadian diversity without some intervention seems farfetched.

Reading reaction to Guilbeault’s bill in these pages, I was struck that both Internet law specialist Michael Geist, on the one hand, and Canadian-content advocacy group Friends of Canadian Broadcasting, on the other, are displeased with the proposed changes. For a much-delayed first effort on a politically tricky file, Guilbeault seems to have got the balance about right.