Canadian Heritage Minister Pascale St-Onge answers a question during Question Period in the House of Commons of Parliament Hill in Ottawa on June 6.Sean Kilpatrick/The Canadian Press
Music streamers, including Spotify, Amazon and Apple Music, have appealed to Heritage Minister Pascale St-Onge to intervene after being told by the broadcasting regulator to contribute 5 per cent of their annual Canadian revenues to support the country’s creative industries, warning the costs could be passed onto consumers.
The body representing streamers wrote to Ms. St-Onge after the Canadian Radio-television and Telecommunications Commission (CRTC), the independent regulator implementing the Online Streaming Act, ruled that foreign streaming platforms will together have to pay about $200-million a year to support Canadian music, TV, film and radio.
Graham Davies, president and chief executive officer of the Digital Media Association, warned in the letter that the decision could lead to higher prices.
“Canadian consumers clearly seek access to millions of songs at an affordable price. We are concerned that this new tax will exacerbate the current affordability crisis in Canada, in particular for younger Canadians who are the predominant users of audio streaming services,” the letter says.
Earlier this month Mr. Davies warned MPs on the House of Commons international trade committee about the implications of the CRTC decision for consumers.
“In general, rising costs can lead to rising prices, and we have identified nothing in the new regulations to soften the impact of this economic rule,” he told MPs.
He warned in his letter that “forcing U.S. and international companies to pay into funds they cannot access” also risks becoming a trade issue with the United States.
He urged the minister to “work collaboratively with us to ensure the continued growth and success of the Canadian music industry” and said he wants to continue an open dialogue with her office, while foreign music streamers mull the effects of the CRTC ruling.
The CRTC is responsible for issuing regulations now that the Online Streaming Act has gained royal assent and the minister has said she will not interfere with its decision-making.
Ariane Joazard-Bélizaire, spokesperson for Ms. St-Onge, said in a statement that the act “is now being independently implemented by the CRTC.”
“All along, this was squarely focused on foreign streamers contributing more to Canada and creating a level playing field,” she said. “These companies profit massively here in Canada and Canadians expect them to participate in promoting Canadian content creation. This is about fairness.”
Foreign streaming platforms that are not affiliated with a Canadian broadcaster and make $25-million or more of Canadian broadcasting revenue a year will have to pay out, under a regime that follows the passing of Bill C-11 last year.
They will have to contribute to a variety of funds, including those supporting the creation of Indigenous content, French-language productions and work by Black filmmakers.
Scott Reid, a spokesperson for Spotify, said “the Canadian government chose the past over the future by demanding that streaming services pay a protectionist subsidy to radio.”
“Streamers already pay 8.5 times more in royalties than radio and are the engines of growth for Canadian music,” he said in a statement.
Andrea Kokonis, general counsel at SOCAN, the society that collects royalty payments in Canada, said the CRTC decision was welcome.
“It is not unprecedented. Rather it ensures online streaming services that have been operating in Canada for many years without regulatory obligations will contribute to the future of Canadian music,” she said.
Members of Canada’s music industry, particularly in Quebec, have welcomed the CRTC ruling to make streaming platforms pay.
Jérôme Payette, executive director of APEM, the association representing Quebec and francophone music publishers in Canada, said in a statement Monday: “Sadly, the big platforms are more interested in lobbying the Canadian government than in supporting our sector.”