On Thursday, April 27, Bill C-11, the Online Streaming Act, finally made it over the finish line after almost three long years extending over two Parliaments. The Canadian Senate voted to adopt the bill as returned to it by the House of Commons after the Commons accepted some Senate amendments but rejected others. Thus, the first legislation in over thirty years to amend the Broadcasting Act was passed. When the Broadcasting Act was last amended (1991), AOL was just emerging as an internet giant, flip-phones were the latest thing, and the most common internet sound was the screech of a dial-up connection. Google was still seven years away from being born. Bill C-11 will extend the reach of the Broadcasting Act, and the broadcasting regulator, the CRTC (Canadian Radio-television and Telecommunications Commission), to cover online streaming content. That simple concept will have wide implications for content production and distribution in Canada.
Judging by who you talk to, C-11 is the best thing that has happened to promote Canadian content and culture in a very long time or is a deeply flawed bill representing the worst possible form of government overreach, interfering with freedom of expression and undermining opportunities for digital creators. It is seen by some, such as the Canadian Media Producers Association as a positive step toward ensuring the vitality of Canadian creativeness in the digital age, although they think it does not go far enough because it seems to hold foreign streamers to a lower standard than Canadian broadcasters. For others, such as the Washington DC based high tech trade association, the Computer & Communications Industry Association (CCIA), C-11 is a discriminatory and unwanted intrusion into the market affecting US companies in ways that violate Canada’s international trade obligations under the US-Canada-Mexico Agreement (USMCA/CUSMA). Google has been vocal that it will negatively impact YouTube and tried to mobilize YouTube users to oppose the legislation. In particular, YouTube objects to being required to install Canadian content discoverability features on its platform. Much of the controversy has revolved around whether user-generated content will be captured by new regulations to be developed to implement the legislation.
As for the trade agreement arguments, I deal with them in detail in this analysis recently published by the School of Public Policy of the University of Calgary. (Spoiler alert: the CCIA’s arguments that Canada will have to invoke the CUMSA cultural exception clause because the legislation violates national treatment and other CUSMA commitments are a valiant lobbying effort, but unsubstantiated.)
At this stage no one knows for sure exactly how the bill will be implemented because the CRTC is required to engage in public hearings as part of its rule-making process. It will also be provided with further guidance through a Policy Directive to be issued by the government. While some, such as Michael Geist of the University of Ottawa, have criticized the Bill for creating a long, drawn-out process that will likely not see the final regulations in place until 2025, it is important for the CRTC to get it right within the overall guidelines they have been given by the legislation and the policy directions they will receive. After all, it has been 33 years since the Broadcasting Act was amended so why quibble about a few months of consultation? If the CRTC rushes the process, they will be subject to criticism for moving too quickly. (The requirement for extensive CRTC hearings was not Geist’s only criticism of the Bill. In fact, he has criticized just about every aspect of the legislation in an endless series of blog posts, to the point where one wonders if there is anything left in the legislation for him to find fault with).
One of the elements of the legislation the Policy Directive will apparently deal with is to provide clarity regarding user-generated content, confirming that it will not be subject to regulation–although the platforms that carry it will be. Heritage Minister Rodriguez has repeated on numerous occasions that it will be “platforms in; users out”. This may be a distinction without a difference, and it will be interesting to see exactly how this will be achieved. Early in the process the government closed a loophole in the legislation that would have allowed platforms like YouTube that host user-generated commercial content to evade the requirements to promote Canadian content, such as music, in videos. The music industry –especially in Quebec–was concerned that this would negate the intent of the legislation to promote Canadian music content. An elaborately developed definition put forward as an amendment by the Senate that would have defined what forms of content were captured by the legislation based on who did the uploading was rejected by the government, presumably because it was too prescriptive. In the end, Senators passed the revised legislation without this amendment after the government gave public assurances that Bill C-11 “will not apply to user-generated digital content.”
The bill includes a number of other measures as part of its objective to promote Canadian content on streaming services. One of these to redefine what constitutes Canadian content (CanCon). Right now, the definition is a complex web of funding and creative requirements that vary across music, film and television as I outlined in this blog post on the topic last year. (“Unravelling the Complexities of the Canadian Content (Cancon) Conundrum”). The definition is important because not only does the achievement of Canadian cultural objectives hang on it, but so does a lot of funding. The new Act instructs the CRTC to consider the following in arriving at a new definition of CanCon; (Regulations — Canadian programs 1.1)
(a) whether Canadians, including independent producers, have a right or interest in relation to a program, including copyright, that allows them to control and benefit in a significant and equitable manner from the exploitation of the program;
(b) whether key creative positions in the production of a program are primarily held by Canadians;
(c) whether a program furthers Canadian artistic and cultural expression;
(d) the extent to which persons carrying on online undertakings or programming undertakings collaborate with independent Canadian producers, with persons carrying on Canadian broadcasting undertakings producing their own programs, with producers associated with Canadian broadcasting undertakings or with any other person involved in the Canadian program production industry, including Canadian owners of copyright in musical works or in sound recordings; and
(e) any other matter that may be prescribed by regulation.
The bill will also require streaming services to make “maximum, and in no case less than predominant, use of Canadian creative and other human resources in the creation, production and presentation of programming” (subject to some exceptions for non-English or French language programming) but foreign streamers are subjected to a somewhat lesser requirement. They are only required to “make the greatest practicable use of Canadian creative and other human resources”. However, they are also required to contribute “in an equitable manner” to strongly support the creation, production and presentation of Canadian programming. Criteria for calculating financial contributions are not fixed but will almost certainly include measurement of revenues generated by foreign streaming services in Canada. Canadian streaming services, like Canadian broadcasters, will also be required to contribute to Canadian production.
The requirement for foreign streamers to contribute to Canadian production is an issue the CRTC will need to handle carefully. It is one thing to set conditions that have to be met when foreign content producers are seeking to access a subsidy (e.g. minimum Canadian spend, use of certain Canadian talent) but it is quite another when these same producers are required to provide the subsidy. If they are not given fair and equitable access to the content they have indirectly funded, this could call into question the fairness of the CRTC regime. Requiring that all copyright be held by Canadians for a production to qualify as CanCon could be an obstacle. One solution might be to allow co-productions between foreign streamers and Canadian indie producers, allowing for assignment of copyright to one of the co-producers.
This won’t satisfy those who see keeping the rights in Canadian hands as a policy objective but may be a realistic way to deal with the desire to promote Canadian independent production while not unfairly handicapping foreign funders. While not directly related to CanCon, no one wants to jeopardize the huge amount of Foreign Location Shooting (FLS) production that takes place in Canada. These are US shows shot in Canada in order to access film production credits and benefit from lower Canadian production costs. FLS constitutes the largest amount of Canadian production by value but has nothing to do with Canadian stories or content. US scripts and lead actors are used, but Canadian production crews and post-production facilities benefit. Netflix, for example, has extensive production facilities in Canada. What the Canadian AV production industry wants to do is keep and grow the FLS sector while shifting more foreign funding into production of CanCon. Bill C-11 gives the CRTC a stick to do this, but a bit of carrot would be helpful as well.
Whether the CRTC will be able to thread that needle will be determined as it develops the regulations to implement the intent of the Online Streaming Act. Stay tuned. It will be a long ride.
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