Canada orders streaming services like Netflix and Spotify to pay 5% of revenue

The Canadian government has ordered major streaming services such as Spotify and Netflix to hand over 5% of their revenues in Canada to the government. This is a measure to support local media and domestic content in Canada, and it is said that about 200 million Canadian dollars (about 23 billion yen) will be raised annually to give back to local media.

CRTC requires online streaming services to contribute to Canada's broadcasting system - Canada.ca
https://www.canada.ca/en/radio-television-telecommunications/news/2024/06/crtc-requires-online-streaming-services-to-contribute-to-canadas-broadcasting-system.html

Canada demands 5% of revenue from Netflix, Spotify, and other streamers | Ars Technica
https://arstechnica.com/tech-policy/2024/06/canada-demands-5-of-revenue-from-netflix-spotify-and-other-streamers/

The Canadian Radio-television and Telecommunications Commission (CRTC), the government body that regulates broadcasting and telecommunications companies in Canada, has announced the Online Streaming Act, which will require major streaming services to pay 5% of their revenue in Canada to the government.

The CRTC explained the Online Streaming Act, saying, 'Based on public records, the CRTC will require online streaming services to contribute 5% of their Canadian revenues to support Canada's broadcasting system. This obligation will begin in the 2024-2025 broadcast year and will generate an estimated C$200 million per year in new funding.'

The CRTC's Online Streaming Act applies to both video and music streaming services. The act has been opposed by major streaming service operators such as Amazon, Apple, Disney, Google, Netflix, Paramount, and Spotify.

The obligation to pay under the Online Streaming Act will come into effect in September 2024 and will only apply to streaming services that generate at least 25 million Canadian dollars (approximately 2.8 billion yen) in annual revenue in Canada. The Online Streaming Act does not include audiobooks, podcasts, game streaming services, or user-generated content (such as YouTube).

CBC points out that if the Online Streaming Act requires streaming services to pay, they may raise their fees in Canada. Netflix raised its prices in October 2023, and Spotify just raised its prices in June 2024.

Why do streaming service subscriptions continue to rise in price? - GIGAZINE

According to the CRTC, the funds raised through the Online Streaming Act will be used to support content production for local radio and television, French-language content, Indigenous content and official language minority communities, which the CRTC said are 'areas of urgent need within Canada's broadcasting system.'

CRTC Chair Vicki Eatrise said the Online Streaming Act 'will help ensure that online streaming services make meaningful contributions to Canadian and Indigenous content. They will have the flexibility to redirect a portion of their contributions to directly support Canadian television content.'

Meanwhile, the Motion Picture Association of Canada, a film industry group, criticized the online streaming law, saying it 'reinforces a decades-old regulatory approach designed for cable companies' and is 'discriminatory,' making it 'harder for streaming services around the world to work directly with Canadian creators and invest in world-class content made in Canada for audiences in Canada and around the world.'

Additionally, the Motion Picture Association of Canada said, 'Global studios and streaming services spend more than C$6.7 billion annually to produce quality content for audiences in Canada and abroad, and this will exceed the amount of investment in content made by Canadian production companies in 2023.'

The Digital Media Association, which represents music streaming services such as Amazon Music, Apple Music and Spotify, also said in a statement that 'discriminatory taxes on music streaming services are effectively protectionist subsidies to radio, jeopardizing affordability in Canada.'

Meanwhile, the Canadian Media Producers Association praised the Online Streaming Act, saying it will 'put our industry on a more level playing field.'