#CyberFLASH: Melanie Joly’s Tough Choice on Canadian Content: New Thinking or New Taxes

27521603693_5eda2af096_k-780x350Canadian Heritage Minister Mélanie Joly launched her surprise national consultation on Canadian content in a digital world last April with considerable excitement for the possibilities of revolutionizing policies born in an analog era. Joly spoke enthusiastically about the potential for Canadian creators to use digital networks to reach global audiences and for all stakeholders to rethink the cultural policy toolkit.

My Globe and Mail op-ed notes that submissions to the consultation closed last week and despite the hope for new, innovative thinking, many of Canada’s largest cultural groups placed their bets on extending a myriad of funding mechanisms to the Internet. Rather than overhauling older programs, the groups want those policies expanded by mandating new fees, costs or taxes on Internet services, Internet service providers, Internet advertisers, and even the sale of digital storage devices such as USB keys and hard drives.

Netflix is the top target, as the streaming giant is on the receiving end of demands to extend sales taxes and implement a Cancon contribution tax on foreign online video providers. For its part, Netflix highlighted its investment in Cancon in its submission, noting that Canada is now one of the top three locations worldwide for its commissioned original productions and pointing to dozens of Canadian programs that it has licensed or helped finance.

Yet groups such as ACTRA, the Writers Guild of Canada, the Canadian Media Producers Association, and the Directors Guild of Canada remain unconvinced, arguing that the government should require Netflix to contribute a percentage of its revenues toward the creation of Canadian content.

If implemented, such a Netflix tax could have far reaching effects. For example, ACTRA recommends that any online video service that distributes broadcast content with more than 2,000 subscribers be required to contribute 5 per cent of its gross revenue toward independent Cancon creation funds. The proposal could mean that many services block Canadian subscribers to avoid the mandated payments, resulting in decreased online video competition in Canada. In fact, the Directors Guild of Canada wants even more, running into the hundreds of millions of dollars annually.

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#CyberFLASH: Behind the Scenes of the Digital CanCon Consultation: Geist

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Canadian Heritage Minister Melanie Joly launched her review of CanCon rules last spring by stating that “everything is on the table.” The pre-consultation revealed a sharp divide between industry and the public with industry stakeholders emphasizing more public and government support and the public focusing on efforts to promote Canadian content.

This week I obtained government documents under the Access to Information Act that provide some interesting insights in the behind-the-scenes process that brought a major government consultation from concept to launch in a matter of weeks. The roughly thousand pages show Canadian Heritage officials worked long hours to develop timelines, consultation documents, communications plans, and advisory committees. Given the time constraints, it is an impressive effort.

The documents also highlight internal thinking on several major issues, including Netflix regulation, the CRTC’s Let’s Talk TV rulings, and copyright. On the Netflix tax, the documents indicate that officials downplayed the possibility of legislative reforms for broadcasting before the consultation was even launched. Part of the department’s communication plan includes the following Q&A on Netflix regulation:

Some have been calling for changes to the Broadcasting Act – including to require OTT players like Netflix to be regulated by the CRTC. Do you see moving in that direction as a potential result of these consultations?

a. In my view, legislation is not the starting point. It’s one tool that governments have used to support cultural policy objectives.

b. The starting point is ensuring that we strengthen the creation, discovery and export of Canadian content in a digital world.

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