NEW CULTURAL POLICY TAKES ‘BABY STEPS’
Affordable, open internet the focus while tougher reforms left for later
A half-billion dollar cash influx from Netflix Inc. stole the show when Heritage Minister Mélanie Joly revealed a new funding regime for the cultural sector, but observers say the rest of the plot aimed at modernizing the industry for the digital age is relatively thin.
Notably missing from what was billed as an ambitious policy framework was any funding for news organizations, which have been hit hard as advertisers flock to digital platforms such as Google and Facebook. Despite intense lobbying from the news industry, Joly said the government’s approach “will not be to bail out industry models that are no longer viable.”
Joly did not make major changes despite once describing the system as “broken.” She did announce new money to maintain the existing broadcast system and unveiled a patchwork of policy designed to promote Canadian content. Tougher reforms to quotas and funding mechanisms were left to future reviews of the broadcasting, telecommunications and copyright acts. “Creative Canada does not do the heavy lifting of shaking things up — there is no reform to the definition of Cancon, no modernization of existing funding mechanisms, and some of the tougher legislative questions are deferred for further review,” internet expert Michael Geist said. “But Joly deserves credit for delivering a policy that rejects new taxes and regulation, keeps net neutrality intact, and still finds some new money for production and investment certainty from Netflix.”
Yet even Netflix’s promise to invest $500 million in original production in Canada over five years — the first time it will set up a production company outside the United States — may not be as groundbreaking at it seems. The company had previously told the federal government that it contributed “hundreds of millions of dollars” in 2016 to original programming produced in Canada. It’s also unclear whether its productions will follow the same strict stringent content requirements broadcasters must obey.
But Joly’s focus on an affordable, accessible and open internet signalled the government won’t try to force broadband and internet companies into the old framework. Most notably, the government refused to tax internet service providers or treat Netflix like a conventional broadcaster.
“We will continue to champion the internet as a progressive force and an open space without barriers,” Joly said. “We must find a new way — a Canadian way — to support our content creators, to ensure they can compete, and to create a space for them in markets and platforms at home and around the world.”
To that end, the government announced $125 million in new funding over five years to develop a creative export strategy and a partnership between Facebook and Ryerson University to create a digital news incubator. It will also let creative industries apply to the previously announced $1.26-billion Strategic Innovation Fund and set aside part of its $300-million Cultural Spaces Fund for creative hubs.
It’s clear the government is trying to “do right” by creators, said communications lawyer Bram Abramson, who has represented telecoms and creatives.
“But the message they’re sending to creators is extremely clear — that has to happen with an affordable internet and an open internet,” he said, lauding the government for rejecting the internet taxes. “Heritage is having a hard time of putting its finger on exactly what that looks like, which is why we’re seeing baby steps.”
The status quo was particularly evident in the video sector. Heritage didn’t touch thorny issues like Canadian content quotas and kept existing funding mechanisms, with a promise to top up the Canada Media Fund with an unspecified amount of cash for an unspecified period.
Traditionally, the fund got money from broadcasters that are required to contribute 30 per cent of revenue to fund Canadian programming (most goes to news and sports, but five per cent must go to scripted content like dramas and documentaries). But that source has been dwindling as consumers cut the TV cord and increasingly get content online from streaming giants including Netflix and Amazon.
The Canadian Media Producers Association and the Writers Guild of Canada welcomed the commitment to stabilize CMF funding. But it believes updates to the regulatory system are needed given the new digital players.
Creative groups and broadcasters alike have called for a “level playing field,” given Netflix doesn’t follow the same rules despite having approximately five million Canadian subscribers. At about $10 per month per subscriber, that’s at least $600 million in annual revenue. (Netflix, which doesn’t reveal subscriber numbers, did not say whether it will start charging sales tax on its subscriptions now that it’s setting up a production house in the country.)
Netflix still won’t be treated like a broadcaster when it launches a production house under the Investment Canada Act. If it doesn’t contribute the funds as promised, it could be fined up to $10,000 per day under its agreement with the federal government.
BCE Inc.’s Bell Media noted the Netflix contribution represents only a fraction of what Canadian companies pay. Bell’s total investment in 2017-18 is nine times Netflix’s annual contribution, spokesman Scott Henderson said in an email. “We’re asking for a level playing field for all participants that ensures maximum benefits for Canadian viewers and creators. That includes an equitable tax regime and balanced approach to investment in Canadian content.”
Rogers, which invested about $660 million in content last year, welcomed the commitment not to tax internet services and the recognition of the importance of local news.
When it came to the news business, Joly stated the importance of journalism and the CBC to a healthy democracy but did not announce any funding for news.
“We will focus our efforts on supporting innovation, experimentation and transition to digital,” Joly said, adding she expects internet companies that share and aggregate news to contribute to these goals.
The focus on innovation and potential to access the innovation fund won praise from Postmedia Network Inc. CEO Paul Godfrey, who was among those who lobbied for government help for the struggling newspaper industry.
“I’m a little surprised more detail wasn’t given to the legacy news and some of the problems we’re facing,” Godfrey said. “We are not seeking a bailout, what we’re seeking is help to transition to the digital world.”
The chair of News Media Canada says the nation’s struggling newspaper industry is “on its own” thanks to a federal cultural strategy that all but snubs legacy media.
“We must find a new way — a Canadian way — to support our content creators, to ensure they can compete, and to create a space for them in markets and platforms at home and around the world.”
MÉLANIE JOLY, Heritage Minister